04-December-2021

The New Monetary Package: lncentive Or Further Impediment To Sudanese Expatriates

The New Monetary Package: lncentive Or Further Impediment To Sudanese Expatriates

Khartoum International Airport

By: Tagwa Fatah Alrahman

KHARTOUM (Sudanow) — The government has announced a package of 23 incentives in order to encourage Sudanese working abroad to remit their savings through the official channels: The banking system and authorized foreign exchange offices.

The decision is part of the new economic reform policies announced by the Government of Prime Minister Abdalla Hamdok last Sunday that include the floating of the national currency.

The incentives are aimed at rechanneling the expatriates remittances from the  parallel market (the black market) through the authorized financial bodies. If this would occur, some economists argue, the country can collect an annual $8 billion in remittances from millions of Sudanese working outside the country.

The Secretariat of Sudanese Working Abroad puts the number of this category at six million out of the country’s population of about 40 million.

Researchers attribute the tendency towards immigration among Sudanese to several factors, including the desire of individuals to enhance their economic situation, shortage of job opportunities, instability in some parts of the country due to civil wars, political corruption during the long years of the defunct regime and the dismissal of thousands of government employees by the defunct regime for what was called “public interest.” An instances of this mass exodus had occurred in 2017 when 40,000 persons sought employment abroad, according to an official report presented to the then National Assembly.

In addition to the aforesaid factors, researchers also cite the absence of a helping research environment that encourages inventions and projects and new ideas. Lack of adequate working apparatus for doctors, engineers, academics and other specialists also forced these categories to leave the country in search of better professional environments. An example of this are the reports that say 3000 medical doctors leave the country per annum, putting the number of the medics working abroad at 20,000 in 2017.

And despite the negative impact of the immigration of Sudanese, the National Salvation Government had used to welcome the tendency because of the sums it used to collect from these expats in taxes when they come to the country on their annual leaves. The expatriates have used to complain that they usually pay the government taxes without any return in services or incentives.

As a result of all those constraints, remittances of the expatriates used to pass through the black market particularly because the latter's rate is much higher than the official one. The black market flourished following the 1997 American sanctions on the country which hindered direct bank transaction between Sudan and the outside world.

General Secretary of the Secretariat of Sudanese Working Abroad Makeen Hamid said the incentives they announced Tuesday were aimed at “the consolidation of the expatriates and the immigrants role in the economy and maximize the benefits of immigration.”

Speaking at a press conference, Mr. Makeen said the declared incentives are a cancellation of existing levies, the settlement of arrears and replacing them with a single levy to be paid in foreign exchange. The new measures also cater for encouraging incentives for foreign exchange remittances and  deposits in the banking system. These incentives are determined according to the volume of the sums remitted and the volume and duration of the sum deposited. Policies will also be put in place for encouraging immigrants to open foreign exchange accounts in the local banks. Durable policies will also be taken as concerns the enrolment of the sons of the expatriates in the institutions of higher educatio “that observe justice, durability  and transparency”, said Mr. Makeen.

Makeen

He said one of the most important of incentives is coordination with the banks to design a service for the delivery of money orders, extending legal aid to the Sudanese nationals working abroad with respect to working rights, in addition to other incentives.

During the same press conference, Finance Minister Jibreel Ibrahim said they were in contacts with finance ministers in the Gulf region to help ease remittances of the Sudanese expatriates working in the region.

Jibreel has, however, cited problems hindering the flow of money orders from abroad because it is a long time since the Sudanese banks had done such transactions due to the protracted U.S sanctions. But he said effort was underway to solve reconnect  the Sudanese banks with their previous correspondents or find new ones.

Mr. Makeen is expecting an annual $8 billion in remittances from the Sudanese expatriates, beside their already existing savings and projects inside the country.

But Dr. Hassan Bashir, Professor of Economics at the Red Sea University is of the view that expatriates’ remittances cannot be estimated at the time being. This can be done after the Bureau of the Sudanese Working Abroad conducts statistics and field survey in a number of countries, in particular Saudi Arabia, that hosts the biggest number of Sudanese working abroad. The same should be done in the United Arab Emirates, Qatar and the other Gulf region states.

In a statement to Sudanow, Prof. Bashir considered Sudanese expatriates ”a hesitant category whose remittances can not be relied upon unless after the country’s banking system regains complete confidence. By that time the expats can help in the stability of the national currency’s exchange rate, he said.

Economic Professor at Alneilain University Sa’ad Alkaram said the incentives, be they customs exemptions or land plots or others, can encourage the expatriates to remit their savings through the banking system if they are seriously put in force by the government.

He added that the declaration of incentives should be coupled with political stability to be effective.

Economic expert Abdelazim Alamawi recalled that expatriates remittances were “a target” of the previous governments via a number of incentives. But the expatriates had used to complain from a loss of confidence between them and the government, represented in the Secretariat For Sudanese Working Abroad.. ”Government policies had failed in the past because they could not address expatriates “spree” for investment avenues and attractive incentives for them to send their savings through the authorized channels.

Alamawi further said expatriates remittances can cater for 40% of the import bill and become an important tributary of foreign exchange.

The Government needs a new vision to restore the confidence of the expatriates. For its part, the banking system should energize its work and build a network of correspondents, Alamawi said, adding that the liberalization of the exchange rate is an initial step in encouraging expatriates remittances.

The official exchange rate was 55 Sudanese pounds a dollar before the liberalization decision, while the dollar was sold for nearly 400 pounds in the unofficial market.

But after the liberalization decision the difference between the Bank of Sudan (the Central Bank) price and the price in the parallel market has become almost negligent. On Friday the price per dollar was about 379 pounds (the buying price) and 384 sales price in the parallel market. The Bank of Sudan was 378.26 (purchase price) and 380.15(sales price).

The Sudanese banks had seen a big rush from citizens wishing to change their dollars. In the process, the banks have collected $25.4 million in foreign exchange during the first five days of the new policy, according to the Governor of the Central Bank Alfatih Zain Alabdeen.

He expected more such dealings to come through given the good response of the citizens towards the new policy.

The Central bank has determined a lot of windows for receiving the currency exchange transactions, including 25 branches of the Bank of Khartoum, 23 branches of the Altadamon Bank. A number of other banks and exchange offices are also open for the public in this regard. Even on the official holiday, Saturday, these windows are open for the public from 8 AM until 2 in the afternoon.

Also, a number of banks have inaugurated exchange windows at Khartoum airport to provide such  needed service at that point and to deny black marketeers waiting outside for passengers stepping out of the airport customs offices. 

However in lieu to these incentives, one expatriate suggested a totally opposed approach. Kamal Alshadi, a  Sudanese working in Riyadh, Saudi Arabia, suggested in a message he wrote in the social media to the attention of government officials dealing with the expatriates, the establishment of companies in fields covering, inter alias, construction agriculture, pharmaceuticals, computer and software. He said each of these companies could be allotted for expatriates specialized in the specific domain. The government should contribute with the basic infrastructures and then invite the public to buy shares in the company. The companies should be operated by the  concerned expatriates, he said. Such investments will encourage those  working abroad to employ their remittances therein and ultimately to return home.

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