Poverty Alleviation as a National Priority in the Gambia’s Economic
Development
Compiled by the Finance Department of the APRC Government
Background
The year 1985/86 is a watershed in the Gambia's economic history. It
witnessed the launching of the Economic Recovery Program (ERP) which sought
to reverse the declining trend in the economy in the 1970s, a period
characterized by declining terms of trade, oil price hikes, inappropriate
economic policies, and excessive domestic absorption.
These factors resulted in a consistent decline in the Gross Domestic Product
(GDP), debt crisis, shortage of foreign exchange, galloping inflation, and
increase in the deficit GDP ratio. The Government of the Gambia, therefore,
embarked on an Economic Recovery Program in 1985/86 entailing the
elimination of exchange rate and other price distortions, assigning a
greater role for the private sector, rolling back the frontiers of the state
and creating a conducive environment for the long term growth of the private
sector and elimination of subsidies.
As a result of these policy measures, economic performance improved. The
Gross Domestic Product grew by an average of 4.4% per annum, the overall
deficit declined from 17% of GDP in 1987/88 to 4% in 1991/92, inflation
declined from a record high of 70% in 1985/86 to 5% in 1990/91.
In addition, the Program for Sustained Development (PSD) was introduced in
1990 with the objective of consolidating the gains of the adjustment
process. The main thrust of this program constituted the following:
-Promotion of the private sector as the engine of growth;
-Divestiture of public enterprises;
-Rationalization of custom tariffs; and,
-Streamlining of the tax system.
The Transition Era
The Gambian economy has been affected by three major shocks in the first
half of the 1990s, namely the border closure to the re-export trade, the
devaluation of the CFA and the military take-over of 1994. The first
development resulted in the loss of revenue from the re-export trade while
the second had the effect of loosing the Gambia's comparative advantage in
the re-export trade. The take-over brought about the suspension of and
balance of payment support, the withdrawal of development assistance (by
50%), a downturn in the tourism sector (by 70%) and contraction of private
sector activity. These unforeseen developments impacted adversely on the
economy with GDP declining by about a low of 2.15 in 1994/95 and inflation
surging at 7%.
Economic Developments in The New (Second) Republic
It was against this background that the government began to improve the
governance environment during the transition period, 1994-1996 with the
holding of several polling activities, including a referendum on the draft
constitution and presidential and parliamentary elections in September 1996
and January 1997 respectively. Thereafter, confidence from both foreign and
domestic investors resumed culminating in the resumption of development
assistance.
The IMF, for example resumed its Article IV consultations with a view to
engaging in policy dialogue thus setting the pace for other multilateral and
bilateral development partners. Subsequently, the Government of the Gambia,
in collaboration with the IMF, adopted a Medium-term Strategy and Program
for the period 1998-2000. This culminated in the provision in June 1998 of
an Enhanced Structural Adjustment Facility (ESAF) amounting to $27 million
in support of the government's economic program. In addition, the government
was able to mobilize the support and endorsement of the development partners
of its macroeconomic framework and program for the Social Sectors at a Round
Table Conference in Geneva in July 1998. This medium term strategy sought to
re-establish macroeconomic stability and consolidate government finances by
further reducing government deficit
The basic economic objectives for 1998-2000 are:
To achieve real GDP growth of 5 percent a year,
Keep annual inflation around 3 percent,
Reduce the external current account deficit (excluding official transfers)
to less than 10 percent of GDP by 2000, and
Keep gross official reserves above the equivalent to five months of imports.
The fiscal program aims at reducing the overall budget deficit (excluding
grants) to 4 percent of GDP in 1998 to 2 percent by 2000. The monetary
program will continue to be tight, consistent with keeping the annual rate
of inflation at about 3 percent, with the continued reliance on the use of
indirect monetary instruments. The enhanced structural adjustment facility
has now been re-orientated to a poverty reduction growth facility, shifting
emphasis from mere structural adjustment to more social sector and poverty
reduction strategy.
The measures implemented under the medium term strategy yielded positive
results. For the period 1995-1999, average GDP growth was 5% per annum. In
1998, the economy registered a growth rate of 4.9% compared to 4.4% in 1999
and it is projected to grow by 5% in 2000.
THE GAMBIA’S HIPC DEBT RELIEF STATUS
The focus of policy reform in recent years has been to restore macroeconomic
stability, and implement broad-based structural reforms in support of the
country’s Strategy for Poverty Alleviation (SPA). The Gambia is currently a
PRGF-eligible and IDA-only country, with a per capita GDP of about US$315 in
1999. It is one of the poorest countries in the world, ranking 161st (out of
174 countries) in terms of the United Nations Development Program’s 2000
Human Development Index. On the basis of the 1998 household survey, 69
percent of the Gambia population lives in poverty and 51 percent in extreme
poverty. Poverty is more prevalent in the rural areas and especially among
groundnut growers. Women in the Gambia are a particularly vulnerable group.
