Where Do Sudan’s Dollars Go?

18 7 minutes read

Muhand Awad Mahmoud

How can a country that produces around seventy tons of gold annually, possesses gum arabic, livestock, sesame, and peanuts, and has millions of expatriates around the world, still suffer from a chronic dollar shortage? How can a country with such resources appear to be in a constant foreign currency crisis, while the Sudanese pound continues to decline, banks fail to meet demand, and the parallel market remains the real controller of the exchange rate?

This is not the question of a citizen standing in front of an exchange bureau, nor the complaint of a trader seeking financing to import a shipment. It is the question of an entire nation.

If Sudan produces nearly seventy tons of gold annually, then the theoretical value of this production, according to current global prices, approaches ten billion dollars. And this is from gold alone, without counting revenues from gum arabic, livestock, sesame, peanuts, and remittances from millions of Sudanese working abroad. Yet the Sudanese economy behaves as though it belongs to a country that produces nothing. Dollars are scarce, the pound weakens, banks are largely ineffective, and the parallel market has become the real bank.

But the shocking figure does not stop there. According to official statistics, Sudan’s gold production in 2025 reached around seventy tons, while official exports through known channels amounted to only about 14.7 tons, generating approximately $1.5 billion in revenue. This is not a minor gap that can be explained by export timing differences or market fluctuations. It is a massive discrepancy that raises an unavoidable question:

If Sudan produces seventy tons of gold, where did the rest go?

Here begins the real story.

Sudan does not suffer from weak gold production; it suffers from weak control over the gold it produces. The real gap is not between what we produce and what we need, but between what is produced and what actually enters the formal economic cycle. A significant portion of the gold never reaches official channels, is never converted into monetary reserves, and the foreign currency earned from it never returns to the banking system.

Some international estimates suggest that between half and two-thirds of Sudan’s gold production leaks outside official channels. If true, then we are not talking about isolated commercial violations, but rather a continuous structural hemorrhage of a resource that is supposed to be one of the pillars of the national economy. Gold smuggling is not merely an economic offense; it is a direct drain on foreign currency. Every kilogram that leaves outside the formal system simply means dollars that never enter the national economy.

So, should the state monopolize gold purchasing?

The answer is: no.

Because monopoly itself can become another gateway to opacity. The state should be a strong regulator and a competitive buyer within the market, not its monopolist. A gold monopoly, in the absence of the highest standards of transparency, could shift the crisis from individual smuggling to a larger institutional ambiguity, especially if resources become tools of barter outside declared economic frameworks.

The solution is not to close the market, but to make official sales more attractive than smuggling. The state should enter as a strong buyer, offering prices close to global rates, fast payment, and clear procedures, so that dealing through official channels becomes more profitable and safer than escaping them.

Ironically, some current policies push the market in the opposite direction.

The central bank prohibits banks from financing gold transactions. This policy may stem from concerns about speculation or the diversion of banking liquidity away from sectors such as agriculture, manufacturing, and productive trade. The concern is theoretically understandable, since gold is a fast-moving and highly attractive sector for financiers. However, this prohibition requires serious reconsideration.

The solution is not to keep gold outside the banking system, but to bring it into the system under smart regulations. Organized bank financing for gold, if tied to export proceeds returning through the financing bank, could become not a burden, but an effective oversight tool. Instead of leaving gold trading to cash transactions, brokers, and the parallel market, the activity would move into the banking system, export proceeds would become traceable, exporters identifiable, and foreign currency inflows more likely to return to the country.

The simple question here is: if banks do not finance gold, then who will? The parallel market? Brokers? Untracked cash?

And gold is not the only issue.

There is another, more sensitive question: are some state institutions themselves contributing to market distortions?

When government-owned or semi-government-owned companies enter trade, exports, and strategic resources without the highest levels of transparency, roles become dangerously blurred. The state is supposed to be the referee that regulates the market, not a player competing within it using privileges unavailable to others. When a market loses fair competition, it loses trust. And once it loses trust, capital begins searching for exits.

