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The Gambia - Economy

The Gambia’s real per capita GDP growth over 2004–14 averaged less than ½ percent per year, among the lowest in sub-Saharan Africa (SSA). As a consequence, The Gambia remains among the poorest countries in the world. Over the last 50 years, The Gambia has been hit by eleven instances of drought, with four in just the last 12 years. This has contributed significantly to The Gambia’s inability to sustain uninterrupted periods of growth. Since 1965, The Gambia has had just three short-lived episodes—a combined duration of 16 years—of growth spells, i.e., periods of real per capita growth in excess of 2 percent. The remaining years, The Gambia had low or negative per-capita growth. This includes three spells of a combined duration of 22 years in which per-capita growth was negative. The Gambia’s growth performance displays fragile state characteristics.

The Gambia suffers from widespread poverty. Life expectancy at birth is 56 years, but that figure has improved markedly in the last two decades. Unemployment is high in urban areas, and in rural areas the fragile agricultural sector is highly dependent on the weather. The country ranks 168 out of 182 in the UNDP's human development index (2009). Child school enrolment is relatively high for comparable countries, as is adult literacy rate at 62% (according to UN estimates). The UNDP and ILO, in collaboration with the government, are engaged in a 3-year programme - the Fight Against Social and Economic Exclusion - which aims to empower communities, especially women, to create sustainable livelihoods.

The Gambia’s economy is dominated by agriculture. About two-thirds of the population is engaged in raising livestock or growing crops, such as rice, maize, millet, sorghum, and cassava. Small-scale manufacturing includes processing peanuts, fish, and hides. The Gambia has no important mineral or other natural resources and has a limited agricultural base. About 75% of the population depend on crops and livestock. Their livelihood is highly dependent on rainfall.

The Gambia continues to face severe difficulties in meeting export quality requirements for food-grade groundnuts. Structural problems also persist in the domestic trading mechanism. A Quality Assurance Framework for groundnuts has been proposed, which, if followed, could assist greatly in bringing the trade up to required SPS standards. Rice is a staple of the Gambian diet and a major import. Improvement of domestic production and hence lower reliance on imports is a major element in Government plans, including through the New Rice for Africa (Nerica) scheme.

Tourism is the largest industry after agriculture. It employs about 125, 500 people, and contributes 16% to The Gambia’s GDP. In 2013, there were 157, 000 tourist arrivals mostly from the UK, Scandinavia, the Netherlands, Germany and Spain. This figure rose to 171, 2001 in 2014. Tourists usually visit during the months of November to April. Most of them stay in and around Kololi beach area hotels, resorts, and guesthouses. Tourists can engage in many excursions to visit Katchikaily Crocodile pool, the old colonial village of Janjangbureh (Georgetown), the former slave trade post in Albreda and Juffureh along with James Island, which was renamed Kunta Kinteh Island after the Alex Haley’s Roots Saga book and TV miniseries. Tourists can also do bush and beach safaris, take river and fishing trips along the river Gambia, and visit the prehistoric Wassu Stones circle.

Tourists can hang out with young trained official Gambian tour guides whose goal is to “enhance guest-host encounters”. What the Gambian tourism board doesn’t mention is the many ways Gambian men and women have engaged in affective sexual economies with European tourists visiting the country. One component of tourists’ experiences above the usual excursions is the consumption of Gambian bodies. Both tourists and their Gambian mates fashion their sexual encounters as “relationships.” These “relationships” provide Gambian men and women with opportunities to make a living, while tourists get the chance to satisfy their (neo-colonial) fantasies about young black bodies. The Gambia’s tourism sexual economy is mainly grounded on the cheap labor of young Gambian men and women who have very little economic opportunities. Their bodies are the main capital they possess.

Small-scale manufacturing activity includes the processing of groundnuts, fish, and animal hides. Re-export trade to neighbouring countries makes a significant contribution to the economy, but is dependent on fluctuating relations with Senegal. Tourism, and associated construction industry, are a mainstay of the economy, as are remittances.

In August 2015 the state-owned television station broadcast appeals for volunteers to provide free labor at President Jammeh’s private farms. The secretary general in the Office of the President, Lamin Nyabally, issued a circular to civil servants instructing all heads of departments, ministries, and state-owned enterprises to take their staff to the president’s home village of Kanilai to work on his farms. According to several reports, there was an expectation that communities and government workers would participate. The government reportedly withheld state resources from villages that did not work. Civil servants allegedly understood their jobs depended on committing to this annual call for compulsory labor.

