Digital Economy For Africa DIAGNOSTIC ASSESSMENT FOR THE REPUBLIC OF SUDAN DIGITAL ECONOMY FOR AFRICA (DE4A): DIAGNOSTIC ASSESSMENT FOR THE REPUBLIC OF SUDAN © 2022 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: +1 202-473-1000; Internet: www.worldbankgroup.org Some rights reserved 1 2 3 4 21 XXXXXXXXX This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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If you wish to reuse a component of the work, it is your responsibility to determine whether permission is needed for that reuse and to obtain permission from the copyright components that can include, but are not limited to, tables, figures, or images. All queries on rights and licenses should be addressed to World Bank Publications, The World Bank 1818 H Street NW, Washington, DC 20433, USA; email: pubrights@worldbank.org 2 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Contents  Contents Digital Economy for Africa (DE4A) 9 Acknowledgements 12 Diagnostic Methodology 13 Data Collection 13 Limitations and Data Gaps 13 List of Acronyms 15 Executive Summary 17 Sudan and the Digital Economy 17 Recommendations and Next Steps 19 C HAPTE R 1 Introduction 23 1.1. Sudan at a Glance 23 1.2. Structure of this Report 26 C HAPTE R 2 Digital Infrastructure 29 2.1. Importance of Digital Infrastructure 29 2.2. The State of Digital Infrastructure 29 2.2.1. First Mile: International Connectivity 31 2.2.2. Middle Mile: National Backbone 33 2.2.3. Last Mile Connectivity 35 2.2.4. Invisible Mile 38 2.3. Recommendations 41 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 3 Contents  C HAPTER 3 Digital Public Platforms 45 3.1. The Importance of Digital Platforms 45 3.2. The State of Digital Public Platforms in Sudan 46 3.2.1. G2G Platforms 47 3.2.2. G2C and G2B Platforms 50 3.2.3. Analogous Complements 52 3.3. Recommendations 54 C HAPTE R 4 Digital Skills 59 4.1. The Importance of Digital Skills 59 4.2. The State of Digital Skills 59 4.3. Supply of Digital Skills 61 4.3.1. Structure of Educational Institutes and Digital Skills 61 4.4. Demand of Digital Skills 66 4.5. Role of Private Sector and Development Partners 67 4.6. Recommendations 69 C HAPTER 5 Digital Businesses 73 5.1. The Importance of Digital Businesses 73 5.2. The Digital Business Sector in Sudan 73 5.2.1. State of Digital Businesses in Sudan 73 5.2.2. Strengths and Opportunities of the Sudanese Digital Business Ecosystem 75 5.2.3. Key Constraints 77 5.3. Recommendations 81 4 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Contents  C HAPTER 6 Digital Financial Services 85 6.1. Importance of Digital Financial Services 85 6.2. The State of Digital Financial Services 85 6.2.1. Availability of Digital Financial Services 85 6.3. Constraints facing development of Digital Financial Services 92 6.4. Recommendations 95 IN FOCUS A Gender and ICT 97 IN FOCU B State of Cybersecurity and Data Protection 98 IN FOCUS C Climate Change Adaptation and Mitigation 100 IN FOCUS D Digital axation 101 Conclusion 102 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 5 Contents  Graphics Figure 1: Targets for the African Union’s Digital Transformation Strategy   10 Figure 2: Mapping Digital Infrastructure   30 Figure 3: Fiber routes and population density (Sources TPRA and World pop), Fiber Infrastructure gaps   32 Sudan Fiber infrastructure gaps   32 Figure 4: ICT Sector Revenues in million USD   37 Figure 5: The digital public platforms framework   46 Figure 6: EGDI values of Sudan, Egypt, Chad, and Ethiopia (0-1, best)   46 Figure 7: ID coverage by state (2020 estimates)   47 Figure 8: Change in revenue collection on the URDCA platform (2016-2018)   49 Figure 9: E-participation Index values for Sudan, Ethiopia, Chad, and Egypt from 2010-2020 (0-1, best)   53 Figure 10: Human Capital Index   60 Figure 11: Public Education Expenditure   61 Figure 12: Structure of Education in Sudan, 2021   62 Figure 13: Distribution of Level of Proficiency in the Education System   63 Figure 14: Household access to Electricity, Radio, TV and Computer, HFS, 2021   64 Figure 15: Educational Activities attended by Students   65 Figure 16: Labor Force participation rates and unemployment rate by sex, quintile, locality and year   67 Figure 17: Digital Businesses bring opportunities and risks, DE4A   74 Figure 18: Participation in the gig economy, select countries, 2018   74 Figure 19: Examples of Digital Businesses in Sudan   75 Figure 20: Total Entrepreneurship Activity (TEA,%), International Comparison and National View by State 76 Figure 21: Entrepreneur Support Organizations (ESOs) ecosystem, Sudan, 2015-2021   76 Figure 22: Factors preventing purchase from e-commerce websites   78 Figure 23: Factors preventing order of food delivery on digital apps   79 Figure 24: Access to Financial Accounts (2014)   88 6 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Contents  Tables Table 1: Summary of Recommendations  20 Table 2: Key statistics   25 Table 3: Effect of a 10-percent Increase in Mobile Broadband Penetration on Select African Economies  30 Table 4: Sudan’s Submarine Cable Landings (actual and potential)  31 Table 5: Used International Bandwidth  33 Table 6: First Mile Summary  33 Table 7: National fiber routes  34 Table 8: National fiber routes and market share, Source TPRA  34 Table 9: Middle Mile Summary  35 Table 10: Internet Coverage Gaps  36 Table 11: Key Performance Indicators for last mile connectivity  37 Table 15: Telecom indicators for Sudan  38 Table 16: Invisible mile assessment  39 Table 18: Snapshot of Education Sector Indicators, 2018  60 Table 19: Snapshot of Labor Market Indicators, 2020  66 Table 20: Digital Skills Programs Led by the Private Sector and NGOs  68 Table 21: Completed training in Digital Skills, by level of education  68 Table 22: Sudan’s Business Environment  89 Good Practices in Cybersecurity   98 Boxes Box 1: GSMA’s (Global System for Mobile Communications Association) position on Spectrum Pricing 40 Box 2: Sudan Family Support Project 48 Box 3: Unified resource development & collection authority 49 Box 4: E-health platforms 51 Box 5: NIFTI Fuel Platform 52 Box 7: State Expenditure on Education in Sudan 61 Box 8: Indicative Mapping of DigiComp 2.1 Digital Skills Framework in Sudan 63 Box 9: Digital Alternate Learning Program, UNICEF 64 Box 10: International Computer Driving Licence (ICDL) for Teachers 66 Box 12: Best-practice principles for taxation 101 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 7 Digital Economy for Africa (DE4A)  Digital Economy for Africa (DE4A) D igital transformation is rapidly re-shaping The DE4A Initiative is underpinned by five our global economy, permeating virtu- principles: ally every sector and aspect of daily life – changing the way we learn, work, trade, socialize, 1. Comprehensive:Taking an ecosystem approach and access public and private services and infor- to digital economy development that looks at mation. In 2016, the global digital economy was both supply and demand and defies a narrow, worth some US$11.5 trillion, equivalent to 15.5 per- siloed approach in defining the elements and cent of the world’s overall Gross Domestic Product foundations that make up the digital economy. (GDP) and expected to reach 25 percent by 2026, quickly outpacing the growth of the overall econ- : Aiming at a very different scale 2. Transformative omy. However, countries like Sudan are currently of ambition beyond incremental ‘islands’ of capturing only a fraction of this growth potential success. and need to strategically invest in the foundational elements of their digital economy to avoid being 3. Inclusive:Recognizing that the digital economy left behind. is for ‘everyone, in every place, and at all times’ as well as creating equal access to opportuni- The DE4A Initiative forms part of the World Bank ties and dealing with risks of exclusion. Group’s support for the African Union’s Digital Transformation Strategy (DTS) for Africa, which 4. Homegrown: Supporting solutions anchored aspires to see every African individual, business in the local context and unleashing the African and government digitally enabled by 2030. As part spirit of enterprise to support more home- of the DTS, ambitious, high-level targets have been grown digital content and solutions. established, articulated in the DE4A assessment framework, as a way to define and measure success Dealing with the digital econ- 5. Collaborative:  against the overarching goal of the DTS. Many of omy requires a more flexible mindset, including these targets have in turn been embedded in the collaboration among countries, across sectors World Bank Group’s IDA19 Commitments. as well as between public and private players. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 9 Digital Economy for Africa (DE4A)  Figure 1: Targets for the African Union’s Digital Transformation Strategy Digital Digital Digital Digital Digital Infrastructure Skills Public Platforms Financial Services Businesses • Universal internet • All 15-year-old • Doubling of Online • Universal access to • Tripling the number network coverage students with basic Services Index rating digital financial of new • A ordable internet digital skills for all governments services digitally-enabled for all at less than 2% competencies • All individuals are • Africa-wide payments businesses created of GNI per capita • 100,000 graduates in able to prove their infrastructure/ annually • Interim milestone advance digital skills identity digitally platform in place • Financing for venture doubling broadband programs annually • At least 50% of the capital to reach 0.25% connectivity by 2021 population regularly of GDP uses the internet to access government or commercial services LEGAL AND REGULATORY FRAMEWORK • E ective competition • Data privacy and protection • Preventing digital divide • Cybersecurity • Protecting against risk of digital explotation The overarching analytical framework that shapes 3. Digital Public Platforms that enable digital trans- this assessment is guidedby the premise that five actions and exchange, and support new digital busi- foundational digital elements (Figure 1) create the nesses and service delivery models. Related systems, building blocks for unlocking digital transformation applications and services have the power to trans- in Sudan, and thus determine the country’s ability to form the way people, government, businesses and build a robust digital economy: civil society interact with each other in all aspects of life. Digital Public Platforms help create economies 1. Digital Infrastructure that provides the means for of scale and leverage network effects to create value people, businesses, and government to get online, and support productivity gains. and subsequently access local and global digital ser- vices, thus effectively embedding users in the global 4. Digital Financial Services that provide individu- digital economy. Broadly speaking, digital infrastruc- als and households with convenient and affordable ture consists of high-quality, accessible and afford- means to pay, as well as to save and borrow, using able connectivity services, but also includes internet digital tools and platforms. Firms can leverage DFS of things and data centers, as well as institutions and to transact more easily with their customers and rules that foster a competitive telecommunications suppliers, as well as to build digital credit histories market. allowing access to finance. Governments can use DFS to increase efficiency and accountability in var- 2. Digital Skills that support the creation of a digitally ious payment streams, including for the disburse- savvy workforce. These are critical to building a robust ment of social transfers and receipt of tax payments. and competitive digital economy, where innovative Digital payments are often the entry point for DFS services, industries and business models can emerge. and provide the “rails” through which additional Broad-based digital literacy and basic skills acquisition products and use-cases can be developed. are instrumental to supporting wide adoption and use of digital products and services by the average con- 5. Digital Businesses that help bring the digital sumer, and hence critical to ensuring digital inclusion. economy to life and accelerate digital transforma- However, the level of intermediate, advanced and tion – with both young ventures and innovators highly specialized digital skills will determine Sudan’s helping to generate new products and services that ability to embrace digital innovation. leverage technologies and digitally-enabled business 10 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Digital Economy for Africa (DE4A)  models, as well as traditional industries adopting creates new legal and regulatory challenges, such as related solutions – contributing to net employment, protecting consumers and their right to privacy, sup- enhanced competitiveness and productivity. Digital porting cybersecurity and data protection, as well Businesses help expand products and services on as effective taxation and competition policy, which offer and also create new markets. need to be effectively addressed to ensure that innovative services continue to emerge, and guar- In addition, several cross-cutting themes or areas antee their safe and affordable access. Moreover, for shape these foundational elements, which deter- all Sudanese to reap the digital dividends associated mine Sudan’s ability to create an enabling institu- with the digital economy, it needs to be inclusive tional and policy environment. A clear strategy and to ensure that anyone, regardless of age, gender, strong leadership are both needed to spearhead the income and geography has the ability to access digi- agenda at national level. Equally, the digital economy tal tools and services. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 11 Acknowledgements  Acknowledgements T he Digital Economy for Sudan Diagnostic for North Africa, CANDR, IFC). The authors are report was prepared by a cross-sectoral grateful for additional guidance and support pro- team of technical experts from the World vided by the Sudan Country Office; Milena Petrova Bank Group. The overarching diagnostic exercise Stefanova (Country Manager for Sudan, AEMSD), was led by Jennifer Gui (Senior Digital Development Mohamed Hamid (Operations Officer, AEMSD), and Specialist and Task Team Leader of the Digital Econ- Mazin ElKamil (Team Assistant). omy Diagnostic) and Tim Kelly (Lead Digital Devel- opment Specialist, Regional Cluster Lead). Core team Valuable feedback was provided by the following members included Naomi Halewood (Senior Digital World Bank Group (WBG) staff who peer reviewed Development Specialist), Suleiman Namara (Lead the diagnostic report: Eric Dunand (Senior Digital Social Protection Economist), Surat F Nsour (Senior Development Specialist, IDD02), Jana Kunicova Social Protection Specialist), Rafika Chaouali (Lead (Senior Public Sector Specialist, ETAEG1), Katerina Financial Management Specialist), Leonard Mutuku Koinis (Private Sector Specialist, EAEF1) and Julian Matheka (Senior Financial Sector Specialist), Lobna McNeill (Junior Professional Officer, CNGUP). After Mohamed Abdellatif Ahmed (Senior Public Sector a Quality Enhancement Review (QER) meeting on Specialist), Ahmed Faragallah (Senior Financial Sec- the report in early 2022, the team received valuable tor Specialist), Nilima Ramteke (Senior Financial input from both Kene Ezemenari, Senior Economist Sector Specialist), Asta Bareisaite (Senior Private and Abdoulaye Ouedraogo, Economist of Sudan on Sector Specialist), Alexander Leipziger (Social Pro- the latest Country Economic update in Fall 2022. tection Specialist), Vicente A. Garcia Moreno (Senior Economist), Matthew S. Leonard (Operations Offi- The team would like to express their sincere grat- cer, IFC), Lavanya Choudhary (Digital Development itude to the Government of Sudan’s ministries, Specialist), Christoph Stork (Digital Development departments and agencies (MDAs) for their insights Consultant), Teib Assaf (Digital Development Con- and generous cooperation during the drafting of sultant), Reimaz Hashim (Education Consultant) and the report. Specifically, the then Ministry of Tele- Hala Mutwakil Ahmed Elamin (Consultant). communications and Digital Transformation (MTDT) and the National Information Center (NIC) and their The report was prepared under the guidance of teams provided invaluable support. Finally, the team World Bank Group management, including Maria is also grateful to numerous World Bank Group col- Isabel Neto (Practice Manager, Digital Develop- leagues, government counterparts, private sector ment Global Practice for East and South Africa representatives, and development partners who Region IDD04) and Cheick-Oumar Sylla (Director generously shared their time and insight. 12 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Diagnostic Methodology  Diagnostic Methodology Data Collection Financial Sector: CBoS, Bank of Khartoum, United Capital Bank, Faisal Islamic Bank, Family Bank (Microf- The diagnostic took place in a complex and dynamic inance Institution), Shumoul (Fintech), EnayaPay, political, institutional, economic and social environ- Syberpay, Sheikan Insurance, Blue Nile Insurance, ment, with COVID-19 restrictions posing further United Insurance, and others. challenges. Recognizing Sudan’s fragility, conflict, and violence (FCV) affected context, and the urgency Academia: University of Khartoum, Future Univer- for insights to inform World Bank Group’s growing sity, Ahfad University for Women, Faculty of Man- engagement on the ground, the report has used a agement Information Systems and others. more condensed process than suggested in the WBG standardized methodology for Digital Economy for Digital Start-ups, and Entrepreneur Support Orga- Africa (DE4A) diagnostics. Additionally, given the nizations (ESOs): 249Startups, Tirhal, GO, Savannah travel restrictions due to the pandemic, the diag- Innovation Lab, AlAwasi Medical Services, Doctors nostic predominantly draws on existing secondary on Call, Yala Natlob. literature and remote stakeholder interviews con- ducted through a virtual mission conducted in May Non-governmental organizations and Devel- 2021. The team relied heavily on virtual consultations opment Partners: SUDIA, SICTA, Sudan Digital, and desk-research, drawing on publicly available Friends of Sudan - Donor Group and the European documents, as well as data and resources provided Chamber of Commerce, by stakeholders from the public and private sector, as well as civil society and development partners. Limitations and Data Gaps The following stakeholders were consulted over the Given the nascent state of Sudan’s digital eco- duration of the assessment: system, there is a lack of reliable data across each foundational pillar of the digital economy. Data col- Public Sector:Ministry of Telecommunications and lection efforts were further impeded by the ongo- Digital Transformation, National Information Center, ing COVID-19 pandemic, which delayed national Telecommunication and Post Regulatory Authority, surveys related to information and communication Ministry of Finance and Economic Planning, Central technology access and usage at the household level. Bank of Sudan, Electronic Banking System, Ministry The assessment thus draws heavily on data shared of Infrastructure - Khartoum State, Ministry of by stakeholders consulted, as well as drawing on Education, Ministry of Higher Education, Federal past World Bank diagnostic studies. Where specific Ministry of Health, Ministry of Social Development, data is unavailable, proxy data is used to draw infer- Ministry of Justice, Ministry of Federal Governance, ences about the state of the digital economy. These Federal Customs Authority, Chamber of Commerce, gaps highlight the need to improve related data col- Chamber of Taxation, Unified Resource Develop- lection, as a means to both improve policymaking ment and Collection Authority - Khartoum State, and track progress pertaining to digital economy Sudan Computer Emergency Response Team (CERT), development. Equally, further analytical efforts are National Digital Certification Authority, National needed to estimate the true contribution of ‘digital’ Bureau of Statistics, and others. to overall economic growth and job creation, which were beyond the scope of this analytical exercise. Telecommunications Sector:Canar, Ericsson, Hua- wei, MASI Holding, MAXNET, MTN, Nile Center It is noted that all consultations and data exchanges for Technology Research, SABAL Group, SUDATEL, carried out during the preparation of this assess- Sudasat, Zain, and others. ment were carried out among teams at the World Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 13 Diagnostic Methodology  Bank and the Government of Sudan between the paused disbursements in all of its existing oper- period of March-October, 2021. This assessment ations in Sudan and stopped processing any new therefore reflects and reports on the situation up operations due to the developments in the country. to mid-October 2021. Relatedly, this assessment These measures were adopted in accordance with does not attempt to capture the recent political the World Bank Operational Policy 7.30 “Dealing developments of the establishment of military rule with De Facto Governments”’. The present report and is not in a position to shed light on the likely is a Bank-financed product and was consulted with impact of the same on the digital economy in the the Government and concluded before October 25, near future. On October 25, 2021 the World Bank 2021 14 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan List of Acronyms  List of Acronyms 2G Second Generation GSM GII Gender Inequality Index 3G Third Generation GSM GNI Gross National Income 4G Fourth Generation GSM GoS Government of Sudan ADR Alternative Dispute Resolution GRM Grievance Redressal Mechanism ALP Alternative Learning Program GRP Government Resource Planning API Application Programming Interface HCI Human Capital Index ARPU Average Revenue per User HIPC Heavily Indebted Poor Country ASSEK Association of Start-up and SME HP Hewlett Packard Enablers HRMIS Human Resource Management B2B Business to Business Information System B2C Business to Consumer ICDL International Computer Driving BAAS Banking as a service License BIS Bank of International Settlement ICT Information and Communications BTS Base Transceiver Station Technology CBOS Central Bank of Sudan IDA International Development Association CDD Customer Due Diligence IFMIS Integrated Financial Management CERT Computer Emergency Response Team Information System CIASA Credit Information and Scoring Agency ITES Information Technology Enabled CIPE Center for International Private Sector Enterprise ITU International Telecommunication CIT Corporate Income Tax Union CMM Cybersecurity Capacity Maturity Model IXP Internet Exchange Point DEP Digital Entrepreneurship Program JICA Japanese International Cooperation DLT Distributed Ledger Technologies Agency EBS Electronic Banking System KIEP Kenya Industry and Entrepreneurship ECCH Electronic Cheques Clearing House Project EGDI E-government Development Index MBPS Megabyte per second ESO Entrepreneur Support Organizations M&E Monitoring and Evaluation E-GP E-government Procurement MDA Ministries, Departments and Agencies E-LS E-learning Sudan MENA Middle East and North Africa FCV Fragility, conflict, and violence MGA Microfinance Guarantee Agency FPS Fast Payment System MFI Microfinance Institutions FSB Financial Stability Board MIS Management Information System FSP Financial Service Provider MMO Mobile Money Operators MoH Ministry of Health MNO Mobile Network Operators G2B Government to Business MoE Ministry of Education G2C Government to Citizen MoEO Ministry of Energy and Oil G2G Government to Government MoFEP Ministry of Finance and Economic GACR General Administration for the Civil Planning Service MoHESR Ministry of Higher Education and GBPS Giga Byte per second Scientific Research GCI Global Cybersecurity Index MoI Ministry of Interior GDP Gross Domestic Product MoIT-KRT Ministry of Infrastructure and GE Global Entrepreneurship Index Transport – Khartoum state GEM Global Entrepreneurship Monitor MoJ Ministry of Justice Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 15 List of Acronyms  MoSD Ministry of Social Development SETCO Sudan Electricity Transmission MSMEs Micro, Small and Medium enterprises Company MTDT Ministry of Telecommunication and SFSP Sudan Family Support Project Digital Transformation SICTA Sudan ICT Advisory Group NAPA National Adaptation Program of Action SIXP Sudan Internet Exchange Point NB-FSP Non-Bank Financial Service Provider SMDC Sudanese Microfinance Development NCI National Cybersecurity Index Company NCR National Civil Registry SMEs Small and Medium Enterprises NEC National Electricity Corporation SSA Sub-Saharan Africa NFIS National Financial Inclusion Strategy SSL Secure Sockets Layer NHBS National Household Baseline Survey SSN Social Safety Net NHBPS National Household Budget and SSTL State Sponsor of Terrorism List Poverty Survey STC Sudan Taxation Chamber NIC National Information Center SUDIA Sudan Development Initiative NLA National Learning Assessment TEA Total Entrepreneurship Activity NPS National Payment System TIN Tax Identification Number NPSS National Payment System Strategy TMIS Tax Management Information System NN National Number TPRA Telecommunication and Post OOSC Out of School Children Regulatory Authority OP Operational Policy TSA Treasury Single Account P2P Peer to Peer TVET Technical and Vocational Education P4R Performance for Results and Training PPD Public Private Dialogue WBG World Bank Group PPIAF Public Private Infrastructure Advisory UN United Nations Facility UNDP United Nations Development Program PSD Payment System Department URDCA United Resource Development and PSP Payment Service Provider Collection Authority RAN Radio Access Network USF Universal Service Fund RTGS Real Time Gross Settlement USSD Unstructured Supplementary Service SDD Simplified Due Diligence Data SDG Sudanese Pound 16 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Executive Summary  Executive Summary S udan is a low-income, resource rich country stands suspended, rising inflation and disruptions in that has inherited a harsh economic envi- the supply chain are contributing to food insecurity, ronment from decades of war. The country and the economy is projected to have contracted by is endowed with substantial natural and physical two percent. resources such as arable land and water from the Nile, as well as oil and gold. However most nat- Sudan and the Digital Economy ural resources remain untapped, and resources from period of oil booms have mainly not been The ICT sector increasingly occupies a sizable posi- used for investments in productive sectors. Eco- tion in the service sector-led economy of Sudan. nomic mismanagement has been driven by politi- The share of the service sector’s contribution to cal instability with several periods of military rule GDP has consistently grown over the last three (1946-2021) and the impact from the secession years,1 and is over 50 percent today.2 Within the of South Sudan (2011). Resulting social unrest, service sector, ICT plays a key role, equivalent to mostly in the South of the country, and associ- approximately 2 percent of GDP (2019).3 The ICT ated political choices by the previous leadership sector has been contributing significantly to Sudan’s disrupted economic activity and led to Sudan’s per capita income growth of over 1.5 percent.4 The isolation from most of the international economy growth of ICT enabled services in the country has due to economic and trade sanctions resulting in manifested in new marketing approaches, new ways the country’s slide into the low-income group of of conducting training and new products and ser- nations. vices, serving traditionally underserved or excluded markets. While the 2019 revolution heralded a positive change, the change in government shortly after in On account of developments in the ICT sector, 2021 has yet again placed Sudan in an unfavorable Sudan’s digital community5 has expanded sub- place. The ‘Sudanese Revolution’ ended the 30-year stantially in recent years. Sudan has a relatively rule of President al-Bashir and a largely civilian cab- competitive telecommunications market with active inet was formed, led by a Prime Minister, Abdalla participation from both government and private sec- Hamdok. This government’s time in power was, tor MNOs, and investments from foreign investors. however, short lived, and military rule was re-es- The telecom and postal regulatory authority (TPRA) tablished in October 2021. The impasse that has was established over two decades ago and oversees followed has been detrimental—all international aid issuing licenses for telecom and broadband with a Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 17 Executive Summary  fair degree of independence. The country also boasts fiber infrastructure in the country expressed as kilo- a relatively well developed first mile and middle mile meters of network per million inhabitants is on par network comprising four undersea cables and some with its regional comparators,8 the disparities widen 24,000 km of national backbone fiber across the particularly in rural and post conflict areas located in country. The presence of these fundamentals has borderlands. Mobile operators in the country (e.g., resulted in improvements to the quality,6 prices,7 MTN, Zain) mostly backhaul using microwave fast and levels of access to mobile and internet coverage internet access. Not surprising then, quality of ser- in the past few decades. Mobile cellular subscrip- vice (QoS) is poor. This incentivizes subscribers to tions stand at 77 per 100 people, and close to 31 continue using voice and SMS9. percent of the population uses the internet (higher than certain other countries in the region such as Lack of a centralized e-government strategy and Chad, Eritrea, Ethiopia or South Sudan). Conse- inadequate ICT infrastructure and digital skills in quently, the country’s digital community has grown government is limiting scope and reach of gov- significantly. This substantial expansion of the digital ernment services. While an e-government strategy community has led to a nascent rise in the number (2008) and key public platforms exist,10 albeit with of digital businesses across a range of digital econ- varying degrees of digitization, MDAs have adopted omy sectors such as ridesharing apps, food delivery a scattered and siloed approach to the development platforms (e.g. Tirhal, Lemonlabs, Careem) and tele- of digital public platforms, leading to imbalanced com providers entering e-commerce (e.g. M3Roud, success in their digital capabilities and utilization. Soooqna). Limited investments in the digitization, functional- ity, usage, interoperability and data privacy of gov- There is growing confidence in the ability of digi- ernment backend platforms are limiting their scope. talization to make a more significant impact on the G2C services lack sufficient reach since Sudan does Sudanese economy, and the Government of the not have a unified e-services portal that can facil- Republic Sudan (GoS) is committed to advancing itate access to consolidated services. The country this agenda. While there is general acceptance that has a fairly digitized national ID system (registra- ‘digital is currently an important part of the econ- tion and management are fully digitized) through omy,’ with 66% of people agreeing to the statement, the National Civil Registry (NCR) but lacks universal some 81% assert that digital will become of greater coverage. importance to the Sudanese economy in the future. In March, 2021, the then government announced the In the absence of any recent statistics, the true establishment of a single ministry - Ministry of Tele- level of digital literacy is hard to gauge, though it is communications and Digital Transformation (MTDT), perceived to be low, primarily due to an insufficient tasked with the agenda of digital transformation. focus on digital skills in the traditional education This indicates the importance being placed on the system. While over 60% of the population is liter- digital agenda in the country. ate, stakeholder consultations reveal how the levels of digital literacy are much lower. A survey recently However, Sudan’s digital economy remains at a conducted by Sudan Digital revealed that over 50% nascent stage facing several bottlenecks, partic- of digital businesses surveyed believe that attract- ularly on the fundamentals of infrastructure and ing applicants with appropriate skill sets is a big skills side, that limit its expansion. Key bottlenecks challenge. This is largely because the development are highlighted below: of digital skills is insufficient in Sudanese education programs at all levels. The absence of a clear defini- The country is primarily struggling with skewed tion of digital skills or digital skills framework in the geographic concentration and poor quality of digi- country has resulted in no data or indicators being tal infrastructure networks. The country is already systematically collected or tracked. Digital literacy connected to the global internet through four sub- at the primary and secondary levels is limited, as the marine cable systems with landing stations in Port computer science curriculum offered at schools is Sudan, with the development of three more subma- only theoretical. Due to schools’ lack of infrastruc- rine cable systems planned for the next four years. ture and poor training and expertise of teachers, However, the fact that there is only effectively one practical training of students in digital skills is not route into the country is a source of vulnerability possible. Similarly, tertiary education institutions and the country needs to invest in building alternate throughout the country offer both compulsory basic routes to create redundancy. While the national digital skills and advanced specialized digital skills 18 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Executive Summary  courses, but graduates are often not taught how to balanced support for financial stability and financial apply their theoretical knowledge on the job. inclusion. Consequently the financial sector has low private sector participation and limited geograph- While the growth of digital businesses is promis- ical or product diversification. On the consumer ing, these currently remain at a nascent phase and side, use of financial services is limited primarily on occupy only a small part of the economy with several account of low financial literacy. Sudan has a finan- infrastructure constraints hindering further expan- cial literacy rate between 0-24 percent (the lowest sion. High levels of entrepreneurial activity, prox- category in the Standard and Poor’s [S&P] interna- imity to regional markets, a burgeoning network of tionalrankings), and usage of cash is preferred over Entrepreneurship Support Organizations (ESOs;the other payment instruments due to low financial number of ESOs has grown by five times- 2015-2021), awareness and literacy. increasingly active involvement of development part- ners and the rise of successful digital start-ups (e.g. Recommendations and Next Steps Tirhal, Yalla Natlob etc.) are fueling the growth of dig- ital businesses. However, most digital businesses are The Government of Sudan has an opportunity to still at an early stage of their development and haven’t kickstart the country’s digital transformation by realized economies of scale and scope. Both demand focusing on infrastructure and skills as building and supply side factors are limiting the expansion of blocks. Rather than implementing multiple, frag- digital businesses. For instance, demand side barriers mented interventions, a coordinated, complemen- such as the lack of an online trust environment con- tary, and phased approach is needed while focusing strains demand of digital products/services, techno- on the foundations of infrastructure and skills with logical isolation limits digital outreach and adoption, targeted actions that are feasible to implement in and currency fluctuations limit business contracting the FCV context. With these considerations, this with large parts of the domestic and international report proposes a set of recommendations under market. On the supply side, lack of support for busi- three themes: (1) Building Resilience, (2) Furthering ness growth (access to finance constraints, limited Inclusion and Trust, (3) Capacity Building (Table 1). accelerators), weak access to inputs (ICT infrastruc- These recommendations have been prioritized as ture, capital, talent), absence of national policies or short (0-2 years), or medium (0-4 years), and sug- enabling environment targeting digital businesses are gest a phased approach. All recommendations are key challenges. described in more detail under individual chapters of the report. Levels of financial inclusion remain low primarily as a result of weak financial intermediation, lagging Key conditions of a secure and stable macro-eco- financial infrastructure and the lack of an enabling nomic environment would be a prerequisite for legal and regulatory environment. The absence the recommendations to be enacted. Key prereq- of a full-fledged fast payment system (FPS) is lim- uisites of political stability and government capacity iting expansion of fintech services. A near market and commitment, strong ICT sector leadership and monopoly in payment service provision has created vision, government capacity, private sector willing- market inefficiencies andsystemic risks in the case ness to invest, and independent and transparent of systems failure, and has crippled innovations. regulatory measures would be critical to allow for Traditional credit institutions rarely use digital plat- the following recommendations to be translated forms, and the legal and regulatory framework lacks into actionable steps. