The Gambia: Economy and Finance
The Gambia is subscribing to prudent fiscal policies and
conservative monetary management that is designed to address
the weaknesses in the economy, hold inflation at 2.5%, contain
the external current account deficit below 10% of GDP and
maintain an external reserve of about five months and a half
of import cover. The objective should also see an increase
in government savings, establish full budgetary transparency,
reduce the domestic debt burden and qualify for debt relief
under the HIPC initiative. The pressure of debt service payment
on the budget has been a drain on the limited resources for
development. With the envisaged 67% debt relief, the augury
could change. "The challenge is that we go through the
debt relief program successfully and that the money gets allocated
to the right projects designed for the development of the
local population" . State Secretary Jatta believes that
poverty alleviation is central to economic development "we
must lift our people out of the shackles of poverty and empower
them to take active roles in developing the nation",
he noted.
There are also tremendous efforts to modernise The Gambia's
economy and endow it with the attractive indices for increasing
economic activity. There’s an accelerated depreciation
of taxes already in place, a single swing corresponding to
a three-year depreciation saw company tax reduced by 15% and
the effort is just unfolding. However, at 35%, company tax
is still deemed high. Explaining that further reduction could
only make the country more attractive, Pa Njie, Trust Bank
Managing Director argues, "more incentives should be
accorded investors in order to attract more foreign investments."
Import rates have been reduced with ranges from 0 to 18% of
tariff bands. The government also reduced public borrowing
with a view to improving the efficiency of financial intermediation
while the other tier of this financial reform would be stimulating
the development of secondary markets. Real interest rates
are beginning to fall and there are indications that the trend
is for real.
All these structures are no fluke; they are aimed at enhancing
The Gambia's competitiveness and attracting foreign investments.
"Foreign investors must look at the comparative advantages
of The Gambia vis-à-vis the sub-region", posits
Jatta, "as a small country surrounded by bigger ones,
we understand that we must be very efficient to survive. Our
duties and tariffs are very low, our port facilities are very
efficient and the Gambia is the only country where goods can
be cleared in just 24 hours".
A new comprehensive divestiture strategy, the primary focus
of which is to roll back the frontiers of the state through
withdrawal from activities best suited for private sector
operation has been adopted. It follows a sequential approach
to strengthen priority areas while moving forward with privatisation.
Like divestiture, diversification of economic activity is
a priority.
With sound macroeconomic practises, poverty alleviation,
competitive inducements such as the implementation of the
National Industrial Policy (NIP), and the integration of the
investment code into the tax system. The export processing
zones, tariff and tax reforms, revitalisation of the groundnut
sub-sector, standard sea and airport facilities and Economic
Reform Support Operations with World Bank, The Gambia can
truly hope to achieve substantial economic and industrial
development.
Its strategies may yet be slow, but they are steady, and
even with the turbo-charged motion of globalisation, slow
and steady might still win the race.unemployment and minimize
the population drift from rural areas to Banjul.
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