The Gambia experienced large balance of payments and fiscal imbalances, caused by persistent policy slippages in recent years and financial difficulties in public enterprises. This was exacerbated by sizable exogenous shocks from the impact of the regional Ebola outbreak on tourism and the delayed summer rains in 2014. The delayed summer rains in 2014 led to about a 15 percent decline of the year’s crop with serious implications for real GDP and food security. The cycle of exogenous shocks followed by policy slippages led to weaker real GDP growth in The Gambia than in other countries of the region. The authorities embarked on an economic program based on a strong 2015 budget and structural reforms, and efforts to secure donor support.

The IMF supported the authorities’ efforts through a Rapid Credit Facility (RCF) disbursement in early April 2015 and a Staff-Monitored Program (SMP). However, major policy slippages occurred since the RCF disbursement, pushing the SMP off track and worsening the outlook considerably especially since budget support from donors will not be forthcoming.

In early May 2015, the President’s office issued a directive imposing an exchange rate overvalued by more than 20 percent compared to the prevailing market rates, which the Fund staff assessed to be broadly in equilibrium. The fiscal position deteriorated significantly since mid-April, while inflationary pressures and T-bill rates increased, reflecting the inconsistent macroeconomic policies.

The Gambia's total economically active population is estimated at 400,000. About 75 percent are engaged in agriculture; 18 percent in industry, commerce, and services; and 7 percent in government. The labor force participation rate is about 74%.The Gambia suffers from high unemployment and underemployment, compounded by a shortage of skilled workers and trained professionals. About 59% of the individuals in the labor force have no education. Many of the skilled workers in the construction and mechanical industries are foreigners from neighboring countries. However, many Gambians are now taking up these trades.

Trade with the UK is strong, and the UK is consistently among the Gambia's top 5 trading partners. UK exports in goods to the Gambia in 2008 amounted to £13.5 million or 8.1% of total imports, key products being medicament, sugar, vehicles; accessories and parts.. Trade in goods in the opposite direction was valued at ££680k or 9.7% of total exports, key products: ground nuts, fruit and vegetables.

The Gambia has a liberal, market-based economy characterized by traditional subsistence agriculture, a historic reliance on groundnuts (peanuts) for export earnings, a re-export trade built up around its ocean port, low import duties, minimal administrative procedures, a fluctuating exchange rate with no exchange controls, and a significant tourism industry.

Agriculture accounts for roughly 24% of gross domestic product (GDP) and employs about 70% of the labor force. Within agriculture, peanut production accounts for 6.9% of GDP, other crops 8.3%, livestock 5.3%, fishing 4%, and forestry 0.5%. Industry accounts for approximately 12% of GDP and services about 59%. The limited amount of manufacturing is primarily agricultural-based (e.g., peanut processing, bakeries, a brewery, and a tannery). Other manufacturing activities include soap, soft drinks, and clothing.

The Gambia is a small market compared to some of its West African neighbors. There is a visible presence of foreign investors with significant investments in sectors including financial services where many Nigerian banks have established branches in the past 10 years. The tourism sector also continues to attract investments in hotel development with many new three- and four-star hotels. The energy sector, particularly power generation, transmission and distribution has attracted investments from Lebanon and Malaysia. There is a noticeable presence of Turkish and East Asian businessmen selling electronic goods and home appliances. There is also a growing interest in petroleum exploration particularly after the recent discoveries announced in neighboring Senegal.

Based on historical precedent, there are sectors that are at risk of appropriation by the government, including (but not limited to) agriculture, energy, and natural resources sectors. There are no laws that force local ownership. However, there have been instances of "creeping expropriation" or governmental action tantamount to expropriation as noted above in this report.

In February 2008, the Government of The Gambia announced it had cancelled the license it granted to an Australian mining company, Carnegie Minerals (Gambia) Ltd., in December 2005 to extract and process heavy mineral sands containing zircon, ilmenite, and rutile. Carnegie Minerals filed a $31 million claim against the Government of the Gambia in International Center for the Settlement of Investment Disputes (ICSID) in 2009. In July 2015, a year-and-a-half after the Gambian government won a domestic judgment against the company in Gambia’s Special Criminal Court; the ICSID found in favor of Carnegie Mineral and awarded it $23 million in damages, including legal costs. The Government of The Gambia has not yet complied with the ruling.