Sudan’s Unresolved Conflict Keeps Capital Frozen
Sudan’s conflict leaves its economy paralysed and capital sidelined. DXY raises import costs; CL=F drives freight and fuel. Investors hold liquidity, not assets, awaiting enforceable peace and verifiable improvement in trade and fiscal indicators.
Sudan’s persistent instability has effectively frozen capital formation. Warnings over foreign interference and ceasefire breaches translate directly into higher risk premia and retreating investment. With conflict fracturing trade routes, fragmenting fiscal authority, and disrupting banking channels, macro stabilisation remains impossible. Even where commodity exports continue, rising insurance premia, rerouting costs, and informal levies erode profitability. Investors interpret this as duration risk—capital placed today may not survive to earn returns.
Three constraints dominate. First, fiscal erosion: revenue losses and emergency spending crowd out infrastructure and social programmes, triggering arrears and blocking concessional finance. Second, FX fragmentation: export receipts are diverted through parallel channels, widening black-market spreads and choking imports of fuel and medicine. A firm dollar (DXY) worsens pass-through inflation and compresses affordability. Third, banking isolation: non-performing loans rise, branches close, and compliance fears sever correspondent lines, even for humanitarian payments. Each reinforces the next in a cycle that cannot unwind without enforceable peace on the ground.
For the business community, survival has replaced expansion. Food and fuel supply chains are benchmarked to oil (CL=F), while logistics depend on negotiated corridors that can shift overnight. Neighbouring states face refugee inflows, FX leakages, and illicit trade pressures. Investors limit exposure to essential-goods supply chains and services priced in hard currency.
The metrics to watch over the next 6–12 months include conflict-intensity maps, customs collections, regional port throughput, and parallel-market FX gaps. If credible peace enforcement coincides with better trade indicators, risk premia could compress gradually and a recovery pipeline could reappear. Without that alignment, capital will remain on the sidelines, and Sudan’s asset base will continue to decay under uncertainty.
