Protracted Sudan Conflict: Regional Fiscal and Credit Strains Threaten Trade Corridors and Neighbouring Sovereigns

Analyses in mid‑2026 modelled sustained conflict in Sudan as imposing very large economic costs (example projection cited: US$34.5 billion) and severe humanitarian and regional spillovers. The assessment flags destruction of infrastructure, large displacement and negative GDP impacts that persist while fighting continues. The transmission to African credit operates through disrupted trade corridors, refugee flows, and fiscal pressure on neighbouring states.

Countries reliant on cross‑border trade routes through Sudan or on remittances and regional logistics — notably parts of East Africa — face lower export volumes and higher transport costs, compressing tax revenues and raising deficits. Neighbouring sovereigns that must absorb refugees or backstop corridors see contingent fiscal liabilities rise, which can weaken near‑term primary balances and increase short‑dated refinancing risk in the belly of the curve.

Regional banks and corporates with direct exposure to Sudanese operations face asset‑quality deterioration and correspondent banking risks that can tighten credit to trade finance lines. Relative to other regional credits, sovereigns with stronger external buffers and diversified trade corridors (e.g., Kenya, Ethiopia where trade can reroute) will be less affected than immediate neighbours with porous fiscal positions.

The conflict’s scale implies larger spillover risk for corridor‑dependent states than for distant West African credits. The conditional monitor is the pace and direction of displacement and trade disruption: sustained closure of key corridors or large refugee inflows into a neighbouring capital will be the concrete trigger for measurable spread widening and increased short‑dated funding costs for the affected sovereigns.