The Development of Islamic Finance and Economic Growth in the Republic of Sudan

Abstract

This paper's main objective is to evaluate, the connection between the development of Islamic finance and economic growth during the last three decades in the Republic of Sudan. Islamic financial institutions in the Republic of Sudan have not only had a great economic impact but had a significant contribution, to the social fabric of the country, through the zakat and waqif system. Sudan is the third largest country in Africa; therefore, Islamic finance has ample opportunity to make great differences. The paper also will examine the contribution that has been made by Islamic finance toward the different economies, especially the agriculture sectors. Of the economy. The paper will emphasize more on the agriculture sector which employed more than 80% of the total workforce in the country. However, one may expect the contribution of Islamic finance in the country to the country’s agriculture sector will be detrimental because Sudan has significant farmland. Furthermore, even though the entire banking system in Sudan was converted in the early 1990s most banks in the country focus on short-term trade instead of focusing on the most productive sector of the country like agriculture. Others have argued that because the government of Sudan neglected the agriculture sector following oil discovery in the country in 1999, so did Islamic finance However, generally speaking, the overall impact on economic growth and real GDP in the country was very limited by any means. The finding also demonstrates even though Islamic finance has no direct contribution to economic growth, it nonetheless, has an indirect economic impact such as its impact on other factors that are related to which has a major influence, for example, on saving, investment, and consumption.