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 19 Executive Summary  Table 1: Summary of Recommendations Pillar Recommendations Time frame 1. Building Resilience to allow for continuity of operations in times of crisis Digital Infrastructure Invest in expanding terrestrial fiber routes in the region and diversifying routes (such as Short to Ethiopia, South Sudan, Central African Republic), and furthering coverage in rural and borderland areas Digital Skills Support scaling up private-sector-run digital skills programs and providers Short Digital Businesses Provid operational support to existing ESOs through performance-based grants and/or Short similar mechanisms Digital Financial Services Digitalize government payments, including social protection payments Medium Digital Public Platforms Introduce a digital ID and e-signature facility for online transactions Medium 2. Furthering inclusion and trust to allow for greater citizen reach and engagement Digital Infrastructure Establish a carrier-neutral data center that also functions as a second Internet Exchange Short Point (IXP) Digital Skills Establish a competency based national framework for digital skills, including defining Short digital literacy, and instituting measures to tabulate the level of digital literacy through citizen surveys and gap assessment Digital Public Platforms Expand on NCR coverage to address the under registration of women and girls through Short reforming the legal framework and businesses processes and expanding NCR offices and mobile registration set-ups Digital Businesses Build greater awareness of and confidence in the digital businesses ecosystem through Short creating a mechanism to coordinate (donor) funding of digital businesses, hosting and partaking in investment promotion events, conferences, and meetings Digital Businesses Improve uptake and trust in digital commerce through online consumer and online Short supplier protection legislation, and carrying out awareness campaigns domestically to showcase Sudanese business capabilities Digital Public Platforms Establish a shared e-service platform Medium Digital Financial Services Support financial literacy initiatives through designing financial literacy curricula, Medium materials and outreach initiatives for citizens, and stakeholders in the financial services sector (banks, credit unions, others) 3. Capacity Building to allow for better governance Digital Financial Services Create an enabling environment for outsourcing financial services to nonbanks, fintech Short providers and other new types of providers 20 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Executive Summary  Pillar Recommendations Time frame Digital Infrastructure Improve the governance, institutional and regulatory environment for ICT through Medium introduction of a service and technologically neutral universal licensing regime, rationaliza- tion of fees and taxes in line with international standards and reducing the lag between USF collection and disbursement to account for inflation Digital Skills Equip public educational institutes with the requisite infrastructure and IT equipment Medium through modernizing campus networks Digital Financial Services Create a befitting legal, regulatory and policy enabling environment for the financial Medium services sector through enacting the National Payment System Strategy and National Financial Inclusion Strategy accompanying regulations, and strengthening digital finance oversight Digital Public Platforms Address ICT hardware and software, and human resource constraints in government to Medium digitalize operations Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 21 Chapter 1  |  Introduction CHAPTER 1 Introduction 1.1. Sudan at a Glance to the imposition of economic and trade sanctions.15 Consequently, Sudan has lost a decade of economic growth and per capita gross national income (GNI) Sudan is the third largest country in Africa with a dropped from US$1,690 in 2015 to US$590 in 2019,16 fast-growing population, more than half of which is placing Sudan in the low-income country category young. Sudan occupies 1.9 million sq km of land and once more. is located at the crossroads of Africa and the Middle East. The country is endowed with substantial natu- The 2019 revolution heralded a positive change ral and physical resources such as arable land, water with transition to a democratic transitional govern- (from the Nile River and subsurface water resources), ment.17 In April 2019, the government of President forests, livestock as well as oil and gold.11 The total Omar al-Bashir was deposed and a new transitional population is estimated to have reached 42.81 mil- government came into power. Following sustained lion in 2019 and has been growing at an annual rate civil disobedience and a series of sometimes violent of 2.5 percent over the last 10 years. Approximately street protests, the ‘Sudanese Revolution’ ousted 61% of the population is under 25 years old.12 President al-Bashir and ending his 30 year rule. Shortly after, a period of transitional state institu- A legacy of socio-economic mismanagement under tions under a mixed military-civilian run sovereign the preceding government has resulted in the coun- council came into power. In August 2019, a largely try falling back from middle to low-income country civilian cabinet was formed, led by a Prime Minister, status in 2020. Resources from the period of oil Abdalla Hamdok. This government had the man- boom13 (1999-2011) were not used for public invest- date to preside over a political transition as well as ments in productive sectors, such as infrastructure adopt the policies, reforms, and institutions needed or human capital. Subsequently, high levels of oil to achieve peace, stabilization, inclusive economic revenues could not be sustained following fluctua- growth, and re-engagement with the international tions in global commodity prices, and the economic community. shock of losing 75% of oil reserves following the secession of South Sudan (2011).14 In addition, social On March 26, 2021, Sudan cleared its arrears to the unrest, mostly in the South of the country, and asso- World Bank’s International Development Associ- ciated political choices by the previous leadership, ation (IDA), enabling its full re-engagement with disrupted economic activity and led to Sudan’s iso- the World Bank Group after nearly three decades, lation from most of the international economy due and paving the way for the country to access nearly Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 23 Chapter 1  |  Introduction US$2 billion in IDA grants for poverty reduction imports, worsening the balance of payments, and and sustainable economic recovery. By clearing its food insecurity. Reduced fiscal space has caused arrears, Sudan has also completed a key step for the government to cut public expenditures, limiting receiving comprehensive external debt relief under much needed investment and spending on service the Heavily Indebted Poor Country (HIPC) Initiative. delivery. Protests and ongoing civil disturbances This important step was followed by a cross-GP IDA have disrupted trade and food distribution channels, mission to the country, from April 5-13, 2021, which including blockades of some national trade routes. discussed a number of possible initiatives. This is a This adversely impacted growth, with an estimated critical time therefore for forward-looking develop- 2 percent contraction in 2021. ment initiatives. Sudan continues to be affected by conflict, and The transitional government, however, inherited an fares low on human development indicators. The exceedingly difficult economic environment. Major total area of Sudan’s states affected by conflict is imbalances linked to the loss of three-quarters of about half of the size of the country and home to oil exports following South Sudan’s independence about 43 percent of the population.22 Inequalities in 2011 continue to weigh on the economy. Multi- in the allocation of public resources and in access ple exchange rates for rationing existing foreign cur- to natural resources between the center (Khar- rency created trade imbalances. The legacy of global toum) and the states are the main drivers of con- isolation and a weak business environment hinders flict. The country ranked 168 out of 189 countries private investment. The inflation rate has been on based on the Human Development Index23 (2018) the rise in the last year, reaching a record 304 per- lagging behind its neighbors and Sub- Saharan cent in January 2021.18 While inflation was expected African averages. Education and health indicators to have declined in 2021, it will continue to be a drag remain low and vary markedly across states, gen- on private consumption, which accounts for almost der, and income levels. When disaggregated by 80 percent of gross domestic product (GDP).19 The sex,24 the Gender Development Index of Sudan is fiscal position has deteriorated further (with the fis- 0.837,25 placing it in the group of countries furthest cal deficit rising from 6.5% to 10.7 % of GDP between away from achieving gender parity. The incidence 2017-201920) on account of fuel subsidies and Covid- of extreme poverty—the percentage of popula- 19 related unexpected budgetary expenditures. In tion living below US$1.90 a day—was 13.5 percent26 2020, federal budgetary receipts were more than 40 (2015), and this is estimated to have increased to percent21 less than anticipated in the planned bud- 20 percent in 2020.27 get, limiting state capacity for public investment. Covid-19 has exacerbated the ongoing economic On 25th October 2021, the Sudanese militar- crisis and will likely have negative effects on liv- ytook control of the government.The political ing conditions. Because of the Covid-19 pandemic, impasse that started with the October change in Sudan’s projected GDP growth was downgraded government has severely impacted the Sudanese to -8.2 percent from an initial expectation of +1 economy. Grants were expected to provide almost percent, with negative poverty impacts.28 The gov- one-third of revenues in 2021-2022 but interna- ernment responded to the pandemic with an early tional assistance has been on hold since the polit- declaration of a state of health emergency, banning ical impasse. The pause in external grants caused a all public gatherings and restricting travel. A national depreciation of the Sudanese Pound , weakening Covid-19 Preparedness and Response Plan was also the balance of payments. This has been exacerbated finalized. However, despite these actions, Covid-19 by the Russia-Ukraine war because Sudan imports has worsened economic prospects, hampered key about half its wheat from Russia. The resulting services, delayed political reforms, and impacted higher global food prices have raised the cost of public trust in government capacity. 24 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 1  |  Introduction Table 2: Key statistics29 2018 2019 2020 2021e 2022f 2023f 2024f Real GDP growth, at constant market prices -2.7 -2.2 -3.6 -2 0.3 2 2.5 Private Consumption -2.2 -0.6 -3.4 -0.8 0.3 2.1 3.3 Government Consumption -1.2 -6.5 -8.8 -9.8 2.5 2.7 3.3 Gross Fixed Investment -2.1 -0.2 -2 -2.1 -1.8 2 3 Exports, Goods and Services 8 7 5.2 2 3.5 4 6 Imports, Goods and Services 10.9 13.8 -9 -0.5 4.8 5 17 Real GDP growth, at constant factor prices -2.7 -2.2 -3.6 -1.9 0.2 1.9 2.6 Agriculture -1.8 -1.5 -2.5 -0.6 0.5 2 2.9 Industry -1.9 -0.7 -5.7 -0.7 1 2 3.1 Services -4 -3.8 -3 -3.9 -0.6 1.9 1.9 Inflation (Consumer Price Index) 63.3 51 163.3 359.7 190 105 47 Current Account Balance (% of GDP) -14.5 -15.6 -17.5 -5.9 -6.6 -7 -6.6 Fiscal Balance (% of GDP) -7.9 -10.8 -5.9 -0.3 -2.7 -2.3 -1.6 Debt (% of GDP) 185.6 200.3 249.1 215.6 183.6 167.3 157.9 External debt 176 192.4 167.4 201.3 170.8 154.7 145.4 Primary Balance (% of GDP) -7.6 -10.7 -5.9 -0.3 -2.4 -1.9 -1.2 International poverty rate ($2.15 in 2017 PPP) b,c 18.4 21.26 24.6 26.18 27.37 27.63 27.58 Lower middle-income poverty rate ($3.65 in 2017 PPP) b,c 54.13 57.2 61.6 63.17 64.38 64.72 64.58 Upper middle-income poverty rate ($6.85 in 2017 PPP) b,c 88.24 89.49 91.03 91.5 91.92 92.02 91.95 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 25 Chapter 1  |  Introduction 1.2. Structure of this Report state of the digital innovation ecosystem; and chap- ter five discusses the digital skills gaps and existing ICT training opportunities at primary, secondary, and The Sudan DE4A Diagnostic Report offers a holis- tertiary levels, and identifies any specialized digital tic view on how Sudan can develop its digital skills training programs. Chapter six assesses the economy. The following chapters present in-depth state of digital financial services among the public diagnostics of each of the five foundational pillars of sector, businesses and individuals, identifying chal- Sudan’s digital economy, highlighting challenges and lenges and opportunities to increase uptake. opportunities for growth. Chapter two examines the current state of access, quality, and usage of digital The report concludes with a discussion of next infrastructure in Sudan, as well as the availability and steps and recommendations. These recommenda- affordability of connectivity. Chapter three analyzes tions are intended for a wider audience, including the current use of digital public platforms in the pub- government, the private sector and development lic sector and explores the scope of government-led partners. Findings may also inform ongoing and platforms to scale. The fourth chapter looks at risks future World Bank interventions in Sudan and in the and opportunities for digital businesses, and the Africa region. 26 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 1  |  Introduction Notes 1 Government of Sudan, Three Year Development Plan, 2021-2023 2 World Bank Indicators, 2018 3 In the absence of recent statistics, ICT sector revenue as a percentage of GDP has been considered as best approximation, DE4A 2021 Analysis. National statistics from the government or third-party sources tabulating ICT sector contribution to GDP are dated and reflect mainly 2015-16 data. For example, Telecom and Post Regulatory Authority’s last statistics cover ICT sector contribution to GDP at 10% (2016), similarly UN ECOWAS’s calculation pegs the contribution to GDP at 11% (2016) 4 Calderon, 2009, Africa Infrastructure Country Diagnostic, 2011 5 Digital community is defined as citizens engaging with digital technologies for transactions, accessing goods and services and interactions. 6 A strong ICT infrastructure backbone with a connection to Sudan’s submarine cables has allowed the sector to expand internet bandwidth 7 Sudan has some of the most attractive prices in the region due to the competition in gateways that emerged from submarine cable connectivity. In fact, it is among the 10 cheapest countries for prepaid mobile broadband in Africa and even has reasonable prices in terms of percentage of average GNI in the country. 8 Hamilton Research, 2020 9 For example, according to consultations with MTN, their share of active data users is only 30 percent of total active SIM cards and the share of smartphones was merely 35 percent 10 Integrated Financial Management Information System (IFMIS), the National Civil Registry (NCR), a Treasury Single Account (TSA), a revenue collection platform named E15, an e-tax platform and a e-customs platform 11 Sudan Poverty Reduction Strategy Paper, 2021, World Bank 12 UN World Population Prospects, 2019 revision 13 During the period between 2003 and 2011, oil accounted for 50 percent of domestic revenues and 95% of export earnings 14 Sudan Poverty Reduction Strategy Paper, 2021, World Bank 15 In 1993, the United States designated Sudan as a state sponsor of terrorism which was followed by comprehensive economic, trade, and financial sanctions. In 2005, Sudan was placed under United Nations sanctions involving an arms embargo, travel bans, and asset freeze for selected individuals and entities. 16 Sudan Poverty Reduction Strategy Paper, 2021, World Bank 17 The text of the assessment was written before the military takeover of October 25, 2021. 18 Ibid 19 Ibid 20 Ibid 21 Ibid 22 Conflict prone areas are mainly Eastern Sudan and Darfur, Sudan Poverty Reduction Strategy Paper, 2021, WB 23 http://www.hdr.undp.org/en/composite/HDI 24 GDI, based on the sex-disaggregated Human Development Index (HDI), defined as a ratio of the female to the male HDI. Available at: http://hdr. undp.org/sites/all/themes/hdr_theme/country-notes/SDN.pdf 25 GDI, based on the sex-disaggregated Human Development Index (HDI), defined as a ratio of the female to the male HDI. Available at: http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/SDN.pdf 26 National Household Budget and Poverty Survey, conducted in 2014/15 27 World Bank Country Engagement Note for the Republic of Sudan (FY21-FY22) 28 Central Bank of Sudan, Ministry of Finance and Economic Planning staff estimates and projections, and the World Bank Country Engagement Note for the Republic of Sudan (FY21-FY22) 29 Sudan MPO Projections, 7/9/22, World Bank. Calculations based on 2014-NBHS.Actual data: 2014. Nowcast: 2015-2021. Forecasts are from 2022 to 2024, Projection using neutral distribution (2014) with pass-through = 1 based on GDP per capita in constant LC Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 27 Chapter 2  |  Digital Infrastructure CHAPTER 2 Digital Infrastructure 2.1. Importance of Digital penetration could yield US$43 billion in additional GDP growth and US$ 8 billion in additional tax reve- Infrastructure nue for states, based on the latest ITU (2020) mod- elling for Africa (Table 3). Accessible, reliable and affordable broadband inter- net is the foundation of the digital economy and digital inclusion. Improved broadband penetration is largely suggested by the economic literature to be associated with substantial socioeconomic benefits 2.2. The State of Digital contributing to enhanced productivity, facilitating Infrastructure information exchange, and improving service delivery across the economy.1 Studies that measure the mac- roeconomic effects of mobile broadband penetration This section provides diagnostic findings on the estimate a range from 0.8 percent to 2.46 percent of state of development of high-speed internet in additional GDP growth for an increase of 10 percent Sudan. The key constraints along the broadband in mobile broadband penetration (depending on a value chain are analyzed based on the integrated set of countries and the time period).2 The estimates framework of the 2016 World Bank World Devel- for Africa are at the higher end, with 2.46 percent of opment Report on Digital Dividends (World Bank additional GDP growth per 10 percent higher broad- 2016), starting from the first mile (the point where band penetration. the internet connects a country to international net- works) through the middle mile (national backbone An increase in mobile broadband penetration in and intercity network, including Internet Exchange Sudan of 10 percent could lead to US$ 465 million Points (IXPs)) to the last mile (reaching the end-user in additional GDP and US$37 million in additional through local access networks). The framework also tax revenues per year (table 3). The additional GDP identifies an invisible mile (the enabling policy, legal impetus from an increase in broadband penetra- and regulatory environment facilitating the intangi- tion is not a one-time gain but a continuous benefit ble parts of the network, such as spectrum, licens- for the country’s development. Across Sub-Saha- ing, taxation, competition, cybersecurity, etc.), which ran Africa (SSA), a 10 percent higher broadband could constrain or promote broadband access. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 29 Chapter 2  |  Digital Infrastructure Table 3: Effect of a 10-percent Increase in Mobile Broadband Penetration on Select African Economies Country GDP 2019 Additional GDP Tax to GDP Ratio Additional Tax USD million USD million % USD million Sudan 18,902 465 8 37.2 Egypt 303,175 7,458 12.5 933.7 Chad 11,315 278 NA NA Alergia 34,387 846 11.6 98.1 Kenya 23,065 567 15.2 86.2 Uganda 34,387 846 11.7 99.3 SSA 1,755,011 43,173 18.9 8,159.7 Sources WDI 2020 Calculation based on ITU 2020 Most recent available WDI 2021 Calculation Figure 2: Mapping Digital Infrastructure 30 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 2  |  Digital Infrastructure Table 4: Sudan’s Submarine Cable Landings (actual and potential) Saudi Saudi EASSy FALCON PEACE Africa-1 2Africa Arabia-Sudan-1 Arabia-Sudan-2 (SAS-1) (SAS-2) Start date 2003 April 2011 July 2010 July 2006 Sep. 2021 2023 Q4 2023/4 Cable Length 333 km 330 km 10,500 km 10,300 km 15,000 km 10,000 km 37,000km Sudanese consortium member Sudatel Sudatel Sudatel Canar ? ? ? Landing Points Port Sudan Port Sudan Port Sudan Port Sudan Port Sudan Port Sudan Port Sudan 2.2.1. First Mile: International Strengthening of the cross-border links via Ethiopia Connectivity and South Sudan towards Kenya, which is evolving as a hub with a significant amount of content avail- Sudan’s first mile connectivity is sufficient, and able within Africa in lieu of more-distant European more is planned, but dependency on connection nodes, may be beneficial for Sudan, while also pro- via port Sudan creates vulnerability. Four submarine viding an exit route towards the Port Sudan cable cable systems connect Sudan to the global Internet landing station for those two countries. The routes through landing stations in the Port of Sudan. Two to South Sudan exist close to the border and can be landing stations are owned by Sudatel and a third extended (although connectivity remains absent on one by Canar Telecom. The landing stations operated the South Sudan side). For the route with Ethiopia, by Sudatel are based on open access principles and this could leverage the planned 132 km link along a any operator may connect within the landing stations railway line planned between Sudan and Ethiopia. to the submarine cable systems. Three more subma- The railway link is understood to be part of a big- rine cable systems are planning to land at the Port ger investment planned to extend service from Port of Sudan in the next 3 to 4 years (PEACE, Africa-1 Sudan to Addis Abba. This investment is reportedly and 2Africa; see Table 4: Submarine Cable Landings). being financed by a consortium including the African Since the majority of the routes leverage port Sudan Development Bank, China State Construction Engi- this creates vulnerability and a need for expanding neering Corporation and some firms from Gulf Coop- to other connectivity routes in order to build redun- eration Council countries. The route would serve dancy and reduce dependency on a single point of several small, underserved communities around the entry. Roseires Reservoir and along the Blue Nile in Sudan (including Famaka), and could also provide a second Sudan is connected to four of its seven neighboring cross-border link from Sudan to Ethiopia (see figure countries (Egypt, Eritrea, Chad and Ethiopia) via 3 which overlays fiber routes with population den- terrestrial fiber and there is the option to further sity, and shows the infrastructure gaps in cross-bor- expand connectivity to build redundancy. Eritrea, der connectivity). Chad and Ethiopia are currently connected via microwave (which is slower than fiber) and a route Sudan’s international bandwidth use is low in com- to the Central African Republic is planned. A route parison to Algeria, Egypt, Kenya and Uganda. The to Libya may not be practical due to the large dis- reason for this is not the lack of international con- tances through sparsely populated areas in order nectivity but domestic factors that will be explored to connect the Libyan and the Sudanese sides. in subsequent sections. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 31 Chapter 2  |  Digital Infrastructure Figure 3: Fiber routes and population density (Sources TPRA and World pop), Fiber Infrastructure gaps 3 Fibre Canar Nec Sudatel Zain Population Density <= 10000 10000 - 50000 50000 - 250000 > 250000 Sudan Fiber infrastructure gaps4 Start End Description Distance Bameza Ad-Damazin Cross-border route connecting Ethiopia 130 km (Bameza) to Sudan (Ad-Damazin). Existing FO backbone 50 km north of Dilling Kadugli – South Sudan border Backbone extension 249 km 32 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 2  |  Digital Infrastructure Table 5: Used International Bandwidth Total Used International Bandwidth Population (in 1,000s) Mbps per 1000 inhabitants (Gbps) Algeria 2,513 43,053 58.4 Egypt 2,842 100,388 28.3 Ethiopia 247 112,079 2.2 Kenya 2,204 52,574 41.9 Sudan 245 42,813 5.7 Uganda 420 44,270 9.5 Source Telegeography 2020 WDI 2021 (2019 data) Calculation Table 6: First Mile Summary First Mile Value Challenge Potential Remedy Submarine cable landingsb 4 International connectivity is sufficient More submarine cable landings are and access to landing stations is via planned for Port Sudan. But additional open access, but no route diversity landing stations outside Port Sudan would reduce vulnerability. Terrestrial fiber route to Egypt, South 57.1% Sudan is connected to 4 of its 7 Increasing terrestrial fiber connectivity Sudan, Ethiopia and Chadb neighbouring countries via terrestrial to neighbouring countries will increase fiber. However, the route to South Sudan redundancy and support further only reaches Renk and is non-functional investments into submarine cables. A route to the Central African Republic Fiber links to Eritrea and the Central is planned and Eritrea is currently African Republic are planned and the connected via microwave. While a route to South Sudan or Ethiopia could terrestrial route to Ethiopia exists, an be augmented if political relations additional route to Ethiopia to connect allow. further with Kenya can be explored given synergies with the planned railway link on the route. Used International Bandwidth in Mbps 5.7Mbps International bandwidth usage is low. Remedies will be investigated in the per 1,000 population 2019a middle, last and invisible mile sections. Sources: a) Telegeography 2020; b) PURA 2.2.2. Middle Mile: National Backbone par with Kenya and better than Egypt, Uganda, Ethio- pia and South Sudan. However, in terms of percentage The national backbone network is relatively well of the population within 50km of a fiber node, Sudan developed, including fiber and microwave links. lags behind its neighbours, with the exception of The national fiber infrastructure is nearly 24,000 km South Sudan. The main fiber route owners are Sudatel, in length, much more than in Ethiopia, for instance, Canar, Zain and the Sudanese Electricity Transmission despite the much larger population there. Expressed Company (SETCO). The Sudanese army and Sudan’s as kilometers per million inhabitants, it is 553 km, on national petroleum corporation, Sudapet, also operate Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 33 Chapter 2  |  Digital Infrastructure Table 7: National fiber routes Country Population Area in 1,000 Operational fiber routes Population within reach of a fiber node in million sq km Km per 1,000 per million % within % within % within Sq km inhabitants 10-km 25-km 50-km Kenya 52.6 569.1 29,287 51 557 41% 81% 96% Egypt 100.4 995.5 33,177 33 330 40% 82% 98% Algeria 43.1 2,381.7 159,767 67 3,711 32% 65% 93% Uganda 44.3 200.5 15,096 75 341 31% 65% 93% Sudan 42.8 1,886.0 23,660 13 553 20% 38% 62% Ethiopia 112.1 1,129.3 21,178 19 189 18% 53% 88% South Sudan 11.1 619.8 300 0 27 4% 4% 7% Source WDI 2021 (2019 data) Hamilton Research (2020) Table 8: National fiber routes and market share, Source TPRA Company Sudatel Canar Zain NEC Petroleum Total (SETCO) company Fiber length (KM) 12,135.0 5,863.0 3,076 6,000 3,562 30,636 Market share 39.6% 19.1% 10% 20% 12% 100% fiber routes that could be used to bolster national data because each MNO needs to have their own fiber connectivity. (Table 7 and 8: National Fiber Routes). lines. Converting all licenses to service and tech- nological neutral licenses could potentially lead to Despite relatively extensive fiber networks, mobile additional investment in fiber networks. operators still mostly backhaul using microwave. For example, 95% of MTN’s Radio Access Network Sudan does not yet have a carrier-neutral data (RAN) sites are backhauled by microwave. While center. Sudatel has a state-of-the-art data center. microwave is feasible for 4G, it is not ideal, in par- However, carrier-neutral data centers are the pre- ticular if connecting to backhaul involves more than ferred location for caches of content providers such one hop. RAN sites ideally need to be fiber back- a Google and Facebook. A carrier-neutral data cen- hauled to provide fast Internet access. MTN and ter can also function as an Internet Exchange Point ZAIN do not have sufficient incentive to build fiber (IXP). The website of the Sudan Internet Exchange backhaul to the closest fiber node because there is a Point (SIXP) is not working currently, and it is not licence provision that prohibits them from reselling clear whether it is still operational. Meta (Facebook) fiber backhaul. This license regime prevents MNOs has a cache hosted with MTN while Google has an from collocating on fiber backhauled RAN sites, Edge Node. 34 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 2  |  Digital Infrastructure Table 9: Middle Mile Summary Middle Mile Value Challenge Potential Remedy Population within 50km reach of 62% 95% of MTN’s RAN sites are backhauled • Introduce service and technologically a fiber nodea by microwave. neutral licensing regime to stimulate fiber investment. • Increase the number of fiber nodes Km backbone fiber per million 553 along existing routes inhabitantsa • Expand the fiber network to reach Central African Republic. IXPc 1 It is not clear whether it is operational. Facebook cachec Yes at MTN NA NA Google cacheb Yes NA NA Carrier-neutral Data Center No To facilitate Internet speeds it would be Establish a carrier-neutral Data Center ideal to have Meta and Google caches at a carrier-neutral data center. Sources: a) Hamilton Research (2020); b) https://peering.google.com/#/infrastructure; c) SIXP 2.2.3. Last Mile Connectivity gaps requires considerable investment in expand- ing broadband connectivity (Table 10 shows inter- Sudan benefits from a relatively competitive mobile net coverage gaps). Closing the infrastructure gaps communications market, which has been open to pri- would require focusing on strategic areas with low vate sector competition since the early 2000s. The connectivity, particularly borderland areas. Institu- market is dominated by Zain Sudan, with just under tions such as the USAF can be leveraged for infra- half the market, while its two competitors, MTN Sudan structure expansion. and Sudani, the mobile arm of the former incumbent Sudatel, control around one quarter of the market Sudan’s broadband prices are relatively low in US each. Zain Sudan is owned by the Kuwaiti Group, dollar terms, yet Sudan is still at the bottom end but the company is currently in negotiations over a of mobile broadband penetration in Africa. Sudan is possible sale to Mauritius-based Invictus Group. All among the 10 cheapest countries for prepaid mobile companies in the market have been affected by the broadband in Africa and, in terms of affordability, political turmoil of recent years and the devaluation of when prices are expressed in percentage of aver- the currency. Nevertheless, all operators now offer 4G age monthly Gross National Income (GNI), prices mobile broadband services, albeit with limited cover- in Sudan are still reasonable. Monthly use of 1GB age. Although the market for mobile virtual network is only 1.2% of monthly GNI per capita, well below operators (MVNOs) has been open since 2014, no the 2% target for 2025 set by the UN Broadband candidates have come forward, perhaps because of a Commission.5 At the same time, some 45 countries requirement for 60 percent local ownership. in Africa had a higher mobile penetration, 41 had higher mobile broadband penetration and 42 better Some 88% of the population or 40 million peo- 3G population coverage. Also, 47 countries in Africa ple, do not have 4G broadband coverage and 54%, had faster average download speeds. This points to a i.e., 25 million people, do not have 3G broadband supply-side constraint holding the sector back, per- coverage. Even in Khartoum, some 4.8 million peo- haps due to a lack of investment. The low average ple do not have 3G coverage and 5.6 million have download speeds can be attributed to the limited no 4G coverage. West Kordofan, North Kordofan, 4G population coverage, the reliance on microwave Blue Nile and Central Darfur have less than 20% for backhaul and potentially to the low penetration 3G population coverage. To close these coverage of 4G capable smartphones. