Falling short of its SDG3 billion (US$62.9 million) target, Sudan has only raised SGD1.5 billion (US$31.45 million) through the issuance of a maiden ‘gold Sukuk’ facility with the proceeds aimed at helping the country ease its liquidity crunch. MARC ROUSSOT reports.
The short-term paper, which follows the Mudarabah structure and carries an expected yield of 25-35% per year, had been marketed to both retail and wholesale investors for 17 days until the 31st October.
The transaction was designed to “attract national saving and encourage investments, provide a legitimate Islamic tool to manage liquidity and push the financial policies, assist the Central Bank of Sudan in providing resources for foreign exchange, develop the local capital markets and achieve a profitable return for investors,” Osama Hussein Abdelshakour, the head of the Securities Department of Sudan Financial Services Company, which managed the deal, told IFN.
A total of three million securities worth SDG1,000 (US$20.97) each were initially expected to be printed with the funds to be used for the acquisition of about two tons of gold mined in the country where 78 tons of gold have been extracted during the first nine months of the year, according to the Sudanese Minerals Resources Company, the monitoring arm of the Sudan Minerals Ministry.
With its sovereign Sukuk only 50% subscribed, Sudan is likely to reduce the amount of precious metal it will purchase and then sell to international investors. The hard currencies obtained from the trade will help Sudan swell the empty coffers of its apex bank struggling to keep the country’s economy afloat.
After 20 years of US sanctions that ended in October last year and with the independence of South Sudan in 2011 depriving Khartoum of two-thirds of its oil reserves, its main source of foreign currencies, the northeast African country has been struggling financially.
Over the past 12 months, the Sudanese pound lost 86% of its value against the dollar due to successive devaluations while in June, inflation rose to 63.87% year-on-year according to the Central Bureau of Statistics, and the IMF foresees the country’s unemployment rate to reach 19.5% of the population in 2018.
Much-needed foreign direct investments have also remained low with inflows at US$209.4 million as of June 2018 as Sudan is still on the US list of state sponsors of terrorism.
However, an agreement has been reached last week with US President Donald Trump’s administration for the opening of negotiations to remove the country from the list.