In a recent visit to the Gambia, and on an economic forum on the radio, I heard a statement to the effect that the foreign exchange inflow into the country is more than the foreign exchange outflow. In essence there is a surplus of foreign exchange into the country. The next interesting statement that I heard is that most of the foreign exchange outflow, the foreign exchange that goes out of the country, has very little to do with the buying and selling of goods for the Gambian economy. This thus raises the question, if there is a surplus of foreign exchange into the country, how come the Gambian dalasi continuously depreciates against other currencies in the currency market?
Rene
-----Original Message-----
From: Edrissa S. Sanyang <[log in to unmask]>
To: GAMBIA-L <[log in to unmask]>
Sent: Tue, Jul 30, 2013 2:45 pm
Subject: Re: [G_L] Can someone tell the emperor that, his government is the problem
Jaiteh thanks for enlightening, if jammeh cannot get it from this piece we in a bigger problem than we think. Thanks a bunch.
Farang.
-----Original Message-----
From: Malanding Jaiteh <[log in to unmask]>
To: GAMBIA-L <[log in to unmask]>
Sent: Tue, Jul 30, 2013 12:58 pm
Subject: Can someone tell the emperor that, his government is the problem
Going by the recent flurries of stern warnings, presidential edicts, claims, counter claims about foreign exchange and "unscrupulous" and "unpatriotic currency dealers", and allegations of outright economic sabotage, there is all indications that something is not alright in His Excellency's Gambia.
What is mind numbing is the tone and direction this debate is now taking. The claim that "unscrupulous money changer" are hoarding the US Dollar is at best deceptive. Perhaps it is the classic case of tell a lie long enough and it will become the truth.
The US dollar, just like the candle and box of matches sold in Kerr Biram Ardo or the the sugar, flour and vegetable oil His Excellency dole out as lavish gifts are not made in the Gambia. The dollar, like any commodity is bought and sold for profit. The price at which one pays for them should therefore be dictated by they worth as far as the buyer is concern. In an environment where no one is coerced into buying or selling any produce the price paid is determined by market forces. If the price is right everyone who has the dollar will like to cash it. Same applies to buyers who will refuse to buy when they see that they are being cheated. I am not an economist but this is what I understand by free market. Gambians have time immemorial been free marketeers, thus our bargaining instincts even in the streets of New York.
Demand and supply in a free market. Demand is generated when people find that they need get something and supply is when people realize they can benefit by making that thing available.
So who create the demand for Forex in the Gambia today? All those who buy stuff from outside the Gambia. Can the President's Office tell us how much foreign currency His Excellency and entourage used in their last trip to the AU meeting? Can they tell us how much they plan to spend on coffee, tea, and chocolate for entertaining at the Statehouse or on vegetable oil, rice and flour his regularly gives to his staff this Ramadan alone? Or on the new Mercedes Benz gifts he received on his birthday? Remember none of these can be brought to the Gambia without Forex.
And who are the Forex Suppliers?
Apart from tourists who have no cheaper place to go other than the Gambia, much of the Forex in the Gambian is brought in by sons and daughters of the Gambia who have cross seas and beaten all odds to migrate to "greener pastures". It wasn't called greener by accident! Many of these work extremely long hours in sometimes unimaginable conditions to safe a little so that they can build themselves and families descent housing, food at the table and sometimes a little corner store. Some estimate this to be in the top 3 Forex sources in the country. And this no chicken change!
So why did the Office the President think that its ok decide that Gambians should pay D32 for a dollar one day after paying D40? Do they really believe that nobody will complain? Do they believe that these sons and daughters who braved the high seas, long hours and freezing cold and the desert sun would just roll over and allow someone walk away with as much as 20% of their hard-earn money? We may have scared Gambians but we do have a Gambian who falls into the category of "baa futoo balolu". Excuse my Mandinka. Wolof Njie say, "mak du fecha yal na deh".
I am sure whoever wrote this editorial knows exactly the problem behind the currency shortage. As President Bill Clinton once said, "its economics, stupid". Since the Presidential declaration of D33 / dollar, many individuals (in and outside the Gambia) have decided to hold on their hard earn currency and see what happens. Rather than pretending that its the exchangers hoarding, they should tell emperor its his efforts to fix prices that's sabotaging the economy.
By attempting to control every aspect of citizens' life (who to sell their groundnuts to and for how much; price of meat, sugar, bread, taxi ride) and now how much families sell the few dollars they receive from abroad. This is what's costing the economy. President Reagan would say, "government is not the solution to our problem; it is the problem".
Malanding Jaiteh
courtesy: Daily Observer - http://observer.gm/africa/gambia/article/stop-the-economic-sabotage-1
Stop the economic sabotage Africa » Gambia
Tuesday, July 30, 2013
Editorial
We have dealt with this topic before; we are returning to it because of the developments in our currency market. The refusal of the unscrupulous money changers to cease their unhealthy attitude of hoarding the US Dollar and other foreign currencies is uncalled for. We have said it over and over again that the availability of enough foreign currency reserve in any country is a key determinant of the growth and progress of that country's economy. Economic statistics have proven that the stronger the foreign currency reserve of a country, the more stable the local currency becomes.
It is unbelievable that despite all the achievements registered by The Gambia in the area of economic development, some individuals and corporate entities engage in the nefarious act of hoarding and causing artificial shortage of foreign exchange particularly the United States dollar. This tantamounts to economic sabotage and is unacceptable.
Those involved in this dubious activity must cease from it immediately. Why should banks and forex bureaus and even mobile telephone operators refuse to release foreign exchange when they are the very ones that enjoy the most whenever the economy is experiencing a boom? This paper has reliably gathered that even though government has banned street foreign exchange trading (the handbag forex bureaus), some business people, instead of dealing in foreign exchange through the approved way, employ boys to buy and sell foreign currency on the streets. These illegal foreign currency dealers still loiter the popular West Filed junction where they secretly canvass for customers.
The Gambia has been registering positive economic growth; also our national currency, the dalasi has been relatively stable over the years. All these are due to the policies put in place by the government. As citizens, we should understand that economic development is a programme, a group of policies, or activities that seek to improve the economic well-being and quality of life of a community and its citizens. Hoarding of foreign currency leads to artificial scarcity, and this in turn causes the local currency to depreciate against the major currencies. This in turn, harms the economy. We must not allow it to happen.
We therefore call on the general public to cooperate with the government to help track down those responsible for the artificial shortage of foreign exchange. We also recommend that the authorities create a hot-line so that the people can easily and conveniently report any activity connected to economic sabotage for quick action to be taken.
Our business community must also realise that successful economic development affects everyone and doesn't just happen. It takes time, strategic planning and most importantly, strong public-private partnerships. Government is doing all it can to develop this country. It is the responsibility of everyone to become an active and genuine actor in this process.
Author: Daily Observer
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