Number of Gambians defaulting in repaying loans increased significantly

The number of people who took various kinds of loan from the banks in The Gambia and failed to pay has increased considerably in 2013, the Central Bank of The Gambia (CBG) says in a report.

The ratio of Non-performing loans (NPLs), loans given to customers which they failed to pay back, increased significantly, from 12.1 per cent in 2012 to 19 per cent in 2013, the quarterly report, released on Friday, of the Monetary Policy Committee of the CBG states.

The intense competition in the banking industry has left commercial banks in the country rocking the boat of bad debts.  This is due to unprecedented increased in lending to both the public and private sectors, which unfortunately led to increased risks of NPLs.

Vulnerable to bad debts

IMF allocates $2m to Gambia for poverty reduction

The International Monetary Fund (IMF) has approved the disbursement of US$2.3 million to The Gambia government to support programmes and structural reforms necessary to reduce the high rate of poverty and boost economic growth in the country.

 

The disbursement is following the IMF executive board’s completion of the first review of the government’s economic performance under a programme supported by the Extended Credit Facility (ECF) arrangement, according to a press release from the IMF-Gambia office on Thursday.

 

This last disbursement makes the total disbursements under the arrangement to about US$16.2 million.  

 

In May 2012, the executive board of the IMF approved a three-year ECF arrangement with an amount equivalent to about US$28.3 million for The Gambia to support the government's economic programme.

 

Economy still recovering

 

“The Gambian economy is still recovering from the severe drought of 2011,” Naoyuki Shinohara, deputy managing director and acting-chair of the IMF, said following the Board’s discussion of The Gambia.

 

The government’s policies and the support of the international donor community played an important role in enabling the recovery in agriculture to take hold, he noted.

 

However, he said there are downside risks related to The Gambia’s economic recovery such as the high domestic debt burden, weaknesses in the balance of payments, and inflationary pressures.

 

The domestic debt of the government increased to D11.3 billion, as at end-March 2013.

 

“High public indebtedness continues to pose risks to macroeconomic stability and significant costs to the budget,” Mr Shinohara affirmed.

 

Inflation increases as Gambian Dalasi loses value

Inflation - the rate at which the prices of goods and services increase, is forecasted to have increased more than the target of 5 per cent in The Gambia. 

This is primarily because the national currency, the Dalasi, continues to weaken in value against all major international currencies, the Central Bank Governor has said.

The Central Bank Governor made this remark on Monday during the opening ceremony of the ‘regional course on fundamentals of macro-economic analysis’. 

The weeklong training course organized by the West African Institute for Financial and Economic Management (WAIFEM) underway in Banjul, is being attended by economists from central banks in the ECOWAS sub-region and other financial institutions. 

The Dalasi has 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. 

Governor Amadou Colley said in view of this unforeseen circumstance, the Central Bank of The Gambia (CBG) would therefore continue to implement prudent monetary policy critical to maintaining low, stable and predictable rate of inflation.

Among these prudent monetary policies the Bank is expected to undertake is price stability so as to promote economic growth by reducing uncertainty and preventing arbitrary redistribution of wealth.

The CBG Governor said in view of the uncertain economic environment, policy actions should be indicated by the prevailing economic circumstances of the country.

Gambia to miss the MDG target of halving poverty by 2015

Abdou Kolley, Finance Minister

With the high rate of poverty in The Gambia and the modest achievement in reducing it, there is a likelihood that the country will not met the goal number one of the Millennium Development Goals, which is to eradicate extreme poverty and hunger by 2015.

However, the Minister of Finance and Economic Affairs, Abdou Kolley, acknowledged that as of now the country may or not achieve the MDG target of eradicating extreme poverty.  “It’s a probability,” he confirmed, though he pointed out that the government is employing all efforts to achieve this all important MDG target and such efforts includes boosting agricultural production and productivity as it employs a large percentage of Gambia’s labour force and contributes significantly to the country’s gross domestic product.

Statistics indicates that majority of Gambia’s 1.8 million people still live in poverty despite the reported “robust economic growth” over the years.  More than 40 % of those who are employed still live below the poverty line of $1.25 per day.

Speaking on behalf of Ms Chinwe Diké UN, Resident Coordinator, on Monday at the opening of the 7th Regional Forum for IFAD-funded Projects held in The Gambia from 12^th to 15^th November 2012, Mr Abdou Touray said given the historical trends and modest reduction in poverty levels in The Gambia, the MDG target of halving extreme poverty will not be met by the country, if efforts are not accelerated.

Gambia’s economy shrinks by more than 3%

Latest figures from the Gambia Bureau of Statistics have indicated that the country’s economy shrunk by 3.3 per cent in 2011 due primarily to the contraction in the value-added of agriculture.

