Part3.
d) FINANCE
More often than not, financial institutions and regulations play a vital
role when it comes to investing in any country. This in turn determines the
level of confidence that investors have and the risks associated with such
investments. It can also be argued that this has a direct bearing on the
performance of the economy. By end of 1995 there were 4 commercial banks and
6 insurance commercial banks and a handful of foreign exchange bureaus.
Total bank deposits grew from D140.7 million in June 1985 to D624.2 million
in June 1995, with a steep increase in the savings component. Percentage
growth in real GDP averaged 3.3 % during the period 1983 to 1993. There
never existed any commercial courts or any arbitration office. This, the
government has announced, would be put into place this year.
Presently there are 7 commercial banks and 7 insurance companies. All of
these are present in sere Kunda, most are in Bakau and a number of them in
the provinces. All the banks are computerized and in the case of the
Standard Chartered, they introduced ATMs in the country for the first time
last year. Real GDP also grew at an average of 5.33 % during the period 1994
to 1999.
The re-export trade made significant improvements over the years
contributing 24% to GDP at its peak in 1985/86 before the collapse of the
Senegambia confederation in 1992. Shortly after, its contribution to real
GDP growth plummeted to almost to zero. This however improved steadily to
14.3 % in 1994/95. This collapse can be attributed mainly to the geography
of the country, being surrounded on all three sides by the Republic of
Senegal. Senegal has in the past tightened border controls to the extent of
nearly killing our re-export trade that, invariably needed to transit
through its territory.
Over the years both the former PPP regime and AFPRC/APRC tried to overcome
this problem mainly by appeasement. However the APRC government realizing
that this is not a long term solution to the problem, embarked on projects
to expand cargo-handling facilities of both the air and seaports. Maersk
Gambia limited recently started a twice monthly Less than Container Load
(LCL) Service to Both Freetown and Monrovia. All indications from the GPA
are that this is becoming very popular with our Merchants. May be our “Sink
At Port” dream of the PPP, may after all, become a reality.
e) TOURISM
Over the years, this sector made the most significant growth in terms of
contributing to real GDP. It is however one of the most sensitive to global
or local changes. The recent Foot and mouth outbreak in UK and the infamous
1994 UK travel advice are 2 cases in point. In the case of the UK travel
advise of 1994, Gambia’s economy received a shock that it had never before
experienced. Within a matter of days, our entire tourism industry collapsed,
making 10,000s of people dependent on it income less. It took concerted
effort on the part of both stakeholders and government to recover from that
shock. The industry recovered very quickly (within 3 years) only to be
jolted again by the pullout/buyout of FTI (the biggest tour operator of
recent past) this year. You will recall that their pullout was attributed to
government’s decision to ban the “all exclusive package” within established
hotels due to public outcry over its effect on local businesses. Even though
I don’t have any statistics on this sector at the moment, I will endeavor to
provide them as soon as available. I am however convinced that government’s
efforts over years to diversify our tourism market and product, tackle the
bumster menace, the new weekly direct flight to the US and the establishment
of an autonomous tourism development agency, to provide for a one stop shop,
will soon begin to pay off.
e) LIGHT INDUSTRIES.
This sector still continues to under-perform. The number of new players in
this sector hasn’t grown significantly over the years. Notable new entries
are perhaps the GTTI foundry and Gamjuice. There may be others that I may be
unaware of. This sluggish can most definitely be attributed to the energy
crisis we have. Let’s hope this will be resolved soon.
PERFORMANCE OF THE ECONOMY
Annual % growth of GDP in recent past when compared to the rest of Africa
has been very good considering our lack of resources. The following proves
my point. For reference please refer to (www.worldbank.com or www.imf.org)
% Annual growth of GDP.
1995/96 – 5.3%, 96/97 – 0.8%, 1997 – 5.2 %, 1998 – 4.9 %, 1999 – 5.6 %
Foreign reserves (Millions of SDRs).
1995/96 – 70.1, 96/97 – 70.4, 1997 – 69.6, 1998 – 75.4, 1999 – 78.1
Dalasi/SDR rate for the period.
1995/96 – 14.3, 96/97 – 14.1, 1997 – 14.0, 1998 – 14.4, 1999 – 15.6
Import cover (Months).
1995/96 – 5.2, 96/97 – 5.5, 1997 – 5.6, 1998 – 5.1, 1999 – 5.7
Groundnut production (in 1,000 metric tonnes).
1995/96 – 75.2, 96/97 – 45.8, 1997 – 78.1, 1998 – 73.5, 1999 – 123.0
Domestic Savings (Millions of SDR – exchange rate the same as above).
1995/96 – 2.9, 96/97 – 6.0, 1997 – 7.1, 1998 – 7.5, 1999 – 8.9
Gross Domestic Savings (Millions of SDR – Exch. Rates same as above).
1995/96 – 10.0, 96/97 – 12.6, 1997 – 13.5, 1998 – 14.5, 1999 – 14.4.
Government Revenues (Millions of SDR – Exch. Rates same as above).
1995/96 – 17.7, 96/97 – 19.4, 1997 – 19.3, 1998 – 18.8, 1999 – 17.7.
Gov. Outstanding debt (Millions of SDR – Exch. Rates same as above).
1995/96 – 111.1, 96/97 – 107.0, 1997 – 104.4, 1998 – 107.5, 1999 – 97.4.
I would like to conclude the performance of The Gambian economy by quoting
from the IMF country report 00/114 of 2000 that says, “The Gambia has made
substantial progress in implementing economic reforms. During the past 3
years, inflation remained low at about 2.0 percent, and the overall fiscal
deficit (excluding grants) was reduced to 4¼ percent of GDP from 7.8 percent
in 1997. The Gambia has also made a strong effort in implementing structural
reforms in recent years, including in the area of external trade
liberalization”.
In the light of these, The Gambia qualified for debt relief under the HIPC
initiative from all of The Gambia's creditors worth nearly US$67 million in
Net Present Value (NPV) terms, which is equivalent to 27 percent of total
debt outstanding after the full use of traditional debt relief mechanisms.
According to the IMF,
“The enhanced HIPC Initiative will help The Gambia to advance its poverty
reduction programs and stimulate economic growth. The debt reduction
operation will translate into debt-service relief over time of US$91
million. Debt service will be reduced by about 43 percent over 2001-05 and
25 percent over 2006-15. This will create room for additional public
expenditures on poverty reduction. The Gambia's eligibility for debt relief
under the enhanced HIPC Initiative is a recognition by the international
community of the progress made in implementing economic reforms and
achieving poverty reduction”. IMF release No. 00/68 of 2000.
If the above report on the economy is anything to go by, I cannot understand
what people mean when they say the economy is in “shambles” or is being
mismanaged. I wonder why the IMF/World bank would continue to pump money
into the country to the tune of over $30.31 millions from 2000 to date if
the economy was in shambles or is being grossly mismanaged. I wonder also
whether the other donors are equally blind to see the mismanagement of the
economy. Remember when the UDP was telling us that the government would not
be able to pay salaries and that the shortage of basic goods and services
was eminent?
Anybody who wants to see how the economy is performing need only to look
around to see how the construction industry is booming or the number of
beautiful cars plying our roads daily or the number of supermarkets
springing up everywhere. Gone are the days of the rickety taxis.
I will go on to governance tomorrow and when I conclude hopefully the day
after, I will try to answer all questions raised.
Have a good day & bye 4Now, KB Jobe.
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