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 35 Chapter 2  |  Digital Infrastructure Table 10: Internet Coverage Gaps Population Coverage in 2018 Population projection for Population NOT covered million 2021 State 2G 3G 4G 2G 3G 4G Gezira 100% 93.0% 6.0% 5,545,355 0.00 0.39 5.21 Gadarif 97% 38.0% 12.0% 2,402,682 0.07 1.49 2.11 Blue Nile 70% 12.0% 4.0% 1,205,908 0.36 1.06 1.16 Central Darfur 63% 10.0% 0.0% 826,736 0.31 0.74 0.83 East Darfur 93% 45.0% 0.0% 1,570,210 0.11 0.86 1.57 Kassala 98% 71.0% 4.0% 2,740,702 0.05 0.79 2.63 Khartoum 76% 45% 36% 8,697,162 2.09 4.78 5.57 North Darfur 68% 34% 7% 2,507,743 0.80 1.66 2.33 North Kordofan 47% 8% 0.1% 2,703,439 1.43 2.49 2.70 Northern 91% 86% 7% 1,018,628 0.09 0.14 0.95 Red Sea 67% 37% 13% 1,612,446 0.53 1.02 1.40 River Nile 74% 50% 5% 1,644,421 0.43 0.82 1.56 Sinnar 91% 34% 3% 2,087,501 0.19 1.38 2.02 South Darfur 89% 45% 15% 4,253,782 0.47 2.34 3.62 South Kordofan 86% 17% 2% 1,166,253 0.16 0.97 1.14 West Darfur 88% 31% 13% 1,105,458 0.13 0.76 0.96 West Kordofan 85% 8% 0% 1,876,655 0.28 1.73 1.88 White Nile 91% 54% 7% 2,713,295 0.24 1.25 2.52 Total 83% 46% 12.1% 45,678,376 7.76 24.67 40.17 17% 54% 87.9% Sources TPRA CBS Calculations 36 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 2  |  Digital Infrastructure Table 11: Key Performance Indicators for last mile connectivity Last Mile Indicators Sudan African Rank Source Affordability Price of 300MB data use per USD 0.29 3 RIS Q1 2021 month* % GNI per capita per month 0.6% 9 Price of 1GB data use per month* USD 0.58 1 % GNI per capita per month 1.2% 14 Price of 20GB data use per USD 1.22 6 month* % GNI per capita per month 3% 4 Adoption SIM per 100 inhabitants 33.6 46 ITU Dec 2020 Mobile broadband SIM 5.0 42 Infrastructure 3G Population Coverage 41% 43 Average Mobile download speed (Mbps) 1.35 48 cable.co.uk Figure 4: ICT Sector Revenues in million USD Sector Revenues in million USD 1500 1200 476 436 Zain 513 900 MTN 272 312 294 Sudatel 600 341 326 257 201 300 717 709 128 132 419 417 316 304 0 2015 2016 2017 2018 2019 2020 Exchange rate fluctuations and high inflation have displayed in Figure 8. This exchange rate devalua- had a negative impact on the ICT sector perfor- tion led to a drop in ICT sector revenues expressed mance and investment. Figures 5 and 6 show that in USD (Figure 6) and with it the MNOs’ ability to while the local currency average revenue per user invest in their networks since the equipment is pur- (ARPU) grew in several quarters, nevertheless there chased in USD. USD ICT sector revenue dropped by has been a net fall since 2018. The exchange rate half between 2016 and 2019. It started to pick up of the Sudanese pound (SDG) against the USD is again in 2020. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 37 Chapter 2  |  Digital Infrastructure Table 15: Telecom indicators for Sudan Indicator 2015 2016 2017 2018 2019 Fixed-telephone subscriptions 118,954 136,472 143,280 136,923 137,842 Mobile-cellular telephone subscriptions 27,938,507 27,807,293 28,644,139 30,100,412 33,014,160 Fixed-broadband subscriptions 28,093 26,376 30,549 31,352 32,762 Active mobile-broadband subscriptions 11,649,027 10,205,026 12,363,261 13,557,437 16,241,123 Fixed telephone as percent of mobile subscriptions 0.43% 0.49% 0.50% 0.45% 0.42% Fixed broadband as percent of active mobile broadband subscriptions 0.24% 0.26% 0.25% 0.23% 0.20% Source: ITU Indicator database, January 2021 The key performance indicators (KPIs) for MTN Fixed voice and fixed Broadband services only narrow the cause of low broadband adoption to make up a fraction of their mobile equivalents. In supply-side issues. Only one-third of MTN’s RAN 2019, Fixed-line telephone subscriptions made up sites provided 4G coverage in 2020. At the same less than half of one percent of mobile subscriptions time, the share of active data users was 30% of total and fixed broadband was only a fifth of one percent active SIM cards while the share of smartphones was of mobile broadband. Fixed-broadband services are 35%. This means that about 433,000 smartphone provided via xDSL, FTTh and fixed-wireless services users on MTN’s network did not use data or used such as WIMAX VSAT and LTE. The fixed-broadband less than 5MB of data per month. Nearly 60% of market is dominated by Sudatel and its subsidiaries MTN’s revenues came from voice and SMS, which and Canar Telecom. According to a 2020 report by is high in comparison to other MTN operations in Budde, an Australian market analysis company, ISPs Africa. Given that broadband prices are low this have been obliged to arrange their international seems to indicate broadband coverage is too low or bandwidth with one of the fixed-line or mobile net- too slow so that subscribers continue to use voice work operators as only they are licensed to operate and SMS instead. This is further supported by the international gateways. Removing the international jump in the average MB used per active subscriber gateway license bottleneck would lead to a more from 2,341 MB to 4,567 MB. The doubling of average competitive ICT sector and connectivity innova- data use is an indication that current data users can tions. A service and technological neutral license afford mobile broadband but that access is limited. regime would not only increase competition among The dominance of voice and SMS over data by the fixed-line and mobile operators in Sudan but also majority of MTN subscribers may also be influenced allow ISPs to compete on speed and quality of ser- by literacy but this is hard to assess without access vice with the big operators. In particular, fiber-based to household survey data. end-user access provides an opportunity for ISPs. Zain’s capital expenses have exceeded its net prof- 2.2.4. Invisible Mile its every year since 2015 despite low profit margins. This can be seen as a sign of confidence in the market. The regulatory environment and institutional Its USD revenues more than halved between 2016 arrangements can be strengthened to improve ICT and 2019 and started to recover again in 2020. The Sector governance in Sudan. The Ministry of Tele- USD ARPU fell from USD 5 in 2015 to only USD 1.6 communications and Digital Transformation (MTDT) in 2019. Sudatel’s revenues dropped a year later than is the overarching Ministry overseeing the key three those of Zain and MTN. Its revenues still increased in agencies; the National Information Center (NIC), the 2017 but then took a dive in 2018. It recorded a loss Telecommunications and Postal Regulatory Author- for the first time in 2020 of USD 10 million. ity (TPRA), and the National Authority for Digital 38 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 2  |  Digital Infrastructure Table 16: Invisible mile assessment Challenge Potential Remedy Regulator The Ministry of Telecommunications and Digital The international best practice approach is an independent Transformation encompasses three main bodies: regulator. Separating ICT policy-making from ICT 1) The National Information Center regulation has been shown to be the most effective way of 2) The Telecommunications and Postal Regulatory Authority ICT sector governance. 3) National Authority for Digital Certification Infrastructure Infrastructure sharing is mandatory but not well enforced. Emphasis should always be to establish fair competition. sharing Infrastructure sharing can be used as a last resort where competition cannot be sustainably established. Market Study A market study was conducted in 2011 with Sudatel and Given that the market study was conducted 10 years ago, Zain being dominant operators it would make sense to update market definitions and dominance declarations. Licenses Licenses are not service and technologically neutral. Convert the licensing regime into a technological- and MNOs are not allowed to sell fiber bandwidth, which limits service-neutral one, and reduce or eliminate local fiber investment. ownership requirements MVNO licenses require a minimum of 60% local investment License fees Annual license fees of 1.3% of revenues are reasonable in NA the African context to fund a regulator. Termination TPRA set symmetric interconnection charges for both MTR Low termination rates are not a problem if that does not rates and FTR to 0.075 SDG per minute, which is US 0.017 cents, lead to traffic imbalance. TPRA would only need to address and close to zero. it if a dispute between operators arises. Consider moving The termination rate for SMS is zero. to zero termination rates (ie sender keeps all) Universal Sudan has a Universal Service Fund. It collects 2% of One approach is to suspend the collection of the USF levy Service Fund revenues. A problem is that during a time of hyperinflation, during the period of hyperinflation. Another is to design (USF) a lag between collecting and disbursing fees leads to value a disbursement mechanism that guarantees that levies loss. collected are disbursed within three months for universal access and service projects. Consider introducing a “pay or play” option for operators wishing to offer services in areas that are not economically viable in lieu of contributing to the USF. Spectrum Some of the digital dividend spectrum (790-862 Mhz) has A more effective approach to safeguarding that spectrum been allocated for mobile broadband: 10Mhz for Sudatel at is put to the most efficient economic use is to tie it to 800 Mhz. network coverage obligations, instead of high upfront fees. High once-off fees for spectrum may hinder investment. This ensures that only operators that intend to meet the network coverage obligations bid. Cybersecurity Laws are in place but the equipment to monitor cyber A cybersecurity, legal and policy review needs to be incidents is insufficient, partly because of difficult access conducted to identify bottlenecks in laws and regulation. caused by the embargo. Investment in training, equipment and regulatory processes is needed. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 39 Chapter 2  |  Digital Infrastructure Box 1: GSMA’s (Global System for Mobile Communications Association) position on Spectrum Pricing The GSMA released its position on spectrum pricing (GSMA 2021); “1. High spectrum prices can harm consumers through lower quality mobile broadband services 2. Governments should prioritize improved mobile broadband services – above revenue maximization – when awarding spectrum 3. Avoid limiting the supply of mobile spectrum (e.g. through set-asides), publish long-term spectrum award plans and hold open consultations 4. Set modest reserve prices and annual fees, and rely on the market to determine spectrum prices 5. Avoid creating unnecessary risks that put operators’ current or future services in jeopardy 6. Consult with industry on license terms and conditions and take them into account when setting prices 7. Auctions must be well designed and implemented to be an effective award mechanism 8. There is no single best approach to estimating the value of spectrum and international benchmarks should be used with caution 9. Spectrum pricing decisions should be made by an independent regulator in consultation with industry 10. The rise in the total cost of spectrum is a threat to mobile broadband growth – especially 5G.” Certification (NADC). The international best prac- costs of extending the fiber to the RAN site from tice approach is to have an independent regulator. the tenant. Separating ICT policy-making from ICT regulation has been shown to be the most effective system to The purpose of spectrum fees should be to safe- support good ICT sector governance. guard efficient economic use, not revenue gener- ation.6 A once-off license fee of 50 million USD for Introducing a service- and technologically-neutral 10Mhz in the 800MHz band was highlighted during license regime would incentivize RAN site fiber consultations with the private sector. That would backhaul investment. MNOs would then have an make Sudan one of the most expensive places in incentive to build critical fiber routes that are other- Africa for spectrum.7 The shift from looking at licens- wise not being built. It would also encourage MNOs ees and spectrum fees as a source of revenue and to connect their sites to fiber nodes and facilitate towards a focus on using fees to allocate scarce infrastructure sharing of RAN sites. A RAN site resources efficiently would accelerate rollout of fast that is connected to fiber is more attractive and mobile broadband, which will generate economic the owner of the RAN site can recover part of the growth and additional tax revenues (GSMA, 2021). 40 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 2  |  Digital Infrastructure 2.3. Recommendations R2: Establish a carrier-neutral data center that also functions as a second Internet Exchange Point. This could attract data caches from content pro- R1: Invest in expanding terrestrial fiber routes in viders such as Akamai, Google and Meta, which in the region. Additional terrestrial fiber routes to Ethi- turn would increase the quality of internet access. opia, South Sudan and the Central African Republic As a second IXP, it should increase speeds for locally would increase regional connectivity and make sub- exchanged data. marine cable landings more profitable by increasing the international traffic passing through them. The R3: Transition existing licenses to technologically route to the Central African Republic could also neutral licenses could incentivize MNOs to build provide backhaul services for mobile operators as it critical fiber routes, connect their sites to fiber nodes passes through areas with a high population density. and facilitate infrastructure sharing of RAN sites. Supporting fiber backhauled tower sites to provide an open-access network coverage expansion into R4: Conduct a periodic review of the impact of VAT rural and conflict areas can be considered. Open on telecom services, a nd other fiscal measures could access means that the business model is based on help to balance the Government’s need to balance transparent pricing and that all customers (MNOs) the need for revenue with digital economy growth. will have identical terms of usage. This would allow The review would ensure the sector is in line with best MTN, Sudani and Zain to expand their broadband practice in other countries, and industry standards. coverage without the upfront capital expenditure of establishing a new site and building towers. All three R5: Address lag between USF collection and dis- operators could also potentially sell their sites to bursement to account for inflation. This could be independent tower companies and thus recapitalize done through suspending collection of USF levy to invest into active equipment. Building a route to during a period of hyperinflation, or mandating dis- Ethiopia could leverage the planned railway line, and bursement within a stipulated period of time from connecting with South Sudan would involve reviving date of collection and permitting use of “pay or play” old links. measures. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 41 Chapter 2  |  Digital Infrastructure Notes 1 ITU, 2012. The Impact of Broadband on the Economy: Research to Date and Policy Issues. 2 A range of studies point to the correlation between mobile broadband penetration and economic growth; Czernich et al. 2009, Koutroumpis 2018, OECD 2011, Qiang et al. 2009, Endquist et al. 2018, ITU 2020 3 The fiber routes data is from TPRA and the population data from World Pop (https://data.humdata.org/dataset/worldpop-population-densi� - ty-for-sudan). The population density has been calculated based on the number of people per square kilometer using a top-down approach. This means that the population data set is based on the latest census and then estimates are created for the intervening years between censuses. A more complete explanation can be found here: https://www.worldpop.org/methods/populations. The population density is calculated for a roughly 1km squared area. 4 TMG, APTelecom, HoA Missing Links Study, 2022 5 https://www.broadbandcommission.org/broadband-targets/ 6 ITU, 2016 7 https://manypossibilities.net/2019/04/spectrum-auctions-are-killing-competition-and-failing-rural-access/ 42 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 43 Chapter 3  |  Digital Public Platforms CHAPTER 3 Digital Public Platforms 3.1. The Importance of Digital Digital public platforms lay the ground for improved government effectiveness, accountability, and Platforms transparency, and these can enable delivery of better public outcomes in Sudan. Sudan ranks in Digital public platforms1 are a central pillar in the the bottom 15th percentile on all six World Bank digital economy. Digital public sector platforms are World Governance Indicators (WWGI)4 today. The often part of wider e-government systems that are country’s government effectiveness score stands designed to leverage information and communica- at –1.62 (from a scale of –2.5 to 2.5), placing it in tions technology (ICT) to enhance transparency, the bottom 5th percentile globally. The control of accountability, and efficiency in public administra- corruption score is currently at –1.37 (same scale), tion and services delivery.2 Digital platforms have the in the bottom 8th percentile globally. Sudan has a potential to intersect all pillars of the digital econ- unique opportunity to leverage digital public plat- omy by connecting digital services, including digital forms to improve governance and service delivery, transactions, exchange of information, and goods. including, but not limited to, government-to-gov- If interoperable, these intersections can strengthen ernment (G2G) platforms to streamline government the network effect of the digital economy and create back-end operations and optimize resource man- economies of scale of information and services, such agement, government-to-business (G2B) platforms that the value derived from the integrated network to enhance the ease of doing business environment, is greater than a single interface. Information and and government-to-citizen (G2C) to expand public services offered through digital public platforms can services (Figure 5). G2C platforms can also reduce help serve government agencies, businesses, and cit- the transaction costs of citizens interacting with the izens in different aspects of the economy, including government and provide for new channels for public healthcare, education, commerce, energy, and social engagement and feedback. In reducing the informa- protection. The COVID-19 pandemic has highlighted tion asymmetry between government and citizens, the importance of digital government platforms in digital public platforms can transform economies ensuring business continuity and service delivery in from hierarchical technocracies to open network times of crisis, and that investments in modernizing economies.5 and digitalizing public administrations are a key com- ponent in building resilient governments.3 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 45 Chapter 3  |  Digital Public Platforms Figure 5: The digital public platforms framework Users Benefits • Increase people’s access to rights and services and improve their and end-to-end experiences with services Use cases • Improve core government functions and program administration • Increase public engagement accountability, and responsiveness Applications for core • Facilitate trade and economic integration gov. functions, services, Systems • Support private sector development & CivicTech and interfaces Core components Requirements • Design that is outcome- and context-based, user centric, and uses Digital ID & Trust Services Secure digital open principles transactions • Strong legal, regulatory, and operational frameworks • Whole-of-government approach Data exchange • Investment in digital skills and literacy Interoperability & across common Shared Services resources Figure 6: EGDI values of Sudan, Egypt, Chad, and 3.2. The State of Digital Public Ethiopia (0-1, best) Platforms in Sudan Sudan Egypt Chad Ethiopia 0.6 Sudan leverages more than 10 years of experience in building the digital capabilities of the government 0.5 though digital public platforms remain nascent and scarce. The country’s previous e-government strat- egy, which launched in 2008 and was designed to be 0.4 implemented in two phases (2008-2011 and 2012- 2016), included the establishment of the National Information Center (NIC), extending internet con- 0.3 nections to government units and modernizing gov- ernment websites. However, the previous political and social landscape which these initiatives were 0.2 established on were not aligned with citizen-cen- tered development objectives and did not translate into egalitarian development gains for the country. 0.1 Sudan’s slow digital government and public plat- forms progress is reflected in the country’s rela- 0 2010 2012 2014 2016 2018 2020 tively low rankings on e-government development indicators,though more recent trends suggest slight improvements, which could have been brought on by the political stability and subsequent develop- ments in human capital and the telecommunications Tunisia, is valued at 0.6525, almost double that of sector. Sudan ranks in the bottom quarter of the Sudan. Amongst its neighboring countries, Sudan is least developed countries in e-government globally, only outperformed by Egypt (Figure 7). Sudan has per the United Nations (UN) 2020 E-government not witnessed stable EGDI growth over the past Development Index (EGDI).6 Today, Sudan ranks 170 decade, though it recently improved both its ranking out of 193 countries globally, with an EGDI value of and value on the index, and in the past 2 years alone, 0.3154. The regional leader in Africa, Mauritius has an improved its global ranking by 10 points, moving from EGDI value of 0.7196 whereas the subregional leader, 180 to 170. 46 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 3  |  Digital Public Platforms 3.2.1. G2G Platforms National Civil Registry (NCR) The extent to which key back office G2G platforms Foundational ID systems are a core component of are implemented varies across government min- digital government and the digital economy as they istries, departments, and agencies (MDAs). Key expand access to service and support enhanced platforms are in place, though to varying degrees of delivery of services across both the public and pri- digitization, including an Integrated Financial Man- vate sectors. Sudan’s foundational ID system is the agement Information System (IFMIS), a National National Civil Registry (NCR), which issues a national Civil Registry (NCR), a Treasury Single Account number (NN) and NN certificate to all registered per- (TSA), a revenue collection platform named E15, sons and a national ID card to all registered citizens an e-tax platform, and e-customs. Khartoum State and foreigners aged 18 and over. An optional national also has a business registry platform and a land ID smartcard is also available, but at a cost, which registry. Planned platforms being introduced by would be a reason why there has been limited uptake. the Ministry of Finance and Economic Planning (MoFEP) include a dynamic social registry (with the Consensus from stakeholders is that the NCR intention to transfer its ownership to the Ministry foundational ID system is the most advanced dig- of Social Development (MoSD) in the future), which ital public platform in terms of digitization capa- the World Bank supported Sudan Family Support bilities and is essential for the government’s vision Project (P173521) is playing an instrumental role in for government-wide interoperability. The General developing, and an e-Government Procurement Administration of the Civil Service (GACR) within (eGP) platform, which is in design stages and valued the Ministry of Interior (MoI) is the mandated entity at US$ 2 million dollars, but whose rollout is cur- responsible for civil registrations of all persons in rently constrained by limited available resources. Sudan and issuing national numbers (NNs) to citi- To date, the design and development of G2G plat- zens. The NCR was established in 2011, and has since forms has largely been guided by the MDAs that are become the most digitized government platform managing them, as Sudan does not have a digital (registration and management are fully digitized) government strategy in place to harmonize vari- Sudan is one of the leading countries in Africa in ous initiatives and address capacity discrepancies. terms of ID coverage. Around 80 percent of people in While the development of an e-government strat- Sudan, including 33 million nationals, are registered egy was planned by MTDT to be launched in 2021 in the NCR, which is considered a major achievement as part of the Digital Transformation Strategy, it has for a large country with a low population density and been delayed and its absence thus far led MDAs a history of protracted conflict. Figure 10 shows the to adopt a scattered and siloed approaches to the estimated ID coverage by State, as measured by development of digital public platforms, leading to the total registered/projected population in 2020. imbalanced success in their digital capabilities and The system enables the issuance of national num- utilization. bers (NNs), national ID cards, and civil registration Figure 7: ID coverage by state (2020 estimates) ID Coverage (2020 estimates) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sennar West Darfur Central Darfur South Darfur North Darfur East Darfur Al-Gedarif Khartoum River Nile Al-Gezira Nothern White Nile West Kordofan Blue Nile South Kordofan North Kordofan Kassala Red Sea Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 47 Chapter 3  |  Digital Public Platforms certificates. Currently, around 19 million national ID source of core identity information as part of gov- card records have been digitized and deduplicated ernment-wide interoperability, including the federa- based on fingerprints, with the remaining of those tion of government databases for data sharing and registered being children who have yet to come of exchange. MoI is amongst 5 ministries working with age for national ID card biometric capture. the Ministry of Justice (MoJ) to draft a data pro- tection law, which was expected to be finalized by Although digital IDs have the potential to facilitate September 2021, and will serve as the governing legal single registry identity, Sudan has not yet unlocked framework for data protection during sharing of data. its potential to expand shared e-services for citi- zens or allow card holders to provide their identity Despite its advancements, the NCR faces key chal- remotely for digital transactions. There are plans lenges related to coverage and accuracy, especially by the government to expand coverage of NCR, and with respect to gender disparities. An estimated 10-12 investments are underway for mobile units to travel million people in Sudan are not currently registered in to remote areas and encourage registrations as part the NCR database, and do not have an NN. Vulnera- of the Sudan Family Support Project (Box 2 provides ble populations, including women, children, and those additional details). living in conflict-affected areas, account for most of the unregistered individuals. Around 72% of women Not only is the NCR the most digitized public plat- have an NN compared with 89% of men, and people form, but it is also considered the most advanced in remote and conflict-affected states have low cover- in terms of its services to third parties. Currently, ages (Ex. Red Sea at 49% and East Darfur (50%). Gaps in 38 MDAs, including MoSD (for social safety net pro- coverage limit the potential of NCR as a reliable source grams) and MoFEP (for tax and payments) can access of identification and verification for national safety net the NCR to verify the identity and demographic programs. Some stakeholders noted that data in the information of their clients. MoI is currently finalizing NCR is not accurate and can benefit from a period of the expansion of Application Programming Interface updating and cleaning, as currently, citizens must carry (API) to enable commercial banks to verify the iden- out substantial bureaucratic processes and have limited tity of customers to open bank accounts remotely. incentives to keep their NCR data up to date, which The NCR is well placed to be an authoritative has led to an underreporting of death registrations. Box 2: Sudan Family Support Project7 The Sudan Family Support Project (SFSP) (P173521) is a US$820 million project that aims to deliver cash transfers and improve safety net systems to support Sudanese families affected by economic reforms and other short-term shocks. The SFSP is being implemented by MoFEP and is funded by the World Bank and other international donors. The project is expected to provide cash transfers to around 80% of the population (approximately 36 million people).. The SFSP seeks to strengthen social protection plat- forms in Sudan and build institutional capacity to create the foundations for a permanent national Social Safety Net (SSN) system and a dynamic social registry in the future. When the project concludes and transfers to households under the SFSP end, eligible beneficiaries will be transitioned to an expanded permanent safety net targeted to those most in need. SFSP has a mutually reinforcing relationship with key digital public platforms. The project relies on sev- eral platforms to verify citizens against the exclusion criteria and make disbursements while enhancing and expanding the existing systems. The SFSP utilizes, amongst other platforms, the NCR and the digital financial services provided by commercial banks and mobile payment service providers to deliver cash payments. In doing so, it aims to help scale up NCR coverage to near universal access by incentivizing eligible citizens to register as program beneficiaries in the NCR via physical enrollment centers across the country. The project has established a Grievance Redressal Management (GRM) system and is sup- porting a Monitoring & Evaluation (M&E) system and the development of service-level requirements for digital payments. The project’s Management Information System (MIS) is expected to provide the foundation of a sustainable SSN system to be managed by the MoSD in the future. 