Sudanese microfinance: banks, institutions and guarantees
In Sudan, microcredit is backed by a Central Bank rule requiring banks to devote at least 12% of their portfolio to microfinance, using Islamic contracts such as murabaha or salam and guarantees shared through the Kafalat agency.
The 12% rule set by the Central Bank
The Central Bank of Sudan's microfinance policy requires at least 12% of bank financing to go to micro-enterprises and low-income households. This obligation pushed large commercial banks to open dedicated windows for small customers.
Kafalat, the wholesale guarantee agency
Kafalat guarantees part of the financing banks grant to microfinance institutions. According to data published around 2012, it covered 75% of the risk for a commission of 0.5% of the amount, in order to ease banks' reluctance.
The microfinance development facility
The Sudanese Microfinance Development Facility, set up by the Central Bank and the Ministry of Finance with capital of 20 million dollars, has funded technical assistance, training and refinancing for Sudanese microfinance institutions.
Specialised banks and institutions
Savings and Social Development Bank, Family Bank and Ebdaa Bank are among the players dedicated to small customers. Commercial banks also serve micro-entrepreneurs through specialised units, especially in Gedaref, Kassala and Northern states.
Murabaha, salam and musharaka for small projects
Murabaha finances the purchase of a sewing machine, a fridge or stock. Salam advances the price of a future harvest, and musharaka gives the institution a proportional share in the profits of a small business.
Women, the leading customers
Tea sellers, seamstresses, kisra makers and poultry keepers make up a large share of customers. Solidarity groups allow women without formal collateral to access small loans that are repaid in modest amounts every week.
Group guarantee and personal guarantor
Without a land title, the institution asks for a guarantor, a joint guarantee from the group or a pledge on the financed equipment. A recorded default affects the whole group and its future access to financing.
What the war has changed
The fighting destroyed markets, displaced customers and cut branches off from their head offices. Several institutions rescheduled instalments for displaced people; new applications are mostly handled in the eastern and northern states.
Financing a tricycle or a farm tool
Micro-loans are often used to buy a raksha, a cart or an irrigation pump. For a bigger farming project, the page on agricultural finance in Sudan presents the Agricultural Bank of Sudan and salam contracts.
Growing beyond microcredit
After several repaid cycles, a trader can qualify for larger amounts and standard bank financing. The page on loans for Sudanese entrepreneurs describes the commercial register, the locality licence and the guarantees banks then require.
Microfinance in East Africa
The Sudanese model differs from the interest-based microcredit of Uganda or Tanzania. For comparison, see microcredit in South Sudan, driven mainly by NGOs and a few institutions based in Juba and border towns.
Beware of fake humanitarian schemes
Scammers use the names of UN agencies or NGOs to promise microloans to displaced people in exchange for registration fees. Genuine programmes never ask for prior payment and work through partners that can be identified on the ground.
Accessing microfinance in Sudan
- Find a microfinance bank or dedicated window operating in your state or town.
- Prepare a simple description of your activity with weekly income and expenses.
- Form a solidarity group or find a guarantor accepted by the institution.
- Present the invoice for the equipment or stock, since the institution buys the item under murabaha.
- Attend any required training, sign the contract and keep to the weekly or monthly schedule.
Cost of Islamic microfinance in Sudan
| Item | How it works | Indication |
|---|---|---|
| Murabaha markup | Profit included in the resale price | Varies by institution and term |
| Kafalat commission | Wholesale guarantee paid by the institution | 0.5% of the amount (indicative, data around 2012) |
| Share guaranteed by Kafalat | Risk covered for the lending bank | 75% (indicative, data around 2012) |
| Assessment fees | Opening the file | Low, depending on the institution |
| Compulsory savings | Deposit required by some programmes | According to group rules |
Application file for Sudanese microcredit
- ID card or national number
- Certificate from the neighbourhood committee or local leader
- Description of the activity and estimated income
- Pro forma invoice for the equipment
- Guarantor's documents or solidarity group commitment
- Locality licence for a fixed shop
What makes a microloan fail in Sudan
- Using the financed item for household spending instead of the business, which then makes it impossible to pay the weekly instalments.
- Joining a solidarity group without knowing the other members, when a single member's delay blocks the whole group.
- Paying fees to a fake NGO representative promising loans to displaced people in camps or schools used as shelters.
- Taking several micro-loans from different institutions, which the credit scoring agency can now detect.
Lenders to contact
- Faisal Islamic Bank (Sudan): Pioneering Sudanese Islamic bank providing Sharia-compliant banking services and financing to individual customers and businesses across Sudan.
- Bank of Khartoum: Sudanese commercial bank offering Sharia-compliant financing, notably murabaha, for individual customers and businesses seeking transparent financing.
Sudanese microcredit in questions
Is Sudanese microcredit interest-free?
Yes, in line with Sharia. Institutions earn a fixed markup under murabaha or share profits under musharaka. The cost is not zero, though, and you should compare the total price paid with the cash price of the item.
Do you need a land title to get microcredit?
No. Institutions generally accept a guarantor, a group guarantee or a pledge on the equipment bought. These substitute guarantees explain why microcredit is open to women and rural households without registered property.
Can displaced people get microfinance?
Some programmes target displaced people in host states, often with support from international organisations. A verifiable identity and a realistic activity in the host town, such as Port Sudan, Kassala or Gedaref, are usually required.
What does the 12% rule mean for a borrower?
It obliges banks to set aside part of their financing for small customers. In practice, it explains why commercial banks have microfinance windows, but it does not guarantee that any individual application will be accepted.