This was contained in a July 27 report of the Monetary Policy Committee (MPC) of the Central Bank of The Gambia.

Speaking at the MPC meeting held on 27 July at the conference room of the Central Bank in Banjul, Governor Amadou Colley said the country’s economy is expected to grow by 9.7 per cent in 2013 premised on improved agriculture output and continued rebound of the tourism sector.  The growth of the Gross Domestic Product (GDP) from one period to another is an indication of how healthy the country's economy is.

In the first quarter of 2012, the economy registered a deficit of D418.6 million, which is a modest improvement compared to the deficit of D469.50 million in the first half of 2011.

The country’s fiscal performance continues to be challenged by higher-than-projected expenditures unmatched by revenue performance of the economy. 

Total revenue and grants amounted to D3.2 billion of which D2.5 billion consist of domestic revenue, comprising tax and non-tax revenue. 

 However, total expenditure and net lending amounted to D3.6 billion.

Gambia Govt’s high debt burden impedes other development endeavours

The Gambia government’s high domestic debt burden, which continues to rise by the day and interest payment of which consumes more than 22% of the public revenues, is crowding out other public expenditures as there is no space to increase funding for employment creation, purchase drug for the hospitals, and other pressing national needs.

Mrs Songwe

“The debt dynamics today are dragging down in the economy and cold undermine growth in the future,” the World Bank regional director for The Gambia, Senegal, Cape Verde, Guinea Bissau, and Mauritania, Vera Songwe, has said.

Speaking at the recently ended (12 – 13 July) resource mobilization and investment for the Programme for Accelerated Growth and Employment (PAGE), Mrs Songwe said The Gambia’s debt has increased from 61.7 per cent in 2009 to 68.4 per cent in 2011.  Interest payments on debt are 22.5 per cent of public revenues. The World Bank director observed that if this trend continues, the government will have to forgo necessary infrastructure investments in energy and road construction.

Apart from reducing government’s power to channels fund to other areas, the high domestic borrowing is also pushing up interest rates and denying the private sector of the much needed fund for investment to generate employment.

Gambia’s currency loses value

As at end-April 2012, the value of The Gambia’s currency, the Dalasi, depreciated against all major international currencies, Central Bank Governor Amadou Colley revealed during the quarterly press conference of the Bank’s Monetary Policy Committee (MPC) on 18 May.

Governor Colley said the value of the Dalasi dropped by 6.86 per cent against the US Dollar, 4.64 per cent against the Pound Sterling.  In nominal effective exchange rate terms, the Dalasi depreciated by 5 per cent.

In the year to end-March 2012, money supply grew by 9.0 per cent but lower than the growth rate of 14.9 per cent in March 2011.

At the same period, the domestic debt increased to D9.2 billion, equivalent to 31.3 per cent of Gross Domestic Product (GDP).  Treasury bills and Sukuk-Al-Salaam combined, and accounting for 78.8 per cent of the debt stock, rose to D7.43 billion compared to D6.0 billion in March 2011. The Gambia’s pays almost 25% of the annual national budget to interest on domestic debt.

‘Corruption remains a challenge in W/Africa’

Officials of economic and financial departments in the member states of the West African Institute for Financial and Economic Management have made strong recommendations to stamp out corruption and fiscal indiscipline in government circles.

The senior public officials from Nigeria, Ghana, Liberia, Sierra Leone and The Gambia say there is the need to enforce and strengthen legislations by various governments with the aim of tackling fiscal indiscipline and perennial corruption in the sub-region.

“Corruption remains a challenge in the effective utilization and management of public funds within the West African sub-region,” they say, adding that the adoption of best practices of good governance, transparency and accountability are precondition for the achievement of rapid economic growth, sustainable development and poverty reduction.

Investigative institutions and judicial arm of governments must be truly independent and capable of prosecuting culprits, they state in a communiqué they established after their two-week regional course on public financial management held at the Paradise Suites Hotel in Kololi from 19 to 30 March this year.

More than 50% of Gambians still in poverty despite improvement in education, health

The latest report of the International Monetary Fund on The Gambia has revealed that majority of Gambia’s 1.8 million people still lives in poverty despite an increment in primary school enrolment and completion, as well as an improvement in immunization, child and maternal mortality.

With the reported “robust economic growth” over the years, the latest survey on the country’s poverty situation states that the 58 per cent of the population lives in poverty.

  

The IMF report says the Gambia’s progress on reducing poverty has been mixed as various social indicators have shown strong improvement notably in education and health, but “a large share of the population stills lives in poverty”.

22% of Gambia’s active labour force unemployed

At least 22 percent of The Gambia’s active labour force is without employment, and more than 40 % of those who are employed live below the poverty line of $1.25 per day.

