Essay Sample on Sudan: Increasing Oil Growth Through Challenges Addressed

Introduction

The paper looks at how the country of Sudan can increase the growth of the oil industry by addressing the challenges that affect the sector. The country of Sudan is located in North-Eastern part of Africa, the country borders Eritrea to the East, Chad to the west, Egypt to the North, Libya to the North West, South Sudan to the south and the Central African Republic to the Southwest. The country covers an area of 1.8 million square kilometers and has a population of slightly over 43 million as of 2020, with the majority of the people being Arabian migrants' descendants (Worldpopulationreview.com. 2020). The country's political framework is democratic with a presidential representative; the previous country president was Omar Hassan Ahmad al-Bashir, who was ousted in 2019 while the prime minister of Sudan is Abdalla Hamdok. The political party in power is the National congress party. The country derives its laws from Islamic laws, and the country's legal system is based on the Sharia law that applies to all the residents in the country.

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Previously the economic system of the country was based on agriculture which employed over a third of the people, and a large percentage of the exports were agricultural products. Currently, the main country exports are oil and oil products; in that case, I can say Sudan is a mixed economy. As per 2018, GNI per capita PPP in Sudan was 4420.00, while the GNI per capita was 1556 (Indexmundi.com. 2020). The primary natural resource of the country is petroleum; there are also deposits of copper, gold, chromium ore, and iron ore. The country's major exports are gold and livestock; other products include oil and cotton. The Sudan products are exported to countries like Saudi Arabia, UAE, and Japan. The main imports of the country include manufactured goods, food, and machinery, most of which come from India, Italy, UAE, and Brazil. Sudan is a member of the Common Market for East and South Africa (COMESA). Sudan uses Sudanese pounds as their form of currency, which can be freely exchanged.

Business Proposal

A business proposal is a brief document that persuades a country or an organization to buy a service or a product. It is either solicited or unsolicited, meaning that the state or companies intending to make the purchases are looking for proposals that meet their objectives actively, or they are reacting to the offer. Oil extraction, as the primary source of revenue for the Sudan government, has enabled the country to roll out of its social and physical infrastructure. It has contributed a lot towards the increase of road infrastructure as well as electricity networks. However, the growth of oil industries in the country has been faced by various challenges, from political and economic factors. This discussion has proposed techniques that Sudan oil industries can adopt in overcoming these challenges, which are to support investments for other sectors, to support policies that encourage free trade in the country, and to show the need for privatization.

Evidence for the Proposal

The oil sectors in Sudan will support the investments of other sectors. The exploitation of oil resources since 1999 has increased national wealth but has also increased the complications in the management of macro-economic management. And this has increased pressure towards both internal and external imbalances. Sudan has over-relied on oil sectors as the main source of growth, thus neglecting other non-oil areas. In return, this has made the government increase the collection of taxes more from the oil sectors (Nour, 2011). Since oil sectors are also after increasing profitability, they have been making more exploitation towards this natural resource. In return, it has increased competition, and this may lead to overexploitation. Hence this is a very serious challenge, and it needs to be addressed to improve sustainability in the oil sectors. Besides, it will also help in diversifying and growth of other sectors, which means that the government will have many sources of obtaining revenue (Nour, 2011). Through this, the government in Sudan will probably have a standard form of collecting revenue from all sectors, and this will work as a method of releasing a tax burden from oil sectors. For instance, the government may venture into other areas like agriculture and product manufacturing, where it can help reduce overreliance on oil and oil products. The country needs to diversify and avoid overreliance on oil; this can be through extending to other areas. Basing that the country has the resources for practicing agriculture, they can invest further in growing cotton, gums which will increase the products that the Sudan country exports. The country can also review its livestock production this way. The country's economy is going to grow without straining natural resources.

