Why Infrastructure Matters

The recent schism of all parts of Sudan into Sudan and South Sudan will have massive impacts

on the\ Sudanese economy. For one, the splitting of oil assets that are mostly in South Sudan will impact Sudan’s\ overall resource revenues in the coming years.
The economy for all parts of Sudan grew at the rate of 6 percent per capita between 2003 and 2007. Its growth was more robust than that of several of its East African peers, who grew at 4 percent per capita\ during the same period. The advent of an oil-based economy in Sudan was the harbinger of robust growth between 2000 and 2008. Oil constituted around 90 percent of Sudanese exports and was driven by oil production in South Sudan. Oil resources enabled the government to roll out new physical and social infrastructure, focused primarily on the northern part of the country. There was an increase in the volume of transportation between Khartoum, where economic activity has been concentrated, and Port Sudan, the coastal gateway for imports and exports.
Empirical evidence linking infrastructure to recent economic growth patterns documents how the allocation of oil wealth to infrastructure development has impacted the economy. Between the 1990s and early 2000s, all parts of Sudan reaped large growth benefits in infrastructure development. Infrastructure contributed over 1.75 percentage points to all parts of Sudan’s per capita growth. The ICT sector made the strongest impact on growth. The road and power sectors made modest contributions in contrast to other countries, where inadequate power infrastructure had a negative effect on growth. Since most of the improvements in the ICT sector were recorded in Sudan and very little in South Sudan, it is reasonable to expect that the largest gains in growth came through contributions from the ICT sector in Sudan.
Simulations suggest that if Sudan’s infrastructure were to be upgraded to the level of the best-performing country in Africa (Mauritius), the impact on per capita economic growth would be on the order of 3.5 percentage points. While all areas of infrastructure—ICT, power, and transport—need to be upgraded, improvements in roads can impact growth the most—by around 1.5 percent. Improvements
in power infrastructure will add another 1 percent to per capita growth. Infrastructure’s immediate potential contribution to growth is less than it is in several other East African countries.

Sudan’s Infrastructure

The spatial distribution of Sudan’s economy shows a sparse population with pockets of economic activity around a few urban centers. There is a heavier concentration of activity and population along the Nile. The topography of Sudan is divided into three regions—the deserts, the semi-arid Sahel region, and the wetlands and rain forests. The deserts in the north—the Nubian Desert to the east of the Nile, the Libyan Desert, and the rugged uplands to the northwest of the Nile—comprise around 30 percent of the area of Sudan. Central Sudan is characterized by the semi-arid Sahel region of steppes and low mountains. Southern Sudan has vast wetlands in the upper Nile region that are among the largest in the world. The Nile spans a vast length of Sudan’s territory. The tributaries of the Nile—the White Nile and Blue Nile—meet in Khartoum in the north. The White Nile crosses South Sudan from the Ugandan border, while the Blue Nile flows through east and central Sudan, irrigating a large part of the Sudanese land. Sudan is endowed with significant natural resource wealth in the form of metals and oil. There is one oilfield along the Red Sea in the north and another closer to the border of South Sudan.
Road density in Sudan is among the lowest in Africa and the world. The existing road arteries are centered on Khartoum as the hub. One artery connects Khartoum with the coastal gateway of Port Sudan, a second connects Sudan with Egypt and North Africa, a third connects Khartoum with the Eritrean border, and a fourth leads to Ethiopia. Connections to South Sudan are fragmented; there is little traffic overall. In fact, along most of the networks, except between the Red Sea and Khartoum, traffic is sparse and road conditions patchy at best.
Power infrastructure is developed only around select urban centers. A national grid is nonexistent, and there are no cross-border interconnectors. Power infrastructure is primarily focused on hydropower, with some thermal generation capacity.
In recent years Sudan has benefitted from an increase in capacity, but there is an even greater hydropower potential that can be exploited (figure 3b). Sudan is naturally endowed to be a large producer and exporter of agricultural products. It is a riparian country, its fertile soil centered on the Nile, and areas of high suitability can be better exploited.
The bright spot of Sudan’s infrastructure is the ICT sector. ICT growth has accelerated and is comparable to regional averages. Mobile subscriptions have grown exponentially, and Sudan boasts of one of the most liberalized ICT markets in Africa, with a strong multinational presence.
It is also relatively well endowed with fiber-optic connectivity to several undersea cables (figure 3d).
This report begins by reviewing the main achievements and challenges of each of Sudan’s major infrastructure sectors. Thereafter, attention will turn to the problem of how to finance the outstanding infrastructure needs.

