The traditional banking system was inherited from the AngloEgyptian
condominium (1899-1955). When the National Bank of Egypt opened
in Khartoum in 1901, it obtained a privileged position as banker
to and for the government, a "semi-official" central bank. Other
banks followed, but the National Bank of Egypt and Barclays Bank
dominated and stabilized banking in Sudan until after World War
II. Post-World War II prosperity created a demand for an increasing
number of commercial banks. By 1965 loans to the private sector
in Sudan had reached £Sd55.3 million.
Before Sudanese independence, there had been no restrictions
on the movement of funds between Egypt and Sudan, and the value
of the currency used in Sudan was tied to that of Egypt. This
situation was unsatisfactory to an independent Sudan, which established
the Sudan Currency Board to replace Egyptian and British money.
It was not a central bank because it did not accept deposits,
lend money, or provide commercial banks with cash and liquidity.
In 1959 the Bank of Sudan was established to succeed the Sudan
Currency Board and to take over the Sudanese assets of the National
Bank of Egypt. In February 1960, the Bank of Sudan began acting
as the central bank of Sudan, issuing currency, assisting the
development of banks, providing loans, maintaining financial equilibrium,
and advising the government.
There were originally five major commercial banks (Bank of Khartoum,
An Nilein Bank, Sudan Commercial Bank, the People's Cooperative
Bank, and the Unity Bank) but the number subsequently grew. The
public was dissatisfied with the commercial banks, however, because
they were reluctant to lend capital for longterm development projects.
Since the Nimeiri government decreed the 1970 Nationalization
of Banks Act, all domestic banks have been controlled by the Bank
In 1974, to encourage foreign capital investment, foreign banks
were urged to establish joint ventures in association with Sudanese
capital. Banking transactions with foreign companies operating
in Sudan were facilitated so long as they abided by the rulings
of the Bank of Sudan and transferred a minimum of £Sd3 million
into Sudan. Known as the "open door" policy, this system was partly
a result of Nimeiri's disillusion with the left after the unsuccessful
communist coup of 1971. Several foreign banks took advantage of
the opportunity, most notably Citibank, the Faisal Islamic Bank,
Chase Manhattan Bank, and the Arab Authority for Agricultural
Investment and Development.
In addition, the government established numerous specialized
banks, such as the Agricultural Bank of Sudan (1959) to promote
agricultural ventures, the Industrial Bank of Sudan (1961) to
promote private industry, the Sudanese Estates Bank (1966) to
provide housing loans, and the Sudanese Savings Bank established
to make small loans particularly in the rural areas. The system
worked effectively until the late 1970s and 1980s, when the decline
in foreign trade, balance-of-payments problems, spiraling external
debt, the increase in corruption, and the appearance of Islamic
banking disrupted the financial system.
Data as of June 1991