Issue Number 89/2003, 20-23 November, 2003 Editorial The Gambian Courts In Crisis It is true that the Attorney General is not a member of the judiciary but a member of the executive. However according to section 72 of the constitution he/she is the principal legal adviser to the government. The new Attorney General would have to alert his mind to the need to inform government of the crisis in the courts. The government got rid of appeal to the privy council to make the Gambian court system to be completely independent. Section 126 of the constitution made the Supreme Court the final court of appeal for the Gambia. Many cases are now pending waiting for the supreme court to be convened. However, there is need for not less than five judges to convene the court. In actual fact, the constitution makes it a requirement to have at least 6 justices of the Supreme Court in active service at any given time. Furthermore, the Court of Appeal has to be constituted by three judges of the court. Now all these institutions are waiting to be properly constituted. The position of a judge is one of service, many lawyers can get more money from private practice. Only a government which can motivate such judges can attract Gambians to take up such duties in the national interest. This requires respect for the independence and integrity of the courts and its officers. Suffice it to say, the constitution also calls for the establishment of a Cadi Appeals Panel. This has been constituted after a long delay which Foroyaa projected over and over again. Now, there is delay in the operation of the panel contrary to what the Secretary of State for Justice said at the National Assembly in August that it wold be operational within three weeks. Cases are pending while the panel remains inactive for one reason or another. This is causing a delay to justice. Suffice it to say that the wisdom of the ages asserts that justice delayed is justice denied. There is need to inject life in the judicial system, otherwise it will go asleep. This institutional slumber has even affected the legal year celebrations. Apparently, there is no zeal to breath life into the judicial system by inspiring all stakeholders to be committed to doing justice that is seen by all knowing that it is a profound principle of jurisprudence that justice should not only be done but should be seen to be done. The people are the final judge. Currently, they are grumbling against the delay in the appeal system. Should The National Assembly Intervene In Baba’s Case The answer to this question is provided by section 120 subsection (3) of the constitution which states: "In the exercise of their judicial functions, the courts, the judges and other holders of judicial office shall be independent and shall be subject only to this constitution and the laws and…shall not be subject to the control or direction of any other person or authority." Notwithstanding this the whole National Assembly could have intervened including non APRC members if he was detained without appearing before a court for over 72 hours. In short, this would have been an opportunity to teach Baba the importance of creating democratic laws and abiding by the rule of law. Suffice it to say, since it is the dictates of law that a person is innocent until he/she pleads guilty and is proven to be guilty, this is the moment to teach Baba fair play and good faith. The press should strive its best to treat allegations as allegations until proven to be true in the courts. The public should be given the accurate picture of the proceedings so that Baba will not accuse the press of witch hunting. As the old saying goes in the face of adversity show valour and in the face of victory show magnanimity. When a person is down, no matter how much one is opposed to him, one should call for decency and fair play so that in the final analysis a person shall be judged by his/her deeds and not on the basis of people’s likes and dislikes. Foroyaa will present accurate record of the proceedings of this case in good faith in the public interest. The State Of The Gambian Economy The Public Corporation Public corporations have been completely ignored in the process of regeneration of the National Economy. The ideology that the state should roll back its activity and restrict itself to the provision of social services and provide regulation for the private sector to bring about development have given many governments in Africa the excuse to ignore the productive potential of public corporations and reduce them into their private milking machines to enrich themselves at national expense. The facts we have shown clearly indicate that the small private sector in the Gambia is even finding it difficult to attract investment not to talk about sustaining economic development. In fact, many financial institutions and private investors depend on government treasury bills to increase their earning capacity. They also rely on the government for the sale of goods for office use and consumption in public institutions. This confirms our view that African economies inherited a small or narrow private sector from colonialism which had a very small manufacturing base which lacked competitiveness in the world market. The financial institutions were not linked to the productive sectors of the economy other than services. Hence the private sector remained small. The public sectors could not generate enough investment capital and dividend to increase production and contribute to social development. Diversion of its resources dwarfed its development. Today many countries lack both a viable private and public development sector that could promote