Remittances to The Gambia, moneys sent to The Gambia by Gambians in the Diaspora, has now been increasing more than ever and as of 2011, it constitutes up to 10% of the country’s Gross Domestic Product - more than the total monetary value of the country’s export which constitutes only 8 to 9% of the GDP.
The Central Bank Governor Amadou Colley said in The Gambia, remittances as a percentage of the GDP has grown over time from a mere about 3 – 4% in the 1990s to nearly 10% of the GDP in 2011. In addition, he said, it has become one of the largest sources of foreign exchange for the country.
Despite this significant contribution to the national economy, Governor Colley said The Gambia is still at the developmental stage to harness the full potentials of remittances.
In a statement read on his behalf by Ismaila Jarju, director of research at the Central of The Gambia during the launching of the Least Developed Countries (LDCs) report 2012 on Wednesday at the Ocean Bay Hotel in Bakau, Governor Colley noted that most of the remittances flows are channeled into consumption though it also plays a significant role in housing financing and it is also a key driver in other sectors such as the wholesale and retail trade.
Governor Colley said few years ago, the Central Bank in collaboration with Gambia Investment and Export Promotion Agency conducted a survey in the real estate sector and found out that most of the investments in that sector are done by Gambians in the Diaspora.
“When the financial crisis stuck, we reviewed the data and also we showed that it was actually impacted. Though remittance was still coming in but the funds that were channeled to the real estate sector actually went down because of the recession in the global economy,” he said.
He noted that ways to liberate remittances for housing finance will be valuable for this country. To this regards, the CBG has been working assiduously to improve the payment system. This is to reduce the cost of remittances because its cost is very high in this part of the world and this makes access a bit difficult.
So we have been working to upgrade the payment system also. This development is part of efforts at modernizing and upgrading the country’s payments, clearing and settlement system infrastructure.
With this new development, the banks are required to process cheques deposited/lodged or payment instructions for remittances received the same business day as long as the transaction occurred within workings days and between the hours of 8:00 am and 1:30pm.
“This we did in a bid towards the reducing the cost of remittances,” he emphasized.
He said work is also underway to improving the regulatory environment affecting remittances because The Gambia’s financial sector is very shallow as a result most of the regulations concerned the formal banking sector.
“This is also an obstacle to some of the informal channels that received remittances to The Gambia. Now, one very important challenge we have in this country is the fact that data reported on remittances is the one we obtained through the formal banking systems as well as the bureaus.
However, we all know that in developing countries the informal channels account for big chunk of remittances flow, and this is normally unaccounted for.