48 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 3  |  Digital Public Platforms Box 3: Unified resource development & collection authority The Unified Resource Development and Collection Authority (URDCA) was launched by Khartoum State in 2015 and aims to harmonize the collection of resources to finance both current expenditure as well as development projects in Khartoum state. It is considered an electronic payment platform under the umbrella of MoFEP. The system collects taxes, property fees, and other state ministries’ and local- ities’ fees from citizens for basic service provision across the state’s 7 localities. Similarly, the URDCA feeds into the government’s E15 account, with allocation to Khartoum State. The URDCA is partially digitized; payments are made offline and in cash, through paper-backed invoicing, and integrated into a fully digital system with e-receipts. The system relies on GIS mapping to identify entities, and economic activity across the state, and currently has the most updated satellite image of the Khartoum state, including rural regions in the state. URDCA draws on the similar revenue collection models in two Arab countries (Jordan and United Arab Emirates) as well as in Ethiopia and South Africa. Prior to its establishment, there were no unified policies or frameworks for unifying resource collection. The URDCA was designed to address the lack of statis- tical data on economic activities and suboptimal use of technology to facilitate collection initiatives . In doing so, it aims to reduce the cost of collection while building an effective system to combat tax evasion. However, there are discrepancies between e-invoices and e-receipts, which expose the system to tax evasion and corruption risks, potentially undermining its reliability and efficacy. Figure 8 below highlights the success of URDCA in increasing revenue collection from localities during the period 2015-2018. Because of its success, other states in Sudan, including Red Sea, North Kordofan, and Nile River requested Khartoum State to help them replicate the platform. Figure 8: Change in revenue collection on the URDCA platform (2016-2018) Change in revenue collection on the URDCA platform (2018-2018) 180 150 Zain 120 40% MTN 90 137% 39% 55% 33% Sudatel 60 49% 49% 46% 30% 44% 30 22% 30% 16% 21% 15% 2% 8% 15% 0 Federal Khartoum Baseline Ministries Localities Total transfers state taxes taxes Integrated Financial Management and subnational levels, and the MoFEP has the legal Information System (IFMIS) mandate and authority to set the standards and systems. While no data exists on which IFMIS mod- The Government’s Integrated Financial Man- ules exist or their functionality, general consensus agement Information System (FIMIS) is in place, from stakeholders interviewed was that the IFMIS though it is not fully digitized or utilized. Sudan is not fully utilized and reliance on manual systems has a centralized IFMIS typology in that the govern- prevails within the Ministry. Moreover, despite the ment has a uniformed IFMIS for both the national existence of a Treasury Single Account (TSA), which Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 49 Chapter 3  |  Digital Public Platforms was launched in 2015 and has since been mapped to of public procurement practices, which are currently all MDAs, payments from the TSA are not central- undermining government accountability and trans- ized which heightens risks associated with misuse of parency, risking the public’s fragile trust. While the public funds, especially if system controls are weak. GRP system has a procurement model, its function is limited to automating several back-end functions, The IFMIS is currently undermined by three main but suppliers cannot currently register in the system, factors. The first is that there is fragmentation submit bids online, or perform other e-Tendering between the Government Resource Planning (GRP) functions. The wider procurement process is man- and the revenue collection system—the E15 plat- aged manually, in that public employees pre-identify form, , which leads to the need for manual consolida- a closed group of companies to advertise the ten- tion of accounting reports as the IFMIS is unable to der for, and contract managers choose their pre- generate financial statements of revenue and expen- ferred system to track performance, delays, or costs. ditures. This stymies the Ministry’s ability to manage Moreover, an analog GP system renders it difficult to its cash flows effectively, which leads to misalloca- monitor active government projects and consolidate tion of scarce public financial resources as some line the value of GP for stock-taking, historical compari- ministries overbudget while others underbudget. sons or future planning. The second factor is that MoFEP assumes a fiduciary role in executing the budget but does not carry out 3.2.2. G2C and G2B Platforms value considerations to ensure efficient budget allo- cation. In tracking budget execution, MoFEP does E-services not track performance of MDAs, which breaks the relationship between spending the performance and Citizen-facing public platforms are less developed results that the IFMIS aims to optimize. Finally, the and more scattered, and Sudan does not have a Human Resource Management Information System shared e-services portal. Expanding e-services is (HRMIS) is not currently linked or consolidated with important for efficient, effective, and at-scale ser- the payroll system, often resulting in a surplus in vice delivery. As of today, e-services in Sudan are subaccounts of line ministries as Treasury is unable mainly limited to online university applications and to manage the resources effectively. renewing passports. MTDT highlighted that while there are 170 e-services in their system, most, if not The E15 platform (Sudan’s revenue collection sys- all are aspirational. Further, citizen-facing websites tem) is only a quasi-digital platform with strong in Sudan serve to disseminate information but are reliance on cash payments. The E15 system is the not interactive and do not have the functionalities unified revenue collection platform across all MDAs, to deliver services or accept payments, and Sudan managed by MoFEP. It was launched in 2014 and to does not have a shared e-services portal to facilitate date, around 37 banks have connected to it in the access to various government services. One excep- system. It was previously developed and managed tion to this is the Nifti platform which is managed by by a Sudanese company called the Nile Center for Ministry of Energy and Oil to manage diesel alloca- Technology Research. All the data is stored in the tion to address fuel shortages; the platform is out- Nile Center, and there are intentions to migrate lined in more detail in Box 5. In designing a shared the data to the National Information Center (NIC) government-wide e-services platform, the GoS can servers. Despite its potential and reach, several leverage best-practices in terms of design, func- stakeholders, in discussions, noted its broad scope tionality, and accessibility from leading e-service for improvement, especially in infrastructure and portals, like that of the Government of Denmark software licensing. Today, the system lacks a strong (https://www.borger.dk/), United Kingdom (https:// firewall and antivirus protection, making its cyberse- www.gov.uk/), Australia (https://www.australia.gov. curity risk high. Moreover, it is not fully digitized as au/) and Estonia (https://e-estonia.com/). It is also invoices remain paper-based and payments are still important to design the portal to be accessible by made in cash, despite a digital back-end system. marginalized populations, including people with dis- abilities and illiterate individuals. E-Government Procurement (eGP) Tax and Customs: Although planned, the Government does not cur- rently have an eGP platform in place. Sudan’s ana- The Sudan Taxation Chamber (STC) is currently log GP system poses a major threat to the integrity working on developing its IT infrastructure for the 50 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 3  |  Digital Public Platforms Box 4: E-health platforms The COVID-19 pandemic has accelerated the digital health platforms, though key infrastructure gaps prevail. Sudan has developed two iterations of an e-health strategy, the first in 2005 and a revised strategy in 2016 though the strategy has not been operationalized due to technical, infrastructure, and resource constraints. The COVID-19 pandemic and the subsequent COVAX initiative to provide COVID vaccines to poor country populations, has paved the way for the government to build a health database that is able to track vaccination progress at the individual level (through NCR linkages).The database also contains COVID-19 testing history of individuals. During the pandemic, the Ministry launched a telemedicine initiative to provide consultations to citizens, though no additional information was provided during meetings with stakeholders regarding the scope of this initiative. The Federal Ministry of Health (FMoH) has plans to digitize the health management information systems across hospitals and to build electronic records for patients for seamless service delivery, though these plans have not yet turned into concrete projects due to resource constraints. Today, e-health delivery service in Sudan still largely stems from small private sector platforms such as Al-Awasi medical platform, Doctors on Call, and others, facilitated by clearance from the FMoH to allow them to operate. Doctors on Call is a primary healthcare service provider that supported FMoH to expand healthcare services during the pandemic. The service is deemed affordable; the Doctors on Call smartphone application has over 10,000 downloads. Al Awasi is another platform that provides training and capacity building of healthcare professionals. The platform also has an online job application portal to link healthcare providers with employment opportunities to help address the brain drain challenge in Sudan. 300 tax offices across the country. STC has two assessment and payment reconciliation, and com- main infrastructure projects in the pipeline, the first pliance actions). STC’s 300 offices use the system is developing its own data center and the second is to register citizens and generate a Tax Identification extending connectivity to the 300 centers across the Number (TIN), which must be done by the system, country. There are two data centers in Sudan, one is but other modules like declaration and audit remain operated by SUDATEL company (telecommunica- manual. This is partly because the staff working in tions operator) and the second is being developed the STC offices lack the digital know-how on how by STC. The SUDATEL data center is considered the to use the software, and because citizens still prefer largest enterprise data center in Sudan and one of to declare their taxes manually rather than electron- the most important centers in Africa. The center ically. No exact information exists on the percent- cost USD $45m to build, and has four data rooms, age of taxpayers declaring electronically. The system each room has nearly 1000 servers (the center is interfaces with the Customs system, where TMS is around 14,000 square meters). The center aims to able to provide a TIN for the customs system, and supply reliable IT infrastructure with network mon- in turn, the customs system provides the TMS data itoring and data and power backup. The STC data on exports and imports. The trade and business reg- center remains under development, and today, the istrations are also connected with the tax system, facility and the systems are installed but the serv- as well as the NCR. TMIS also interfaces with the ers and external storage are not yet installed. Once Central Bank, though it is only a one-way commu- completed, the center aims to be connected to the nication channel such that it provides the Central 300 STC offices, and plans are underway to enhance Bank information (TIN and contact information). the hardware and connectivity of these centers. STC is currently working on adding e-payment as a function to the tax system to allow for payments Sudan has a digitized Tax Management Informa- of tax liabilities, which remains under development. tion System (TMIS) and a digitized Customs sys- STC is also working with MoFEP to expand 2-way tem. Sudan’s TMIS is fully digitized, and provides communication and allow STC to track the compa- more than 80 functions (including registration, nies that are being contracted by the government Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 51 Chapter 3  |  Digital Public Platforms Box 5: NIFTI Fuel Platform Nifti is a platform launched by the Ministry of Infrastructure and Transport – Khartoum State (MoIT- KRT) on August 10th, 2020 to manage fuel allocation in Khartoum State. The platform was born out of a need by the Ministry to take stock of the fuel consumption in Khartoum State and manage energy resources effectively, as the state was constantly facing shortages arising from a lack of comprehensive data on fuel supply and demand. It is jointly operated with the Ministry of Energy and Oil (MoEO). It is currently the only platform in Khartoum that is operating to supply fuel above the 50-liter mark and connects to 134 fuel stations across the state to distribute fuel to the end user. There are a total of 19,013 facilities registered on the platform, including more than 2,700 housing units, 4,000 farms, 1,500 bakeries, and 400 government offices, amongst many others. In just one month (April to May, 2021), the platform delivered more than 6,511 kiloliters of fuel. Users download the application on their phones (currently only available for Android), and request the fuel to be delivered to their loca- tion. The platform is linked to the NCR for user verification. In instances where there is a fuel shortage, the user’s request gets rejected and they have to wait till the stations are refilled Nifti is managed by a team of nine (including 1 project manager), and it cost the Ministry around US$ 190,000 for the hardware, software, and human resources. The data is currently stored in MTDT’s National Information Center. The team is looking forward to expanding the platform by partnering with Diesel Supply companies and expanding the payment services on the platform to accept e-payments (including e-wallets) as currently the platform only accepts cash-on-delivery. and the value of the procurement for tax purposes. Open Data Sharing A one-stop-shop to facilitate the e-business land- scape (registration, compliance, licenses, etc.) was Government culture is not conducive to open data not identified in Sudan. sharing. As evidenced by Sudan’s low positioning on the Open Government Data Index (value of 0.0688 3.2.3. Analogous Complements in 2020, on a scale of 0-1, similar to Lebanon and Uganda), open data sharing is limited. While Sudan Grievance Redressal Mechanism (GRM) does have an Open Government Data website (https://sudan.opendata,forafrica.org/), the gov- Aside from the nascent GRM recently developed ernment does not publish data on its performance for the SFSP, there are no other GRM or citizen or responsiveness, as the published data is limited participation platforms in Sudan to capture and to national statistics and economic indicators. The consolidate citizens’ feedback or needs. Today, lack of information on public governance combined Sudan ranks among the bottom 15 countries in with low e-participation of citizenry limits Sudan’s Africa on the UN e-participation index,8 and 175th in potential for participatory governance for better the world, tied with Djibouti and just ahead of the public outcomes. The SFSP GRM, which is accessible Democratic Republic of Congo and Turkmenistan to project-affected constituencies, could be a useful (comparisons with neighboring countries are shown building block, though it remains at an early stage in Figure 9: E-participation is important to foster and requires further improvements and enhanced civic engagement and participatory governance in a communication to ensure extension to, and usage decentralized way. Lack of formal channels to hold at, the community level across the country. governments accountable or demand better public services can fragment the trust between citizens and governments. 52 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 3  |  Digital Public Platforms Figure 9: E-participation Index values for Sudan, public platforms landscape. Doing so can help design Ethiopia, Chad, and Egypt from 2010-2020 (0-1, incentive structures to address the institutional best) capacities and infrastructure connectivity across MDAs. Improving readiness should also be coupled Sudan Egypt Chad Ethiopia with the development of a legal framework. 0.8 Several challenges to the development and har- 0.7 monization of digital public platforms exist. These include varying infrastructure capacities within 0.6 MDAs (software, hardware, and connectivity), lack of an interoperability framework and shared services, subpar cybersecurity and data privacy safeguards 0.5 and practices (data protection, privacy, and fraud), and varying digital capabilities within the public 0.4 administration. These gaps are underpinned by a lack of monitoring and evaluation (M&E) of existing 0.3 public platforms to understand efficiency gains, cost savings, user feedback, and overall performance. 0.2 The lack of interoperability between existing digital platforms and limited shared service reinforces the 0.1 scattered approach and exacerbates the fragmenta- tion between federal and state governments. Lack 0 of an M&E framework and practices does not allow 2010 2012 2014 2016 2018 2020 for the government to take stock of existing plat- forms, leverage evidence to inform policy analysis, or develop new or existing platforms. This is the back- ground to the government facing difficulty mobi- Institutional readiness, governance and lizing resources to fund the digital public platforms coordination initiative, which was highlighted as a key concern for the MoH, Sudapost, and MoSD. Today, the institutional readiness in Sudan is con- sidered low and stronger coordination mechanisms While MTDT is tasked with developing an e-gov- for the standardization of digital public platforms is ernment strategy, there is no clear understanding needed. Discussions with stakeholders revealed that or consensus on the scope of its mandate. Identi- while MTDT is tasked with developing an e-govern- fying a mandated institution to develop the digital ment strategy as part of the wider digital transfor- public platforms landscape can help ensure that the mation strategy, there is no clear understanding or “whole of government” approach underpins the dig- consensus on the scope of its mandate. Identifying ital public platforms landscape. Doing so can help a mandated institution to develop the digital public design incentive structures to address the institu- platforms landscape can help ensure that the “whole tional capacities and infrastructure connectivity of government” approach is underpinning the digital across MDAs. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 53 Chapter 3  |  Digital Public Platforms 3.3. Recommendations of key G2G platforms, MDAs should outline visions and work plans to strengthen the digitization, func- tionality, usage, interoperability, and data privacy R1: Reduce the NCR coverage gaps by expanding of government backend platforms. This includes NCR offices and/or mobile registration. The Gov- prioritizing the IFMIS and E15 platforms in terms of ernment can accelerate on-going SFSP NCR regis- building their digitization capabilities while fostering tration efforts by optimizing and/or increasing the a change management culture within the MoFEP quantity of the existing 1,400 mobile registration to ensure full utilization and to phase out manual kits for improved coverage. Registration through the financial management processes and procedures mobile kits should prioritize addressing geographic that are prone to corruption and inefficiencies. As and gender gaps to eliminate further disenfranchis- a secondary priority, the government should estab- ing already-marginalized groups. Specifically, this lish an eGP platform as it does not exist as of this includes eliminating the discriminatory legal require- date, to help increase transparency and efficiency, ment for women and children to have a “paterfamil- and build public trust in government procurement. ias” (husband, father or court-appointed alternative Similarly, it is recommended to launch a govern- in case the husband and father are deceased) physi- ment-wide HRMIS system to help take stock of the cally during registration. number and distribution of public sector employees and use the administrative data housed within the R2: Develop scalable verification mechanisms for system to inform recruitment needs and forecast non-in-person transactions. Sudan will need to future needs for wage-bill management. Key consid- establish digital ID and e-signature systems that erations in developing these platforms would be to will enable people to verify their identity and sign ensure that the analog complements (culture, skills, contracts remotely, without the need for physical data security practices, etc.) are conducive to the presence. The existing NCR is primarily used for development and usage of the platforms. Equally in-person transactions currently, and while there important is enhancing the interoperability of the are efforts to develop verification services for finan- systems through the development of an API road- cial service providers to verify customers remotely, map to facilitate the exchange of information. this is not a scalable model. Such digital ID systems that issue credentials to registered persons can be R3: Establish a shared e-services platform to integrated as a feature of the NCR – i.e. a central- increase the scope of e-services offered for better ized architecture – or a federated ecosystem of public outcomes. The e-service landscape in Sudan third-party digital ID providers that onboard users is limited to a handful of e-services, and the Gov- using NCR data, which would be governed by a ernment does not have a shared e-services portal to trust framework. Another option is a decentralized enhance citizen experience. The MTDT and the NIC model that allow users to store digital equivalents can lead the development and coordination of a gov- of their IDs and qualifications in personal wallets – ernment-wide e-service portal to include e-health e.g. a smartphone app – and allow this to be verified (telemedicine, electronic medical records, insurance using cryptographic techniques without consulting claims, etc.), e-education (delivery of distance learn- any central database, but this would be exclusive ing, school enrollment, university applications, etc.), to the population who have smartphones and dig- and e-citizen services (taxes, marriage registration, ital skills. Approaches similar to those outlined in R2 passport application, etc.). The platform can also exist for e-signatures, which are tied to digital IDs as include the development of a G2B ‘one-stop shop’ signatories need to be associated with a natural or to facilitate business registration and ease of doing legal person. A whole-of-country approach to digi- business (taxes, customs, permits, etc.). In parallel, an tal ID and e-signatures is needed, including to bring M&E platform and a GRM platform should be estab- together various public and private sector stake- lished to monitor the implementation and uptake of holders to ensure the legal frameworks, technology, the e-services and incorporate citizen feedback to and processes align with the Principles on Identifi- further develop the platform and refine the services. cation for Sustainable Development, especially with respect to inclusion, trust and responsiveness to the R4: Conduct an assessment of the digital skills and needs of users. ICT resources in the public sector to inform skills and resources gaps that need to be addressed to R3: Develop and strengthen back-end G2G plat- foster a digital government. The government can forms. To address the fragmentation and nascency conduct a skills audit of the workforce through the 54 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 3  |  Digital Public Platforms administration of surveys to better understand the skills gap through designing competitive recruit- demographics and digital capabilities of the work- ment strategies and defining upskilling and reskill- force. Insights from the assessment can help quan- ing needs for future training. It will be important to tify the skills gaps vis-à-vis the government’s digital incentivize MDAs to ensure digital skills within the transformation objectives. Accordingly, and if need public sector workforce are decentralized beyond be, the government can design policies to close the the IT departments. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 55 Chapter 3  |  Digital Public Platforms Notes 1 Digital platforms can be defined as digital systems and interfaces (for example, web- and mobile-based sites, applications, and software) that facilitate communications, transactions, and service delivery for government, people, and business through digital channels. 2 “Government as a platform” thus commonly features in many countries’ e-government strategies; see https://ash.harvard.edu/files/ash/ files/293091_hvd_ash_gvmnt_as_platform_v2.pdf. 3 OECD (2020), Digital Transformation in the Age of COVID-19: Building Resilience and Bridging Divides, Digital Economy Outlook 2020 Supple- ment, OECD, Paris, www.oecd.org/digital/digital-economy-outlook-covid.pdf 4 The World Governance Indicators (WGI) have been produced by the World Bank annually since 1996 for more than 200 countries. The WGI defines governance as “the traditions and institutions by which authority in a country is exercised,” including “the process by which governments are selected, monitored and replaced; the capacity of the government to formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.” It measures governance through six sub-indices: Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. Source: Kaufmann, D., A. Kraay, and M. Mastruzzi. 2006. “Measuring Governance Using Cross- Country Perceptions Data.” In International Handbook on the Economics of Corruption, ed. S. Rose-Ackerman. Cheltenham, United Kingdom: Edward Elgar. Latest dataset for which the Sudan values were retrieved from can be accessed here: https://info.worldbank.org/governance/wgi/Home/Reports 5 De Blasio, E., and M. Sorice. 2016. “Open Government: A Tool for Democracy?” Media Studies 7 (14). 6 The EGDI is produced by the UN Department of Economic and Social Affairs (UNDESA) every two years. The EGDI is a composite indicator that consists of three indices (online service index, telecommunication index and human capital index) that are equally weighted. The online service index measures a government’s capability and willingness to provide services and communicate with its citizens electronically. The telecommu- nication infrastructure index measures the existing infrastructure that is required for citizens to participate in e-government. The human capital index is used to measure citizens’ ability to use e-government services. Additional information on the UN EGDI can be found here: https:// publicadministration.un.org/egovkb/en-us/About/Overview/-E-Government-Development-Index Data source (2020): https://publicadminis- tration.un.org/egovkb/en-us/Data-Center 7 Additional information on SFSP can be found here: https://projects.worldbank.org/en/projects-operations/project-detail/P173521 8 The e-participation index (EPI) is derived as a supplementary index to the UN E-Government Survey. It extends the dimension of the Survey by focusing on the use of online services to facilitate provision of information by governments to citizens (“e-information sharing”), interaction with stakeholders (“e-consultation”), and engagement in decision-making processes (“e-decision making”). The e-participation framework is composed of those three measures, defined as: E-information: Enabling participation by providing citizens with public information and access to information without or upon demand. E-consultation: Engaging citizens in contributions to and deliberation on public policies and services. E-decision-making: Empowering citizens through co-design of policy options and co-production of service components and delivery modalities. Data source can be accessed here: https://publicadministration.un.org/egovkb/Data-Center 56 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 57 Chapter 4  |  Digital Skills CHAPTER 4 Digital Skills 4.1. The Importance of Digital 4.2. The State of Digital Skills Skills Sudan’s education system has been chronically Digital skills form an essential building block of the affected by a combination of armed conflicts, a leg- digital economy, critical to maximizing the uptake, acy of decades of international isolation, political impact and benefits stemming from greater access instability, and weak institutions. Despite recent to connectivity and jobs. Digital skills can help progress in student enrollments, the education sec- bridge the digital divide, bringing more people online tor suffers from multiple challenges from inputs to and empowering individuals to utilize digital tools outcomes, including low and unequal levels of access and services in a personal and professional capac- and completion, low and stagnant student learning ity. A digitally skilled citizenry is likewise critical to outcomes, poor education system management, creating the consumer base for new digital products inadequate learning environments, and a low level of and services created by local entrepreneurs. public spending on education with significant con- tributions from households. These challenges also Sudan could better utilize its human capital on affect digital literacy and skills. broader educational outcomes. The World Bank Human Capital Index1 measures the extent to which Though Sudan currently lacks a digita skills rame- countries and economies optimize their human cap- work, efforts are underway to create an ICT in ital through education and health outcomes. Sudan Education Policy. The transitional government has ranks 139 out of 157 countries (among the bottom shown commitment towards focusing on ICT in edu- 20 countries in the world), with a Human Capital cation. Development of a National ICT in Education Index (HCI) value of 0.38 which implies that a child Policy led by a committee of both Basic Education born in Sudan today will be 38 percent as produc- and Higher Education, together with few interna- tive growing up as he or she would have been if they tional organizations and UN agencies, is underway. had received complete education and full health. The committee was established in 2019, with a mis- This HCI score is below both the global and regional sion to articulate the relevance, responsibility, and averages for education compared to countries with effectiveness of utilizing ICT in the education sector. similar income levels. It aims at addressing current sector challenges and equipping Sudanese learners, students, teachers, and communities to meet demand for 21st century skills. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 59 Chapter 4  |  Digital Skills Figure 10: Human Capital Index 100% 96% 8 94% 93% 93% 80% 78% 74% 75% 76% 71% 70% 7 65% 62% 6.3 Years of scholing 60% 47% 6 38% 40% 40% 37% 5.2 5 20% 4.4 4.4 0% 4 Sudan Low income Lower middle income Upper middle income HCI Survival to age 5(%) Kids under 5 not stunted (%) Adult survival rate (%) Learning-adjusted years of school Table 18: Snapshot of Education Sector Indicators, 2018 Indicator Value Literacy Rate (age 15 years and above) 60% Primary Gross Enrollment Ratio 69% Secondary Gross Enrollment Ratio 38% Enrollment in technical and vocational education and training (TVET) as % of the total enrollment in 4.19% secondary education (2018) Out of School Children (OOSC) (2018) 3mn Highest numbers of out-of-school children (OOSC) in the Sub-Saharan Africa (SSA) region. 52 % had never attended school 48 % started but dropped out While 60% of the population is considered literate,2 sector. This is in part due to an absence of a clear levels of digital literacy are believed to be much definition of digital skills or digital skills framework lower, in the absence of recent statistics. Currently in the country. Yet stakeholder consultations reveal no data or indicators on digital skills are being sys- how digital literacy levels are generally much lower tematically collected or tracked by the education than the recorded literacy levels. 