development, guarantee employment and increase income. This is why claims of socialist of capitalist development by such countries have always been false declarations. What is lacking is clear development strategies of any kind that could promote welfare on a sustainable basis. This is why we classify economies like that of the Gambia which cannot rely on any rigid ideological lines to take off. What is required above all are policy makers and planners who are committed to making the institutions of the state transparent and accountable so that it could serve to enhance development of the public, private and informal sectors according to their capacity to generate optimum development. PDOIS has always preferred to accept our classification of the Gambian economy as one in transition and one that needs a multidimensional development paradigm that can only be worked out by a people centered and honest leadership, knowledgeable in the intricacies of economic planning and development. Without that, bureaucracies will be built which live above its means and promote perpetual budget, trade and balance of payment deficits. Let us look at the nature of public corporations in the national economy. In 1999 the gross turn over of public enterprises amounted to D914.3 million. This represented 18.5% of the GDP. GAMTEL was the largest contributor to the public sector turn over with a sum amounting to 268.4 million. NAWEC contributed 225.3 million; Social Security 128 million, Gambia Ports Authority 116.9million, Gambia Public Transport Corporation 64.4 million, Gambia Civil Aviation Authority 54.2 million; Gambia International Airlines 40.1 million; Assets Management and Recovery Corporation. 6.3 million, National Printing and Stationary Corporation 6.3 million, Maintenance Services Agency 4.1 million; Independence Stadium and Friendship Hostel 3.2 million. Suffice it to say, public enterprises contributed to infrastructural development in 1999 by making capital expenditure amounting to 213.5 million. The public enterprises also contributed 69.5 million as loan repayments, dividends and taxes. A progressive would have established a development idea for public enterprises. It should have kept track of its turnovers, its capital investment, its contribution to government revenue in terms of taxes and dividends, its loan portfolio and repayment ratio, its employment rate and its assets. A proper monitoring of a sector of the economy which could contribute 18% of the GDP would have facilitated planning for its sustainable development on an annual basis. In fact, a correct development strategy would have been to create a resource pool for dividends contributed by public enterprises and utilise the pool for the promotion of social services. Let us now follow the public enterprise sector to prove that no strategic plans were made for the development of the sector. Instead government had only vague proposals of a divestiture programme to maintain the jargons of structural adjustment paradigms while the public enterprises enriched a few at the expense of public coffers. In 2000 public enterprises registered a gross turnover amounting to D1,042 million. GAMTEL contributed 344.6 million, NAWEC contributed 212.1 million; Social Security and Housing Finance Corporation 181.2 million; GPA 129.1 million, GPTC contributed 71.5 million, Gambia Civil Aviation Authority contributed D57.4 million; Gambia International Airlines 44.3 million. However despite the increase in turnover, public enterprises contribution to government revenue dropped to D57.3 million in 2000. The total investments made by the public enterprises was recorded to be 794 million. Without any sectoral indications the direction of such investments become difficult to target for development purposes. In 2001 government abandoned all schemes that geared to the planning of the role of public enterprises in the economy by failing to declare its cumulative turnover, its total investment and its total contribution to government revenue. In fact when a parliamentary question was put to the secretary of state for finance and economic affairs regarding the payment of dividends to government by public enterprises he revealed that most public enterprises contributed not a single butut. In the next issue we shall come to this point. To be continued Issue Number 90/2003, 24-26 November, 2003 Editorial President Jammeh Should Address The Nation On The Attempt To Reduce Prices By Military Means!!! "I bought rice at D325 and transport made it D350" Foroyaa has always maintained that with proper monitoring of the prices of fuel, rice and other essential commodities and their systematic management through dialogue with importers the retail prices can be regulated through dialogue and the prices of all other local commodities could follow suit. We argued that the militarist method of sending security forces to compel retailers to sell at prices not determined by the wholesale cost of commodities would only lead to bankruptcies in the informal sector and scarcity of goods. Our experience has shown that the working capital or money base in the informal sector is very small. Sometimes one maintains a revolving capital of 500 to 1000 dalasis. Any encroachment in their earnings from sales without reducing the expenditure on purchases would lead to collapse of their business. In fact, contrary to popular belief many people who sell meat etc take bulls from their owners to sell and repay them. They cannot even afford to buy bulls and sell them for profit. A leader should investigate all sides of a coin before coming up with a decision that can satisfy all fair minded people. Failure to