The Grievous Political Economyof Port Sudan and Nairobi Governments

Professor Mekki El Shibly
Executive Director – Mamoun Behairy Centre, Khartoum
📌 Despite two years of escalating conflict between the Sudan Armed Forces (SAF) and the Rapid Support Forces (RSF), neither the army-backed Port Sudan nor the RSF-backed Nairobi coalition has established a credible government. This delay is due to various political economy factors, characterised by the interactive relationship between politics and economics, where political forces shape economic performance, and economic realities influence the political context. The declared Port Sudan and Nairobi governments are entangled in a complex political economy crisis, marked by a lack of legitimacy, internal contradictions, unstable alliances, international isolation, and the failure of both warring parties to assert full control over Sudan, rendering calamitous economic consequences. These challenges collaborated to enforce Port Sudan and Nairobi coalitions to postpone the formation of a credible government.

1. Political Economy Challenges of the Port Sudan Government
   📌 The Port Sudan government lacks both domestic and international legitimacy, rendering it unable to sign international agreements or attract investment. Sudan’s economy is heavily reliant on international aid, trade, and investment, making global recognition crucial for economic stability. Without it, the government remains economically isolated.
   📌 The alliance between the army leadership and the Islamists is inherently unstable due to conflicting economic interests. Islamists control parallel economic networks, including security companies, gold trade, and real estate, limiting the military’s grip on national resources. Additionally, tensions between non-Islamist army officers and the Islamist movement further destabilise the investment and economic landscape.
   📌 The Port Sudan government primarily relies on revenue from ports and customs but lacks control over productive sectors such as agriculture and industry. The war has devastated agricultural production, increasing dependence on imports and fueling inflation.
   📌 Regional allies remain hesitant to invest significantly in Port Sudan due to concerns over Islamist influence, fearing their role in fueling war and instability. Consequently, economic pressure from regional partners may push the Port Sudan government toward a political settlement that conflicts with Islamist interests.
   📌 War expenditures consume a large portion of the budget, diverting resources away from essential services and development. The prolonged conflict prevents long-term economic planning, as military spending takes priority over sustainable economic policies.
2. Political Economy Challenges of the Nairobi Government
   📌 The Nairobi government struggles with a lack of institutional control over the economy. It lacks organised financial institutions, forcing the RSF to depend on illicit activities such as gold smuggling, illegal taxation, and financial extortion. The absence of a formal financial system prevents economic integration and leads to financial instability.
   📌 The Nairobi coalition is an economically fragmented alliance, consisting of the RSF, armed movements, political parties, and indigenous administrations with conflicting economic agendas. The RSF prioritises resource exploitation, while armed movements rely on arbitrary taxation to sustain themselves. Political parties such as the National Umma Party and the Democratic Unionist Party remain too weak to impose their economic vision.
   📌 The Nairobi government’s economic dependence on foreign support leaves it vulnerable. The RSF relies heavily on regional allies for financial backing. Any reduction in this support due to international pressure could trigger a severe financial crisis.
   📌 The Nairobi government lacks control over strategic economic sectors, such as banking, foreign trade, and national institutions, limiting its ability to implement effective policies. Additionally, the economy in areas under Nairobi’s control has been devastated by war, leaving little foundation for recovery.
3. Common Political Economy Challenges Between the Two Governments
   📌 Both governments suffer from the negative interplay between political instability and economic deterioration. The two governments are unable to implement long-term economic policies due to ongoing military and political chaos. The war has led to capital flight, halted investment, and declining production.
   📌 Public revenues have collapsed due to the loss of full control over vital economic sectors such as gold, agricultural exports, and oil. Declining tax and customs revenues have forced both governments to rely on indirect taxation and increased service fees, further burdening citizens and expanding the informal shadow economy.
   📌 Monetary policy implementation is severely hindered. The Port Sudan government controls the Central Bank of Sudan, but the divided banking system prevents effective monetary policies. Meanwhile, the Nairobi government lacks control over the Central Bank and may attempt to establish a parallel financial system, exacerbating inflation, monetary instability, and the collapse of the Sudanese pound. Some regions have already begun “dollarising” or using the Emirati dirham, making monetary management nearly impossible.
   📌 Both governments face growing international pressure due to their escalating war crimes. Increased sanctions from global powers such as the U.S., U.N., E.U., and A.U. could further cripple their already fragile economies.
   📌 The war has triggered the world’s worst humanitarian crisis, exacerbating Sudan’s political and economic landscape. Over 9 million people are internally displaced, and more than 3 million have fled as refugees. Around 26 million people (more than half the population) face acute hunger, while 18 million suffer from severe food insecurity. Healthcare and basic services have collapsed, with 80% of facilities in conflict zones destroyed or non-functional. The spread of deadly diseases and the lack of clean water have further eroded public trust in both governments.
   📌 Sudan’s banking system has been crippled by war, making remittances and foreign trade nearly impossible. This has expanded the black market, making inflation control and exchange rate stabilisation unmanageable.
   📌 The parallel economy has grown to more than twice the size of the formal economy, undermining taxation and monetary control. Smuggling networks and black-market activities have stripped both governments of financial resources, driving an exodus of businesses and capital due to security and political risks.
   📌 Sudan remains isolated from the global financial system due to the lack of an internationally recognised government. Without legitimacy, neither government can secure international loans nor economic aid without a comprehensive political resolution.
   📌 Sudan’s continued war prevents re-engagement with the Heavily Indebted Poor Countries (HIPC) Initiative. International creditors that helped Sudan reach the “decision point” in June 2021 refused to engage with either unrecognised government. Ongoing conflict deters international financial institutions from providing support to a war-torn nation dominated by militias and an uncontrolled shadow economy.
4. The Political Economy of Future Scenarios
   📌 A prolonged war scenario, driven by Islamists in the Port Sudan coalition, would deepen economic collapse and social unrest, heightening the eventuality of both governments being overthrown.
   📌 A partial political settlement scenario, led by either government, could yield limited economic improvements but would fall short of rebuilding state institutions.
   📌 A civilian-led scenario, involving a credible, independent, civilian-led transitional government backed by a broad coalition from the December Revolution, would offer the best chance for economic and political recovery. Such a government could secure domestic and international recognition, reopen Sudan’s access to international financial aid, and implement necessary economic reforms. It would focus on rebuilding financial institutions, revitalising agriculture and industry, and restoring investor confidence. Without such an alternative, the intransigence of the Port Sudan and Nairobi governments will quagmire Sudan in a cycle of chaos, deepening economic collapse, and threatening regional and international stability.
   melshibly@hotmail.com
   21 March 2025