• Gambia: Economy registers low growth output in 2016

Gambia: Economy registers low growth output in 2016

Gambia’s economy did not do well last year. It grew at a slower rate because of recent political impasse and poor performance of key sectors of the economy. This was disclosed in a press release made by the West African country’s Ministry of Finance and Economic Affairs as the new government of President Adama Barrow spent its first hundred days in office. According to the ministry, in 2016 Gambian economy posted low growth output of 2.2 per cent compared to 4.3 per cent in 2015.

This low growth is the result of shocks in major sectors of the economy – agriculture and tourism. The low performance in these two sectors combined with increasing poor performance in state owned enterprises has resulted to an unsustainable level of public debt of about 108 per cent of GDP as at end 2016. Still, economy needs to be more productive, especially about agriculture, tourism, public debt, and by taking several innovative measures.

Economy needs to be more productive

Dr Matarr Njie, an economist and lecturer at University of the Gambia said the past government relied heavily on borrowing to provide services. “The European Union is bringing budgetary support but we need to have productive economy,” he emphasized.

For example, agriculture which is the mainstay of the economy and accounts for 20% of the gross domestic product (GDP) with 80 percent of the population depending on agriculture for its food and cash income has underperformed in the past years due to low rainfall and crop failures. The sector was also neglected during the long reign of former President Yahya Jammeh.

Also, the recent political impasse which drove thousands of holiday makers away from The Gambia also dealt a big blow to the tourism industry. The country is very popular as a tourist destination and tourism plays a key role in the Gambia’s economy. It is the main foreign exchange earner and source of employment. However, during the impasse, tourists’ occupancy rate in all Gambian hotels dropped from 95% to zero and after the crises hotels struggle between 20 to 25% occupancy. The industry made revenue loss of over 200 million dollars and about 30 to 35% of the business was lost.

Mounting public debt and Innovative measures

The new government said composition of the public debt was a cause for concern with more than 60 per cent of the debt in domestic treasury bills with high interest rates. “Over the years, domestic resource mobilization efforts has led to significant increase in both tax and non-tax revenues, however, the growing level of expenditures have overstretched revenue growth – especially from the late part of 2014 to 2016. Inflation has also picked up since the late part of 2015, reaching 8.9 per cent in 2016.”

Meanwhile, the government has announced new innovative measures geared towards high growth output in the economy.  Among these, is the restructuring of public debt by changing the composition of the debt profile and this action has helped to reduce the interest cost of debt on the budget. Also, government intends to secure external financing that are asserted to be fiscally sustainable in line with the country’s macroeconomic stability framework. The current national budget is being revised to reduce expenditures by about 1 per cent of GDP so that expenditures are aligned with new macroeconomic policy direction. Another step is the reforming of State Owned Enterprises and an ongoing staff audit of civil service to eliminate ghost workers.


Author: Momodou L JAITEH // President Adama Barrow © DR

You might also like

News

Agility, second edition of the photography contest

Agility, the leading professional in the field of  integrated logistics, has launched the second edition of the first Pan-African photography contest entitled , “Modern Africa” dedicated to the modernization of

News

Strategy: Africa Life decrypts the African consumer

The Kantar Group, which is specializing in market research, launched its new “Africa Life” report in early May. Focusing on African consumers, it reveals many trends, one of which is

News

Africa – Japan Business Investment Forum Concludes in Addis Ababa

Delegates at the Africa Japan Business Investment Forum  Over 450 participants convened in Addis Ababa earlier this week for the Africa Japan Business and Investment Forum. The Forum, hosted for the