do so is to pit the people against each other and blame them for inflicting hardship on each other. A living example of the viability of our analysis is Brikama market. On October 13Th. the people were given the impression that palm oil will be sold at D5 per cup, milk D30 per gallon; groundnuts D10 per tomato tin and D250 per bag, coos and maize D10 per tomato tin and D300 per bag, findo D30 per tomato tin and D350 per bag; cassava D400 per bag, charcoal D1.50 per cup and D30 per bag; candle D4 per packet and 50 bututs per stick, laundry soap D4, sugar D2.50 per cup, rice D2 per cup, garden eggs, D100 per bucket, sweet potatoes D100 per bucket; bread D2.50per loaf; one bonga fish D1 and Gambian chicken D50 or less. The end result is that commodities started to disappear from the market and the problems of the poor increased. As prices climb back again we are back to square one. The militarized way has not worked. It is leading to closure of Lumos or weekly markets and more poverty. It is time to take the democratic way and deal with prices through consultation and by increasing the supply of goods and services and the earning capacity of the people. We insist that the government teaches up good example by reducing the price of fuel, electricity and water supply which is under its control. This can have effect in reducing the cost of many commodities which require ice blocks, transportation and so on. The State Of The Gambian Economy The Public Corporation When a parliamentary question was put to the secretary of state for finance and economic affairs regarding the payment of dividends to government by public entreprises he revealed that most public entreprises contributed not a single butut. The question raised by Halifa Sallah, member for Serekunda Central, asked for the companies in which government had shares and how much was realized from such companies during the 2001 financial year, both in terms of dividends and tax revenue. SoS Jatta indicated that the companies where government has shares and the respective contributions of each in terms of tax revenue and dividends for the financial year 2001 are as follows: Enterprise Tax Paid (Dmbn) Dividends Gamtel 27.34 0.0 GPA 5.29 1.0 GPTC 1.89 0.0 GCAA 1.20 0.0 GIA 2.73 0.0 NPSC 0.12 0.0 MSA 0.20 0.0 SSHFC 2.34 0.0 NAWEC 5.00 0.0 Banjul Breweries 1.06 0.02 Senegambia Beach 1.12 0.0 Total Tax Paid D48.28 million and dividends D1.02 million. SoS Jatta indicated that it is worthy of mention that the above sums received during the financial year 2001 are in respect of the financial year. Halifa questioned why is it that companies like Senegambia Beach are making no profit for government to be able to pay any dividend. What is responsible for the absence of earnings from dividends? In response, SoS Jatta indicated that for companies like Senegambia, there was an agreement in 1992 for the loans that were contracted and guaranteed by government and are still being serviced; instead of paying those dividends they are using that money to service the loan to Senegambia. SoS Jatta indicated that they are looking at the audited accounts of some of the other parastatals not paying dividends to ensure that at least dividends that are due to government are paid. "This we started because it is money we budgeted for and if it doesn’t come it affects the way we implement our budget." It is abundantly clear that the public corporations are not contributing to public revenue in accordance with their capacity. The government has proven that it is not in tune with the gross potential of public entreprises in promoting sustainable development. A review of the gross turn over of such entreprises, which amounted to over 1 billion dalasis in 2000, and total investments amounting to over 700 million confirms that if government was very serious about building the productive sectors it could have transformed the public sector into an engine for economic growth rather than shift production of goods and services to a private sector that was over burdened with high interests rates and under financed to the point that it could only generate very limited revenue for government. We will come to this in our concluding remarks. A government with a seriously meant commitment to promote sustainable development would have established and maintained indices for monitoring and ensuring the sustainable growth of turn over, good investments, capital investments, employment rate and contributions to public services through taxation and payment of dividends. What is revealing is that the projection of resource indicators we have highlighted ceased in 2001. In the 2003 budget speech no reference was made to gross turn over, total investments and capital expenditures. Only sectoral analyses were made. However, one can see the tremendous amount of capital that is being generated for in the year 2002, after 6 months of operation the revenue accrued to GAMCEL amounted to D255.9 million. This was made possible by the rapid expansion of the Gamcel Network. Suffice it to say, in a question posed to the Secretary of State for finance and economic affairs at the National Assembly regarding the cash and assets recovered by the Assets Management and Recovery Corporation since 1994, the secretary of state indicated that the AMRC recovered cash and assets totalling D154 million, of which D97 million was a cash amount transferred to Government through the Central Bank and the Department of State for Finance and Economic Affairs. The balance of D57 million being assets is transferred to Government to accommodate Government departments and agencies. As of December 2002 a balance of D90.6 million was