Then we arrive at one of the most dangerous silent phenomena in the Sudanese economy: the trade in export and import documents (“paper trading”).

There are people who neither farm, manufacture, nor actually export, yet they trade in the documents themselves. Export documents are sold, matched against import documents, and settlements occur outside Sudan between various parties, so obligations are cleared abroad without any money moving through the Sudanese banking system.

This is where the real danger lies.

Exports are supposed to generate foreign currency proceeds that enter the country, support the banking system, increase the supply of foreign exchange, and relieve pressure on the pound. But when the process turns into offshore settlement between export and import documents, exports may physically occur while their proceeds never return to Sudan at all.

Put more plainly:

The country exports… but the dollars never come in.

This is one of the most dangerous forms of silent hemorrhage because it may not look like traditional smuggling, yet it produces the exact same result: Sudan’s resources leave the country without benefiting the national economy.

Beyond this, there is another drain on dollars that is equally dangerous and rarely discussed with sufficient clarity: irrational customs exemption policies.

Industrial exemptions are not inherently wrong. Every country uses incentives to support industry. But the real question is: which industries are we supporting, and what is the actual return to the economy?

When certain activities receive customs exemptions to import inputs using dollars, while the real value they add to the economy is minimal, then we are not facing smart industrial policy, but a double hemorrhage.

Take some steel factories as an example. If the actual activity is limited to reshaping, rolling, or preparing steel for the local market, without deep industrial transformation, significant exports, or real technology transfer, are we truly looking at a strategic industry worthy of broad support? Or are we looking at an activity that consumes dollars, benefits from exemptions, and reduces government customs revenue without generating economic returns proportional to these privileges?

The problem is not with the factories themselves, but with the state’s definition of “value added.” Not every industrial activity deserves support. Exemptions should be tied to clear standards: How many jobs were created? How many dollars were saved? How many dollars were generated? Did the activity genuinely replace imports, or merely replace finished-product imports with imports of near-finished raw materials?

Because if we support activities that consume dollars without creating meaningful added value, then we are not building industry — we are financing a legalized depletion of foreign currency.

Then came the Prime Minister’s recent decisions banning the import of certain goods.

In principle, any country facing a foreign currency crisis may resort to restricting imports, and that is understandable. But the question is: what is the real impact? If the banned goods are limited in effect or symbolic more than they represent an actual drain on hard currency, then the decision may appear correct on paper while remaining weak in practice.

Sudan’s dollar crisis is not about biscuits and chocolate.

The real crisis is far bigger: it is about gold leaving the country, export proceeds that never return, document trading, exemptions that consume dollars without real value, opaque companies, and the complete loss of trust in the formal system.

And here we arrive at the root of everything: trust.

In economics, people do not move based on slogans, but on incentives and trust. If exporters feel that official channels punish them, they will evade them. If expatriates believe the parallel market is fairer, they will transfer money through it. If citizens lose trust in banks, they will keep cash outside them. If importers lose hope of obtaining dollars through the formal system, they will seek alternatives.

Thus, the parallel market becomes not merely a violation, but the natural result of the failure of official channels to become the better option.

What is needed is not only tighter oversight, but a monetary policy that makes compliance with official channels the most profitable and rational choice. Exporters, expatriates, and traders are not driven solely by patriotic slogans; they are driven by economic incentives. If dealing with the state means fair pricing, speed, flexibility, and trust, people will come voluntarily. But if it means losses, bureaucracy, and restrictions, they will search for alternatives regardless of the risks.

Sudan does not appear to be a resource-poor country.

Sudan appears to be a country with a leaking container.

The gold exists, exports exist, expatriates exist, and the private sector exists — but the dollars never arrive.

The solutions are not mysterious: reform the gold market through competition rather than monopoly; open regulated bank financing for gold and exports; subject government and semi-government companies to full transparency; end the trade in export and import documents that drains proceeds abroad; review customs exemptions and tie them to genuine added value; and rebuild trust in the banking system.