60 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 4  |  Digital Skills Box 7: State Expenditure on Education in Sudan Education in Sudan is decentralized, and subnational levels of Government have the primary responsi- bility for the delivery of pre-university education. Education provision in Sudan is a shared responsibility among various administrative layers, managed at the federal, state and local levels. The Federal level has the policy mandate for strategic planning, coordination, and definition of standards. The 18 states are responsible for secondary education provision, human resource management, coordination of work of the Directorate of Education at the local level, and basic education certification. Localities are the frontline service providers, responsible for basic education day-to-day management. Low public funding for education is affecting quality services and impeding access. The education bud- get as a proportion of the overall budget remained stable at 11 percent between 2009-2017, which is low compared to the SSA average of 16 percent. As a share of GDP, spending in education was halved from 2.4 percent in 2009 to 1.2 percent in 2017, which is the lowest in Sub-Saharan Africa. The few resources in education are a limitation to investing in digital skills. The digital agenda is extensive and complex. Problems go from: a lack or outdated nature of digital infrastructure, shortages of critical resources and supplies, to halts in policy implementations. Figure 11: Public Education Expenditure 12 12 11.2 15 10 9.2 9 12 8.1 8 7.3 Education spending 9 as a % of total public spending 6 6 Education spending 4 as a % of GDP 2.7 2.7 1.8 1.9 3 2 1.3 1.3 0 0 2000 2002 2005 2007 2009 2018 4.3. Supply of Digital Skills in 2015 revealed how learning outcomes were low at this level, specifically in literacy and numeracy. Mainstreaming digital literacy is limited. A “computer 4.3.1. Structure of Educational Institutes science” curriculum is offered at the end of the sec- and Digital Skills ondary education,4 but the curriculum is outdated, and theoretical with no presentation of practical Basic education, i.e. primary and lower secondary aspects primarily due to lack of ICT infrastructure levels, offer largely theoretical basic digital skills such as computer labs, electricity in schools, quali- through “computer science” courses. The current fied teachers and resources. basic education (8 years3) which comprises 6 years of primary education (ages 5-10 years) and 2 years Upper secondary education academic or techni- of lower secondary (ages 11-13 years) is provided by cal track offer basic digital skills through optional both government and private entities. The results of ICT courses. After 8 years of basic education, learn- the National Learning Assessment (NLA) conducted ers who complete and attain a basic examination Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 61 Chapter 4  |  Digital Skills Figure 12: Structure of Education in Sudan, 2021 Source: General Education Sector Strategic Plan 2018/19 – 2022/23, federal Ministry of Education certificate may proceed to academic or techni- Tertiary education is offered by universities cal secondary schools or join vocational training and higher educational institutions; these offer institutes. Within the academic track - secondary advanced and specialized digital skills training. schools mainstream ICT through optional subjects Tertiary education is offered by 52 universities and in the 3 years of secondary level. The subject taught 87 colleges including 17 public and 66 private insti- however, is theoretical and lacking practical aspects tutions, respectively (2016).7 Advanced Digital skills due to infrastructure constraints. are usually delivered at the undergraduate programs (e.g. Faculty of Engineering, Mathematics, Science) Upper secondary education vocational training and post-graduate programmes (e.g. masters & doc- track offers technical skills but sees low enroll- torates in Applied Science, Applied Mathematics, ment. Although technical education is a full fledged Engineering, Technology). Highly specialized dig- part of secondary education in the country, the ital skills are taught in specialized post-graduate total enrollment is 31,000 representing about 3% programs such as the Masters and Doctorates in of total enrollment5 in secondary education. This is Technology. Some universities, mainly public uni- presumed to be due to underfunded institutes lack- versities, particularly their Faculties of Arts, teach a ing sufficient resources, and a general preference compulsory basic digital skills course in “computer towards pursuing the academic track. Technical sec- science,” while others like University of Khartoum, ondary education provides linkage between educa- offer e-learning semesters. Student placement is tion and the world of work and this route can be done centrally by the Ministry of Higher Education used to strengthen technological literacy, and cre- and Scientific Research (MoHESR) and there may be ate labor market linkages. Recognizing this potential, room for bringing in the private sector through this the government plans to support the development route via early internships or placement programs to of an institutional framework for the engagement of support better employment outcomes. industry in development of education and training programs in vocational institutes.6 62 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 4  |  Digital Skills Box 8: Indicative Mapping of DigiComp 2.1 Digital Skills Framework in Sudan DigComp 2.1 Digital Skills Framework8 provides a broad framework for understanding digital skills in a country. According to this framework, digital skills can be broken down into four general proficiency levels: i) Foundational Digital Skills are typically taught at primary and lower secondary school level, and involve the foundational digital literacy needed to use basic digital devices, tools and applications; ii) Intermediate Digital Skills should be provided to students in upper secondary school, technology pro- grams at TVET institutions, and undergraduate students in courses that apply technology. Intermediate level proficiency would typically be required in middle-level occupations. However, moving forward, intermediate digital skills are expected to be a ubiquitous requirement for all formal employment; iii) Advanced Digital Skills are primarily developed through core engineering programs, especially electrical and computer engineering and science programs. Advanced level proficiency is typically required of occupations with a high level of ICT intensity, involving the application of digital technologies, includ- ing IT engineers and, increasingly, finance professionals; and iv) Highly Specialized Technical Skills are typically provided at the postgraduate (masters and doctorate) level, focusing on advanced computer science and engineering, as well as applied mathematics and related fields. Highly specialized digital skills are considered a requirement for scientific and advanced ICT professional occupations, which involve the development of new digital technologies, products, and services. The DigiComp framework has been used to create a preliminary map of digital skills in Sudan. Not- withstanding data constraints, an initial mapping (Figure 13) was developed based on stakeholders’ interviews and current curriculums taught across the education ladder. Here it is worth noting how secondary education offers courses on digital skills, but the curriculum is outdated, and theoretical with no presentation of practical aspects primarily due to the lack of ICT strategy and policy implementation at the basic education level. Introduction of advanced proficiency level and highly specialized levels differs from one university to another, depending on the courses offered by universities. Figure 13: Distribution of Level of Proficiency in the Education System9 Post-graduates Solving technical programmes (masters and issues, identifying doctorates in technology) need and Creating, technological integrating, and responses, and Post-graduates programmes modifying digital creatively using (masters and doctorates in content, while digital applied science, applied correctly applying technologies and copyright and identifying Level of education mathematics, engineering) licenses as well as competence gaps programming, in + digital content to Undergraduate programmes addition to access (faculty of engineering, Interacting, sharing protecting devices opportunities in the mathematics, science) information, and personal digitial economy engaging in data/privacy citizenship, and Undergraduate programmes collaborating via (faculty of arts) digital technologies while using netiquette and Secondary level Capacity to use managing digital basic digital devices identity Primary level or applications Level of proficiency Fundation Intermediate Advanced Highly specialised Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 63 Chapter 4  |  Digital Skills Figure 14: Household access to Electricity, About 19%11 of the learners in government second- Radio, TV and Computer, HFS, 2021 ary schools do not have power. Technical and voca- % of households that have the following goods tional training institutes also struggle with a stable 80 supply of energy. This limits the ability of institutes 71.5 to offer ICT infrastructure for practical training. Data 70 on the number of schools that have access to ICT 62.1 equipment is not recorded, however almost all pub- 60 lic schools in Sudan lack basic infrastructure such as 50 48.5 toilets, classrooms, water and electricity; the invest- ment at the school level has not kept up with grow- Percent 40 ing demand. This indicates how most schools do not have access to computer labs or the internet. 30 Households also lack access to power and ICT 20 infrastructure limiting practical use of digital skills 10 7.0 taught. According to the Sudan High Frequency Sur- vey (2021), only 71.5% of households in Sudan have 0 access to electricity, while only 7% of the HHs have Electricity Television Radio Computer a computer at home. When evaluating educational Source: Authors’ elaboration using the High-Frequency Survey, 2021, WB survey activities carried out by students, it was seen that those leveraging ICT infrastructure (such as mobile apps, or educational TV programs) was very limited (Figure 14). Access to ICT at home has a direct impact Access to Infrastructure on student development and retention of digital skills, in addition to other benefits, like browsing the Power outages and poor ICT infrastructure across internet for schoolwork outside of school, follow up educational institutes limits practical training for on lessons, allowing students to recycle lessons and digital skills or smart learning. About half of learn- knowledge, allowing students to connect with each ers in basic education are enrolled in schools that other, motivateing learning. It also allows positive are not connected to any source of electricity.10 participation in social networks. Box 9: Digital Alternate Learning Program, UNICEF The Alternate Learning Program (ALP) was recently (2019) adopted by the National Ministry of Education, as an alternative venue of learning for children and adolescents who missed the opportunity to join schooling, including children affected by emergencies. It is set to bridge the eight-year primary education cycle in four education calendar years. The ALP curriculum focuses on literacy, numeracy and life-skills to help children mainstream into formal basic education, or alternatively enroll in skills training increasing their employability for improved livelihoods. The program established and equipped 82 e-learning centers as part of the global Can’t Wait to Learn (CWTL) project to help at least 6,000 hard-to-reach children access learning opportuni- ties using digital game-based learning material – based on the Sudanese national curricula – on tablets. The first phase of the Can’t Wait to Learn program in Sudan started in 2014 focusing on a numeracy trial with a project called e-Learning Sudan (eLS), in partnership between UNICEF, War Child Holland, Ahfad University and the Ministry Of Education (MoE). eLS uses an applied mathematics game on a tablet, solar power and community facilitators to bring education to children directly in the villages where they live. Local facilitators are trained in child-friendly approaches and technical aspects of the game and the tablet. The trial has been accompanied by rigorous research and monitoring. Results show that children who have previously been excluded from education can learn mathematics faster and achieve better results using tablet-based technology than through the traditional non-formal education model. Throughout their engagement in the project, individual child progress is tracked and recorded on the tablets and through periodic testing.12 Source: UNICEF Sudan, Education Annual Report 2020 64 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 4  |  Digital Skills Figure 15: Educational Activities attended by Students Jun/Jul 2020 Aug/Sep 2020 Nov 2020/Jan 2021 Feb/Apr 2021 Completed assignments provided by the teacher Used mobile learning apps 80 75.56 76.05 73.85 4 3.58 60 3 2.53 43.86 40 2 1.81 20 1 0.77 0 0 Watched educational TV programs Listened to educational programs on radio 15 1.2 13.31 1.03 12 0.9 9 0.6 6 0.42 3.91 0.33 2.79 2.72 0.3 3 0 0 0.0 Session/meeting with lesson teacher (tutot) Other 40 40 35.76 35.3 30 30 25.38 22.22 18.97 20 20 12.55 9.84 10 10 3.61 0 0 Source: Authors’ elaboration using the High-Frequency Survey, 2021, WB survey Teacher Training South and East Darfur out of a total number of 7,315 employed teachers. Although teachers are required Digital skills training is absent in the existing national to upgrade their credentials to meet new education teacher training requirements, and many teachers policy standards, digital skills are not included in the are untrained in basic training methods. Many teach- new minimum requirements for primary or secondary ers in Sudan were found to be volunteers,13 untrained, teachers. A national digital skills teacher training is under supervised and unequally distributed between needed to train teachers on basic level skills. Lessons rural and urban areas.14 For instance, The Ministry of can be learnt from successful teacher training initia- Education identified 3,692 unqualified teachers in tives around the world (See Box 10). Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 65 Chapter 4  |  Digital Skills Box 10: International Computer Driving Licence (ICDL) for Teachers ICDL Foundation is a global social enterprise which focuses on raising digital competence standards in the workforce. Certain training programs target teachers with the aim to improve teachers’ ICT profi- ciency at three levels: ICT skills, pedagogical skills and curriculum training. This training enables teachers with little to no experience in the basic mechanics of working with computers. This model has been running in over 100 countries around the world including in countries in Africa such as Rwanda, Uganda, Tanzania, Kenya and others. 15 Source: ICDL Africa Some higher educational institutes are conducting Table 19: Snapshot of Labor Market Indicators, their own teacher training programs, but face chal- 2020 lenges due to lack of infrastructure. For instance, the University of Khartoum (UofK) conducts a basic Indicator Value teacher training module for professors. The training targets all the teachers within the university through Unemployment rate (2020) 17.71% a five-day training covering content creation, the use of learning platforms and applications (e.g. use Labor force participation (2020) 46.92% of Google Meet, JamBoard), recording model classes and managing an online class. The challenges of inter- mittent access to internet and electricity were cited as major hindrances in conducting these trainings. Stakeholder consultations revealed how professors is the absence of computers, internet access, and who attended the training were able to efficiently electricity in many public institutions, particularly at manage online classrooms more and were confident state and locallevels. teaching online versus professors who did not attend the training. It is important to note that provision of New opportunities for digitally trained labor are such training is likely more evident, and possible, in rapidly growing in the ICT and related sectors in cities with better digital literacy and digital skills uti- Sudan. Globally, a positive correlation has been lization (like Khartoum). Universities in state such as observed between growth of the ICT industry of a El-Gedaref and El Fasher do not provide concrete city and job creation.16 This trend is also witnessed teacher training programs inclusive of ICT modules. in Sudan where technology-enabled start-ups are leading to new sources of employment. For instance, anecdotal evidence from interviews with ICT sector companies emphasized the need for digitally skilled labor for new and upcoming positions. There is a 4.4. Demand of Digital Skills growing number of digital businesses and start-ups in Sudan that are demanding hires for more special- ized digital jobs. For ex. corporate companies, such The demand for digital skills is driven primarily as DAL Group, have expanded their specialized digi- by the private sector. Private companies, including tal marketing and digital solutions staff. but not limited to, the telecom sector companies, digital business, start-ups, and e-commerce outlets In the absence of a recent national labor force require intermediate to advanced levels of digital survey, third party resources suggest correlation skills. Contrarily, the majority of government institu- between ICT and labor force participation. Based on tions, particularly at subnational levels, require only the WB analysis, labor force participation increased basic digital skills. This is attributed to the absence from 2009 to 2014, and unemployment decreased in of digital skills requirements for most civil service this period. However, the recent economic crisis and entry level jobs. An external factor that exacerbates the pandemic might have further impacted these the poor demand in digital skills in the public sector indicators. 66 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 4  |  Digital Skills Figure 16: Labor Force participation rates and unemployment rate by sex, quintile, locality and year a. Labor force participation rate b. Unemployment rate 80% 60% 40% 20% 0 All Women Men B20% B40% T20% Rural Urban All Women Men B20% B40% T20% Rural Urban By gender By quintile By locality By gender By quintile By locality 2009 2014 Source: World Bank, ILOSTAT modeled estimates 2020 4.5. Role of Private Sector and to its high cost, a class of less than 500 applicants was admitted and trained. With limited student and Development Partners institutional financing facilities, private providers have achieved relative success, but only at a smaller Private digital training providers are offering basic scale and are unlikely to expand without incentives. and specialized digital skills courses. Private train- Here government support through financial incen- ing centers are conducting digital skills training tives, such as risk sharing or guarantees, reduction of across Sudan covering mainly basic digital skills such taxes, provision of venues, and other means can help as use of ICT equipment and tools, while also offer- scale up these initiatives. ing targeted specialized digital skills such as digital marketing. Most of these are located in and around Financial constraints for potential students may Khartoum, with limited presence in the states. Stake- also be limiting up-take of digital skills courses. holder consultations revealed how the employment While some private digital skills training providers rates for students graduating from these institutions offer basic courses for free, advanced courses are is between 80 to 100 percent after six months of offered at a fee. Paid courses see limited up-take training. Employment here refers to both market indicating financial constraints being faced by employment and self-employment. The success of potential participants. For instance, Savannah Inno- these institutes is attributed to a strong emphasis vation Labs is a training center and business support on market-relevant skills and close collaboration unit in Sudan that offers few free courses for basic with businesses throughout the courses offered. digital skills and sees healthy participation. It also offers paid courses for advanced and highly special- While successful, private digital training provid- ized levels such as “programme development” and ers are struggling with creating sustainable mod- “cyber security training” but sees minimum reach, els and are limited in reach. These providers do likely due to the fees barrier. Stakeholder consulta- not have viable economic and financial models in tions confirmed that several digital skills courses by the absence of a steady source of revenue and high private sector providers exist but are believed to be donor dependence for funds. For instance, 249Start- expensive for students and fresh graduates of sec- ups17 recently received over 1000 applicants for a ondary or higher education. digital training program but due to the operational challenges of no steady internet access, continu- Recent Survey on digital skills and educated youth ous power cuts, and lack of fuel for generators due in Sudan The survey data was collected as part of Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 67 Chapter 4  |  Digital Skills Table 20: Digital Skills Programs Led by the Private Sector and NGOs Private Sector and Non-Governmental Level of Training Reach (annually) Organizations 249Startups General basic skills training, Digital Marketing Approximately 250 students Kiwi center Basic skills training Approximately 700 students UNESCO led ICT projects UNESCO ICT Training for TVET staff Over 1000 participants MSM ICT Training for TVET staff and teachers Community Learning Centers in NK & WN Savannah Innovation Lab Advanced and highly specialized training Approximately 600 participants Source: DE4A Stakeholder Consultations the sixth High-Frequency Phone Survey of House- Table 21: Completed training in Digital Skills, by holds (HFPS) in Sudan. This panel series of surveys level of education were designed and conducted by the World Bank across several countries around the world, in an No Yes effort to provide timely monitoring of the pandemic and to inform mitigation efforts. As of May 2022, a Primary 100.0% 0.0% total of six rounds of the HFPS had been conducted in Sudan between June 2020 and August 2021. The Secondary complete 100.0% 0.0% Sudan HFPS was implemented through live inter- views using mobile phones from a call center. The Post-secondary diploma 0.0% 100.0% panel sample was randomly selected from a list of registered phone numbers, and the sample size was Bachelor’s degree 85.6% 14.4% proportional to the number of registered numbers in each of the 18 states of the country. The survey is longitudinal by design, that is, the initial sample was Master’s degree 0.0% 100.0% surveyed again in every subsequent round, though the sample size decreased over time due to attri- Total 88.9% 11.1% tion. For each household participating in the sixth Source: HFPSH, 2021 round of the HFPS, one randomly selected house- hold member between 15 and 24 years old answered questions in the youth modules. The final sample includes 1,626 youth. (15-24) in Sudan, putting these youth at risk of being permanently excluded from the labor market. Are The Survey found that young people have a higher the young people engaging in digital skills training to level of digital skills than the rest of the population. be part of the labor market in Sudan?” The youth population uses computers, the internet, and software daily. However, their digital skills can- The High-Frequency Phone Survey of Households not be taken for granted, particularly when it comes (2021), round six, asked to one randomly selected to applying them in the workplace. According to the household member between 15 and 24 years old report Socio-Emotional Drivers of Unemployment: about training out of school and also if this training The case of High Educated Youth in Sudan, “youth was in digital skills in the form of computer or inter- unemployment and disengagement from any pro- net skills, application/software use, programming, ductive activity are high among our young people and app development. The results from the HFPSH 68 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 4  |  Digital Skills show that only seven percent of individuals 15 and should as well detail existing and projected labor 24 years old who were not studying answered that market demand to inform which sectors act as they were part of training out of school; from those, digital skills bottlenecks. (For ex. promoting pub- only 11 percent completed a digital skills training. lic sector employees’ digital skills can significantly Almost one person out of 100 who are not studying improve government sector efficiency). The existing in this sample had completed training in digital skills. curricula could be expanded to include areas such In addition, out of those who completed training, as digital literacy, digital entrepreneurship, and an 22 percent were employed, while 49 percent were introduction to digital media. Complementary soft unemployed. As shown in table XX, educated youth skills such as creative thinking, problem solving, and engaged in this type of training more than those teamwork also need to be included in the curricu- who only completed secondary education. Digital lum. Best practices in the form of bench-marking Skills training for those out of school was provided curricula with courses of international institutions by NGOs (45%), firms (23%), universities (15%), and providing similar courses,18 necessarily relevant to community centers (17%). Sudan’s context, can promote improved outcomes and bridge the labor market gap in digital skills. Training in Digital Skills can support youth employ- ment. Out of the student population, only six percent R2: Equip educational institutes with resources, answered that they took part of training out of school; and teachers with the requisite skills to deliver from those, 32 percent completed digitalskill training. digital skills training. Equipping teachers with strat- digital skills training for students was provided by pri- egies to develop digital skills is a vital prerequisite. vate employment centers (99%), and Universities (1%). Regular teacher training in ICT-related fields (not just the ICT educators) needs to be enhanced to develop sufficient competencies to ensure their stu- dents become digitally savvy. 4.6. Recommendations R3: Support Private Sector Digital Skills Providers. Provide incentives to education institutions and training services providers to introduce new digital R1: Establish a competency based national frame- skills programs or update and expand on the exist- work for digital skills. The framework should clearly ing ones. Interventions could also support intake define each of the digital skills and competency lev- through providing scholarships for students or to els, sensitive to variables such as sector, region, gen- top performers from various universities encouraging der, labor force component skills, etc. The framework enrollment in private sector ICT training programs. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 69 Chapter 4  |  Digital Skills Notes 1 The HCI measures the amount of human capital that a child born today can expect to attain by age 18. It conveys the productivity of the next generation of workers compared to a benchmark of complete education and full health. It is made up of five indicators: the probability of survival to age 5, a child’s expected years of schooling, harmonized test scores as a measure of quality of learning, adult survival rate (fraction of 15-year- olds that will survive to age 60), and the proportion of children who are not stunted. 2 Literacy is defined as adult population (age 15 years and above) that can read and write, 2018, https://www.cia.gov/the-world-factbook/field/ literacy; http://uis.unesco.org/en/country/sd?theme=education-and-literacy 3 Ministry of Education has recently introduced a new structure wherein a ‘2-6-3-3’ school year ladder (i.e. two years of preschool, six years of primary, three years of lower secondary and three years of upper secondary) will be followed, General Education Sector Strategic Plan 2018/19 – 2022/23, federal Ministry of Education 4 DE4A Mission Consultations 5 General Education Sector Strategic Plan 2018/19 – 2022/23, federal Ministry of Sudan 6 Ibid 7 Ibid 8 European Commission (2017). DigComp 2.1: The Digital Competence Framework for Citizens with eight proficiency levels and examples of use 9 DE4A Mission Consultations 10 General Education Sector Strategic Plan 2018/19 – 2022/23, federal Ministry of Sudan 11 Ibid 12 UNICEF Country Report https://www.unicef.org/sudan/stories/sudan-cant-wait-learn 13 https://www.globalpartnership.org/where-we-work/sudan 14 https://www.unicef.org/sudan/education 15 ICDL Africa: https://icdlafrica.org/ 16 “Growth and sustainability of tech innovation ecosystems in city environment”, Mulas, V., Minges, M., Appelbaum, H., World Bank Group, 2015 17 249StartUps is a social enterprise initiative that fosters and support small businesses, it was established in April 2018 with a mission of contrib- uting to the development of a vibrant entrepreneurship ecosystem that supports the growth of new start-ups in Sudan 18 Digital Skills: The Why, the What, the How - DE4A Methodological Guidebook 2021 70 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 71 Chapter 5  |  Digital Businesses CHAPTER 5 Digital Businesses 5.1. The Importance of Digital it is essential for government policies to not only support development of digital businesses, but also Businesses safeguard against risks of anti-competitive behav- ior, data security threats, or the creation of a digi- Digital Businesses can offer opportunities for tal divide.4 For example, for online platforms to be inclusion and efficiency and have positive spillover inclusive, a farmer in Sudan would need to have min- impacts on the rest of the economy. Digital busi- imum basic digital skills, in addition to business skills, nesses, which encompass both digital start-ups and to sell products through the Sudanese ‘Fresh’ mobile established digitalbBusinesses,1 represent a unique app, or risk being left behind. Figure 17 highlights the opportunity for economies to generate more inno- opportunities and risks presented by the growth of vation-oriented jobs, promote integration of lagging digital businesses. populations and regions, and increase efficiency in the offline economy (Figure 18).2 They can also serve as a critical foundation to enable traditional offline businesses to adopt new digital business models and digital technologies, creating positive spillover 5.2. The Digital Business Sector effects in the rest of the economy. This has already in Sudan started to take place in Sudan, with e-commerce platforms and delivery apps such as Lemonlabs and M3Round enabling MSMEs to reach a larger con- 5.2.1. State of Digital Businesses in Sudan sumer base. While statistics about the digital sector are scarce, However, the healthy creation, adoption, and pro- third-party surveys indicate that a modest propor- liferation of digital businesses requires balancing tion of the Sudanese population often uses digital the opportunities they offer, with the risks, like platforms to buy and sell products and services. market distortion and potential job displacement. Available national level statistics are quite dated Large platforms and data firms may engage in exclu- (e.g., 2009 National Household Baseline Survey – sionary and collusive practices increasing market NHBS, 2014/15 National Household Budget and concentration, or misuse of data. Job displacement Poverty Survey – NHBPS), and the country has not or digital exclusion stemming from the change in the been included in most recent international surveys skills demanded could also occur.3 For this reason, and studies related to the digital sector (e.g. WB Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 73 Chapter 5  |  Digital Businesses Figure 17: Digital Businesses bring opportunities and risks, DE4A Digital businesses Opportunities Risks Digital Start-up refer to early-stage ventures that create new digital solutions Inclusion E ciency Market Potential Job or business models Distortions Displacement as part of their core products or services Access to markets and Productivity gains via: New disruptive Horizon scan for: jobs for: behaviors: Established Digital • Increased pace of • Loss of market share by Businesses are • Lagging region (rural innovation • Increased pace of traditional industries mainly large and tertiary towns) innovation (e.g. due to online • Increased platform-based and • Lagging population participation in int’l • Increased channels providing data-driven firms that (women and youth) trade & value chains participation in int’l more competitive have passed the trade & value chains products and initial start-up stage, • SMEs (niche products • Increased convenience) having acquired more likely survice servicification and • Increased and scale via value added of servicification and • Outdated occupation suppliers, and skills mix for new contractors, and platforms) production through value added of data-driven production through digital business models consumer rapidly (and industry 4.0) solutions data-driven solutions enterprise survey or Findex survey last conducted Figure 18: Participation in the gig economy, in 2014).5 However, sample surveys carried out by select countries, 2018 third-party organizations suggest that a small share 25 of the Sudanese population is already using digi- tal technologies to earn an income. For example, the 2018 Global Entrepreneurship Monitor (GEM) Adult Population Survey concludes that 6% of the 20 population receive income for paid work obtained via both social media platforms (e.g., Whatsap, Face- book, Instagram) and local digital platforms that pro- 15 vide goods and services (e.g., Tirhal, Alsouq). While Sudan’s participation rate in the gig economy is lower than high-income countries such as Korea and Israel, it is relatively high in relation to other lower 10 and lower-middle income countries (Figure 24). The same survey determines that 40 percent of those using digital platforms for this purpose receive more 5 than 25 percent of their income in this way, and that 64 percent of this group would like to continue obtaining work in this manner in the future.6 Simi- 0 larly, a recent survey by Sudan Digital shows that 82 y da r Ind r a l ia Mo n o ia ae ta a rke re da cc rab es sc percent of digital users are already buying products Qa Isr Ko ro Su on ga Tu iA ud through social media platforms like Facebook, Insta- Ma Sa gram or WhatsApp.7 Source: GIG Economy Participation Rates, Global Entrepreneurship Monitor The number of people using products or services sold by digital businesses are also increasing in Sudan. While the current usage of e-commerce e-commerce platforms that have been set up (e.g., is still low (e.g., according to a recent survey by M3roud.com, https://www.instagram.com/shopper- Sudan Digital, 84 percent of the population have skart_sudan/). Furthermore, this space is primed for never heard of an ecommerce brand), 8 percent of considerable growth in the near term, as two large Sudanese digital users are already buying from the telecom operators (e.g., Zain and Sudatel) have 74 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 5  |  Digital Businesses Figure 19: Examples of Digital Businesses in Sudan Source: Briter Intelligence, DE4A Consultations recently entered the e-commerce market with their is engaging in starting or running a new business) is brands 3amir and Soooqna respectively, and it is 22.9 percent. This is not only the highest TEA out expected that at least part of their large customer of all the countries surveyed in the Middle East and bases will become ecommerce users. Ridesharing North Africa (Figure 20), but also above the average digital businesses have also gained traction with rate for all 54 countries surveyed around the world high levels of user engagement (e.g., the average in the 2018 GEM report (i.e., 12.6%). The high level of user has approximately three car ride apps on their entrepreneurship