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Effect of Sudanese Expatriates Remittances on the Sudanese Economy

Tuesday, 20 December 2011 12:17

Source: Sudan Vision
By: Khalda Elyas

The development boom witnessed by the country in the last decade can be attributed to the flow of foreign investments into the country in a manner unprecedented in the modern history of Sudan.

However, flow of foreign investments is not the only reason for such boom. Indeed, direct foreign investments entails that assets are transferred to a foreign country but remain the property of investors who can set whatever conditions they deem for the utilization of such assets.

In this the researcher at Expatriates Sudanese Service (ESS), Dr. Ezzedine Ibrahim Hassan, an economic expert and former Minister said that the role being played by Sudanese expatriates remittances is important for the economic development of the country. By making such remittances, he says, Sudanese expatriates contribute to the transfer of modern technology, advanced management and marketing methods that they acquire abroad.

"The new skills that these expatriates gain as a result of their contact with highly skilled labor abroad is have greatly benefited Sudanese expatriates," he said.

He added direct and indirect contribution of expatriates to the general budget in the form of fees they pay against the services provided to them at Sudanese embassies abroad or inside the homeland at ESS, and the taxes they pay are an important source of revenue for the general budget.
He said these resources are allocated in most cases to cover official representative office costs outside the country.

"In addition to that, expatriates remittances provide the country with foreign currency that enable it pay for its imports in hard currency. Other revenues include customs, value-added taxes and other revenues from goods expatriates send to the country for various purposes," he said.
In the last years of the past decade, expatriates remitted the equivalent of about 8 percent of petroleum revenues and these remittances are-similar to those of petroleum-provided the country with foreign currency that is needed badly for bringing in capital commodities necessary for investment. In addition, they contribute to the flow of production inputs and the import of consumer and essential commodities.

These remittances and other indirect revenues from expatriates stood at $1.8 billion per year, with the per capita share standing at $456 million in the past decade, and  per capita share of expatiates' families exceeding that of other population.

These figures show that the effect of Sudanese expatriates on the alleviation of poverty, support of family and relatives is very great.
There is evidence that the effect of expatriates on the economy and social life in the country are by far greater since current transfer figures do not take into consideration in-kind contributions, such as consumer goods, cloths and electronic equipment.

Current expatriate remittances are divided into two types: expatriates remittances and the compensations of expatriates who work for less than one year and those who work at embassies and international and regional organizations.

Generally, current expatriates' remittances are going up at an annual rate of 16 percent in the average. Such growth has accelerated in the second half of the last decade by about 7-8 percent during the year.

Indeed, such rate has exceeded inflation rate in most of the past years which means that the Sudanese economy had made real benefit from current expatriates' remittances.

Moreover, current expatriates' transfer ratio to commodity exports that included petroleum and non-petroleum exports had been going down in the early years of the last decade.

However, these rates had started to go up since 2008 coinciding with the start of the world financial crisis and the decline of petroleum price at international markets that negatively affected Sudanese exports in general at the end of last decade.

Sudanese expatriates remittances, however, continued to rise and with the exit of petroleum from Sudanese exports following secession of South Sudan in the second half of 2011, it is expected that ratio of expatriates remittances to commodities export will rise in 2012.

In this way, expatiate current remittances would be the most important source of foreign currency in the country's balance of payments.