Projections indicate that The Gambia’s per capita GDP would increase to only
about US$500 by 2019. Therefore, The Gambia will continue to need
substantial international concessional assistance and is likely to remain a
PRGF-eligible and IDA-only country in the foreseeable future.
HIPC Qualification:
The Gambia qualified for US$66.6 million worth of debt relief assistance,
equivalent to 27.2 percent reduction in the country’s outstanding stock of
debt at end 1999 after full use of traditional debt relief mechanisms. The
Country reached its decision point in December 1999, and is expected to
reach its completion point by 2003 by fulfilling the following conditions;
Preparation and implementation of a full PRSP for at least one year; and
improvement of the poverty database and monitoring capacity, as evidenced by
progress in restructuring capacity building of the Central Statistics
Department;
The Gambia has now confirm getting Interim Relief from three of our
Multilateral Creditors, namely; The World Bank, IMF and ADB in the form of
debt service forgiveness until we reach completion point in 2003. For the
rest of our creditors, we have yet to confirm their share of debt relief.
The Gambia’s debt has the following characteristics;
Paris Club Bilateral debt with Austria, Netherlands, Norway & France
Non-Paris Club Bilateral with Taiwan PRC, China ROC, Kuwait Fund & Saudi
Fund
Multilateral debt with IMF, WD, IDB, ADF, IFAD, BADEA & OPEC
These are further divided into;
Paris Club Pre-cut-off/Post-cut-off Debts (any debt prior to 1986)
Non-Paris Club Pre-cut-off/Post-cut-off Debts (any debt after 1986)
Multilateral Post-cut-off
One major characteristic of Gambia’s Paris-Club debt is that its mostly
post-cut-off debt and therefore not subjects to traditional Paris Club debt
relief mechanism. The Gambia currently has four Paris Club bilateral
creditors and the proportion of their outstanding debt represents 28.2 per
cent of the Gambia’s total debt in net present value terms. The bulk of
these are owed to Austria and France whose debts constitute 7.9 per cent and
5.9 per cent respectively of the total debt owed to the Paris Club. The main
objective of The Gambia by approaching these creditors will be to achieve
some kind of relief for this kind of debt.
The Gambia’s outstanding debt with the Non-OECD bilateral creditors stood at
US$53.8 million in net present value terms as at the end of 1999,
representing 21 per cent of our outstanding debt. The bulk of these loans
(11 percent) are owed to Taiwan, Republic of China.
The Gambia currently has nine multilateral creditors. Our multilateral debt
constitutes the bulk of our external debt stock with 71% in net present
value terms. Our two biggest multilateral creditors are the World Bank and
African Development Bank with 46.5% and 28.3% respectively of the total
multilateral debt.
POVERTY ALLEVIATION PROGRAM
Through out its post-independent development period, The Government of The
Gambia has constantly sought to reduce Poverty. The main objective of a
succession of Development plans has been to enhance the income of the
farming community (the largest in The Gambia) and to provide basic social
services to rural areas that comprised 80-85% of the population. The oil
rises of the seventies and the ensuing dept rises of the 80s not only
mollified the macaque achievements of these efforts but also put a
considerable stain on Government efforts to continue providing these support
services.
Structural adjustment downsizing considerably reduced public sector
investment in social services, leaving the poor and destitute helpless.
Against this background, following an assessment of the Poverty situation in
1992, The GOTG formulated a Strategy for Poverty Alleviation. Although SPA
received an encouraging welcome at the Geneva Roundtable in 1994, Donor
support failed to follow suit due to the military take-over of the 22nd July
of that year.
Consequently, on assessment of the SPA, it was clear that Poverty (measured
by both income and non-income indicators) has risen from 31% of the
population to 62% between 1991 and 1998. Rural Urban Migration led to the
over use of resources and services in urban areas resulting in urban poverty
improved also.
With renewed vigour in the fight against poverty, The Gambia developed an
interim PRSP, which received acclaim, once again, from the Donor Community.
Within the content of debt relief, new hopes have emerged to resolute a
decisive action to reduce poverty.
PRSP to be finalised by September 2001
In the meantime, thirty-two interventions in the form of programs, projects
and mainstream actions are on going to reduce poverty. This is indicative of
an excellent rate of implemented for poverty reduction in general, and a
high absorptive rate in particular.