has the potential to translate into phones), and more than 30 different ride sharing digital businesses if new entrepreneurs can access solutions operating in the country (e.g., Mishwar, and utilize digitalization opportunities. If Sudan Tirhal, RentX, LemonTaxi, Careem, etc).8 Moreover, manages to channel further entrepreneurship in this space is expected to continue gaining traction the digital space, there could be the potential of a given the cost advantages of using ridesharing apps growing number of digital businesses.11 Future gen- as compared to owning a personal vehicle. There has erations of digital ventures in the country thus has also been a rise in the number and usage of food the potential to be high. delivery platforms in the last year (e.g. LemonFood, Yalla Na6lob)9 with approximately 55 percent of Sudan’s nascent but growing system of entrepre- Sudan’s digital community having ordered food via a neurship support organizations (ESOs) can provide delivery app or website at least once.10 Finally, while considerable assistance to digital entrepreneurs. in a less significant fashion, there have been a grow- The number of ESOs in Sudan has increased by five ing number of digital businesses in various other times over the last few years (Figure 21)12 and are digital business subsectors (e.g., digital advertising, mainly located in Khartoum, the Western regions of health-tech, ag-tech; see Figure 19. Overall, experts Sudan and, to a lesser extent, in the Eastern part of believe that the use of digital platforms by entrepre- the country.13 ESOs are likely to increase the chances neurs is going to experience a substantial expansion of success of digital start-ups in Sudan. Some of the in the next decade. country’s fastest growing start-ups are alumni of Sudanese incubators and received significant ear- 5.2.2. Strengths and Opportunities of ly-stage support (e.g., idea generation, minimum the Sudanese Digital Business Ecosystem viable product development, market research).14 For example, start-ups graduating in recent years from Sudan’s relatively high levels of entrepreneurial incubator 249Startups– including Trihal - have gen- activity also holds potential for digital businesses. erated more than 500 jobs and raised over USD The Total Entrepreneurship Activity (TEA) rate in 600,000 of equity investment and approximately Sudan (i.e., percentage of the adult population that 1 million USD in total investment.15 The potential Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 75 Chapter 5  |  Digital Businesses Figure 20: Total Entrepreneurship Activity (TEA,%), International Comparison and National View by State 30 States 33.6 30.0 25 24.5 23.0 21.6 21.6 22.5 21.9 21.4 20.0 20 16.0 15 8.1 GEM Average: 12.6% 10 r rif m n le a la a ile le No ofan r rfu na zir Se er ssa Ni Ni ou da eN th Sin Ge Da 5 d er Ga e rd art Ka r Re hit Blu No Riv Ko rth Kh W rth No 0 y on n ia E h o ke UA da pt cc rab an y r ro Su Tu Eg iA b Mo Le ud Sa Figure 21: Entrepreneur Support Organizations (ESOs) ecosystem, Sudan, 2015-2021 No. of Entrepreneur Support ~20 Organizations (ESOs),number Savannah of global events/partnerships Labs DarHub Sharezone Elfashir Ohub X5 Comboni Innovation Yalla Nbda Businesses Mougran Yalla Hub ~4 Sudan Start-up RAEID 249 Startups Hub UNIDO Impact Hub Technopark Global Entrepreneurship Week Entrepreneurship Khartoum Khartoum British Council Global Get in the UNDP Accelerator Innovation Hub Green Space Mashrouy Competition Ring Competition lab solutions Fair Sunmakers MTN Start-up Techstars Startup IEC Accelerate 2030 Lab competition Weekend <2015 2016 2017 2018 2019 2020 Source: Situation Analysis of Startups in Sudan, 249Startups and JICA, 2019, Desk Research, DE4A consultations impact of ESO support has also improved recently international and local links. Similarly, events like because of the expanding international footprint of the Global Entrepreneurship Week, TechStars these organizations. Sudan’s ESO ecosystem has Start-up Weekend and others are hosted in Sudan been increasing its partnerships with international through ESOs. communities through hosting entrepreneurship events in Sudan. For instance, Impact Hub is a art of While Sudan’s ESO ecosystem is still nascent, it is the Impact Hub Global community with established likely to grow considerably in the near term given 76 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 5  |  Digital Businesses active support from international organizations 5.2.3. Key Constraints and the Sudanese private sector. Sudan’s ESO eco- system is clearly underdeveloped when compared to Digital Businesses in Sudan face several con- more advanced ESO ecosystems in the region (e.g., straints. Cross-cutting constraints to the country’s Kenya, South Africa), not only because the number private sector make it one of the most challenging of ESOs in Sudan is smaller (other ESO ecosystems in the world, and cause one of the highest rates of in Africa have 40+ ESOs compared to 20+ in Sudan), “business discontinuation”19 in the globe,20 and con- but also because it is still dominated by incubators – sequently a level of established businesses that is with only a small number of accelerators, angel inves- lower than what would be expected from a country tors and hybrid model organizations in the system with a TEA as high as Sudan’s. There are also a wide According to stakeholder consultations performed range of sector-specific constraints that affect only by the DE4A team, some incubators have accep- digital businesses. Both of these types of constraints tance rates of less than 2 percent (e.g., 1250 appli- are subsumed within the four following categories: cations for 20 seats) because the demand for their (i) regulatory and policy constraints; (ii) lack of criti- services is significantly higher than what they have cal inputs – e.g., finance and skills; (iii) an inadequate the capacity to serve. The small number of incuba- infrastructure; and (iv) macro-economic constraints. tors and accelerators could be due to ESO services Each of these constraints are discussed in more not operating with a sustainable business model detail below. (i.e. relying on grants with low rates of successful start-up launch and scale). However, it is likely that Regulatory and policy constraints to the Sudan’s ESO ecosystem will receive a boost in the digital economy short term given the support it is receiving. Some donor-funded programs are already supporting There is no clear government strategy or road- ESOs (e.g., The Dutch government has been sup- map on support of digital businesses. Given the porting 249Startups’ “Orange Corners Program16” cross-cutting nature of the digital economy, it is carrying out 6-month acceleration programs). The essential for the involved government ministries Sudanese private sector has also launched accel- and public bodies to coordinate their support activ- eration programs for entrepreneurs (e.g., Haggar ities to be effective. While the Ministry of Invest- Acceleration program). Finally, development insti- ment is responsible for the broader investment tutions (e.g., UNHCR and World Bank) and inter- climate, several government bodies are responsible national partners such as the European Union (EU) for MSME support and the newly established MTDT have expressed interest in providing further support is responsible for supporting the digital economy. to promote entrepreneurial ventures.17 Coordinat- Whereas the Government has taken several steps ing donor activities to ensure ESOs are supporting that will indirectly have a positive effect on digital digital start-ups to keep growing into the venture businesses (e.g., commitment to implement a new capital stage and beyond will be essential. Investment Code, PPP Act 2021) there is no strat- egy that caters to supporting digital businesses. This Ability to engage with and access the Gulf region lack of guidance also leads to the fact that most markets, due to Sudan’s strategic location and digital businesses express that they lack information bilingual abilities, offers additional opportunities about existing government programs and upcoming for Sudanese digital businesses. Sudan is located policies.21 at the crossroads of Africa and the Middle East, with geographical and time zone proximity to the Sudan lacks laws and regulations that support major import markets of the GCC and Europe. Fur- trustworthiness in digital markets, e.g., personal thermore, a large share of the Sudanese population data protection and online consumer protection. is bilingual18 (i.e., English, Arabic), and labor costs A digital economy can only thrive if people trust in are comparatively low. Stakeholder consultations online transactions and know that their personal revealed how these factors are perceived as com- data are protected and their welfare is safeguarded. parative advantages for Sudan in a variety of digi- However, Sudan so far does not have a legal frame- tal industries (e.g., business process outsourcing, work that explicitly ensures data protection or that digital marketing solutions), though the Sudanese would penalize privacy violations.22 According to a ecosystem will also need to consider its comparative 2019 survey conducted by Digital Sudan, the major advantages in relation to other Arabic digital entre- reason that prevents customers from purchasing preneurship ecosystems such as Egypt and UAE. products from e-commerce websites is a lack of Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 77 Chapter 5  |  Digital Businesses Figure 22: Factors preventing purchase from e-commerce websites 35 32% 30 25 20 19% 19% 16% 15 10% 10 5 4% 0 Trust Payment options Availibility of products Pricing Delivery options Other Source: Sudan Digital, 2019 trust in these platforms (Figure 22). This may also be due to the heavy regulatory burdens of policies and one reason why customers are more likely to pur- taxation. About half of digital start-ups are not reg- chase from international e-commerce platforms like istered owing primarily to lack of information about Amazon and Souq rather than local ones. However, the registration process and the complex proce- nearly all survey respondents state that they have dures.25 Furthermore, in Sudan registering a busi- an intention to buy regularly from ecommerce as ness requires having a physical space and between long as trust and simplicity of transactions can be 3 weeks to 3 months,which is burdensome for digital achieved.23 This indicates that addressing consumer businesses that only have an online presence. concerns (e.g. product complaints, refund policies) may allow for creating a market opportunity for dig- Lack of access to comprehensive, transparent and ital businesses in e-commerce. timely data is impacting the operations of digi- tal businesses in the country. Businesses require General issues with ease of doing business in Sudan timely, granular, relevant and easy-to-access data- and gaps in the regulatory framework hamper the sets for strategic business planning, including data emergence and growth of digital businesses. The for benchmarking growth and market sizing, and sec- Sudanese private sector is generally constrained by tor-specific information to identify new customers, the cumbersome tax regulation of the country. Fur- optimize transportation routes, and plan production thermore, there is no specific tax regulatory frame- schedules more efficiently. However, data sources in work in the country that captures the economic Sudan are scarce and outdated. Furthermore, stake- activities of start-ups or the digital sector.24 Digital holder consultations reveal that the limited datasets businesses often have no physical presence and dig- that do exist are held in silos within certain minis- ital value chains do not often correspond neatly with tries and can be accessed solely through personal existing tax rules, making it difficult to apply tradi- connections and by physically visiting government tional corporate tax rules to tax digital businesses offices. While business advisory groups such as the (e.g. should the revenues generated by ridesharing Nile Research Center, the Sudanese Development platforms be considered as digital sector or trans- Initiative (SUDIA), the Sudan ICT Advisory Group port sector revenues). In addition, taxation poli- (SICTA) and similar agencies have made some efforts cies do not cater to the start-up ecosystem, which to provide businesses (including digital businesses) exhibits different accounting books and structures in with data, there is still a long way to go in this sense. comparison to traditional industries due to its high In addition to government-owned data, private sec- risk, high failure rate nature. Further, the country tor data sharing and sales is also largely missing due has no government procurement program that can to weak regulatory certainty around what is con- support local digital business solutions or any tax sidered as sensitive data, and what data minimiza- incentives or subsidies for digital businesses. Con- tion and localization is required before a dataset is sultations with ecosystem players reveal that digital exchanged, shared or sold. There is an urgent need businesses restrain from registering their businesses to collect information more periodically, centralize 78 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 5  |  Digital Businesses Figure 23: Factors preventing order of food delivery on digital apps 35 33% 30 25% 25 20 15 14% 14% 10 9% 5% 5 0 The apps are not Delivery is too Bad user Menus are Not enough Other designed well expensive experience not complete restaurant options Source: Sudan Digital, 2019 public data sources and have a data exchange mar- fit-for-purpose design, possibly reflecting the lack ket that is operated with transparency and security of digital and business skills in Sudan. Research to safeguard personal privacy and minimize data-re- finds that a majority of consumers are likely to visit lated market dominance. digital platforms and purchase products online if they have a digital presence.29 But a large share of Lack of critical inputs such as: digitally consumers in Sudan appear to believe that websites skilled talent, access to business of existing digital businesses in the country lack a acceleration services, and growth finance good user experience or are poorly designed, as a survey among users of food delivery platforms in A shortage of digitally skilled talent is a key chal- Sudan suggests (Figure 23). This may partially reflect lenge for digital businesses in Sudan. A survey the shortage of talent in the digital sector that conducted by Sudan Digital found that over 70% results in digital businesses that are sub-par relative of surveyed digital businesses that are located in to Sudan’s regional and international peers. The rel- Khartoum and 50% of those located in other states atively poor user experience could also make home- believe that attracting applicants with appropriate grown Sudanese digital platforms less competitive, skillsets is the biggest challenge when hiring talent especially since multinational platforms, employing in Sudan.26 While most employees in digital com- better digital talent can easily enter the market. panies are have a post-secondary education,27 they usually lack practical training, in particular regard- Limited acceleration services available in the mar- ing the use of digital tools and software. The digital ket signal that the current market condition is skills courses taught in schools and universities are unsuited for digital start-ups to grow and scale. almost solely theoretical, and there is an absence As highlighted earlier, the ESO landscape in Sudan of internships or shadow programs with the pri- is characterized by majority (>90%) incubators and vate sector (refer to Digital Skills Pillar for details). very limited accelerators. Accelerators are organiza- Whereas some initiatives to provide necessary tions that support cohorts or classes of start-ups, applied knowledge before graduation have been through enrolling teams within the start-up (and implemented (e.g., Sudan Digital has partnered with not just individual founders), for time-based sup- Garden City university to train graduates that may port programs usually accompanied with pre-seed then be offered internships and placements),28 the investment.30 The support of accelerators is aimed reach of these programs remains limited. In addition, at enabling start-ups to grow and scale. Some of Sudan’s low salaries relative to other countries in the the largest accelerators in the world include Tech- region make it difficult for digital firms to retain tal- stars, 500 Start-ups, Y-Combinator (with increasing ent they hire. presence in Africa) and those based in the African region including Growth Africa or GearBox (Kenya). Uptake of local digital platforms seems to be Early evidence demonstrates the significant poten- constrained by their insufficient and lack of tial of accelerators to improve start-ups’ outcomes, Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 79 Chapter 5  |  Digital Businesses and for these benefits to spill over into the broader diesel-powered generators as backup, this raises start-up community.31 The fact that accelerators the cost of doing business significantly – especially are largely absent in Sudan reflects market immatu- with the recent phasing out of fuel subsidies. Simi- rity of digital start-ups. Limited market size, limited larly, unavailability of quality high-speed internet in growth of digital start-ups, lack of digital talent and most areas (and almost zero internet connectivity an entrepreneur pipeline, and costly and inefficient in remote areas) represents a sizable constraint for product development would make Sudanese digital the operations of digital firms in more marginalized businesses regionally uncompetitive and prevent states (refer to Digital Infrastructure pillar for con- accelerators from entering the ESO ecosystem in straints on connectivity). Sudan. Due to these market characteristics, digital start-ups are less aware of the accelerator model. Disconnect from international markets and Only 40% of those engaged in digital start-ups in macroeconomic instability Khartoum and 26% of those in the other states are aware of acceleration services.32 Isolation from the international technology com- munity particularly in the technology sector is Sudan’s low access to finance is especially a prob- further limiting digital business expansion and lem for digital start-ups, which in turn rely on adoption in Sudan. Effective December 14, 2020, informal networks for capital. Start-ups typically the US stopped classifying Sudan as a State Sponsor struggle to receive formal financing given their lack of Terrorism (SST). However, the lifting of sanctions of historical financial records, negative cash flows for has not been fully internalized by the international a prolonged period, insufficient collateral and high community, particularly within the technology sec- uncertainty of business success. This means most tor which is hesitant to do business with Sudanese early stage-digital businesses rely on informal fund- players. For instance, iOS has remained blocked for ing, such as family and friends, before accessing more users in Sudan so that updating and downloading formal funding sources such as angel investors, ven- apps as well as accessing iCloud can only be done via ture capitalists (VCs), and debt financing. In Sudan, a VPN. This creates a technology gap as Sudanese early-stage digital start-ups seem particularly lim- locals are unable to access the latest updates and ited to informal funding. According to the 2018 GEM applications or digital products and services. Stake- survey, Sudan is actually the country with the high- holder consultations also revealed issues around est level of informal finance in its region. However, some tech tools such as Facebook advertisements informal financing is also relatively limited as Sudan and WhatsApp business account tools not being has the lowest estimated average funds invested per allowed in Sudan. This limits business outreach informal investor in the region.33 Strict banking rules and expansion in a country where Facebook and regarding collateral are a further barrier for banks to WhatsApp are dominant modes of e-transactions support the entrepreneurship ecosystem. In effect, (detailed above). Further, larger technology product stakeholders interviewed in consultations suggested and service providers do not have repair or customer that banks rarely lend to digital businesses or charge service centers in Sudan (e.g., Hewlett Packard), high interest rates and demand guarantee letters.34 resulting in technology support services being out- In order for digital businesses to gain better access sourced outside the country to the Gulf. The lack formal funding required in their early growth stages, of hardware servicing skills adds to the operational the macro digital business environment needs to be inefficiency and prevents positive spillover. improved to incentivize digital businesses to build financial records accepted by financial institutions, Currency fluctuations are impacting business to hire formal workers, and to leverage accelerator contracts. Growing macroeconomic imbalances networks. have pushed inflation and currency depreciation to dangerously high levels.35 This has impacted digital Inadequate energy and ICT infrastructure businesses especially. Stakeholder consultations revealed that most contracting, particularly with Poor electricity supply and lack of high-speed government agencies, is carried out in local currency internet connectivity are also major barriers for and mostly through post-dated payment contracts. digital businesses in Sudan.. Stakeholder consul- Accordingly, any fluctuations in the currency rate tations confirmed that power outages (often up to significantly impact digital business deals and fur- 6-7 hours a day) are a major barrier for their oper- ther limits the inflow of capital for Sudanese digital ations. Furthermore, because most businesses use businesses. 80 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 5  |  Digital Businesses 5.3. Recommendations incubator and accelerator support programs. For instance, assessments of mLabs in Africa, Asia, and Europe and Central Asia, which were financed by R1: Improving uptake and trust in digital commerce the World Bank’s Digital Entrepreneurship Program through online consumer and online supplier pro- (DEP), emphasize the importance of supporting the tection legislation. Sudan may consider using incubator or accelerator’s core business model as international good practices such as the OECD’s well as the need to strengthen capacity and program Principles of Online Consumer Protection as a ref- management erence for updated laws. These principles protect consumers before, during, and after transactions, for R2.2: Supporting joint initiatives of business mem- example by mandating sufficient information about bership organizations and industry associations the seller (e.g., name, address, phone number), dis- to support digital businesses in Sudan. A thriving closure of information about goods and services digital business ecosystem is of interest to Sudan’s (e.g., key functionality and interoperability features, private sector, but individual actors may lack the guidance on health and safety aspects) and clarity incentive to actively provide support on their own. on the conditions after a purchase (e.g., returns, Sudan has several business associations such as the refunds, warranties, etc.).36 Sudan may also consider Chambers of Commerce, Sudan Business Federation, introducing online dispute resolution (ODR) mech- US-Sudan Business Council, and European Chamber anisms that provide a way of dealing with the large of Commerce in Sudan (ECCS), which could be lever- number of small-value disputes which are character- aged to provide more support to digital businesses. istic in e-commerce (see, for example, ODR mecha- The Sudanese government may consider strength- nisms in Brazil, Mexico or the EU). In addition, Sudan ening the collaboration with these business associ- may consider establishing laws that govern the rela- ations, in particular international ones\ to improve tionship between (small-scale) suppliers and online knowledge spillovers. For example, the government platforms that counter the abuse of market power may foster business relationships between estab- by e-commerce platforms. For example, the EU’s lished traditional firms seeking to enhance their Regulation on Promoting Fairness and Transparency innovative drive and emerging digital start-ups, e.g., for Business Users of Online Intermediation Services through match-making events and idea competi- provides basic online supplier protection by man- tions. Eventually, this may also lead to the creation dating transparent terms and conditions, restrict- of an overarching association that improves coor- ing platforms from unilaterally ending or changing dination in Sudan’s start-up ecosystem by bring- terms and conditions or banning suppliers from the ing together start-ups, traditional firms, investors, platform, and requiring disclosure of differentiated incubators, accelerators, tech hubs etc. Such an treatment of different sellers (e.g., in product rank- association may be similar to Kenya’s Association ings). Introducing basic online consumer and sup- of Start-up and SME Enablers (ASSEK) which rep- plier protection may lead to increased levels of trust resents all ESOs, including incubators, accelerators, and uptake by consumers in e-commerce in Sudan. tech hubs, bootcamps and related entities. Stake- holder consultations with international partners, R2: Supporting development of the Entrepre- including UNHCR, the Embassy of Netherlands and neurship Support Ecosystem: Operational sup- the EU, showed that several partners are considering port to existing ESOs through performance-based giving more support to digital businesses in Sudan. It grants or similar mechanisms. Support could be would be beneficial if these support measures would provided to ESOs to expand their offering to start- be consolidated to ensure resources are used most ups (programs are currently oversubscribed) and cost-effectively. International partners expressed improve the quality of the existing programs. New interest in creating a forum for periodic coordina- initiatives could be created such as a national data- tion and interaction on the challenges and support base of funders with a mechanism to match start- required within the digital economy. Initial steps ups with potential funding opportunities and vice have been taken in this direction, such as by the versa enable the establishment of more business Center for International Private Enterprise (CIPE) acceleration support programs (which is limited as which set-up monthly private sector forums to help highlighted above), and provide growth oriented build partnership and collaboration between the financing to investment-ready start-ups among oth- Sudanese business community, international orga- ers. The design of the ESO support mechanism could nizations, and foreign aid agencies. This forum has incorporate best practices in government supported more than 20 member organizations, such as JICA, Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 81 Chapter 5  |  Digital Businesses the British Council, KFW, GIZ, the UK FCDO, ILO, R4: Carrying out awareness campaigns to show- and UNDP. It would be beneficial if Sudan’s govern- case Sudanese digital business capabilities in ment – e.g., through MTDT – would become more domestic markets. Uptake of digital businesses such active in these forums. When approaching such a as e-commerce is limited on account of low aware- platform, Sudan may get valuable insights from sim- ness; for instance, 84% of the population surveyed ilar forums in other countries such as the ICT donor was not aware of e-commerce brands that exist group in Rwanda or the donor coordination for ICT in Sudan. Addressing this low level of awareness in Kenya which are very active and valued. Currently, through popular media channels and platforms such efforts are already underway to strengthen Pub- as television, radio, cell phones and the Internet can lic Private Dialogue (PPD) mechanisms in Sudan to be considered. Local media such as ‘Mashrouy,’ the help accelerate private sector development reforms. local televised competition where contestants com- These could include targeted mechanisms focused pete against each other and present their business on supporting digital businesses to address specific ideas, has won wide popularity and is regarded as a needs for this sector. medium that has been successful in inspiring bud- ding entrepreneurs and informing the audience of different types of businesses in the country. 82 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 5  |  Digital Businesses Notes 1 DE4A Methodology, World Bank 2 Ibid 3 Ibid 4 Ibid 5 A new Enterprise Survey for Sudan is currently underway. 6 The survey suggests that 39.6 percent of the population want to work solely through digital platforms, and 24.5 percent would like to use digital platforms to obtain work in addition to being employed in a firm. 7 The State of Sudan Digital, 2019 8 Ibid 9 Ibid 10 DE4A Consultations 11 Situation Analysis of Startups in Sudan, 249Startups and JICA, 2019 12 While Sudan’s ESO ecosystem is growing rapidly, it is still nascent when compared to other more advanced ESO ecosystems in the region (e.g., Kenya, South Africa) which have 40+ ESOs and a larger presence of venture finance (GSMA, Tech Hubs in Africa, 2019). Not surprisingly, accord- ing to stakeholder consultations demand for some incubators far outstrips what they have the capacity to serve. 13 DE4A Consultations, DE4A Mission 2021 14 Ibid 15 Ibid 16 Orange Corners was launched by 249Startups in 2018 with the support of the Kingdom of the Netherlands with the main goal to provide young entrepreneurs across Africa and the Middle East with the necessary training, networks and facilities to start and grow their start-ups. 17 DE4A Consultations, DE4A mission 2021 18 The New Sudan, The Ministry of Investments and International Cooperation, Sudan 19 Business discontinuation is defined as ‘The percentage of the adult population aged 18–64 years that have discontinued a business in the past twelve months, either by selling, shutting down, or otherwise discontinuing an owner/management relationship with the business. Global Entre- preneurship Monitor, Sudan Entrepreneur profile, 2018 20 Sudan’s business discontinuation of 17 percent is higher than the average of all 54 countries surveyed in the 2018 Global Entrepreneurship Monitor. 21 DE4A Consultations, DE4A mission 2021 22 DE4A consultations, 2021 23 The State of Digital in Sudan, 2019 24 DE4A consultations with MTDT, 2021 25 Situation Analysis of Startups in Sudan, 249Startups and JICA, 2019 26 The State of Digital in Sudan, 2019 27 DE4A consultations, DE4A mission, 2021 28 DE4A consultations, DE4A mission, 2021 29 The State of Digital in Sudan, 2019 30 Bound, K. and Miller, P. (2011) ‘The Startup Factories: The rise of accelerator programmes to support new technology ventures.’ London: NESTA 31 See: https://hbr.org/2016/03/what-startup-accelerators-really-do 32 Situation Analysis of Startups in Sudan, 249Startups and JICA, 2019 33 Global Entrepreneurship Monitor, Sudan 2018 34 DE4A Consultations, DE4A Mission, 2021 35 IMF Debt Sustainability Analysis, 2021 36 Organisation for Economic Co-operation and Development (OECD), 2016, Consumer Protection in E-commerce, available online at https:// www.oecd.org/sti/consumer/ECommerce-Recommendation-2016.pdf. