Interview: Long Road Ahead For Sudan Debt Relief-World Bank

Sudan needs structural reforms to broaden its economy and encourage private business to reduce a 46 percent poverty rate and qualify for relief on its $35 billion external debt, the World Bank’s vice president for Africa said on Thursday.

Obiageli Ezekwesili told Reuters in an interview that Sudan needs to work on reducing poverty through small business and agricultural incentives and developing infrastructure before it can qualify for relief on its debt.

"On the macro fiscal side of things you can’t take it away from them that they’ve actually done some interesting things," Ezekwesili said. "On the structural reform side though they could do a whole lot more."

Since signing the peace deal in 2005 ending Africa’s longest civil war, which claimed 2 million lives, Sudan has asked for relief on its debt, which makes Khartoum ineligible for major international loans.

Ezekwesili said Khartoum was not on track to achieve millennium development goals set by the United Nations and must invest in health, education, infrastructure, human development and agriculture to diversify its economy, which depends on oil for 60 percent of its revenues.

Such investment was needed to accelerate any path to relief on Sudan’s debt, some of which was racked up by previous governments to propagate the north’s war against the south.

A co-founder of anti-corruption agency Transparency International, Ezekwesili, a former government minister in Nigeria, said Sudan should also work equally hard to encourage private local businesses as it did to attract foreign investors.

"How easy is it for a private individual in Sudan to just set up a business and thrive in that business without being tied up in all kinds of rules and procedures?" she said. "How do you create an environment where the average Sudanese wants to pull themselves out of poverty?"

The World Bank plays a lead role in determining how to spend $4 billion pledged by donors to rebuild Sudan following the 2005 north-south peace accord, although much of the aid was diverted to a humanitarian crisis in Sudan’s western Darfur region.

Ezekwesili said the economy’s structure was hampering Sudan’s ability to meet UN millennium development goals (MDGs), which include eradicating extreme poverty and hunger, providing universal primary education, reducing child mortality and promoting gender equality by 2015.

"When you look at the poverty indicators in the country it’s clear that the structure of the economy has not enabled the MDGs to be positively on track," she said.

The World Bank, donors and Sudan have jointly spent $414 million on development projects throughout the country since the 2005 peace accord.

AID FOR SOUTH SUDAN

Ezekwesili said the World Bank and donors would likely develop a more comprehensive approach for aid to develop semi-autonomous south Sudan, which will vote on a referendum for independence in January. Most analysts believe it will secede from the north.

"It will not just be a specific project kind of focus but to look at the whole issue of an effective development strategy that enables the government to prioritise broad-based economic growth and development," Ezekwesili said.

She said the focus in the south would be on building the government’s capacity and improving the efficiency of public spending.

The south’s government is dominated by the former rebel Sudan People’s Liberation Movement, which is struggling to transform from a guerrilla movement into a political party. The government has been plagued by corruption and a lack of trained staff in the ministries after the civil war which raged for all but a few years since 1955.

The government derives 98 percent of its revenues from oil in the south but the refineries and port are in the north, which means some oil revenue-sharing would probably continue even if the south secedes. (Editing by Susan Fenton)