Oil sectors in Sudan will also support and push for the creation of policies that encourage free trade by the government (Pomfret & Sourdin, 2009). The oil sectors in Sudan are limited towards exporting of oil, due to increased rates rate of exchange. The currency in the country has depreciated at a high rate, and this has been observed as a challenge for the cost-effectiveness of the exports. Besides, the government in the country has imposed high taxes on goods moving out of the country. Through this, most of the countries have been limited to 'make purchases of products and services from Sudan. Therefore, Sudan being among the largest producers of oil in the world, it has not been able to make more exports. In return, most of the oil produced has been used within the country. Therefore, the oil sectors will come up with strategies to encourage more export and present them to the government (Pomfret & Sourdin, 2009). Then the government will present them to other countries. For example, instead of the government making more taxes towards the oil products moving out of the country, it will sign an agreement between with the oil sectors to lower taxation, so that the oil sectors can help in boasting of other sectors like manufacturing and agriculture. That to say, this will not only help the oil sectors in making more sales but also help in the overall growth of the country (Patey, 2010). Besides, all the oil industries in the country will come into an agreement on sales terms to encourage balanced growth and understanding. Engaging in trade agreements will allow free trade that will allow the oil industry to expand and grow. Free trade will also help increase the range of products offered by these industries, such as petroleum products. As a result, global energy cooperation will also be achieved (Pomfret & Sourdin, 2009). Furthermore, the trade will foster an environment that is conducive for exportation of the country of Sudan products. Besides, removing the trade barrier will lead to the growth of the market and raise the profit the country can make as the country can trade freely without restrictions.

The privatization of the oil sectors in Sudan will increase efficiency in the industry. Privatization takes place when the businesses owned and run by the government are converted to private and operated as nongovernment institutions. The process will result in increased gains as the sector will be in a position to perform more efficiently. At the same time, the government raises revenue from the privatization process, besides they get an opportunity to focus in other areas (Patey, 2010). Also, there will be an increase in revenue that will be put into uses such as investments and paying off debts this way; the economy of the country is going to rise.

Furthermore, privatization will also mean that there is reduced government and political interference as fewer officials from the government will take part in the running of the oil sectors this way, there will be minimal corruption (Suliman, 2007). Privatization of the oil sectors will also mean better management as it will strive to cut costs and work toward increased competition. As a result, the company will get more profits. All these factors will help in the development of the economy. The state can venture into other areas such as agriculture and manufacturing, where it can also increase the product it's exporting while at the same time, imports will reduce (Patey, 2010). Sudan entering into agreements with other countries and supporting agreements that promote free trade will ensure that the country rips big from the oil and oil products.

Conclusion

In conclusion, the adoption of the adopting of the above techniques will go a long way in ensuring that the challenges in the oil sector in the country of Sudan are overcome. Supporting other investments besides the oil and oil product will help reduce the country's overreliance on the oil sector. The government should also consider joining the international trade organization that will ensure that they increase the market for their products and are also protected through trade protection policies. Joining other trade organizations makes the countries have an easier way that they can import or export their products. Changing of the government-run companies through privatization will ensure that the country gains more from the oil sector and the companies will be run more efficiently without political interference. One of the challenges likely to be witnessed is the crisis that may arise in control of the oil sectors. Lack of political will and political interference are other problems that may affect the adoption of these measures. Without the adoption of these measures, the government will continue making little progress in the oil sector.

References

Indexmundi.com. (2020). Sudan - GNI per capita. [online] Available at: https://www.indexmundi.com/facts/sudan/gni-per-capita [Accessed 20 Feb. 2020].

Nour, S. (2011). Assessment of the Impacts of Oil: Opportunities and Challenges for Economic Development in Sudan. SSRN Electronic Journal. doi: 10.2139/ssrn.1949169

Nour, S. S. O. M. (2011). Assessment of the impact of oil: Opportunities and challenges for economic development in Sudan. African Review of Economics and Finance, 2(2), 122-148. doi: 10.2139/ssrn.1949169

Patey, L. A. (2010). Crude days ahead? Oil and the resource curse in Sudan. African Affairs, 109(437), 617-636. doi: 10.1093/afraf/adq043

Pomfret, R., & Sourdin, P. (2009). Have Asian trade agreements reduced trade costs? Journal of Asian Economics, 20(3), 255-268. doi: 10.1016/j.asieco.2009.02.007

Suliman, O. (2007). Current Privatization Policy in Sudan. Policy Brief, 52.

Worldpopulationreview.com. (2020). [online] Available at: http://worldpopulationreview.com/countries/sudan-population/ [Accessed 20 Feb. 2020].