Mr Samba Jallow of the Ministry of Finance and Economic Affairs, said according to the result of the Integrated Household Survey (IHS), the unemployment rate for the population aged 15 – 64 is 22 per cent but 5 per cent of the surveyed population did not report on their employment status.  Employment rate for the same age group is 73 per cent.



However, he pointed out that 40 per cent of all those who are employed do not earn enough to pull themselves and their families above the poverty line of $1.25 per day.  The working-poor is higher for the population aged 15 – 24 and lowest for the population aged 30 to 34 with 49 per cent and 35 per cent living respectively on less than $1.25 per day.

PRICES OF LOCALLY PRODUCED GOODS MAY FURTHER INCREASE

The prices of some locally produced goods will start to skyrocket come 2012 as the government has added more tax on domestically produced goods, something that will surely reflect on the final prices paid for these goods by consumers, whose earnings rarely increase.

As part of measures to remedy the declining revenue performance of the government, the Ministry of Finance and Economic Affairs has announced that come 2012 it will widen the tax base in order to reverse the current decline in revenue and also reduce the swelling deficit of the country to the target that will allow sustainable growth in the economy.

Mambury Njie, Gambia's Minister of Finance

In this light, the Finance and Economic Affairs Minister Hon. Mambury Njie, while delivering the 2012 budget speech, said the government will expand excise tax coverage through the collection of excise taxes on domestically produced goods.  Excise tax is a tax levy on goods produced locally.

“This will certainly increase the cost on local producers,” said Abdoulie Baks Touray, an economist and financial analyst, who spoke to Marketplace Magazine shortly after the minister delivered the budget speech at the National Assembly on 17 December 2011. 

BOOMING TIME FOR THE PRIVATE SECTOR

ENTERING 2012 WITH HOPES AND ASPIRATIONS
The Gambia Government has launched a project to provide matching grant support to qualifying Micro, Small, and Medium Enterprises (MSMEs) and eligible private enterprises to become more competitive, grow their businesses, create jobs and increase household incomes.

The launching of the Matching Grant Facility on 27 December,  according to the Minister of Trade, Industry, Regional Integration and Employment, “signifies that we will be entering 2012 with hopes and aspirations to become better entrepreneurs with resolutions of creating employment, better services and sustained wealth for improved livelihood of the Gambian people”.

Gambia's Trade Minister, Hon. Kolley

In his launching statement at the Kairaba Beach Hotel recently, Trade Minister Abdou Kolley said the project would help The Gambia’s private sector to successfully partake and grow in the domestic and international market.

The Matching Grant Facility (MGF) is a sub-component of the World Bank-funded Growth and Competitiveness Program.  It seeks to confirm long-term sustainable job creation and income generation by providing enterprises in The Gambia with the necessary assistance to facilitate growth of their business in a planned, business-savvy manner.

Gambia Gov’t chop-off more than D200 million from consolidated fund

The government of The Gambia has received green light from the National Assembly to take an estimated whooping sum of D219, 800, 000 from the Consolidated Revenue Fund more than 100% the amount Parliament approved last year.

The National Assembly of The Gambia endorsed the Supplementary Appropriation Bill, 2011, which gives the government the authority to take the additional amount from the Consolidated Fund for the period 1st January 2011 to 31st December 2011, to finance some of its projects and activities. 

Even though D5.65 billion was the estimated amount budgeted as the government expenditure, to finance all its projects and activities for the whole of 2011; the Finance Minister said during the year certain un-anticipated expenditure came up that had to be met with urgency, hence the need for supplementary fund.

Gambia economy deficit swelling

Mr Sabally, Director of Budget, Ministry of Finance

The Gambia economy is experiencing increasing budget deficit as the government continues to spend more than its revenue.  The country’s deficit has increased from D58.3 million in the first quarter of this year to D708.5 million in the second quarter.

The Central Bank of The Gambia says the government has registered a deficit of D708.5 million, excluding grants, in the first half of 2011.

However, when grants, monies given by other governments and institutions to the Gambia Government, are added to the budget, the deficit reduced to D90 million. This shows that the government received (a total grant of) D618.5 million during the period under review.

The total fiscal deficit of The Gambia for 2011 is estimated at D466.36 million or 1.47 per cent of GDP. The government says this deficit would be financed by foreign and domestic borrowing amounting to D833.82 million and D120.00 million respectively. 

The Gambia’s fiscal (or financial) performance continues to be challenged by higher-than-projected expenditures by the government that is unmatched by revenue performance of the economy.

The Governor of the Central Bank of The Gambia (CBG), Amadou Colley, says the 2011 projection of the country’s Balance of Payments (BoP) - which is the difference between the export and import of goods and services - indicate an overall deficit of US$3.70 million, which is more than D100 million, compared to a deficit of US$15.20 million more than D400.0 million, in 2010.