Structural Transformation in Sudan: Challenges and Conflicts

Structural Transformation in Sudan

Economic Models, Historical Challenges, and the Impact of Conflict

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• Introduction & Recap (Lewis, Rostow, Deindustrialization)
• Colonial Legacy
• Post-Independence Planning
• Crisis & Stagnation
• IMF Reforms
• GDP Trends
• Sectoral Composition (2009 vs 2024)
• Oil Era & 2011 Secession Impact

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1

Introduction & Recap

Lewis Model, Rostow Model, Deindustrialization

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• Lewis Model: Dual economy with surplus labor shifting from subsistence agriculture to dynamic industrial sector
• Rostow Model: 5 stages - Traditional society → Preconditions → Takeoff → Drive to maturity → Age of high mass consumption
• Deindustrialization: Decline in manufacturing's share of GDP and employment as economies mature toward services

2

Colonial Legacy

Impact of British Rule on Sudan's Economic Structure

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• Anglo-Egyptian rule (1899-1956): Focused on cash crop exports, especially cotton
• Gezira Scheme: World's largest irrigation project under British control, reinforcing agrarian economy
• Minimal industrialization; infrastructure served extraction (railways to ports)
• Legacy: Dual economy, unequal land distribution, weak manufacturing base

3

Post-Independence Planning

State-Led Industrialization and Agricultural Focus

• 1956 Independence: Adopted import-substitution industrialization (ISI)
• Five-Year Plans (1960s-70s): State investments in factories, but hampered by foreign exchange shortages
• Agriculture dominant: 60%+ of GDP, mechanization efforts
• Nimeiri era (1971-85): Nationalizations, joint ventures, but debt accumulation

4

Crisis & Stagnation

Debt, Droughts, and Civil Conflict

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• 1980s Debt Crisis: External debt surged to $15B+ amid oil shocks and poor terms of trade
• 1983-85 Droughts: Led to famine, mass displacement
• Second Civil War (1983-2005): Disrupted economy, especially in South
• Hyperinflation (1980s): Up to 100% annually, GDP per capita stagnated

5

IMF Reforms

SAPs and Market Liberalization (1990s)

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• 1990s IMF/World Bank SAPs: Privatization of state enterprises, trade liberalization
• Currency flotation, subsidy removal: Reduced fiscal deficits but sparked social unrest
• Short-term stabilization: Inflation down from 100%+ to single digits
• Long-term: Agriculture-led growth, but manufacturing stagnated

6

GDP Trends

Historical Growth and Volatility

• Average annual growth ~3% (1960-2010)
• 1980s crisis: -1.5% avg
• Oil boom 2000s: +7% peaks
• Post-2011 secession: Contraction
• 2023 war: -12% projected

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7

Sectoral Composition

2009 vs 2024 GDP Shares

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8

Oil Era & 2011 Secession Impact

Resource Curse and Revenue Shock

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• Oil ~50% exports pre-2011
• South Sudan secession: Loss of 75% oil fields
• Immediate GDP drop: -5.4% in 2011, -10.9% 2012
• Hyperinflation resurgence

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9

Has Sudan Deindustrialized?

Declining Manufacturing Share

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• 25%: Industry GDP Share (1980)
• 17%: Industry GDP Share (2020)
• -30%: Mfg Output Growth (2011-20)
• 2%: Mfg Employment Share

• 12M: Displaced
• 61K: Deaths Khartoum
• 25M: Food Insecure
• -12%: GDP Decline 2023

Rostow Model Fit Stuck in 'Takeoff' stage: Oil boom brief, no sustained maturity due to wars, secession

Lewis Model Fit Persistent dualism: Agrarian majority, tiny modern sector; no labor surplus absorption, deindustrialization evident

13

Conclusion

Failure of Structural Transformation

Sudan failed structural transformation due to colonial legacy, civil wars, oil dependency, secession, and ongoing conflict. No progress beyond takeoff; persistent dualism and deindustrialization.

Peace and diversification essential for future growth

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1955-1972: First Civil War Independence prelude, 500K deaths 1983-2005: Second Civil War 2.5M deaths, economic devastation 2003-2020: Darfur War Genocide, displacement 2023-present: Current SAF vs RSF 12M displaced, famine, GDP collapse

> Sudan has endured chronic instability marked by 20 coup attempts, prolonged military rule, two civil wars and the Darfur genocide.

— Sudanese Civil War Overview