Could Blockchain Revive the Banking Sector in Sudan?

Since the war in Sudan broke out on 15 April 2023, many sectors were severely damaged resulting in the paralysis of many aspects of the daily lives of Sudanese people and foreign residents in Sudan. The banking sector is one of the worst hit sectors in Sudan, and that is why new solutions such as the blockchain technology should be introduced to the industry.

Blockchain is a digital ledger that facilitates the process of recording transactions and tracking assets in a business network. Virtually anything of value can be tracked and traded on a blockchain network, which is believed to reduce risk and cut costs for all involved.

Currently, all banks in Sudan except the Bank of Khartoum seised all kinds of operations. What differentiates digital banking services and mobile money applications (apps) such as Bankak by the Bank of Khartoum from other local mobile money apps is that their servers and IT infrastructure were independent and do not rely on the Electronic Banking Services company. Electronic Banking Services company is the national company that is responsible for regulating digital banking services in Sudan and provide necessary IT infrastructure for the banks that are not able to have their own independent IT infrastructure. Unfortunately, the Electronic Banking Services company was hit in Khartoum during the current armed conflict between the Sudanese Armed Forces and Rapid Support Forces (RSF), which brought down most of the banks in Sudan. Of course, there are some banks that have their own IT infrastructure; however, they were not as robust and capable as the Bank of Khartoum.

As for regular face-to-face banking services, there are people who are currently unable to open new bank accounts. The only services currently available are withdrawal, deposit of cash and foreign transfers.

Current mobile money apps in Sudan are locally developed and only Sudanese pounds can be used in transactions.

On the other hand, Bankak provided a new service that converts Sudan pounds to foreign currencies and uses foreign currencies when conducting transactions. However, Bankak is still a local mobile money app that does not have the features provided by international mobile money apps such as Paypal. For a person to use the feature of using foreign currencies in the Bankak app, he/she has to have a bank account in the Bank of Khartoum. Using an email is not sufficient to access the service. International mobile money apps such as Paypal, Payoneer and Wise are currently still unavailable in Sudan.

This problem in the freezing of operations in the digital banking services was mainly due to the idea of centralising all operations, IT infrastructure and other aspects in Khartoum. 

The blockchain technology can resolve many of the problems in Sudan’s banking sector because it provides a very powerful alternative to this concept of centralisation as blockchains are mainly decentralised systems that never rely on a single device or site of servers in the same location. Moreover, blockchain provides many other amazing features such as security, privacy and faster money transfers. Blockchain mitigates the risk of the complete malfunction of banking services in Sudan.

The Saudi Central Bank introduced a blockchain technology, Saudi Arabian Monetary Authority (SAMA),  which allowed for regular bank transfers between Saudi banks to be carried out in the same day if not the same hour or moment instead of waiting for four to seven business days for the money transfer to be conducted and have more efficient and secure money transfers in local mobile money apps, transparency, removal of mediators and reduction of transaction costs.

Al-Rajhi Bank, the largest Islamic Bank in the globe, also adopted the blockchain technology for its operations in their branches in Saudi Arabia and Jordan.

You can also learn more about the uses of blockchain in Gulf States in a paper called Blackchain Adoption in the Gulf States by Fatima AlSubaei. You can also read this paper called as The Role and Potential of Blockchain Technology in Islamic

Finance published at Qatar University (QU) about use of blockchain in Islamic finance.

When depending on cryptocurrency, there is only one country that adopted this concept to its full extent, which is El Salvador, and didn’t bring a great tangible positive impact. The national currency of El Salvador itself is weak. Thus, it adopted the use of Bitcoin.

Moreover, Sudan recently banned the use of cryptocurrency. It might be good to reconsider this decision and allow the regular banking sector and the cryptocurrencies to coexist as this might boost more economic freedom in Sudan and allow more options to be available like in the UAE or South Korea that allowed both regular national currencies and cryptocurrencies to be both available and usable.

The blockchain technology can be used in many other sectors and aspects of life. In addition, even in financial technology (fintech), blockchain can be utilised to support and improve existing regular known banking systems without tampering the economy or the known currencies.

The livelihood of many Sudanese people still suffers from paralysis due to war. The banking sector, which is one of the most significant sectors in a country, was greatly damaged. Therefore, blockchain technology should be seriously considered by decision makers.

Ahmed El-Affendi is a nomadic, coffeeholic and foodie data journalist, and data scientist who graduated from the University of Khartoum with a bachelor’s degree in IT. He is always reading books, exploring new cultures and learning new languages. He is also interested in social media analytics, cinematics, entrepreneurship, digital transformation, and digitisation. Find him on Twitter @affendi_xiii, Facebook @affendi_xiii, and projects on Linktree.