Monday, March 12, 2012

IMF urges Gambia to privatize Gamcel


The International Monetary Fund has urged the Gambia government to move forward with plans “for a fully transparent privatization of Gamcel”, national cellular company.

However, it is still unclear whether the government has initial plans to privatise the national cellular company again following a failed attempt at privatizing it together with Gamtel, its parent company, some five years.

In its latest report on The Gambia, released in February, the IMF said such structural reforms would also help eliminate major sources of contingent liabilities that have impaired government finances in recent years.

The report reveals that claims associated with the failed privatization of Gamcel, and spending on contingent liabilities and extra-budgetary items such as bills and debt service owed by the National Water and Electricity Company (NAWEC), which owes millions of dalasi to its major suppliers, were leading sources of government expenditure overruns.


Therefore, the IMF indicates that state-owned companies and agencies must strive to balance their own accounts, as was planned in the budget.

However, the Fund has noted the dynamic private sector led growth in the telecom sector, where competition is fierce and technological change rapid.

Over the years, Gamcel was battling with challenges including network expansion, deployment of the value-added services, capacity building and financial constraints.  However, the privatization of national GSM services provider will see the country’s GSM sector, in the hands of the private individuals, or companies which will lead to more capital flight out of the country.

National Assembly Member for Kiang Central Babanding K.K. Daffeh has earlier on suggested to the Minister of Information and Communication Infrastructure to consider merging Gampost and Gamcel, as one public enterprise “so as to increase their revenue base, services and delivery”.

It could be recalled that the government has in 2007 sold the 50% of Gamcel, together with its parent company, Gamtel, to Spectrum Company, a Lebanese owned company.  However, the sale was abruptly canceled in 2008, when the government failed to renew the contract.

The Gambia’s telecommunication sector is one of the most competitive in Africa as the four GSM services providers are competing for less than 1.5 million potential GSM services clients, out of a population of 1.8 million.    Each of these companies - Gamcel, Africel, Comium, and Qcell - continues to device ways and means to outbid the others so as to have a greater subscriber.  The situation has now reached a survival of fittest level as the weak ones have either to be sold so that the new owners can pump in the needed capital to upgrade its services or the company gradually dies out.

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