A number of other interventions are still pending, covering the need to
finalise SPA II / PRSP and expanding the scope of poverty reduction
programs.
Three programs appear critical for a smooth transition to SPA II,
implementing these programs at this stage will have a positive impact both
on poverty reduction and the efficiency in the use of HIPC resources:
Most of the Gambia’s multilateral creditors, including IDA, IMF, AfDB, IFAD,
OPEC Fund, ISDB, EU, and BADEA, have agreed to participate in the enhanced
HIPC Initiative. The decision-making bodies of multilateral creditors will
take specific decisions on the delivery of assistance to The Gambia once the
Boards of the Bank and the Fund have discussed the decision point document.
Along with Paris Club, which discussed The Gambia’s situation in November,
these creditors represent more than 80 percent of the debt relief to be
provided to The Gambia.
The Gambia wants maximum debt relief from all of our multilateral creditors
to give us debt service to exports ratio of 15% during the interim period.
Impact of Enhanced HIPC Debt Relief
The above-enhanced HIPC assistance would enable The Gambia to maintain
sustainable external debt level and release resources for the social
program. On the basis of the above assumptions, the total interim HIPC debt
service relief would amount to an average of about US$4.4 million (about 4¾
percent of government revenue and 0.9 percent of GDP) a year for the next
two years. Beyond the assumed completion point, the HIPC debt service relief
would amount to about US$9.2 million a year for the ten-year period
beginning 2003 equivalent to an average reduction of 1.4 percent of GDP a
year. The debt service ratio would be reduced on average by about 22
percentage points during the interim period and 40 percentage points during
the ten-year period following the anticipated completion point.
After debt relief under the enhanced HIPC Initiative, The Gambia’s external
debt at end-1999 would be reduced from US$244.9 (after traditional debt
relief) to US$178.2 million. The amount of assistance under the Initiative
would amount to US$66.6 million equivalent to US$90 million in nominal
terms. Several Paris Club creditors have indicated possible debt relief
beyond their assistance under the HIPC Initiative, through forgiveness of
ODA loans. This could amount to an additional US$ 2 million in NPV terms
(see Figure 1).
The downside scenario in the context of enhanced HIPC assistance. The Gambia
remains vulnerable to adverse shocks even with HIPC assistance; to simulate
these impacts, the following were considered: lower re-export growth (0.5
percentage lower than under the baseline scenario) and lower tourist
arrivals (½ of a percentage point lower than under the baseline scenario).
The strongest impact would result from a lower growth rate in tourist
arrivals in which case the NPV value of debt after HIPC assistance would not
fall below 150 percent before 2011, while debt sustainability would be
reached already in 2002 under the lower re-export growth scenario Debt
service savings arising from the enhanced HIPC assistance will be used to
expand the economy’s productive capacity in order to diversify the sources
of income for the poor; improve the poorest access to social services; and
strengthen institutional capacity to enable local communities to participate
and influence developments affecting their environment. The government has
identified a number of key sectors that would benefit from the enhanced HIPC
assistance and be funded through a contingency budget for 2001. Three
sectors that would have the strongest impact on poverty (education, health,
and rural development) would absorb over 60 percent of the enhanced HIPC
assistance. The specific activities to be financed under each are as
follows:
In the education sector, activities identified under the TESP would be
implemented including the funding of girls’ education trust fund, the
construction of classrooms, and the training of teachers. These activities
are expected to absorb 22 percent of the enhanced HIPC assistance;
In the health sector, focus will be on the elements of primary health care
that are the target of the PHPNP such as vaccines, drug supplies, and the
upgrading of the ambulance fleet. This is expected to absorb 18 percent of
the enhanced HIPC assistance; and
Rural development would benefit from initiatives in irrigation, research in
crop diversification, inland fishing (a potential source of employment),
well drilling, and forest conservation and replenishment (a potential source
of income for the poor). This sector would account for 20 percent of
enhanced HIPC assistance.
Maintaining a stable macroeconomic environment as evidenced by satisfactory
performance under a program supported by IMF-supervised Poverty Reduction
and growth Facility (PRGF) arrangement;
Making progress in strengthening public expenditure management as evidenced
by issuance of annual public reports on the overall budget execution and
semi-annual reports on the use of interim HIPC Initiative debt relief;
Establishing a functional multi-sector regulatory agency, and bringing to
the point of sale the two major public groundnut processing plants;
Making progress in the implementation of sector strategies in education and
health.
It’s the central objective of The Government of the Gambia to use the
proceeds of debt and general donor assistance to boost investments in
health, education, infrastructure, energy and social protection.