deposited in an account at the central bank. We hope the audited accounts of the central bank will reflect such a deposit. Members of the national assembly would have to scrutinize the audit report with vitality. Nonetheless, the investment potentials of the public corporation are immense but the government has wasted all the potentials because of its lack of clear focus and direction of how to develop the sector. Having mismanaged the sector like all governments which pay lip service to private sector led growth, they proceeded to give the impression that they are in line with current international norms of dissociating government from anything that deals with production. In reality they ended up without public sector or private sector led growth. Issue Number 91/2003, 27-30 November, 2003 Editorial President Jammeh: Tell the People the Truth President Jammeh is fond of blaming the people for the economic hardship they are facing. He always refuses to admit that the economic crisis we are now going through is a consequence of his failed economic policies and that the hardship has been aggravated by his militarist approach in solving economic problems. When muslim elders paid their usual Koriteh visit to the president at state house on Wednesday, he dealt with the economic hardship that the people are facing and the failure of schemes he personally initiated to alleviate the living conditions of the people. What he said in this regard can be summed up as follows: While on his way to the mosque during the Muslim feast on Wednesday he saw some vendors, presumed to be Muslims, selling. He deduced that they could not spare just one hour to commemorate the most important feast in the Muslim calendar. He implied that this is an indication that many who regard themselves as Muslims put material things above Allah; that they are driven by greed and are merciless. He further implied that such people sell their goods at exorbitant prices. He went on to say that he took out his personal money to import good quality rice to be sold at low prices in order to minimize the hardship of the people, but the project failed under the July 22nd Movement. He then set up the YDE as an established structure to handle the importation and sale of the rice but this was mismanaged. He further said that he put his money in IBAS but the borrowers never paid back. This, he said, is what brought about "Operation No Compromise" and as from now on he would not compromise. The president must stop pretending and tell the people the truth. He knows very well that "Operation No Compromise" is unworkable and has therefore failed. Even he himself admitted that he compromised under "Operation No Compromise" "because of the month of Ramadan". If he persists with his failed policy of Jammehnomics, using militarist tactics one could not but accuse him of wrecking the economy. In short, forcing vendors to sell at prices that do not commensurate with the prices they got them from wholesalers and local producers would tantamount to pushing them out of business and effecting scarcity of commodities, because they would not be willing to sell at a loss. The consequence is to ruin the informal sector, which is vital to the national economy. The president could change his policy to what is workable. He could change his policy from "no compromise" to "compromise". In the first place, if he is really serious about price reduction he would reconsider the recent increase in the price of petrol from D10.50 to D19.00, the price of gas oil from D9.50 to D15.00, the price of kerosene from D5.50 to D9.50, the unit price of electricity, etc., all of which affect costs of transportation and commodities. Furthermore, he could set up a unit to study price indications and negotiate a price level with importers. Alternatively, if the president is bent on price control and is serious about it he would have enacted a law to control prices. A mechanism for price determination would have been in place, the controlled prices would have been published in the Gazette and inspectors with powers to arrest culprits would have been appointed. The current wave of arrests by vendors selling above would be controlled prices is unlawful. The president gave the impression in his speech that he had done his best by initiating schemes and investing his personal income for the benefit of the people, but apparently because of greed and materialism the schemes did not meet his expectation. This attitude is typical of the president. Whenever there is success he boasts that he is responsible but when there is failure he pushes the blame on to others. In fact, a clear distinction should be drawn between being a president and being a benevolent monarch. Indeed there is no room for a monarch under our constitution. Dr Yahya Jammeh is free to become a benevolent man and establish his charitable organisation. It is good, indeed noble to give out charity. He is however advised that for the sake of accountability and transparency it would be more honourable and dignified to declare how he obtained the millions he has been dishing out since 1996, especially since he failed to fully declare his assets during the 2001 presidential election as required by section 43 of the constitution. Being benevolent however is not what makes one a good president. The role of a president is not to transform one’s populace into beggars and dish them charity occasionally. The role of a president is to empower the people economically and politically so that they become masters of their own destiny. The role of a president includes mobilisation of the resources of a nation and directing the economy to bring about