This paper assesses the effect of oil on economic development in Sudan and
discusses related opportunities and challenges. We provide a comprehensive
analysis using the most recent secondary data, with a view to clarifying the
positive and negative effects of oil on Sudan’s economic development. We support
the view that oil has had a mixed blessing on the Sudanese economy, arguing that
oil is an important resource, particularly in satisfying domestic consumption and
the achievement of self sufficiency by increasing public sector revenues. Although
oil has helped to improve economic performance in the country, we find that the
recent dependence on oil may spark other problems because it is an exhaustible
resource and the instability of oil prices in the international market could
produce uncertainty in domestic growth. Moreover, the increasing dependence
on oil raises the possibilities of a ‘Dutch Disease’ and a lack of diversification,
which may aggravate challenges linked to the division of the country and the
potential for conflict with newly independent Southern Sudan.