Think tanks say the economy is ‘still recovering’ from the severe drought
that hit the country in 2011
In 2013, Gambia's currency, the Dalasi (D), recorded massive depreciation against major foreign currencies. |
The performance of The Gambia’s economic growth is said to have returned
to pre-drought level of about 6 per cent driven mainly by
agriculture and tourism, while think tanks
said the economy is “still recovering” from the severe drought of 2011. However, the poor performance of the national
currency, the Dalasi (D), against major foreign currencies, strict tax rules
and non-stop rising prices of basic commodities top the country’s 2013 economic
highlights.
On February 4, Gambia’s
Central Bank Monetary Policy Committee (MPC) confirmed the continuous weakening
of the Dalasi against all major international currencies traded in the foreign exchange
market. Year-on-year as of December 2012, the Dalasi depreciated
against the US dollar by 11.6 per cent, pound sterling (18.0 per cent) and Euro
(11.5 per cent), the MPC said.
On June 21, the Central
Bank of The Gambia (CBG) suspended money transfer operators, Ria, Money
Express, and W@ri as the Dalasi continues to weaken. A CBG statement said the
three financial bureaus are no longer allowed “to operate in the country’s
foreign exchange market until further notice.” It took four months as of
October 23 before the suspension was lifted for only Ria Financial Services.
Money Express and W@ri are still under suspension.
As recent as May 2013, the Dalasi depreciated
against the British Pound by 12.62 per cent, the US dollar by 11.87 per cent
and the Euro by 12 per cent, according to the International Monetary Fund
[IMF]. IMF’s mission chief to The Gambia, David Dunn, said although inflation
has picked up during 2013, it is projected to stabilize at around 5 per cent a
year by 2014.
On September 13, the IMF
warned that prolonged overvalued exchange rate would damage Gambia’s
international competitiveness. The warning followed several Gambia Government directives that downgraded foreign currency exchange
rates, impose a moratorium on the shipment of the dollar, suspension of money
operators, seizure of financial bureau licences, and arrests and detention of
forex bureau staff.
The IMF suggested further tax reforms to
strengthen revenues and address costly tax
expenditures, while improving international competitiveness. That advice was
followed by a crackdown on small businesses like shops and market vendors who
were forced to pay taxes on the spot or face closure. The authorities claim
they have not been paying regularly. The banking system was regarded “well
capitalized and liquid”, however, high non-performing loans required vigilance,
including through intensive supervision for individual banks as needed.
While poverty remains a major
challenge in The Gambia, projects that the Government said are meant to address
poverty were initiated in 2013. A US $65 million National Agricultural Land and Water Management Development
Project (Nema) was officially launched on March 5. It is meant to uplift the
livelihoods of the rural-poor and increase economic growth in the country’s
services sector. The 2013 to 2019 project is designed to increase income level
of the rural folks, through improved productivity, based on sustainable land
and water management practices. It is expected to directly benefit almost 150,
000 rural households across the country.
On February 20, US $3.5
million Bakoteh Fish Market jointly financed by the government, Arab
Development Bank (ADB) and the Arab Bank for Economic Development in Africa
(BADEA), was inaugurated. The fisheries sector contributes 4.2% to Gambia’s
Gross Domestic Product, GDP, the total value of goods and services that a
country produces in a year. In August, its general manager, Duwa Jatta, said
the Bakoteh Fish Market produced D1.8 million in daily collection of duties from vendors.
The Gambia
Government
faced a financial shortfall as its revenue and grants decreased by D4 billion
in one year, from March 2012 to March 2013, data from the CBG. The MPC
quarterly report stated that provisional information on government’s fiscal
operations in the first quarter of 2013 indicates that revenue and grants
amounted to D1.5 billion; lower than D1.9 billion in the same period in
2012. Expenditure and net lending amounted to D1.9 billion, a contraction
of 14.5% when compared to the amount registered in 2012. As a result, the
government increased its borrowing from local sources like commercial banks in
the country to balance the difference. The MPC’s quarterly report on
the state of the country’s economy stated that the domestic debt of the
government increased to D11.3 billion as at end-March 2013.
