The Gambia's Pathway to Prosperity
IMF News, May 14, 2019
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- Published: May 14, 2019
Economic context and recent performance
- Sub-Saharan Africa overview:
- Growth is expected to accelerate this year to 3.5 percent from 3 percent in 2018.
- Expected to expand at close to 4 percent over the medium term.
- The Gambia recent macroeconomic outcomes:
- Growth in 2018 reached 6.6 percent.
- Inflation has dropped to just above 6 percent.
- Gross official reserves have increased to about 3 months of imports.
- Contributors to stabilization and recovery:
- Support from Gambians living abroad, the private sector, and international partners.
- Progress in infrastructure development (example: Senegambia Bridge).
Regional integration, trade, and infrastructure
- Role of regional integration:
- Enhanced trade and connectivity are central pillars of the pathway to prosperity.
- The Gambia has endorsed the Continental Free Trade Area.
- Potential benefits: add jobs, foster competition, increase investment, spur spread of knowledge and technology.
- Constraints to fully realizing benefits:
- Significant nontariff bottlenecks: infrastructure shortcomings, logistical costs, and other hurdles to cross-border trade.
- Infrastructure projects and regional linkages:
- Senegambia Bridge: deepens economic ties and could be part of a Trans-Gambia corridor within ECOWAS.
- Electricity transmission investments: link Eastern and Northern parts of the country and enable cross-border energy trading.
- OMVG project: unites The Gambia, Guinea Conakry, Senegal, and Guinea Bissau to harness The Gambia River Basin for low-cost renewable energy.
- Port of Banjul upgrades could create a new trans-shipment hub for the region.
Sectoral opportunities and modernization
- Agriculture:
- Regional trade integration and improved infrastructure key to expanding agriculture.
- Examples of modernization: automation, advanced irrigation, processing plants, transit facilities.
- Future tools: weather tracking, satellite imaging, artificial intelligence to modernize agriculture and build climate resilience.
- Goals: food self-sufficiency and new export markets.
- Tourism and services:
- Record numbers of visitors; new hotels, roads, and amenities expanding offerings including eco-tourism and water sports.
- Transport expansion will support tourism and trade-related services (including re-exports).
- Financial sector and private sector-led growth:
- Private sector-led growth needs responsible lending by financial institutions.
- Vigilant supervision of banks and other credit institutions necessary to ensure financial stability amid growing private capital inflows.
- State-owned enterprises:
- Regional orientation may be essential to long-term viability of many state-owned enterprises.
External position and social outcomes
- External buffers and flows:
- Exports, private capital inflows, and remittances are rebounding and likely to increase with regional integration.
- These flows will help build foreign exchange reserves and strengthen confidence in the Dalasi.
- Social progress:
- Observed reductions in maternal and infant mortality rates.
- National Development Plan envisages further improvements in quality of life.
Key challenges and priority reforms
- Three highlighted areas for reform:
- Resolve unsustainable public debt to unlock donor financial support.
- At a recent roundtable in Washington, D.C., most creditors indicated support for debt relief; the government and advisors are following up.
- Foster inclusive growth and address social needs:
- Target poverty reduction through programs aiding vulnerable households and creating jobs for unemployed youth.
- Debt relief can lower debt service costs and create budget room for social priorities and state-owned enterprise reform.
- Strengthen rule of law, accountability, and transparency:
- Recover stolen domestic and foreign assets identified by the Janneh Commission.
- Support transitional justice reform: Commission of Enquiry, Truth, Reconciliation and Reparations Commission, National Human Rights Commission, and planned Anti-Corruption Commission.
- Support security sector reforms to modernize the state and strengthen the rule of law.
IMF engagement and support
- Recent and prospective IMF involvement:
- The Fund provided emergency support in 2017 and is continuing engagement through a Staff-Monitored Program.
- Potential to move to a medium-term program with concessional financing in the future.
- IMF committed to help strengthen key institutions through technical expertise and training, coordinated with the international community.
- Conditionality for assistance:
- IMF assistance should be closely linked to The Gambia’s development priorities; the IMF stands ready to listen to Gambian ideas and proposals.
Keynote Address by IMF Deputy Managing Director Tao Zhang, May 14, 2019. As prepared for delivery. IMF Communications Department.