Multimodal Transport

Sudan’s transport infrastructure is unevenly developed. Despite a few road corridors, a large share of Sudan is unconnected or lacks paved roads. The networks consist of nearly 2,500 miles of single-track railroad with a feeder line (supplemented with limited river steamers) of about 1,200 miles of paved and gravel road—primarily in greater Khartoum and Port Sudan. In addition some roads in the north-south direction have been built, as well as an oil pipeline that is 840 miles long and runs from the oilfields in the Nuba Mountains and Khartoum to Port Sudan on the Red Sea
Around 22 percent of firms indicated that transport is a major obstacle to business activity, with challenges more acute in some areas than others. A sizable share of establishments in Sudan used their own transport facilities.
The average share of own-transport use ranged from 35 percent of the total value of production-related transport activities within the country in Khartoum to 17 percent in North Kordofan. Nyala Red Sea (with 26 percent) and Gezira (with 25 percent) also registered a high rate of own-transport use. Transport in Nyala (Darfur region), meanwhile, was cited as a constraint on doing business by around 60 percent of the firms based there.
The main internal corridors in Sudan are well developed and generally in good condition but do not extend to provide cross-border connectivity with neighbors . The trading artery in Sudan is the route that connects Kosti to Port Sudan via Khartoum. This road records the greatest traffic volumes in Sudan and boasts overall good-quality roads, particularly from Khartoum to Port Sudan. Another corridor connects Sudan to the Djibouti Corridor offering connectivity to the Port of Djibouti and Addis Ababa. While systematic data on these routes are not available, traffic volumes from Sudan along this corridor are expected to be very low, and the quality of roads range from fair to poor.
Connectivity with South Sudan is practically nonexistent and was never a strategic priority. The regional corridor connecting to South Sudan is in bad condition and records very low traffic volumes. During the rainy season (April/May to October/November), a majority of the roads particularly in South Sudan are impenetrable.
Sudan records average performance by African standards but poor performance when compared to global standards. Along some of the internal transport routes, surface transport moves at a pace that ranges from 8.5 kilometers per hour (kmph) 2 to over 13 kmph, comparable to East Africa; in the parts less travelled and with poorer-quality roads, velocity is consistent with central African countries .Overall, freight in Sudan moves at the pace of a horse and buggy.
Poor road transport connectivity between Sudan and South Sudan requires the use of multimodal transport during half the year and is associated with lengthy transit times. Roads, particularly during the rainy season, are often unavailable. Relying on other forms of transport does not solve the problem: river transport services are not well developed, ports are inadequate, and commercial vessels are old. Freight that has to move via river takes six days longer than if it were to travel only by road. Services are limited between Juba and Kosti, and are used mainly for transporting goods arriving by train in Port Sudan.
The cost of moving freight in Sudan is almost twice what it is on other continents, though it compares with the average for Africa. The average freight tariff between Khartoum and Port Sudan is about $0.08 per tonne-kilometer (tonne-km), and between Khartoum and Kosti is slightly higher, an average of $0.10 per tonne-km. These prices are comparable to that of East Africa but much higher than the global standard of around $0.04 per tonne km.
The middle-of-the-range costs of moving freight—relative to the African average—are driven by the competitiveness of the trucking industry and access to lower-priced petroleum. In Sudan the trucking industry appears competitive, with few barriers to entry. Growth in the trucking fleet was steady during 2004–06: 10 percent annually for lorries, 20 percent for tank trucks, and over 40 percent for dry-cargo heavy trucks. Additionally, the trucking sector is not cartelized as it is in West and Central Africa.
Absence of cartels keeps profit margins reasonable without significant markups. Further, the low cost of petroleum, oil, and lubricants in Sudan—50 percent lower than the regional aggregate—helps maintain reasonable prices.
Trucks travelling to South Sudan, however, may encounter various transport bottlenecks that increase costs. For example, one truck transporting sacks of onions from Kassala to Malakal was subject to taxes and fee payments at about 20 different locations, totaling 2,000 SDG ($800) (Yoshino 2009). Similar payments have not been reported while travelling within Sudan.
Moving freight in Sudan is constrained by inadequate infrastructure and high costs. Comparing the competitiveness of Sudan’s main trading artery (Port Sudan to Kosti) with Africa’s best-performing corridor (the North-South corridor) reveals that there are significantly more costs and longer delays associated with moving along Sudan’s arteries. Moving freight within Sudan takes longer than moving imports from Durban to Lusaka—a route  across three countries that is 800 km longer.