Authorities in Khartoum have approved laws that will pave way for non-Islamic banking for the first time in decades.
Former president who’s currently facing trial for the coup that brought him to power, introduced a Sharia law system of governance that espoused Islamic banking as the only acceptable form of banking in the three decades of his rule.
However, the Sovereign Transitional Council–the current ruling administration–in March started signaled plans to open the window for a dual system of banking.
Analysts say the sudden change was a reform recommendation by the International Monetary Fund and the United States as prerequisites to lift sanctions from Khartoum.
“It’s going to be a turning point … if you want to have foreign investors and people coming from outside and support for them, you have to put your banks in order,” Amin Hassan Sudanese banking expert was quoted by Reuters as saying.
The struggling economy had wrecked the banking system, media reports indicate.
By March, many of Sudan’s 37 banks were reported to be undercapitalized due to improper accounting standards and years of an unrealistically valued currency. The Central Bank thus gave struggling until the end of the year to increase their capital by asking shareholders for more funds or by merging with stronger banks.
In the new development, Banks that switch would still be able to set aside a window for Islamic banking. However, those that remain Islamic would not be able to practice conventional banking.
The announcement came a day after Sudan’s justice minister said the country had abolished a law mandating a boycott of Israel that dated from 1958, the latest step in building economic and diplomatic relations with the Middle Eastern state. The cabinet recently approved its repeal.
The transitional council’s statement said only that the abolition of the law had been discussed with the cabinet. Sudan’s government, a grouping of civilian and military figures, frequently gives mixed messages on its burgeoning ties with Israel.
Authorities also approved a long-awaited investment law, as well as legislation on public-private partnerships, according to the statement released Monday.