" We therefore have three policy areas to consider, (1) limit the rate of entry into the banking sector, to
maintain profit incentives and encourage expansion across the country by first mover protection for a
certain period. This will include for example if access bank becomes the first bank to open a branch in
a certain area of the country, no other bank should be allowed to open in the same area for a certain
period say, three years, to serve as an investment incentive. This will not only increase access to
banking services to the wider population but will also increase the level of intermediation through the
banking system and thus the potential for capital accumulation and funding expansion. (2) Internally
liberalise the financial sector to allow banks to go into insurance or pension funds management and
vice versa if they so wish to diversify their exposure and gradually phase out the participation of Social
Security and Housing Finance corporation in housing finance and pension management. We cannot
aspire to a vibrant market system and have the stifling legislation or the state competing in a sector that
should underwrite our drive towards a market economic system. The pension funds management is
closed to the private sector but how much average pension is paid by the government. Efficient and
well regulated private companies operating in the pension funds management sector are more likely to
generate and pay significantly more pension rate that what the government pays at present.(3) We
have to make sure we deal with the problem of information asymmetries as it not only adds to cost of
borrowing but also limits credit availability. The government should encourage the setting up of private
financial and investment research companies that will make information readily not only to domestic
financial institutions but also foreign companies looking to invest in the country. At the moment it is
almost impossible to get information about companies in the country let alone their financial
fundamentals. The government should also encourage a private credit reference agency in the country
as it will provide significant information about potential borrowers thus not reducing the cost of
borrowing but also the risk of loss on the part of banks.

Unless policy changes are introduced to address these problems, the relenting rate of entry into the
banking sector will do more medium to long-term harm than good. The encouraging aspect is, we are
a developing country undergoing reforms and I believe the best days of this country are ahead of us.

God Bless The Gambia."

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