Sudanese Conflict: The Impact on Egyptian Economy

Updated 5/23/2023 8:00:00 AM

As conflict erupted in Sudan between the army and the main paramilitary force on April 15^th, 2023, several countries, including Egypt, are expected to be economically affected by the instability in Sudan. Egypt has been in good economic relations with Sudan, as the two countries have been trading several goods with each other, and both share strong economic ties.

Trade Exchange between Egypt and Sudan

Egypt has a considerable amount of trade exchange with Sudan. In 2022, the value of Egypt’s imports from Sudan increased by around 31% year-on-year (YoY), reaching around $505.4 million, compared to about $385.6 million in 2021, according to the Central Agency for Public Mobilization and Statistics (CAPMAS)’ Trade Statistics.

Meanwhile, the value of the country’s exports to Sudan grew by around 12.4% YoY, recording around $929 million in 2022, compared to about $826.8 million in 2021, according to CAPMAS’ Trade Statistics.

In the first two months of 2023, Egypt’s imports from Sudan reached $123.5 million, while the country’s exports amounted to $132 million, as stated in CAPMAS’ Trade Statistics.

As the conflicts erupted in Sudan, Egyptian trade with Sudan has been affected. Egypt exports several products to Sudan, topped by plastics, fertilizers, milling products, lime and cement, and pharmaceutical products. The conflict in Sudan would affect companies producing/exporting such products if there is no alternative market, according to Trading Economics.

Moreover, Egypt imports a number of goods from Sudan, including live animals, oil seeds, cotton, meat, and fish. Unless the country finds alternative providers of these products, the Egyptian market would suffer a shortage, mainly when it comes to edible goods, Trading Economics noted.

Egypt Views Export/Import Alternatives

Looking at trade exchange, exports to and imports from Sudan play a part in Egypt’s economy. However, Egypt has already started addressing export/import issues.

Egypt has already started to find alternative meat suppliers to meet local market demands as the country tends to diversify importing meat from several African countries, including Djibouti, and offering it at government outlets.

Mohamed Waheed Aglan, Principal Co-Founder of TEBA Import, Export, and Supplies, tells Arab Finance: “The government already imports meat from Ethiopia and has begun to cooperate with new countries such as Chad.”

Furthermore, Sherif el-Gabali, Head of the Egyptian-Sudanese Business Council, talked to the media, expecting a number of Egyptian firms to stop exporting to Sudan out of fears of not collecting their money, and also due to the high-security hazards caused by the ongoing conflict.

Aglan says "I think that Egypt should help small companies export to all African countries, just like China, which already has a strong presence in Africa. By helping them obtain licenses in Egypt or even in African countries and participating in the various exhibitions that are held there."

Affecting the Egyptian Economy

Not only is the conflict in Sudan affecting Egypt’s exports and imports, but it could also have an impact on a wider economic scope. Sudan is located on the Red Sea, and armed disruptions in Sudan might affect navigation in the Red Sea. “Securing navigation in the Suez Canal begins from Bab al-Mandab, and not just from the Egyptian territories,” Dalal Mahmoud El Sayed said in her Journal entitled 'The Red Sea Region Security...Different Visions'. According to Monte Carlo Doualiya, any disturbances in navigation in the Red Sea would eliminate traffic in the Suez Canal and the great economic return that Egypt reaps from the transit of ships.

Moreover, Medhat Nafei, Chairman of Arab Alloys and Former Deputy Minister of Supply and Internal Trade, tells Arab Finance: "Any regional conflict could pose a real economic threat to the affected region. One form of the risks could be food security, supply chain disturbances, and refugees’ issues that are typical symptoms of such kinds of civil wars. Egypt should play a positive role to settle the conflict and should be ready to welcome fleeing Sudanese crossing its borders until this crisis ends."

The conflict in Sudan might be quite challenging for the economy, but Egypt has already started to look for alternatives. Yet, overcoming the challenge will require several steps ahead, and the impacts are not crystal clear.

By Sarah Samir