In June this year,
Gambia’s President Jammeh announced his government would ban the importation of
rice into the country in 2016. The Gambia heavily depends on rice imports from
south-east Asia for local consumption. “Come 2016, we will ban the
importation of rice into this country in order to strengthen local food
industries as well as promote food self-sufficiency and good health,” Mr Jammeh
said.
On November 21, The Gambia Groundnut Corporation (GGC) made public
its readiness to buy this year’s groundnut harvest from farmers. It has been
criticised in the past for buying from farmers on credit basis. Agriculture is
the leading contributor to the country’s GDP of about 30%.
On November 28,
The Gambia lifted the ban on frozen chicken legs imports after it took effect
in September. The “immediate ban” on the importation of chicken legs into the
country was made on June 6, and was followed by mixed reaction. The Ministry of
Trade, Regional Integration and Employment has said all imports of poultry
products will be accompanied by what it called ‘SGS test certificate’ which
will indicate that the product meets national food safety standards with no use
of hormones.
On
November 5, the
Joint Session of the Public Accounts and Public Enterprise committees (PAC/PEC)
of The Gambia’s National Assembly criticised the Ministry of Finance and
Economic Affairs for “their poor financial discipline” highlighted in the
Auditor General’s Report. PAC/PEC members scrutinised and adopted the Auditor General’s
Report on the audited accounts of Central Government for the year 2008, but
also expressed concerns over the poor weakness of financial practice by staff
of government institutions. They also
raised concerns over missing $6.5 million, monies from the 50 per cent (%) sale
of shares of the telecommunication and cellular companies, Gamtel and Gamcel to Spectrum, a private
company in 2007.
On October 25,
President Jammeh withdrew expulsion of Lebanese business tycoon Hussein
Tajudeen who was asked out of The Gambia on June 4. The proprietor of Tajco
Company Ltd, was declared Persona Non-Grata over allegations he was “involved
in undesirable business activities which have very serious health and economic
consequences to the people and State [of The Gambia].” Tajudeen runs a
collection of businesses including Gambia’s largest supermarket [Kairaba
Shopping Centre], and is considered one of the biggest investors in The Gambia.
His Tajco Company and an array of business establishments have been blacklisted
by the US State Department over allegations of “providing funds to the
terrorist-designated Lebanon-based Hezbollah movement” and “having links to
Lebanese Canadian Bank accused of engaging in money laundering.”
While
it was admitted there are “risks associated”
with Gambia’s heavy debt burden,
particularly domestic debt which have intensified significantly in
recent months - reflecting difficulties in coping with spending pressures, on
December 19, the Government’s D8.6 billion budget estimate for the year 2014
was unveiled at the national assembly. The budget estimate for revenue,
expenditure and development for next year will focus on fiscal prudence aimed
at minimizing the growing deficit being financed by costly domestic borrowing. It
is anchored on containing the net domestic borrowing to 2.5 per cent of the
gross domestic product by end of 2014 and to near-zero per cent by end 2016.
The Gambia’s minister of finance and economic
affairs Hon. Kebba Touray said “despite global and domestic challenges
including the international financial crises and the recent draught, The Gambia
still remains resilient.” “Growth is back to its pre-draught level of about 6
per cent of GDP driven mainly by agriculture and tourism as the anchor.
Therefore agriculture remains a priority for government,” he said. He added
that inclusive growth, fight against inflation, a stable local currency and employment
opportunities remain the medium term goal for government, and this budget is
anchored on these parameters.
Compile and
written by Modou S. Joof for the Serekunda-based
privately-owned The Voice Newspaper.
Follow on Facebook: The-North-Bank-Evening-Standard
No comments:
Post a Comment
The views expressed in this section are the authors' own. It does not represent The North Bank Evening Standard (TNBES)'s editorial policy. Also, TNBES is not responsible for content on external links.