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 83 Chapter 6  |  Digital Financial Services CHAPTER 6 Digital Financial Services 6.1. Importance of Digital can facilitate the growth of e-commerce and sharing economy markets and create new business models Financial Services and revenue streams. DFS can be used by govern- ments to increase the reach to government services Digital financial services (DFS) are financial services and reduce administrative costs and leakage. Digital (payments, remittances, saving, credit, and insur- methods can reduce the cost of providing financial ance) accessed and delivered through digital chan- services by 80 to 90 percent. nels, including via the internet and mobile devices. These encompass established services offered by banks, microfinance institutions, insurance com- panies, as well as non-traditional service providers such as mobile network operators and financial ser- 6.2. The State of Digital vice providers which operate payment, lending, and Financial Services micro-insurance solutions built on cloud computing, digital platforms, and distributed ledger technolo- gies (DLT), spanning mobile payments, crypto-assets 6.2.1. Availability of Digital Financial and peer-to-peer (P2P) applications. Services Increasing the level of DFS would increase the GDP The rate of access to financial services in Sudan is by six to eight percent in countries such as Sudan,1 under-developed, and stood at a level of only 15 where access to finance and digital services has percent by 2014,2 compared to higher levels in the vast opportunities to develop. Digital payments Eastern Africa, Sub-Sahara, and Middle East regions. can facilitate the growth of e-commerce and sharing No further financial access surveys have taken place economy markets and create new business models since 2014. However, no dramatic change is expected and revenue streams. DFS can provide unserved in these figures considering the absence of govern- and underserved individuals and micro, small, and ment plans or strategies to increase financial inclu- medium enterprises (MSMEs) with convenient and sion, with the exception of the recent SFSP that plans affordable payments, savings, credit, and insurance to reach out to 80 percent of households with a goal services, enabling millions of individuals to meet their of one financial account per family. Further under- financial needs and tens of thousands of MSMEs to lining the access issues in Sudan, only 10 percent of gain access to financial services. Digital payments women gained access to financial accounts, while 12 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 85 Chapter 6  |  Digital Financial Services percent of the population made or received a digital geographical spread across the country compared payment transaction within the last year, and three to bank branches. There is limited product diversity5 percent received salaries or wages to accounts.3 - most MFIs offer similar individual or group-based Murabaha financing. MFIs, in general, don’t provide A. MARKET PARTICIPANTS digital forms of financial services due to the lack of know-how and infrastructure. There are two leasing Banks companies operating in Sudan. The major financial institution providing financial Mobile Network Operators (MNOs) services in Sudan are banks. The 37 commercial banks in Sudan are complemented by other financial The CBOS issued updated e-money regulations service providers, including 43 microfinance institu- earlier this year. These regulations allow:(i) non- tions (MFIs), three mobile money operators (MMOs), banks such as MNOs to operate limited financial plus insurance companies. services directly without participation of a bank; (ii) operators to use their own infrastructure to operate The digital financial services provided by banks the service, with using Electronic Banking Services are still in a nascent stage. Few banks are providing (EBS) infrastructure as an option, (iii) EBS is acting internet and mobile banking, and the most widely as the interoperability platform among e-money ser- available functions are access to account balance, vice providers with CBOS being the only e-money with no sophisticated banking functions. Bank of issuer in the country. The MNOs need to establish a Khartoum provides some advanced services with separate entity, mostly a 100% owned subsidiary, to a mobile banking platform called “Bankek,”4 while be licensed by CBOS as a service provider. another bank Elkhaleej Bank provides an internet and mobile platform for corporations . Some specific Two MNOs, MTN and Sudatel, were major con- banking applications are designed for students, and tributors to the e-money service before the reg- another e-wallet is associated with pensioners and ulations,. At the same time, Zain refrained from employees despite only having 17 thousand clients. A participation for the inefficiency of the permitted few banks started to issue payment cards, in the form business model. After the regulations were changed, of the international Visa brand,after the ending of the three companies applied for a payment service sanctions, and others are connected to Visa gateway provider (PSP) license, and the CBOS is assessing to accept e-commerce transactions, mostly for airline the requests. The mandate to have a separate entity and tourism merchants. Considering the large per- acting as a PSP allows for a separation between the centage of the young population, banks might focus financial and telecom regulators. However, strong on the youth as early adopters of mobile banking. cooperation among the two authorities would be required to ensure non-conflicting regulations or Lending Service Providers audit requirements, especially for supervising com- mon resources between the MNO and its fully Banks are the main institutions providing credit. owned PSP, such as agents’ networks and technical The domestic credit to the private sector as a share infrastructure. of GDP was around 13.5 percent by 2019, which is low relative to comparable countries in the Middle East Financial Technology Providers (Fintechs) or Sub-Saharan Africa. Islamic Microfinance is a suc- cess story in Sudan with above 1.67 million borrow- The digital transformation in Sudan is taking ers in 2019, mainly as a result of the CBOS’s focus on place, though at a slow pace. New providers such the sector with the introduction of 2009 regulations as ride-sharing applications (started with Mish- requiring commercial banks to allocate at least 12% war and followed by Tirhal) led to more than 30 of total financing to microfinance and the establish- different ride-sharing solutions in the market until ment of the Microfinance Guarantee Agency in 2016. Careem, the global billion-dollar company, entered the market. This shows how digital solutions have MFIs are growing at a rate that is higher than any the potential to disrupt and make a transforma- other type of financial institution. They are mainly tion to an existing market (refer to chapter on dig- filling the gap in access to credit for micro-enter- ital businesses for more details). The awareness of prises. There were 43 MFIs operating 215 branches e-commerce in Sudan is limited, though people have as of the end of 2019. MFI branches have a higher started to buy products from Facebook, Instagram, 86 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Digital Financial Services or WhatsApp groups. The reasons for the limited integrated system for all government collections. usage of e-commerce platforms are due to a trust The system facilitates payment by persons or enter- deficit, lack of payment options, lack of logistics and prises for taxes and other services provided by courier services, and the unavailability of products. government units against the issuance of a receipt. However, the success of the small emerging e-com- The customs revenue collection is conducted elec- merce market shows that people are keen to use tronically, as well. The customs system allows the e-commerce in the future. The telecom operators automation of all customs processes and includes have also started providing e-commerce services, web-based payment functionality. The implementa- a point they are playing up to try to attract new tion of the system resulted in a year-to-year increase subscribers. in government collections equivalent to 27 percent and 30 percent in the first and second years of oper- The Sudan Fintech Association was established ation, respectively. last year with members, mostly individuals. The development of fintechs in Sudan, though nascent, Digitization and automation of government pay- is concentrated in the payments space. There are no ments are lagging. According to Global Findex, only providers yet in the credit or insurance space. The three percent of employees received their wages outdated regulations are seen as the main obstacle through bank accounts in 2014. Payments of govern- for fintechs to enter the digital space. There are dig- ment employees’ salaries through digital means have ital payment solution providers such as Syberpay, progressed since, but not significantly. Payments to which is gaining traction in Sudan. There are strong government suppliers are automated for all govern- opportunities for fintechs, considering the overall ment units at the federal level. Disbursements are high need for digital financial services, the young processed under the Treasury Single Account (TSA) population of Sudan, and the authorities’ recent framework. Some accounts are kept with commer- commitment to financial inclusion and the digitiza- cial banks, and there are delays in transferring funds tion agenda. Grasping such opportunities requires to the TSA. Further financial resources and support coordination among various stakeholders. should be given to complete government payments projects, including payroll, pensions, and govern- Payment service providers ment suppliers as this can be an important driver of financial access and DFS. The major payment service providers are banks, with non-banks now entering the space as e-money Remittances service providers. CBOS took an approach where the bank ratifies electronic payment service provid- The remittances market suffers from the reduction ers while keeping the commercial banks ultimately in in remittances transferred through official chan- charge of the service. By 2018, CBOS ratified eight nels and the high cost of sending remittances to companies to provide mobile applications, nine Sudan. The total value of remittances sent through companies to provide point of sale management official channels decreased from USD 1.59 billion in services, three companies to provide e-commerce 2008 to 496 million in 2020.6 The cost of sending platforms, and a company to provide e-wallet ser- remittances to Sudan showed variances across cor- vice. Recently, the three MNOs, through their sub- ridors, ranging from 2.59 percent for Saudi Arabia by sidiaries applied to provide mobile money services the first Quarter of 2021 to 9.44 percent for Qatar directly as payment service providers. MNOs are in the same period.7 Remittances are distributed providing the basic services viz., mobile top-up and through bank branches and exchange bureaus. A bill payment services. A few companies are provid- total of 21 exchange bureaus are licensed by CBOS. ing bill aggregation services. Furthermore, fourteen The remittances market suffers from a large paral- remittance service providers are licensed by the lel market and an insufficient direct relationship central bank to distribute international remittances. between domestic providers and International and regional money transfer operators. The Treasury (Ministry of Finance and Economic Development) Insurance Revenue collection including, taxes, fees, and The insurance market is very nascent in Sudan. customs duties, are, to a large extent, conducted The insurance sector is very small, and premiums digitally. The E15 system is designed to build an accounted for less than one percent of GDP in 2017. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 87 Chapter 6  |  Digital Financial Services Figure 24: Access to Financial Accounts (2014) Sudan and Peers Disparities wihtin population segments 80 25 70 20 60 % of population age 15+ % of population age 15+ 50 15 40 30 10 20 5 10 0 0 ar a tan ran a My ca ia n 0% le ) n ) en 0% e 5+ 25 ny an da da iop om Ma m ri m 6 t4 5- kis e2 Ke Gh Af Su Su an Wo st Eth nc e1 es be (ag he i or ag Uz le Ric ha lts Po idd s( sa du ult m b- ra ad r Su we de ng Ol Lo u Yo Source: Global Findex Database 2014. World Bank There are 15 insurance companies that offer risk cov- below provides a comparative picture of the per- ers; social funds that deal with issues of pension and centage of adults with a financial account compared social insurance; a deposit insurance guarantee fund to peer countries and the average for SSA and low- that serves to strengthen confidence in the banking er-middle-income countries system for financial system stability and safety pur- poses; and a reinsurance company. However, pene- There is some growth in the number of bank tration is very low. The biggest insurance company accounts, which increased to 5.5 million in 2017 (Sheikan) represented 60 percent of insurance pre- from 2.9 million in 2013 (a 90 percent increase). miums. The digitization initiatives in insurance are There is also a considerable increase in the popu- limited in number and scope, and most processes are lation receiving credit from MFIs, with 1.67 million manual or semi-manual. However, there have been borrowers in the microfinance sector. However, some efforts to move services more online (e.g. mar- financing for Small and Medium Enterprises (SMEs) keting and servicing travel and car insurance) online). – a key driver of the country’s economic develop- The current insurance law fully complies with Islamic ment and job creation - remains constrained. The Sharia. The law is under a modification process to 2013 Statistical Report states that only 2.7 percent accept conventional insurance as well which may fur- of small firms had access to a loan or line of credit ther open the market. Due to the sanctions applied from a bank in Sudan. on Sudan for a long time, the insurance market lacks product innovation. Insurance services are generally The low levels of financial inclusion are a result not digitized. However, there is potential for growth of weak financial intermediation, lagging financial in micro-insurance and agriculture segments. infrastructure, and a lack of enabling legal and reg- ulatory environment. The possible reasons include B. ACCOUNT OWNERSHIP (i) a high reliance on cash as a store of value and as a medium of payment, and use of informal channels, Financial inclusion including for remittances and borrowing, (ii) impact on the trust in the financial sector and uptake of The financial inclusion level in Sudan is one of the electronic payments due to the banknote crisis that lowest in Sub-Saharan Africa (SSA).8 As per the took place since 2018, (iii) payment systems infra- Global Findex (2014),9 only 15.3 percent of Sudanese structure that has not fostered innovation and an adults (age 15+) had a financial account with 7.5 per- under-developed credit infrastructure which allows cent saving at a financial institution, and 4.2 percent sector-wide credit risks to persist, (iv) thelegal and borrowed from a financial institution.10 Figure 31 regulatory framework lacks balanced support for 88 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Digital Financial Services Table 22: Sudan’s Business Environment Economy Sub-Sah. Sudan Egypt Eritrea Ethiopia Kenya Rwanda S. Sudan Tanzania Uganda Africa (2014) (2020) (2009) (2015) (2018) (2019) (2014) (2013) (2013) Percent of firms with a 86.2 98.4 83.1 98.2 92.6 89.3 93.3 84.1 73.7 86.7 checking or savings account Percent of firms with a bank 19.9 4.6 4.4 10.9 32.8 33.9 32.8 6.9 16.6 9.7 loan/line of credit Proportion of loans requiring 84.8 100 95.4 66.2 85.8 81.4 99.4 80.4 96.2 86.7 collateral (%) Percent of firms whose recent 15.4 33.8 17.6 15.1 3.7 23 2.8 9.2 loan application was rejected Percent of firms using banks to 18.8 6.7 10.3 11.9 12.9 31.6 12.2 8 18.5 8.1 finance investments Proportion of investment 8.9 2.4 6.7 1.2 7.8 20.7 6.5 2.4 8.8 3.1 financed by banks (%) Proportion of working capital 8 0.8 1.6 1.4 8.7 14 14.3 2.2 5.9 6.8 financed by banks (%) financial stability and financial inclusion, and (v) the of CIASA as a credit scoring company; and (v) issu- long-lasted sanctions that prohibited the market ance of an enabling regulatory framework for MFIs from exchanging experiences and importing tech- and credit reporting. However digitalization efforts nologies and best practices. As a result, the financial are still nascent, and this sector lacks digitization sector has low private sector participation and lim- in customer enrollment and account management. ited geographical or product diversification. Overall, Fintechs could either partner with banks and MFIs these factors have led to limited sector-wide capac- or be licensed to provide innovative models such as ity to serve individuals and businesses (particularly digital banks. SMEs) in Sudan. The World Bank Enterprise Surveys report provides Enterprises’ access to finance a better look at Sudan’s business environment compared to its neighbors. The access enterprises Lending in the Microfinance sector surged from have to savings or checking accounts is relatively 9,500 clients in 2006 to 1.67 million clients in very high, while access to credit from a bank is one 2019. The microfinance sector is well served by of the lowest rates compared to other countries banks and MFIs, with Islamic microfinance prod- in East Africa. All loans require collateral, although ucts. The expansion of the Sudanese microfinance the required collateral value is the lowest in the is largely due to the following CBOS policies; (i) region and with the highest percentage of rejected development of microfinance sector strategies and applications. Sudan is one of the lowest performing establishment of a national microfinance council countries in the region in terms of the banks’ ability to garner policy support,11 (ii) creation of institu- to finance investment and working capital of enter- tional arrangements such as the microfinance unit prises. Despite the fact that the survey in Sudan is at CBOS and Sudanese Microfinance Development a bit old (2014), it is interesting to see the huge gap Company (SMDC), (iii) establishment of the Microfi- between enterprises’ access to savings accounts and nance Guarantee Agency (MGA), (iv) establishment the lack of their access to bank credit. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 89 Chapter 6  |  Digital Financial Services Financial Literacy Electronic Banking Services (EBS) company oper- ates most of the retail payment systems in Sudan, Use of cash is preferred over other payment including the interbank card switch and the instruments due to low financial awareness and e-money interoperability platform. Besides being literacy. As per Global Findex (2014), 41 percent a payment system operator, EBS acts as a payment of the adult population saved money, but only 7 service provider and third-party processor. EBS pro- percent saved through a financial institution. Sim- cesses all POS terminals and a significant percentage ilarly, 46 percent of the adult population borrowed of ATMs in Sudan, manages the domestic “SudaPan” money, but only 4 percent did so through a finan- cards, operates all mobile money accounts on behalf cial institution. According to S&P Global Financial of financial institutions, manages banks’ connections Literacy Survey, Sudan has a financial literacy rate to bill payment aggregators, and acts as the single between 0-24 percent, which is the lowest bracket. gateway to international card schemes. This large Reforms in the banking, microfinance, mobile pay- concentration of service provisioning creates market ments, insurance, and telecommunication sectors inefficiencies, systemic risks in the case of systems have not yet achieved a transformative impact in failure, and cripples innovation. EBS performs two expanding access and usage of financial services in types of roles in the payments market: it provides Sudan. National awareness campaigns about the market infrastructure and is a third-party processor national electronic payment systems were imple- for financial institutions - which is a competitive ser- mented, including shopping festivals with discounts vice by nature. A separation between the two roles for using an electronic payment means, in addi- should be enforced by the regulator. As a result of tion to the participation of banks in a technology these dual roles, the government faced challenges in week. To some extent, efforts to build financial expanding enrolled people in EBS services. awareness and trust with the population are led by individual players from the private sector or state- The market lacks the infrastructure that performs owned institutions rather than a centralized and a full account-to-account credit transfer, typically coordinated policy reform. There is a need to have provided through a fast payment system (FPS). coordinated efforts by all stakeholders. The CBOS A full-fledged FPS could facilitate a number of use should work with governmental media, the Ministry cases in the market, including interoperability in of Education, and Sudanese universities to create procurement from merchants, bill payments, gov- awareness amongst specific groups of the public, ernment transfers and collections, and others. FPS including young generations, university students, would typically be associated with standards on business owners, and ultimate users of financial QR-Codes and the use of APIs and would introduce products and services, about the benefits of access associated services such as proxy services. Introduc- to accounts, credit, and insurance, and the alter- ing an FPS in the market would pave the road for a native options available for fulfilling their payment large number of fintechs to enter and develop extra needs instead of cash. use cases for different segments of the market. C. Financial InfrastructureReal Time Gross Credit Infrastructure Settlement In 2013, the CBOS established the Credit Informa- Financial Market Infrastructure tion and Scoring Agency (CIASA) as the credit bureau in Sudan. The Sudan Credit Information and Scoring CBOS operates the Real Time Gross Settlement Agency includes all commercial banks, two leasing (RTGS) System and the Electronic Cheques Clear- companies, and 24 of the 46 MFIs. The CIASA system, inghouse. RTGS is the largest value payment system a web-based application, is accessible via the inter- in Sudan. All commercial banks are direct partic- net and is accessed by its members, including MFIs. ipants in the RTGS, where interbank settlement CIASA is in the process of using the National ID as the takes place. Both the cheques clearinghouse and unique identifier for all users. The Agency has made EBS batches settle in RTGS as well. However, the considerable progress in the past few years in building cash leg of the Khartoum Stock Exchange securities a reliable and comprehensive reporting capability, but settlement doesn’t take place in RTGS. Checks are further substantial improvements are required.12 The widely used in Sudan. Truncated checks are rec- ICT infrastructure is underdeveloped even when com- ognized at the Electronic Cheques Clearinghouse pared with its peers in the region. However, CIASA’s (ECCH). database covers only three percent of the population. 90 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Digital Financial Services D. FINANCIAL ACCESS POINTS targeting households and MSMEs. The size of banks loans amounts to above 40 percent of banks’ Access points to payment and banking total assets. Lending to households contributes to services less than 20 percent of total loans. All the loans in Sudan must comply with the Islamic Sharia. The Policy measures in the CBOS’s Annual Report most commonly used approaches for lending are 201813 indicated the process to push transforma- Musharka and Murabaha, with average rates of 30 tion towards a cashless economy. This requires the and 12 percent consecutively. Due to the high infla- development of a payment system and increasing its tion rates and credit risks, and lack of competition, spread, and expansion of the modern electronic sys- the cost of borrowing is high. Other credit provid- tems, along with modernization of equipment, cov- ers by 2018 included 43 microfinance institutions ering both payment and settlements. Sudan has an and two leasing companies. Commercial banks have average number of bank branches (3.37 branches) per microfinance windows as well. Other semi-for- 100,000 adults compared to its neighbor countries. mal microfinance providers included NGOs, civic The number of points of sales reached 16,162 ter- associations, social funds, and rural development minals by the end of 2018—a considerable increase projects. from 2017. The number of banks that participated in the mobile payment system reached eight banks with Digital channels to provide credit and deposit ser- 5.6 million participants by 2018. Expansion of access vices are still evolving. Most of the banks request points can be informed through deeper geospa- a wet signature (i.e. signed in-person with a pen) tial analysis. Access point data may be aligned with to open a new account, even for existing custom- demographic data such as population density and ers. There are few, if any, digital platforms managed economic activity data such as industrial clusters. by third parties that are available as an outsourcing service for banks. Alternative methods of lending, Interoperability including crowdfunding and peer-to-peer lending do not exist at this stage. Besides not being regu- The CBOS-RTGS system is used for retail transac- lated, by the time of writing this report, no success- tions as well, though it is not the optimal system to ful crowdfunding projects were reported in Sudan. do so. EBS offers two retail payment infrastructures; the first is the interbank card switch to transfer card F. Capital markets transactions among banks, and the second is the mobile money interoperability platform that allows The Capital Market Authority established the transfer of e-money transactions among system through the CMA Act of 2016 is the supervisor of participants. The market lacks agents’ interoperability, the Khartoum Stock Exchange, brokers, and the so customers of one FSP (Financial Service Provider) central securities depositories established under can’t use the agents of another FSP. The interopera- the Act. Sudan’s Stock market is underdeveloped bility of USSD (Unstructured Supplementary Service compared to regional stock markets. There are 38 Data) is likewise facing implementation problems; stock market brokers. As of the end of 2018, the while the regulations allow for different FSPs to use market capitalization of the 66 listed companies, the USSD channels available to MNOs, FSPs typically 17 funds, and 47 listed Sukuk amounted to only 4.1 struggle to have access to such a channel, sometimes percent of GDP compared to 21 percent in MENA for technical reasons and often due to high prices. (excluding the high income countries). The size of Additional retail infrastructure such as an Instant or trade in the market is very limited. The total value Fast Payment system could be extremely useful to traded even declined from 1.4 percent of GDP in enable a system of flourishing digital transactions. 2012 to less than 1 percent of GDP in 2018. The trading is concentrated in government Sukuk with E. CREDIT AND SAVINGS their high yield (over 30 percent). Both primary and secondary markets need reorganization and Bank lending in Sudan is directed largely to the restructure to be attractive to domestic and for- wholesale banking business,14 with little lending eign investors. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 91 Chapter 6  |  Digital Financial Services 6.3. Constraints facing regulated by the Insurance Supervisory Author- ity of Sudan, and the Capital Market Authority development of Digital Financial is empowered to supervise the Khartoum Stock Services Exchange and any other stock exchanges, and bro- kers, established under the CMA Act. A. Policies and Strategies In general, the financial authorities need to focus on digital channels by developing regulations that CBOS, in cooperation with MoF and the Govern- are balanced and detailed enough to mitigate risks ment, established an initiative to develop the and provide clarity to market participants. The national financial inclusion strategy (NFIS) of existing regulations tend to be on a very high level Sudan. The initiative is supported by the WBG and and ambiguous. There is not enough clarity on the aims at identifying the strategic directions for Sudan conditions to permit ditigal financial services, the to increase the access and use of financial services. risks associated with suchservices, the risk mitiga- Over the years, the Central Bank of Sudan and the tion measures required by the regulator, the macro- Government have introduced various initiatives to prudential requirements, the responsibilities of the support financial inclusion. Direct interventions service provider boards and top management, etc. A included the establishment of a microfinance unit specific law on Payment Systems and Services would within the CBOS in 2007, the microfinance regula- be crucial to the market. tions of 2009 requiring commercial banks to allocate at least 12% of total financing to the microfinance The recent e-money regulations allow non-banks sector, the Microfinance Guarantee agency that to operate e-money accounts for their clients. The became operational in 2016 and the e-money reg- regulations list a number of activities that a licensed ulations of 2020. However, the results of those provider can perform and prohibits the provider from actions were limited due to the lack of harmoniza- performing any other activities. They provide strong tion among the authorities on the policy level and protection to e-money account holders. However, weak partnership between the public and private the regulations don’t recognize the concept of issu- sectors. ing e-money and considers the CBOS to be the only issuer of e-money in Sudan. Banks and non-bank iIn 2012, CBOS’ Payment System Department PSPs technically are not issuers of e-money, even developed a draft for a national payment system if they manage e-money accounts for their clients. strategy NPSS, but the strategy was never recog- The regulations allow PSPs to operate their own nized by the CBOS Board. A NPSS is instrumental systems, contrary to the previous regulations which in ensuring proper harmony between the public enforced the operation of all e-money accounts by authorities and the private sector. The NPSS typi- EBS. The impact of the regulations are not yet clear cally addresses multiple pillars of the payment sys- on the market; MNOs have prepared their systems tems, including the legal and regulatory framework, to operate e-money systems and have started to large value, retail, and government payment systems, announce their services in the market. remittances, securities settlement systems, and the oversight framework. Developing such a strategy The existing legal and regulatory framework in ensures a high level of commitment from CBOS Sudan doesn’t provide specific recognition of towards developing the payment market, develop- agency banking. The only exception is a 2013 circular ing a strong communication channel between the allowing agents to provide services to banks oper- central bank and all service providers, and setting ating e-wallets and the recent e-money regulations clearly the objectives, priorities, and action plans. that allow payment service providers to use agents Those pillars are not clear enough in the Sudanese to provide services directly to their customers. No market. Despite the establishment of a National comprehensive legislation or regulations identify Payment Council NPC, the level of coordination and regulate the activities of banks’ agents. Agency among authorities still needs development. banking regulation is critical in supporting services provision in the financial market, as it offers an B. Legal Framework opportunity to extend financial services into under- served regions of the country and lower-income Banks and non-bank financial institutions are regu- customers. CBOS’s current draft of agent bank- lated and supervised by the CBOS; the insurers are ing regulation, prepared through a WBG TA, is still 92 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Digital Financial Services under discussion and yet to be approved. The scope the financial sector. As a way to encourage innova- of agent networks in the neighboring countries goes tive solutions within financial services, a number of beyond the simple cash-in-cash-out services for relevant authorities, including the European Union e-money service providers, to include performing and the Bank of England, issued regulations oblig- customer due diligence and acting as banks’ front ing the commercial banks to share their clients’ data office to receive requests and documentation from with licensed fintechs based on agreement of the cli- banks’ clients without taking decisions. Such activ- ent, to give customers access to greater services, in ities could make drastic developments in the finan- what has been defined as Open Banking regulations. cial inclusion agenda, not only under the payments’ The trend has expanded in many countries with scope but as well for deposit, credit, and insurance further rules on the consumer agreement require- products. ments, standards for data exchange via application programming interfaces (APIs), and security. Apply- There are no clear regulations on outsourcing ing an open banking approach will not only provide financial services in Sudan. The circular on regu- innovation in financial products but will ensure the lating electronic payment systems of 2013 allowed development of a large sector of financial technol- payment system operators to outsource their ogy (fintech) providers. operations after authorization of the central bank. No risk-related requirements or responsibilities for The Sudanese Parliament issued the Money Laun- the board of directors or senior management were dering and Finance of Terrorism (Combating) Act in assigned within the circular. The lack of detailed reg- 2014. This was followed by the CBOS Circular No ulations could have a two-fold effect on the market. (8/2014) on AML/CFT Regulatory and Supervisory First, companies interested in providing outsourc- requirements for the institutions under the super- ing services will be reluctant due to a lack of clar- vision of the CBOS. Nonbank financial institutions ity of the authorities’ position. Second, banks and (NBFIs) and any entity licensed and supervised by financial providers will not apply adequate measures the CBOS are subject to the requirements of this to mitigate the outsourcing risks. Considering the law. Customer due diligence (CDD) is required immature level of infrastructure owned by many before opening an account whenever a fund transfer banks, it could be more efficient for some banks to is initiated that is above a predetermined threshold outsource to specialized firms operation of their or in other cases involving additional risks. core banking systems and digital channels. Special regulations addressing outsourcing risks would be An updated Simplified Due Diligence (SDD) pro- crucial to elevate the financial services. It could be cess that applies a tiered approach for customer relevant as well to allow FSPs to use cloud services, identification and verification is imperative. The including data processing and storage. Cloud com- SDD process should cover individuals and small and puting could leapfrog the level of financial services micro enterprises in a way that applies a risk-based provided to the Sudanese market subject to ensur- approach and stresses the importance of financial ing an adequate level of risk mitigation. inclusion. It should be designed to accept alter- native proofs of identification for individuals who The expansion of provision of financial services don’t have access to a NID and micro-businesses through third-party processors could led to new that don’t have access to official