Country Brief last updated March 2009 Context 
Sudan is the largest country in Africa by land area, with rich natural resources and an estimated population of 39.2 million in 2008. It borders 9 different countries and has a coast line of 500 miles on the Red Sea. Sudan has many different peoples, languages and cultures. Numerically no one group dominates, but in practice there is considerable inequality between a center, dominated by people from Khartoum and the North, particularly the villages along the Nile, and a far larger periphery. Sudan’s 2005 Comprehensive Peace Agreement (CPA) opened an unprecedented window of opportunity to turn the devastation of years of war, displacement, and underdevelopment into a new era of peace and prosperity. It directly addressed the key causes of the conflict, and laid out the parties’ vision and commitment to accelerating development. The main provisions of the CPA include: - The creation of a semi-autonomous region of Southern Sudan, within an overall federal structure, that also includes substantial transfers of powers from national to state level;
- Democratic elections nationwide in 2009, based on a new census and electoral roll;
- A referendum in the South in 2011, on whether the region should retain its semi-autonomous status, or progress to full independence;
- The establishment of a Government of National Unity (GoNU) for the country as a whole, and a Government of Southern Sudan (GoSS);
- A wealth sharing protocol, building on the emergence of oil as a major source of revenue;
- Two multi-donor trust funds (MDTFs), one for southern Sudan, and one for other areas of the country affected by the conflict, to finance reconstruction and development activities.
Implementation of the CPA has been uneven after initial progress in setting up the GoNU, GoSS and the two MDTFs. However overall, progress continues to be made, albeit at a much slower pace than was originally hoped. Contrastingly, continuing conflict in the West of Sudan (Darfur) has threatened stability and development for all of Sudan. In 2005 the UN Security Council asked the International Criminal Court (ICC) to look into allegations of crimes reportedly committed in Darfur. In July 2008, the prosecutor of the ICC accordingly requested the court to issue a warrant for the arrest of Sudan’s President Bashir. On March 4, 2009, the ICC approved a warrant. Sudan is not a member of the ICC, and its Government has refused to recognize the warrant’s validity. Following the announcement of the warrant, the Sudanese government revoked the registration of 13 international and 3 national NGOs alleging that they went beyond their humanitarian mandate by providing evidence to the ICC. The expulsion of these NGOs has left a large gap in the arrangements for distributing humanitarian assistance to millions of internally displaced people. The UN is currently discussing with the government how to fill this gap. Macro-economic Background The Sudanese economy grew at over 10% in recent years, bolstered by higher oil production, a good harvest, and a continuing boom in construction and services. Sudan’s per capita income rose from $506 in 2003 to $1,139 in 2007. Economic expansion was financed by the new oil revenues, but more recently expansionary spending has outpaced the growth in revenues, with rapid increases in most categories of spending. The sharp appreciation of the real exchange rate (40% since 2005) has affected the competitiveness of non-oil exports. Double-digit growth was expected to continue until the oil price tumbled, but growth estimates for 2009 have recently been lowered by the IMF to 6 percent. Stagnation in near-term oil production compounds this problem. Sudan is also one of 26 low income countries considered highly vulnerable to the adverse effects associated with the global recession, mainly through its impact on trade.. Real non-oil growth is driven by the service sectors and remains vulnerable to reduced public consumption and investment. Inflation has remained below 15 percent, following the decline in world food and fuel prices. The fiscal impact of the crisis has been felt nationally, but most strongly in the South, for whom oil constitutes 97% of revenue. World Bank Assistance to Sudan  Box: MDTFs in Sudan: Success Stories The Rapid Impact Emergency Project (RIEP) in the South was the first approved project under the Southern Sudan MDTF for $20m in December 2005. An additional $5.5m was added to the original grant. Another grant of $8.8m was provided to UNDP to implement public works to the 10 States in the South. The project has so far disbursed $28.8m and contributed to the gradual building up of GoSS’s institutions and programmes. It has provided pharmaceuticals and medical supplies to over 500 local health facilities, and medical kits to 200 more. Additional medical kits for 840 health facilities have already arrived in South Sudan and are ready for distribution. RIEP has also financed printing and delivery of nearly 1 million textbooks and 40,000 school kits to 2,600 primary schools. State Governors’ offices have been renovated and equipped, including the installation of