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WEEKLY NEWSLETTER
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Sudan
Index
The traditional banking system was inherited from the AngloEgyptian condominium (1899-1955). When the National Bank of Egypt
opened in Khartoum in 1901, it obtained a privileged position as
banker to and for the government, a "semi-official" central bank.
Other banks followed, but the National Bank of Egypt and Barclays
Bank dominated and stabilized banking in Sudan until after World
War II. Post-World War II prosperity created a demand for an
increasing number of commercial banks. By 1965 loans to the
private sector in Sudan had reached £Sd55.3 million.
Before Sudanese independence, there had been no restrictions
on the movement of funds between Egypt and Sudan, and the value
of the currency used in Sudan was tied to that of Egypt. This
situation was unsatisfactory to an independent Sudan, which
established the Sudan Currency Board to replace Egyptian and
British money. It was not a central bank because it did not
accept deposits, lend money, or provide commercial banks with
cash and liquidity. In 1959 the Bank of Sudan was established to
succeed the Sudan Currency Board and to take over the Sudanese
assets of the National Bank of Egypt. In February 1960, the Bank
of Sudan began acting as the central bank of Sudan, issuing
currency, assisting the development of banks, providing loans,
maintaining financial equilibrium, and advising the government.
There were originally five major commercial banks (Bank of
Khartoum, An Nilein Bank, Sudan Commercial Bank, the People's
Cooperative Bank, and the Unity Bank) but the number subsequently
grew. The public was dissatisfied with the commercial banks,
however, because they were reluctant to lend capital for longterm development projects. Since the Nimeiri government decreed
the 1970 Nationalization of Banks Act, all domestic banks have
been controlled by the Bank of Sudan.
In 1974, to encourage foreign capital investment, foreign
banks were urged to establish joint ventures in association with
Sudanese capital. Banking transactions with foreign companies
operating in Sudan were facilitated so long as they abided by the
rulings of the Bank of Sudan and transferred a minimum of £Sd3
million into Sudan. Known as the "open door" policy, this system
was partly a result of Nimeiri's disillusion with the left after
the unsuccessful communist coup of 1971. Several foreign banks
took advantage of the opportunity, most notably Citibank, the
Faisal Islamic Bank, Chase Manhattan Bank, and the Arab Authority
for Agricultural Investment and Development.
In addition, the government established numerous specialized
banks, such as the Agricultural Bank of Sudan (1959) to promote
agricultural ventures, the Industrial Bank of Sudan (1961) to
promote private industry, the Sudanese Estates Bank (1966) to
provide housing loans, and the Sudanese Savings Bank established
to make small loans particularly in the rural areas. The system
worked effectively until the late 1970s and 1980s, when the
decline in foreign trade, balance-of-payments problems, spiraling
external debt, the increase in corruption, and the appearance of
Islamic banking disrupted the financial system.
Data as of June 1991
Banking
The traditional banking system was inherited from the AngloEgyptian condominium (1899-1955). When the National Bank of Egypt
opened in Khartoum in 1901, it obtained a privileged position as
banker to and for the government, a "semi-official" central bank.
Other banks followed, but the National Bank of Egypt and Barclays
Bank dominated and stabilized banking in Sudan until after World
War II. Post-World War II prosperity created a demand for an
increasing number of commercial banks. By 1965 loans to the
private sector in Sudan had reached £Sd55.3 million.
Before Sudanese independence, there had been no restrictions
on the movement of funds between Egypt and Sudan, and the value
of the currency used in Sudan was tied to that of Egypt. This
situation was unsatisfactory to an independent Sudan, which
established the Sudan Currency Board to replace Egyptian and
British money. It was not a central bank because it did not
accept deposits, lend money, or provide commercial banks with
cash and liquidity. In 1959 the Bank of Sudan was established to
succeed the Sudan Currency Board and to take over the Sudanese
assets of the National Bank of Egypt. In February 1960, the Bank
of Sudan began acting as the central bank of Sudan, issuing
currency, assisting the development of banks, providing loans,
maintaining financial equilibrium, and advising the government.
There were originally five major commercial banks (Bank of
Khartoum, An Nilein Bank, Sudan Commercial Bank, the People's
Cooperative Bank, and the Unity Bank) but the number subsequently
grew. The public was dissatisfied with the commercial banks,
however, because they were reluctant to lend capital for longterm development projects. Since the Nimeiri government decreed
the 1970 Nationalization of Banks Act, all domestic banks have
been controlled by the Bank of Sudan.
In 1974, to encourage foreign capital investment, foreign
banks were urged to establish joint ventures in association with
Sudanese capital. Banking transactions with foreign companies
operating in Sudan were facilitated so long as they abided by the
rulings of the Bank of Sudan and transferred a minimum of £Sd3
million into Sudan. Known as the "open door" policy, this system
was partly a result of Nimeiri's disillusion with the left after
the unsuccessful communist coup of 1971. Several foreign banks
took advantage of the opportunity, most notably Citibank, the
Faisal Islamic Bank, Chase Manhattan Bank, and the Arab Authority
for Agricultural Investment and Development.
In addition, the government established numerous specialized
banks, such as the Agricultural Bank of Sudan (1959) to promote
agricultural ventures, the Industrial Bank of Sudan (1961) to
promote private industry, the Sudanese Estates Bank (1966) to
provide housing loans, and the Sudanese Savings Bank established
to make small loans particularly in the rural areas. The system
worked effectively until the late 1970s and 1980s, when the
decline in foreign trade, balance-of-payments problems, spiraling
external debt, the increase in corruption, and the appearance of
Islamic banking disrupted the financial system.
Data as of June 1991
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