registration. Other models of banks, known as digital banks. Digital options for low-risk customers include the possibility banks depend mainly on digital channels to pro- of identifying real beneficiaries after account open- vide services to their customers. This approach is ing, inferring the purpose of the account when it is cheaper, faster, and more accessible. Digital banks evident, using agents to identify and verify the iden- could be provided in different models, including pay- tity, and updating data through electronic means. ment banks, banking as a service (BAAS), and big- The remote KYC process is becoming unavoidable, tech banks. The regulators are encouraging those especially with the conditions generated by the models by issuing special licensing to digital banks COVID-19. or upgrading the e-money issuers to payment banks that can accept deposits or provide credit. Few Arab The “know your customer” (KYC) requirements, countries have started or in the process of prepara- as explained by Circular No. 8 for the year 2014, tion to issue a special digital bank license. The expe- identified remote transactions to be of high AML/ rience could be very relevant to Sudan, as it could CFT risk. The updated circular on simplifying proce- attract investments and experienced personnel to dures for opening bank accounts for individuals, of Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 93 Chapter 6  |  Digital Financial Services 2018, required the person to present their NID in financial institution. The availability of only Islamic person to the service provider and to sign a form finance didn’t allow for a variety of lending products. to open an account. Both requirements are not However, with the introduction of conventional applicable in the case of the remote KYC process. credit, lenders need to develop customized products However, the procedures for opening an e-money for individuals and MSMEs. The credit reporting sys- account allow mobile network operators to refer tem has limited data. The credit providers do not use to their mobile number database and the National modern methods for credit evaluation, such as using Registrar to compare the NID number with the cus- mobile, social media, and supply chain data. The mar- tomer information, hence permitting a remote reg- ket would benefit a lot from a registrar of movable istration to the service. Such remote KYC is limited and immovable assets as a collateral system which only to e-money account opening and is not gen- would make access to credit easier against such col- eralized to procedures for opening other types of lateral. The regulations for recording and the rec- bank accounts. Remote KYC should be permitted to ognition of collaterals and the insolvency proceeds open other types of financial accounts based on risk should be developed according to best practices in assessment. Remote KYC measures should be per- this field. Modern methods to receive credit, such as mitted to micro and small businesses as well. peer-to-peer lending and crowdfunding, should be permitted and regulated to protect investors and The expansion of the payment services and sys- allow alternative funding options for entrepreneurs. tems requires a stronger role of CBOS in over- seeing the National Payment System (NPS). The C. Market Entry Payment System Oversight Unit should perform a wider role in the oversight of payment systems and Sudan presents one of the most challenging busi- services to ensure their safety and efficiency and to ness environments in the world to investors. It is ensure other objectives such as financial inclusion, ranked 175 of 180 countries on Transparency Interna- competitive market conditions, and overall risk. tional’s 2017 Corruption Perception Index. According to the World Bank 2011 Financial Sector Review, these The legal and regulatory frameworks for consumer include weaknesses in the lending environment and protection in financial services are fragmented. supporting institutions such as collateral legislation The frameworks have many gaps compared to best and the judicial system, creditor rights, and the lack practices. The country has in place a broad legal of a reliable financial information and credit informa- framework for consumer protection, but legal pro- tion infrastructure. Other factors include a lack of visions relevant to financial services are in many affordable products and services delivered through cases diffused in multiple pieces of legislation, and multiple access channels (including mobile phones), the coverage of issues is generally not comprehen- excessive government borrowing and crowding out sive. This includes limited attention to data privacy of the private sector, and a low level of financial lit- and data protection – which is of critical impor- eracy. These factors affect individuals and MSMEs tance for increasing trust in digital financial services. more than they affect large enterprises. The underdeveloped domestic bankruptcy laws, cross-country differences in local laws, and limited D. Delivery Channel and Product Innovation legal precedents in Sudan create uncertainty over the enforceability of investor rights, particularly in Due to the underdeveloped ICT infrastructure, default events. The absence of a conducive legal and internet and mobile channels for financial services regulatory infrastructure (for example, true asset are not adopted enough. MNOs could be the best sale or separation of title from beneficial ownership; candidates to develop interfaces to financial ser- trust laws; taxation, insolvency, and bankruptcy vices, especially with their monopoly on the USSD laws) is a major challenge for investors. The dis- channel. Banks have started to develop products pute resolution mechanisms continue to evolve and that depend on the internet and mobile applica- encompass both litigation and alternative dispute tions, but still, they are at an early stage and these resolution (ADR) mechanisms; however, redress products are not yet widely used. MFIs and insur- mechanisms are not effective due to inadequate ance companies rarely depend on digital channels. awareness and complexity of procedures. Major issues such as the undeveloped legal and regulatory framework, access to broadband inter- According to the WB Findex 2014 report, only four net, and financial illiteracy are among the main chal- percent of adults had access to credit from a formal lenges to adopt digital channels. 94 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Digital Financial Services Innovative financial products require a suitable Banks and NBFIs tend to depend mainly on the environment that does not exist yet in Sudan. national ID as the tool for customer identity ver- Innovation in financial services depends mainly on ification. The national ID system covers only eighty the supporting companies that can invest in devel- percent of the population (Refer to “Digital Public opment and share with or sell to financial providers Platforms” for details on the National ID system). or be authorized to provide their products directly Alternative government-issued proofsof identity to the market. The overall investment environ- include the armed forces card, the teacher’s card, a ment is not attractive to entrepreneurs, and the driver’s license, and a passport. Most of the citizens associated regulations do not support the entre- who are excluded from the NID system wouldn’t preneurs or small fintechs to act as financial ser- have access to any of the alternate acceptable vice providers. The legal and regulatory framework proofs. Telecommunications companies (telcos) does not provide a level playing field for banks and have online access to the NID system to perform non-bank providers. Product innovation depends ID validation upon purchase of SIM cards. To date, as well on the number of computer science and banks haven’t established such a link with the NID engineering graduates and the quality of educa- system. However, banks depend on access to a SIM tion. In spite of those conditions, the Sudanese card as proof for a previous KYC check performed market is a promising market, as shown by the suc- earlier by an MNO. cess stories of innovative products in ride-sharing and marketplaces. E. Managing Risks of Digital Finance 6.4. Recommendations Cyber risks could impede the development of DFS. The authorities have not developed or enforced a framework to identify, detect, protect against, and R1: Develop a National Financial Inclusion Strat- recover from IT security threats. A recent accident egy (NFIS) and National Payment System Strategy caused EBS operations to completely stop; the (NPSS). CBOS, in cooperation with the MOFEC and root cause was not informed to the report draft- the Sudanese Government, should work on devel- ing team; however, the accident showed a lack of oping a National Financial Inclusion Strategy that preparation for such incidents and the existence includes a strong focus on Digital Financial Services of problems with business continuity plans. While and which sets clear objectives for all stakeholders financial services are the most attractive target for on financial inclusion targets and action plans. The cyberattacks due to the huge possible gains for strategy should be developed in consultation with the attackers, enforcing a cyber resilience frame- all stakeholders to have their buy-in. CBOS should work is crucial to expand DFS while not risking the work with MOF, commercial banks, and other non- financial institutions’ funds and customers’ data to bank payment service providers on developing a cyberattacks. Financial institutions should apply National Payment System Strategy that would guide the framework, develop business continuity plans, the market development and the authorities’ priori- including a scenario for cyberattacks, and regularly ties. The strategy should support the vision of finan- go under penetration and vulnerability tests. The cial inclusion that is part of the NFIS. CBOS, in cooperation with other relevant author- ities, should ensure the cyber resilience of the R2: Creating an enabling environment for out- financial sector. sourcing services. FSPs could consider examining and carrying out a cost-benefit analysis for owning F. Non-Financial Infrastructure: infrastructure vs. using outsourced services avail- able from third parties. Using third parties may Despite the investments in power generation over benefit the FSPs by allowing them to focus on the last decade, there is a huge gap between gen- their core financial business while shifting non-core erated power and actual needs. The national elec- businesses, including IT, to specialized institutions. trification rate (the share of inhabitants with access Advanced models, including using cloud computing, to electricity) in Sudan is 32.6% (World Bank, 2016). should be considered, especially with such consid- The gap is wide in access to the internet as well erations as fast adoption, security, and economical (refer to ‘Digital Infrastructure’ chapter for details on initial costs. The financial regulators should develop ICT infrastructure constraints). , regulations to mitigate the risks of outsourcing and Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 95 Chapter 6  |  Digital Financial Services the use of cloud services. The Bank of International to or from the government, plus the integrated pay- Settlement (BIS) issued guidelines for financial ser- ments within mobile applications that would enable vices outsourcing, and the Swiss-based Financial the creation of widely used apps such as Uber, Ama- Stability Board (FSB) issued guidelines on use of the zon, and marketplaces. The payment infrastructure cloud by financial institutions. Non-banks financial created should support different payment instru- service providers (NB-FSP) are required to expand ments and channels and both pull and push pay- access to finance. NB-FSPs can play a big role ments. IMPS operated by NPCI in India, and NPP in through their ability to provide specialized services Australia, are good models of FPS. and/or products. The Sudanese financial regulators should encourage the innovative role that can be R4: Digitization of Government payments, includ- played by NB-FSPs and fintechs through modern ing social protection payments. Government pay- legislation that enables innovative models for pro- ments and collections need to expand beyond the viding financial services such as legislation on dig- federal level to all states. Some enhancements ital banks and the application of the open banking should be applied, including automating the rec- model. The authorities should make available access onciliation process among different participants, to their infrastructure, including the National ID assessing the performance of the TSA to inform infrastructure, by way of APIs to financial service future initiatives, and extending the level of auto- providers, including non-banks that are compliant mation within MOFEC through implementing a with the criteria prescribed by the respective infra- fully integrated financial management information structure owners/ operators. system (IFMIS). The Government should accept all types of authorized payment instruments, including R3: Develop a Fast Payment System to support payment cards and e-money. real-time retail payments. CBOS should work with financial service providers to assess the market R5: Enhancing financial awareness. Sudanese citi- needs and establish the financial market infrastruc- zens would need special programs for financial and ture, including the Fast Payment System (FPS), that digital literacy, considering the shift from Islamic to would act as the backbone for retail market interop- conventional finance, the lack of innovative prod- erability. The FPS could support varied use cases in ucts and access point services along the previous the retail payment market, including purchase from times, and the sophistication associated with mod- small and micro merchants, bill payments, payments ern offerings. 96 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Gender and ICT IN FOCUS A Gender and ICT S udan fares high on the Gender Inequality Index Women exhibit less confidence in their abilities to (GII), primarily on account of gendered gaps in run businesses, and actively seek training and sup- the labor market. Sudan ranks at a 0.545 (0-1 port. Women in Sudan recorded a lower percentage scale with 1 signifying high inequality) on gender of confidence in their knowledge, skills, and experi- inequality, above its regional peers and the global ence to start a business (68.7% of women reported average (0.517 in Ethiopia, 0.518 in Kenya15, global being confident in running a business as opposed average of 0.492). While the country has embarked to 80.5% men19). Perhaps driven by this perceived on some steps towards reproductive health and lack of abilities, women actively seek training and empowerment over recent years, participation in professional support for running their businesses. economic activity remains an impediment. For exam- Research shows that more women than men (with a ple, in 2019 The female labor force participation was 10 percentage difference) consider seeking advisory 29.2%, compared to 68.2% for men,16 where female services from ESOs or professional advisors as a first labor force participation is largely concentrated in choice of support for business advice. Women are the agriculture sector and in the informal sector. A also more likely to seek training programs to equip similar trend is observed in the digital sector. themselves with the right skills for running their business (50% female vs 40% male founders under- While Sudan sees a high percentage of female went training in their business).20 graduates in STEM, women remain underrepre- sented in leadership and decision-making posi- A gender divide in access to digital technologies tions in the ICT sector. Sudan scores relatively high and broadband usage remains prevalent in Sudan. with regards to females graduating from science, Only 11% of women access the internet from any technology, engineering and mathematics (STEM), location as opposed to 16.9% of men, which is low where 27.8% of tertiary level female graduates grad- compared to 53% of women in Egypt and 20% in uate from these disciplines, which include ICT stud- Kenya.21 Moreover, the penetration of the internet ies – compared to 11.2% in Kenya and 7.7% in Egypt.17 in economic transactions and activities in Sudan is The high rate of female graduates from STEM and generally low, with only 0.7 percent of women hav- ICT study programs in Sudan draws on the trend of ing used the internet to pay bills or buy things, com- increasing women enrollment in higher education. pared to 1.3 percent of men in 2013.22 The gender However, often cultural factors linked to marriage gap in internet access and usage in Sudan is deemed and domestic work impede women’s participation in structural.23 the workforce, albeit in a decreasing pattern (female unemployment rate dropped from 30.2% in 2013 to 28.2% in 2019).18 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 97 Chapter 6  |  State of Cybersecurity and Data Protection IN FOCU B State of Cybersecurity and Data Protection S udan is lagging behind its peers, ranking critical infrastructure, good practice compliance 102nd out of 193 ITU member states on the frameworks, standards and controls, an investment overall Global Cyber Security Index (GCI).24 program in its people with training and awareness While Sudan has basic fundamentals of cybersecu- raising as well as an R&D program.26 Importantly, rity structures in place, e.g. a Computer Emergency the capacity of the Sudanese CERT needs to be Response Team (CERT) established at the National built up so as to fulfil its objectives of monitoring, Telecommunications Corporation, and legislation on preventing, detecting and responding to cyber-at- cybersecurity such as the Combating Cybercrimes tacks and breaches. For this, significant operational Law, (2018), significant gaps remain in legislation investments must be made in people, processes and operationalization of these measures. The 2018 and technology. The risk of cybersecurity threats Cybercrimes law has been critiqued by some observ- also remains high in the absence of adequate pro- ers as too vague and enabling controversial restric- tection of government networks. Access to licensed tions on freedom of expression.25 To strengthen its firewall and data security software was denied until position, Sudan needs to implement remaining good most recently due to the SSTL sanctions. As a result, practice building blocks and operationalize them - the government of Sudan embarked on utilization including a national cybersecurity strategy, an effec- of Firewalls from 3rd party sources (through the NIC) tive institutional and governance framework laying and open sources for email domains. This poses sev- out responsibilities, mandates and roles for cyberse- eral threats to data use and protection. For example, curity agencies, a protection framework for national Good Practices in Cybersecurity 1. Good practice legislation that covers Cybersecurity, National 5. Upgrades and modernization of national networks and government Critical Infrastructures and Cybercrime. Accession to the Budapest platforms in light of cybersecurity compliance frameworks Convention on Cybercrime. 2. An effective and robust institutional and governance structure for 6. Investment in people. Capacity and digital skills training for a wide Cybersecurity that is clear, well resourced, empowered and instills array of audiences including government IT officials, government trust - including a capable National CERT and an independent, civilian non-IT officials, budget decision makers, law makers, cabinet and national cybersecurity agency deputies, judges, parents, teachers, children, women and disadvan- taged groups. 3. Compliance frameworks for cybersecurity in the public and private 7. Investment in the education sector together with the Ministry of sectors, including essential standards for SMEs. Implementation of Education, with curriculum reform at appropriate levels in primary, controls and audit frameworks across government and enablement of secondary, tertiary and vocational education, so as to produce the the private sector to do the same for firms. cohort of cybersecurity analysts needed by the economy. 4. Upgrades and strengthening of the technical and operational 8. Public awareness campaigns to reach divergent target audiences. capacities of the national CERT to handle incident response, present, detect and mitigate through software, applications, tools, drills, simulations, penetration tests and training. 98 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  State of Cybersecurity and Data Protection the E-15 payment system which collects government violations is absent. While a draft data protection revenue lacks solid firewall and antivirus software. law is being formulated, but is yet to be finalized.28 The Combating Cybercrimes Law 2018, while relat- Reforming cybersecurity governance is key. The ing to data and ICT security, does not extend its absence of a recognized cybersecurity agency and scope to basic tenets of good practice Data Pro- administrative overlaps among various ministries’ tection legislation, such as defining the permissible ICT departments is impeding development of a principles of data collection and usage, the rights robust response for cybersecurity. Various minis- of data subjects and the duties of data controllers tries and government institutions carry out inde- and processors. Further, there is no independent pendent ICT procurement through individual ICT body that provides data protection regulations and departments and reach out to the National Infor- guidelines for the country. While the NIC hosts the mation Center (NIC) - the agency centrally tasked to government data centers, has its own data access manage cybersecurity - for technical assistance. The guidelines, and is authorized to collate various overlap in responsibilities and gaps of structure in entities’ private data - it does not have the man- ICT governance (between ICT departments and the date to establish data protection guidelines across NIC) create vulnerabilities and privacy violations. the government. Sudan’s next recommended The role of the NIC in terms of unifying cyberse- steps are to establish a “Data Protection Frame- curity strategies and data security guidelines is yet work”29 and a “Data Privacy Framework” followed to be operationalized. Auditing of security and IT by data protection legislation, while implementing systems is completed annually by the NIC, however an interim governance structure culminating in a as ICT departments in various entities do not align national Data Protection Unit or Agency as legis- with or report to the NIC, there is no authority to lation is adopted, with a clear process of accepting change or adjust existing systems. In other cases, and addressing complaints.30 Substantial technical NIC’s audit frameworks may also be incompatible capacity building for officials and data protection with various entities’ needs. officers is needed to perform effective duties, generate regulations on requisite topics, define Sudan lacks institutional set-up and a legal frame- compliance standards and enforce them as well work for data protection.27 A legal framework that as assist government agencies to comply with the explicitly penalizes data protection and privacy new frameworks. Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 99 Chapter 6  |  Climate Change Adaptation and Mitigation IN FOCUS C Climate Change Adaptation and Mitigation S udan is highly vulnerable to climate related remains concentrated in the capital Khartoum, which natural disasters such as droughts and floods is said to account for the vast majority of all internet that threaten the majority of livelihoods - users. Lack of connectivity has resulted in exclud- these are hard to predict given the lack of local ing vulnerable groups from accessing information or climate related data. Sudan comprises vast dry and government services and support in emergency situ- arid regions with erratic rainfall on which most agri- ations. Marginalized populations, particularly in rural cultural production depends (some 80% of the labor areas, tend to be more vulnerable to climate change force is employed in the agrarian economy31). This related natural disasters, for which digital technolo- landscape makes the country vulnerable to changes gies can play an instrumental role in mitigating risks in temperature and precipitation, with a significant as well as in emergency relief and recovery efforts. impact on life and livelihoods. The country has been experiencing prolonged periods of drought, as well In light of these vulnerabilities, the Government of as devastating floods (most recent in July 2020) Sudan (GoS) has recognized the need to focus on which occur from rain water overflowing the River greater climate adaptation and expanding access Nile and its tributaries or on account of heavy local- to connectivity. The recent Three-year Program for ized rain during the rainy summer season. Given the Stability and Economic Development (2021-2023) lack of sufficient historical local climate related data, highlights the government’s priorities of “Reducing models analyzing weather patterns are absent and the vulnerability of pastoral and agricultural commu- adequate preparedness measures are missing. nities to climate change,” and “Enhancing planning for adaptation to climate change in Sudan based on Limited connectivity, especially in rural and con- recent and reliable data on climate change.” Though flict-affected areas, limits response during emer- dated, Sudan’s early National Adaptation Program gency situations such as climate induced natural of Action (NAPA)34 recommended “establishing an disasters or an ongoing health pandemic. The coun- early warning system.” Furthermore, one of the key try has around 19,000 km of fiber optic cable running ways for mitigating the impact of climate related across cities, but the country’s diverse terrain and events could be through more real time monitoring large area has made the rollout of wireline infrastruc- of climate events, and communication of warnings ture challenging particularly in remote rural areas to vulnerable communities, which can be facilitated and in conflict-affected zones. The penetration rate by better connectivity, especially mobile usage in of mobile broadband subscriptions (based on unique rural areas. In this light, the newly established Min- subscribers) is relatively low at 33%,32 and fixed istry of Telecommunication and Digital Transfor- broadband penetration is also very low at 0.1%. Only mation (MTDT) is working on formalizing a Digital about one-third of households have access to the Transformation Strategy with a potential focus on internet.33 Publicly accessible internet is available in leveraging technologies for climate adaptation and only a limited number of towns and cities, and usage mitigation. 100 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Digital axation IN FOCUS D Digital axation S udan has one of the highest levels of ICT sec- in the first years of operation, paid income taxes from tor-specific taxes in Africa. The VAT on ICT the beginning. This approach is now outdated and is services has recently increased to 40%, possi- an obstacle to further growth in the ICT sector. bly the highest in Africa. Sudan also charges income tax on ICT sector companies based on revenues and Ways can be explored to streamline ICT sec- not profits. Currently, the rate is 7% of revenues and tor taxes in line with global best practices, while a proposal is under discussion to increase the rate adhering to the country’s current fiscal needs. Box to 10%. The corporate income tax was introduced to 12 provides some best practices on taxation for the ensure that new entrants, who typically make a loss sector. Box 12: Best-practice principles for taxation Principle Description 40% VAT CIT 7% revenues Broad-based A broad base of taxation means that a lower While VAT, in general, CIT for the telecom tax rate is required to raise the same revenue, is broad-based the VAT sector is based on while sector-specific taxes distort incentives for the ICT sector is 23% revenue not on profit as and require higher levels of taxation to get the higher at 40% than for for all other sectors. same revenue. other sectors. Take into account Excise duties should be imposed on activities Higher VAT does not take CIT on revenues rather externalities with negative externalities where the objective into account the positive than on profits dis-incen- is to lower consumption, such as alcohol effect of broadband tivizes investment. or tobacco, and should not be imposed on adoption on economic sectors with positive externalities, such as growth. telecoms. Simple and enforceable Taxes should be clear, easy to understand, Collected from telcos is Collected from telcos is and predictable, thereby reducing investor simple and enforceable simple and enforceable uncertainty and ensuring better compliance. Incentives for Higher taxes for one sector in comparison Lower broadband CIT on revenues rather competition & to the rest of the economy could reduce adoption also means than on profits dis-incen- investment should be investment in that sector. lower revenues for telco tivizes investment. unaffected and thus less investment Progressive not The tax rate should increase as the taxable VAT is not progressive by CIT is not progressive by regressive amount increases. Specific value taxes on default default small amounts should be avoided because they make the poor pay more. Source: GSMA, 2016 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 101 Chapter 6  |  Conclusion Conclusion F indings from this diagnostic show how the This report provides key recommendations, with potential of digital transformation remains the aim of focusing on key principles of building to be fully realized in Sudan, primarily due to greater resilience, trust and inclusion, and capacity missing infrastructure and skills gaps. Less than half in the country. The report recommends adopting a of the population has broadband coverage and only coordinated, complementary, and phased approach about a third use broadband. Relatedly, and perhaps focusing on efforts that can aid in (1) building resil- on account of lack of connectivity which acts as a ience, through building broadband redundancy, dig- foundation, other dimensions of the digital econ- italizing operations and proofing infrastructure and omy (financial services, business, e-services) remain skills to emergencies (2) furthering inclusion and trust limited. The supply of digital skills is low, affecting through prioritizing citizen-facing services, surveys the ability of individuals and businesses to leverage and engagement to build in accountability and active existing digital platforms and products. There is also participation from citizens and 3) capacity building a persistent rural-urban digital divide, as well as a within MDAs through investment in infrastructure gender divide in access and use of digital technol- and skills. Given the evolving socio-political context, ogy. Sudan therefore is not reaping the benefits of the report provides recommendations on prioritizing digital transformation including on enhanced secu- key steps, and advises on ensuring that key prereq- rity, greater trust and accountability in governance, uisites for any thriving digital economy—those of and expansion of jobs of the future. political stability, strong ICT sector leadership, high government capacity, international private sector participation—are built and maintained. 102 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan Chapter 6  |  Conclusion Notes 1 McKinsey Global Institute, How digital finance could boost growth in emerging economies report, September 2016 2 WB Global Findex database, 2014 3 WB Global Findex database, 2014 4 In Arabic it means “your bank”. 5 MFIs are also allowed to take deposits from target groups – most individuals- but only a few are engaged in deposit-taking services. 6 The value is estimated by the WB Migration and Remittances database, Annual remittances data, Inflows, 2021 7 WB remittances prices worldwide database 8 Sudan FSAP: TN on Financial Inclusion and infrastructure 9 Request for latest data has been made to the authorities. (Sudan did not participate in the 2017 Global Findex) 10 Registered account at a bank or non-bank financial institution, or mobile money account 11 The first strategy covered 2006-2011, the second covered 2013-2017 and the third one covered 2018-2020. 12 Hussein, Elwaleed Kamal Eldin, “Challenges with Data Acquisition.” A Case Study of the Credit Information and Scoring Agency. CIASA, Khar- toum, Sudan. 13 Bank of Sudan - 58th ANNUAL REPORT 2018 14 IMF report (Sudan – Selected Issues) - March 2020 15 UNDP Human Development Report - Sudan, 2020 16 Ibid 17 UNDP Human Development Report - Sudan, 2020 18 ILOSTAT 213-2019 19 Situation Analysis of Startups in Sudan, 249Startups and JICA, 2019 20 Ibid 21 International Telecommunications Union, ICT Gender Indicators, 2016 22 Global Findex Database, World Bank Group. 2014 23 International Telecommunications Union, 2016 24 International Telecommunication Union 2020 25 https://advox.globalvoices.org/2021/03/04/sudans-revised-cybercrime-law-falls-short-on-its-promise/ 26 Ibid 27 World Bank ID4D Legal Enabling Environment: Sudan 2020 28 As of the time of analysis for this report, July 2021 29 World Bank ID4D Rapid Diagnostic: Sudan - 2020 30 World Bank ID4D Legal Enabling Environment: Sudan 2020 31 Climate resilience for Food Security, World Food Programme, 2016 32 GSMA, 2020 33 Telecoms, Mobile and Broadband Statistics and Analyses, Buddle Communication, 2020 34 HCENR, National Adaptation Program of Action (NAPA) Ministry of Environment and Physical Development-Sudan, July 2007 Digital Economy for Africa: Diagnostic Assessment for the Republic of Sudan 103