communications equipment, generators, vehicles, office equipment, and furniture. An interim Project Accounting Agent is in place in South Sudan, and an international procurement agent has been contracted to establish a Procurement Division in GoSS, review and revise GoSS procurement policies, and to carry out the day to day procurement activities of GoSS for a period of two years. The RIEP model is now being replicated for the Three Areas Program targeting the transitional states of South Kordofan and Blue Nile. Other notable results in MDTF-S projects include: 1) the development of a new secondary school syllabus; 2) the start of the third phase of fast-track teacher training for 1,200 teachers; 3) the rehabilitation of water systems, the hospital, and government ministries in Juba, and 4) the repair of 850 kilometers of roads. The Rural Water and Sanitation project has d rilled 123 new boreholes, rehabilitation / repair of 130 boreholes, training of trainers for CBO partners, completion of two water distribution systems and assessments and site surveys for four locations. A financing agreement between UNICEF and GoSS for construction of 257 new boreholes, rehabilitation of 60 existing boreholes, and construction of 10 small and medium piped water schemes, has been signed in mid of second quarter of 2008 and implementation is ongoing. At the National level, the new national currency mandated by the CPA has been successfully introduced with support from MDTF-National. The National MDTF supported the successful conduct of the CPA-mandated National Census, which is a key precursor to the upcoming national elections. The census was completed in April 2008. The last Census was held in 1983. The Community Development Fund (CDF) has supported 64 completed fast track sub-projects in education (42 sub-projects), health (9), and water (13) in the Kordofans, Blue Nile, and Kassala—all conflict affected areas. A second round of 137 community sub-projects (111 in education, 24 health, 1 water, 1 electricity) is under implementation, with 40 of these already complete of near completion. In addition, 392 solar-powered lighting systems have been installed in schools, health facilities, and other public places. The CDF project has been so successful, a plan to replicate the project in the South is underway. The MDTF is also supporting the rebuilding of critical transport infrastructure in war-affected areas. Demining of the Babanousa-Wau railway has been completed with MDTF counterpart funds from GoNU, opening the way for MDTF-funded rehabilitation of the railway. Contracting for the railway rehabilitation is underway, as is the contracting for rehabilitation of three major roads linking formerly GoS and SPLM-controlled localities in the Three Areas and the East. |
The Bank began to reengage in Sudan in the early 2000s after an absence of nearly a decade. Normal financial support from the International Development Association (IDA) was, and remains, not possible due to Sudan’s outstanding arrears, accumulated since 1993 (some $600m). IFC and MIGA are not active. In 2004-05, the Bank and UN co-led a Joint Assessment Mission (JAM) of Sudan’s recovery, reconstruction, and development needs. The JAM report informed a March 2005 Donor Conference in Oslo, at which $4.5 billion was pledged to cover Sudan’s development and humanitarian needs from 2005 to 2008. It was also agreed that the Bank would administer the two MDTFs specified in the CPA. $600m of the total pledged has been channeled through the MDTFs, including a $10 million contribution from the World Bank’s operational surplus. Besides the MDTFs (discussed below), we have scaled up our advisory and analytic work, including through a Public Expenditure Review; a Country Economic Memorandum, with a second due shortly; and a variety of other studies. At the authorities’ request, the Bank has prepared a number of just-in-time policy notes. IFC has provided technical assistance to help GoSS draft key legislation for private sector development. To help prepare for peace in Darfur, we have worked with the African Development Bank and UN on a Darfur JAM, but this work is currently suspended because of security concerns. A 2008 Interim Strategy Note (ISN) sets out the Bank’s plans to assist Sudan up to December 2009, and also describes the process for eventual IDA financial reengagement. The ISN notes that a peaceful and modern Sudan requires tackling three interrelated challenges: (i) improving governance; (ii) increasing access to basic services; and (iii) ensuring sustainable, diversified, and pro-poor growth, with primary attention to war-affected and marginalized areas. To this end: - Nationally, the Bank will focus on stabilizing peace, including through analytical work and policy dialogue regarding key provisions of the CPA.
- In the South, the main focus will continue to be on helping to build a competent, responsive and stable government, including by decentralizing service delivery to local level.
- In Darfur, the Bank will work with partners, as security allows, to assess development and recovery needs and to prepare programs to be implemented in the event of peace.
