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Infrastructure Financing through Islamic

Finance in the Islamic Countries

144

term period. The African Development Bank Group estimates that the total public and private

investments in infrastructure in the Moderate Growth scenario would increase from 2.3% of

non-oil GDP in 2012 to 3.7% in 2018 and then decline steadily to only 2% of non-oil GDP by

2030 (AfDB, 2016: 173). The African Development Bank estimates that to fill the infrastructure

financing gap, investments in the sector have to triple and increase to 7-8% of GDP in Sudan

(AfDB 2016: 143, 173)

4.5.3.

National Level Policies and Framework of Infrastructure Development

Over the past decades, Sudan’s economy has been, exposed to numerous shocks and

consequently instabilities in its economic growth. The most recent one was the separation of

South Sudan in 2011 which has resulted in the loss of 75% of the former Sudan’s oil output.

The Government has formulated plans to achieve economic diversification and create new

revenue sources such as escalating the remaining oil and gas production, gold mining, and

agricultural production (ALN, 2015).

The weak competence of the state Government institutions, together with the inadequate

infrastructure base has reduced the government’s capability to articulate and execute efficient

macroeconomic improvements and stable economic policies. This situation has had negative

impacts on infrastructure development and economic diversification (UNDP, 2013).

The National Conference for Economic Salvation (NCES) of 1989 recommended the foundation

of a High State Committee to evaluate the performance of the State-Owned Enterprises (SOEs)

and create certain policies, procedures, and road maps to reform them and improve their

performances. The NCWS has also asked the state government to not get involved in

controlling economic activities as a prerequisite cornerstone for privatization and economic

liberalization. The implementation of the Comprehensive National Strategy for Economic

Development (CNSFED) in 1992 included a strict stabilization program and the control of

public expenditures. It privatized the telecommunications sector and some of the SOEs,

including some government banks and financial institutions, and floated the exchange rate

(AfDB, 2016).

Infrastructure development has been a key element of Sudan’s National Strategic Plan and the

Five-Year Plans. During the First Five-Year Plan (2007-2011), Sudan invested SDG 5.4 billion in

infrastructure development as total government spending on infrastructure which was 27% of

the total government expenditure. Transportation, water supply and sanitation, electricity, and

communication networks were the main fields. Nevertheless, the whole country’s

infrastructure development needs exceeded the government’s budget capacity. After the

secession of South Sudan in 2011 and the decrease in oil revenues, the government started

having deficits in budget beginning in 2012. The deficit was SDG 4.4 billion in 2014 (Yesuf,

2017) and reached SDG 14.3 million in 2017 (CBOS, 2017).

As a part of the Sudan Strategy (2007 - 2032), the Five-Year Program for Economic Reform

(2015-2019) was launched under the slogan ‘Production for export and improved standard of

living’. The five-year program includes infrastructure development as one of the building

blocks of the program. The program aims to rehabilitate and expand infrastructure with a

particular focus on electricity, railway, irrigation, as well as the completion of existing roads,

bridges and subways that connect the production areas with local markets and export outlets

for global markets (MFNE, 2015).