development and to enhance the livelihood of the people. President Jammeh has failed in his economic policies and this has brought untold suffering to the people. The trade deficit keeps increasing year after year because we continue to import virtually everything we need and export very little. For example in 2002, exports amounted to 417 million dalasis while imports amounted to 2900 million dalasis. The same applies to the budget, which had a deficit, excluding grants, of over 545.5 million dalasis in 2002. To meet its budgetary requirements the government keeps borrowing through the issue of treasury bills and central bank bills leading to an internal debt of 2900 million dalasis as at October 2002. The external debt is estimated in dalasis to be 18,000 million dalasis. Furthermore the government talks a lot about private sector led growth. The reality is that there has been neither private sector nor public sector led growth. There is no serious scheme in place to develop the productive base of the economy, which is our salvation. Hence the government is now trapped in a net of fiscal and external imbalances. This is the reality, which the president must admit. SEE THE NEXT ISSUE FOR A CONTINUATION OF THE ANALYSIS OF THE PRESIDENT’S SPEECH. The State Of The Gambian Economy Public Corporations The Potential of public enterprises to boost up the national economy, generate revenue through corporate tax and dividends has been explored. It should be abundantly clear that the government is now led by a dogmatic notion that the state should be rolled back from production and depend entirely on taxation to maintain public services. Many economists in developing countries sing the same song not realising the peculiar situation of developing countries. The policy makers of the country have failed to grasp the peculiar situation of the Gambian economy and are therefore being guided by confused and untested economic fundamentals. Those whose minds are in tune with reality would know that the economies that can have states which roll back their productive bases are those with developed private sectors which provide employment to the vast majority of the labour force. Such companies can pay corporate taxes while their employees pay income taxes. These taxes are then utilized by the state to provide services. Despite the fact that all developed market economies have developed private sectors which control a huge world market the demand for services cannot be sustained by tax revenue. This is why US, Britain, Germany and France have been experiencing budget deficits which their countries in the Euro zone are being compelled to control. The way Germany and France are doing it is to cut down on government expenditure in their foreign services and many social welfare programmes. The peculiar situation of developing countries like the Gambia is that they have a very small private sector with a low level of employment. Consequently, corporate tax is very small. Company tax yielded 130 million in 2002 while payroll tax amounted to D13.5 million. This shows small earnings from payroll tax which confirms the low level of employment base. Since the country has a small private sector, increasing company taxes would only undermine the savings and investment capacity of such a sector. In actual fact what can enable the private sector to accumulate more for investment is less taxation. On the other hand, if the government depends on taxation to provide services it would run into problem if it reduces the taxation of the corporation. The simple conclusion is that tax based budget is incompatible with the growth of the private sector in developing countries. This is becoming abundantly clear in the Gambia. In short, the more the government lacks avenue for deriving non tax revenue the more dependent it becomes on tax revenue. However, with a small private sector and low employment rate, government can only increase services or maintain them in the face of inflation by increasing taxation. There is a limit to how much government can get from corporations and the employed. When the limit is reached, the government would have to experience a budget deficit. In order to address the deficit, government would have to borrow. This is why the Gambia government is becoming more and more indebted. This deficit, excluding grants, rose from 196 million in 2000 to 545.5 million in 2002. Here again, the government must undermine private sector led growth by issuing treasury and central bank bills and bonds that will enable the private sector to earn more from financial speculation on government borrowing than investing in the productive base of the economy. Government borrowing is increasing to cover up the deficit and create artificial state of financial health. That is why the domestic debt has risen to 2.9 billion by October 2002. Needless to say, 82% of domestic debts consist of treasury bills. It is therefore no surprise that commercial banks are lending more to government than financing the private sector to build up the productive base. One may now ask: What policy can enhance the growth of productive private companies that promote the interest of countries with a narrow private sector base. The answer is simple. Such countries must have states which depend increasingly on non tax revenue so as to reduce heavy encroachment on income and investment capital. An economy which undermines income and investment capital must undermine savings and the potential to impact on development. _________________________________________________________________ Set yourself up for fun at home! 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