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Banks in Sudan to Introduce Visa Payment Systems

Residents stand outside an automated teller machine (ATM) in Khartoum, Sudan November 8, 2018. (Reuters)
Residents stand outside an automated teller machine (ATM) in Khartoum, Sudan November 8, 2018. (Reuters)
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Banks in Sudan to Introduce Visa Payment Systems

Residents stand outside an automated teller machine (ATM) in Khartoum, Sudan November 8, 2018. (Reuters)
Residents stand outside an automated teller machine (ATM) in Khartoum, Sudan November 8, 2018. (Reuters)

Several banks in Sudan are introducing Visa payment systems as the country seeks to develop its financial sector following decades of isolation, a central bank official and the US financial services company said.

Bank of Khartoum, Qatar National Bank and United Capital Bank (Bank Almal) have received approval to start using the systems, which were expected to be launched in about three weeks, said Omar Amrabi, head of electronic banking services (EBS) at Sudan’s central bank.

A further six banks have applied for approval and were awaiting a response, he said, according to Reuters.

Commercial and financial transactions in Sudan have been restricted by sanctions and the country’s listing as a state sponsor of terrorism by the United States in 1993.

European banks including HSBC Holdings and BNP Paribas agreed in 2013 and 2014 to pay more than $10 billion to settle cases brought by the United States over alleged transactions with sanctioned countries including Sudan.

Sanctions were lifted in 2017 and the United States has indicated that Sudan will be removed from the terrorism list following the overthrow of former leader Omar al-Bashir last year, without giving a time frame.

The terrorism listing continues to deter many foreign investors and banks from doing business in Sudan and Washington is blocking funding from the International Monetary Fund and World Bank until the country is removed from the list.

Sudan has also suffered from liquidity shortages and transfers of foreign currency are strictly controlled.

“We are working closely with select financial institutions in Sudan to progress the introduction of Visa payment solutions in the country,” Visa said in a statement.

“Visa is pleased to be building new partnerships that will bring the benefit of Visa’s world-class payment technology to help support financial inclusion and economic growth in Sudan.”

Initially, Visa payments are expected to be limited to foreign currency payments and capped at $3,000, the maximum amount of foreign currency travellers are allowed to take out of the country.

The first automated teller machines (ATMs) for international withdrawals would be installed at hotels, the central bank’s Amrabi said.

In December, Sudan’s Nile Bank signed an accord with US software firm Oracle Corp for the provision of a mobile banking platform.

The government also said last month that it was in talks with US lender Citibank about entering Sudan.

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Venezuela Depreciation Risks Reversing Years of Inflation Gains

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
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Venezuela Depreciation Risks Reversing Years of Inflation Gains

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)

Currency depreciation is set to reverse years of declining inflation in economically beleaguered Venezuela, public and private sector sources say, as foreign currency sales fall short of demand and the socialist government keeps tight-lipped about its strategy.

After years of hyperinflation and amid broad US sanctions, in 2022 the administration of President Nicolas Maduro began using orthodox policies including credit restrictions, lower public spending, a fixed dollar-bolivar rate and central bank sales of billions of dollars in foreign currency to tamp down consumer prices.

Maduro, who will begin his third term in January after a disputed election that the opposition and international observers say he lost, has said his government defeated inflation of more than 100,000% and prices in 2024 are similar to those in 2014.

But the administration's policy has now changed.

After more than nine months of the exchange rate being held at 36.5 bolivars to the dollar, the government in mid-October allowed the currency to float, beginning a depreciation that has seen the bolivar slide to about 45 versus the dollar, according to central bank figures.

Analysts say the over-valued currency made imports cheaper than locally-produced goods, impacting Venezuela's private sector and helping push prices up by 12% in nine months.

The untethering of the exchange rate will also put upward pressure on prices in the final quarter of 2024, financial and business sources said, with analysts predicting in a LatinFocus survey the rate will end the year at 50 bolivars to the dollar.

Year-on-year inflation was 25% through September. Official figures for October have not yet been released.

"For nine months the depreciation of the currency was zero while inflation was rising, which exposed problems in the exchange scheme," said economics professor and consultant Daniel Cadenas, who added the market depends on oil income. "For the system to function, there needs to be a growing source of exchange and that's not possible."

The government had predicted internally that inflation would close the year at 30%, two sources with knowledge of the projection said, but depreciation could increase the figure and local analysts have estimated inflation between 35% and 40%.

"There has been a necessary adjustment in the exchange rate that will have an impact on inflation," said Asdrubal Oliveros, head of local think tank Ecoanalitica. "The government has understood it needs to devaluate."

REDUCED CENTRAL BANK SALES

Vice President Delcy Rodriguez, who until recently also served as finance minister, told an event with business people last month that there must be "reflection" about the use of foreign exchange.

"We should all be concerned with how foreign exchange is used in imports. It is a subject the Finance Ministry is reviewing," she said. "We need to take care of foreign exchange because this is a blockaded country and there cannot be cheap exchange for hair dye."

Rodriguez's comments are the only ones made on the subject by the government since devaluation began. Neither the central bank nor the communications or finance ministries responded to requests for comment.

Private sector demand for cheap foreign exchange increased during the nine months the rate was held, even as the quantity of dollars being injected into the market by the central bank was reduced, sources said.

In July the bank was offering some $800 million, but by October that figure had fallen to $400 million, according to calculations by local consultancy Sintesis Financiera.

The central bank did not respond to a question about the reduction.

"The strategy in exchange policy is not going ahead," a government source said, without giving further details.

Food and medicine companies in Venezuela are allowed to pay for some of their goods with foreign currency, while other companies are given central bank promissory notes indexed to a specific exchange rate.

Two private sector sources said many businesses are eating through their inventories in the face of import difficulties.