ILLEGAL WEALTH: SUDAN’S SHADOW ECONOMY

Sudan is facing a staggering problem of illicit financial outflows, with an estimated $871 million leaving the country every year due to widespread corruption and lack of transparency in public financial management.

The Scale of the Problem

According to a new report by Global Financial Integrity, Sudan’s trade misinvoicing rate stands at a whopping 44%. This means that millions of dollars are being siphoned off by corrupt officials each year. The Sentry, a watchdog organization, has also uncovered evidence of high-level officials involved in gold smuggling and money laundering.

Lack of Accountability

Despite the scale of the problem, most cases have been either thrown out or resulted in amnesty for the accused. This lack of accountability is staggering, and it’s no wonder that Sudan has one of the lowest scores on transparency in budgeting.

Powerless Parliament

The country’s parliament is powerless to amend executive budget proposals, and even if they try, they don’t have sufficient time to discuss and approve the budget. As a result, a significant portion of the national budget remains shrouded in mystery, with funds being used for unspecified “national security priorities” rather than providing public services.

Decentralization Efforts

The government’s decentralization efforts in 1995 and 2005 were meant to give more power to states. However, the central government still holds most fiscal and administrative powers. Transfers from the center to states represent a staggering 70% of revenue sources, despite constitutional limits being capped at 30%. These transfers are often opaque and prone to corruption.

Revenue Collection

Revenue collection is also marred by lack of transparency, with local officials granting undue tax exemptions to companies in exchange for bribes. For example, North Kordofan state lost up to 7% of its projected revenue in 2010 due to unmerited exemptions.

Common Practices

A common practice known as “tagneeb” or setting funds aside allows ministers to divert discretionary funds without reporting them to the Ministry of Finance, creating a serious risk of corruption. The tax form Form 15 has also been identified as a common vector for tax evasion and embezzlement, with petty corruption by law enforcement and port authorities being notorious.

Ministry of Finance

The Ministry of Finance itself is seen as a war chest for corrupt interests, with funds being misused or siphoned off by officials. In 2014, Sudan’s inspector general was accused of embezzling millions of dollars meant for public projects.

Conclusion

Sudan’s shadow economy is a ticking time bomb, threatening the country’s stability and economic development. It’s time for the government to take concrete steps to address these issues and bring transparency and accountability to its financial management practices.