The Bank opened a country office in Khartoum in 2005, and a sub-office for Juba in 2006 to facilitate implementation of MDTF-South. Staffing levels in both locations reflect program needs. Third Sudan Consortium: Oslo: May 2008 The third Sudan Consortium provided a forum for all development partners to review the progress of CPA implementation and delivery of JAM commitments. The Consortium was also an occasion to agree on the recovery and development priorities for the second half of the CPA period to 2011. Donors agreed that significant progress had been made during the first phase of CPA implementation despite an extremely difficult environment. The donors pledged $4.8 billion for the period 2008-2011 to cover both humanitarian and development assistance. It is estimated that $750-800 million will be channeled to the MDTFs administered by the World Bank. Debt sustainability Sudan’s debt prevents access to concessional finance that could help the country achieve the MDGs. Outstanding external debt stands at about $32 billion, up by $6 billion since end of 2003. This includes arrears of $520 million to IDA, around $1.7 billion to the IMF and $180 million to the AfDB. A debt sustainability analysis suggest that, even assuming prudent macroeconomic policies and further increase in oil revenues, most of Sudan’s debt ratios would remain above indicative threshold for sustainability. Donors have signaled that clearance of arrears will depend on progress on both the implementation of the CPA and the peaceful resolution of the Darfur conflict. Administering the MDTFs The Bank administers each MDTF under the guidance of an Oversight Committee (OC), on which the relevant Government, and donor representatives, sit, and for which the UN is an observer. In partnership with each OC, we have sought to balance a variety of objectives, including delivering quick and visible results for people, while also contributing to sustainable government capacity. Each MDTF is fully embedded in the budget of the relevant government, which helps improve Government capacity for implementation. However, this also means that MDTF-supported projects experience the same implementation constraints and delays as Government’s own public investment programs. Particularly for Southern Sudan, implementation by UN agencies was therefore foreseen as a key, parallel channel by which to deliver quick MDTF results. However, the Bank and UN jointly experienced difficulties in reaching consensus on legal agreements, particularly relating to fraud and corruption, until a path-breaking Sudan-specific agreement on legal templates was reached on November 10, 2006. That agreement later became the model for the more recent UN-World Bank Fiduciary Principles Accord. Since then we have seen both quick wins and a gradual growth in government-administered spending. Quick wins included replacing Sudan’s currency, the rehabilitation of the Juba hospital, rehabilitation of and essential supplies for GoSS ministries, and a WFP-implemented roads project. As capacity has been built, pro-poor operations such as health, rural water supply and education, implemented by Government, have accelerated, doubling their disbursement from 2007 to 2008. 65% of the total grant commitments had been disbursed by the end of 2008 and as the pace of implementation accelerate, it is expected that the ratio will be at 90% by the end of 2009. Since the creation of the 2 Sudan MDTFs, 26 projects have been prepared and approved for total commitment of $420 million, out of which $ 248 million ($152m for the South and $96m for the National) has been disbursed. In addition, the 2 MDTFs have leveraged an additional disbursement of $396m in counterpart funds from GoNU and GoSS. The table below provides a list of the projects and their respective grant amounts. The Box below provides examples of success stories for selected projects.  Portfolio under the two Sudan MDTFs as of March 25 , 2009(Amount in US$) Project Name | National Sudan MDTF | Southern SudanMDTF | Technical Assistance Facility | 5,000,000 |  | Community Development Fund | 42,800,000 |  | Fifth Population Census* | 19,100,000 | 15,300,000 | Capacity Building of the Judiciary | 13,000,000 |  | National Emergency Transport Rehabilitation | 43,500,000 |  | Decentralized Health Systems Development | 6,000,000 |  | PSD-Rural Microfinance | 10,000,000 |  | National Currency* | 22,060,000 | 15,000,000 | Improving Livestock Production & Marketing | 4,000,000 |  | South Kordofan Emergency | 7,505,000 |  | Blue Nile Emergency | 7,074,000 |  | Public Sector Reform, Decentralization & Capacity Building | 2,570,000 |  | Juba Rapid Impact Emergency Project |  | 34,260,000 | Emergency Transport & Infrastructure Development |  | 50,000,000 | Core Fiduciary Systems Support |  | 5,574,000 | Umbrella Program for Health System |  | 20,000,000 | Education Rehabilitation Project |  | 25,500,000 | Rural Water Supply and Sanitation |  | 15,000,000 | Capacity Building, Institutions & HR Development |  | 8,240,000 | Livestock and Fisheries Development |  | 7,670,000 | Rule of Law (Police and Prisons |  | 5,311,856 | Private Sector Development |  | 6,780,000 | Agriculture and Forestry Development |  | 10,000,000 | HIV/AIDS |  | 16,000,000 | TOTAL | $185,769,000 | $234,635,856 |
*The 2 projects cover the whole country. Contacts Kenichi Ohashi
Country Director (based in Ethiopia)
P.O. Box 5515
Addis Ababa, Ethiopia
Tel: +251-11- 517 6000
Email: kohashi@worldbank.org Greg Toulmin
Country Program Coordinator
The World Bank
1818 H Street, NW
Washington DC
Tel: 202 458 1747
email: rtoulmin@worldbank.org Laurence Clarke
Country Manager (Ag) / Manager, Southern Sudan Program and Juba Office
The World Bank
Plot 39, Street 39, Khartoum East
Khartoum II, Sudan
Tel: +249 --155155021 or 22/23/24
email: lclarke@worldbank.org |
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