>From: Mr Makaveli <[log in to unmask]>
>Reply-To: The Gambia and related-issues mailing list
><[log in to unmask]>
>To: [log in to unmask]
>Subject: Jammeh's Bizzarre 7 Years Ago Speech: Rated R
>Date: Wed, 1 Aug 2001 03:14:38 -0500
>
>Folks,
>I don't know about you all but what I saw and heard from this moron is just
>4^<k!ng incredible. It seems this guy got our entire country by the balls.
>I'm taking about addressing all those dignitaries and the entire audience
>as boys and girls and god knows how many doggone times he keeps repeating
>"7 years ago". For a moment I thought he was making a mockery of our elders
>and he was funny at some point, and he kind of reminded me of Chief
>Zebudia (Nigerian comedian) with his "7 years ago" speech. He said, "7
>years, Gambians were ashamed to show visitors the old Yundum airport for
>it look more like a cattle ranch and not an airport. And that today we
>gambians would go to the extent of waking up those visitors, if they were
>asleep, just to make sure they see our new state-of-the-art Yundum airport.
>
>You have to see it and hear speech for yourself, then you'll agree that
>the guy should have pursued a career as a standup comedian than becoming
>a president for any country. Yes, he maybe the president for now but
>Jammeh is not presidential. You should have seen the reaction from the
>crowd. One guy had to adjust his pair of glasses when Jammeh said without
>any regard for diplomacy that the opposition and their alliance "can go to
>hell" and anyone trying to instigate any kind of trouble "will not even be
>able to regret it, because he or she will be six-feet deep". I know what
>some of you might be thinking and hey, I probably would say it's a hearsay,
>but that's why I think his website is a blessing in disguise for those in
>the opposition and we thank him for making such speech available online,
>unedited, raw and uncut.
>
>I tell you, you got to give him dues. The guy renders his speech writers
>useless. No notes, no draft, no speech-writer needed. No wonder he went
>bezerk. I mean the guy has added a new meaning to dictatorship and you
>forget Hitler, considering how small Gambia is compared to Germany. He can
>have his troops perform routine around the country in less than five
>minutes just to show you small gambia is.
>
>His speech didn't stop there. A Jammeh's speech is off record without him
>disrecpecting our parents and people old enough to be his grandpa. Noooo!
>He went on telling parents how they should raise their kids, blaming
>gambian workers for letting foreigners take their jobs, on and on he went.I
>asked why the double standard ladies and gentlemen? For starters, the guy
>is married to a foreigner( Moroccan to be expilicit). Why then did he said
>we cannot allow the foreigners to feed the nation. Curious minds would then
>hasten to ask Who is feeding him then? A gambian woman? Well, as he said in
>his closing comments, he is the president and he has the right to exercise
>his freedom of speech. Therefore I would give him the benefit of the doubt.
>Nonetheless, I wished others were allow that same freedom of expression he
>valued so much.
>
>Anyway, I'm not even going to stoop any lower than I already have into
>this but I just found this mansa in his white oversized 'nyeti abdou' with
>a samurai sowrd on one hand and sheik's prayer beads on the other, quite
>contradicting to say the least. Hell, we may not have a glittering airport
>to show off 7 years ago but we had peace and without peace and stability,
>that very airport he is bragging about may fall into bits and pieces if all
>indications are that what happened in Liberia and Sierra leone might
>invariably and God forbid happen in the Gambia come doomsday.
>
>Looking through the crowd, one could easily identify some 50 to 80 yr olds
>being addressed as boys and girls. Never did I hear him refer the crowd as
>ladies and gentlemen but boys and girls. So what if the vast majority were
>students. Just look around the number 50 years sitting at the edge of
>their seats." Yahya Jammeh, Gadu Gna Bakarr". To him, they are just boys
>and girls and it's either his way or six-feet deep. What gave me cramps in
>my stomach was that people were cheering for him. God help us all.
>As the saying goes, " Video means Wadi Whut" in wolof and here is the
>'Wadi Whut' nicely packaged by his excellency for public consumption. GOTO>
>
>http://www.jammeh2001.org/realvideo/j22speech/j22speech2.rpm
>AND http://www.jammeh2001.org/realvideo/j22speech/j22speech3.rpm
>
> Mr Makaveli! (o-:)
>PS: Normally, I'm a little leery about hearing Jammeh speak because not
>that it's the embarassment I'm bound to stomach but the fact that I'm
>simply allergic to him speak, period. But try it just once like I just did.
>4^<k!ng incredible..
>
>
>
>
>
>Gambians Online " Designed With The Gambian People In Mind"
> http://www.gambiansonline.com
>
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