Reforming Sudan’s Banking Sector: A Dialogue Between Bank Owners and the Central Bank and the Test of Restructuring

Dr. Marwa Fouad Qabbani

The meeting held by the Governor of the Central Bank of Sudan, Amna Mirghani, with representatives of bank owners to discuss efforts to develop the banking sector and the requirements for reform, governance, capital adequacy, and legislative and regulatory frameworks, signals the importance of initiating an institutional dialogue on the future of the banking system amid the exceptional challenges imposed by the war and its repercussions for infrastructure, banking services, and economic activity.

However, the significance of this step goes beyond discussing regulatory requirements. It raises a fundamental question about the nature of the reform needed: Is it enough to increase banks’ capital and reorganize their financial positions, or do we need to rebuild an integrated banking model capable of restoring confidence, mobilizing savings, financing production, and leading the reconstruction phase?

The war has exposed the fragility of many aspects of the banking sector as a result of damage to and the disruption of a large number of branches, interruptions to services, challenges affecting databases and business continuity, as well as a decline in banking transactions and growing reliance on cash and informal channels. Reforming the sector has therefore become an economic necessity that goes beyond the scope of conventional banking remedies.

Capital requirements are among the foremost issues on the reform agenda, particularly given the erosion of their real value due to inflation and exchange-rate fluctuations. This necessitates a reassessment of banks’ financial soundness, asset quality, liquidity levels, non-performing assets, and capacity to withstand risks. In this context, the capital requirements set out in Regulatory Circular No. (4/2026) provide an entry point for reassessing banks’ financial positions.

However, increasing capital should not become an end in itself or the sole criterion for assessing banks’ soundness. What is required is to link recapitalization with management reform, improved asset quality, and enhanced operational efficiency. Options such as mergers, acquisitions, and restructuring must also be based on financial and economic studies, while taking into account the differing circumstances of banks and the financial capabilities of their shareholders, protecting the rights of depositors and shareholders, and preserving competition in the banking market.

Corporate governance is another important area that deserves attention. A strong banking sector cannot be built without effective boards of directors, qualified executive management, and independent audit, risk management, and compliance systems, alongside stronger disclosure, transparency, and accountability. A bank’s soundness is measured not merely by the size of its capital, but also by the quality of its management and its ability to manage risks and safeguard depositors’ funds.

At the same time, restoring confidence stands out as the greatest challenge facing Sudanese banks. Citizens who have lost easy access to banking services need practical guarantees that transactions will continue uninterrupted, transfers will be processed quickly, accounts can be opened easily, and they will be able to access their money. This requires developing digital banking services, expanding the use of applications, electronic wallets, and point-of-sale terminals, and strengthening connectivity with national payment networks, in addition to investing in cybersecurity, backup data centers, and disaster recovery plans.

Digital transformation is no longer merely a technological option; it has become an essential component of restructuring the banking sector and a means of expanding financial inclusion, attracting savings, and reducing transaction costs, particularly in areas where traditional banking infrastructure has been damaged.

Nevertheless, the real test of successful reform will remain the ability of banks to restore their role in financing economic activity. The required shift is from focusing primarily on liquidity management, transfers, and routine banking services to financing productive sectors, foremost among them agriculture, industry, livestock, energy, transport, exports, and small and medium-sized enterprises.

This requires developing financing instruments, reviewing credit policies, providing appropriate guarantees, expanding partnerships with development finance institutions and the private sector, and designing long-term financing products suited to the nature of productive projects and the needs of reconstruction.

To translate the directions discussed at the meeting between the Central Bank and bank owners into tangible results, I propose that the next phase be based on ten key areas: conducting a comprehensive assessment of banks’ financial and operational positions; establishing a realistic timetable for increasing capital; examining options for mergers and restructuring; improving governance and disclosure; strengthening depositor protection; updating legislation; accelerating digital transformation; directing financing towards productive activities; strengthening risk management systems; and, finally, establishing performance indicators to measure banks’ contributions to economic recovery and financial inclusion.

There is also a need to establish a joint mechanism involving the Central Bank and representatives of banks to monitor the implementation of the reform programme, define responsibilities and timelines, and periodically measure results, rather than settling for general understandings and consultative meetings.

Reforming the banking sector is a shared responsibility between the Central Bank, in its capacity as the regulatory and supervisory authority, and bank owners, their boards of directors, and executive management teams. Successful reform also requires striking a balance between regulatory requirements and the stability of banking institutions, so that rushed measures do not undermine banks’ ability to continue operating or compromise depositors’ rights.

Sudan does not merely need banks that meet capital requirements; it needs financial institutions capable of restoring confidence, mobilizing savings, financing investment and production, and providing modern banking infrastructure that keeps pace with the demands of the digital economy.

The question that should guide the reform project is therefore not how many banks have managed to increase their capital, but rather how many banks have become capable of restoring customer confidence, mobilizing savings, financing the economy, and making a tangible contribution to reconstruction.

These are the criteria by which the success of Sudan’s banking sector reform should be measured.