Reforms Reap Strong Growth: Several Years of Painful Economic Reform Now Seem to Be Bearing Fruit and the Gambia and Its Economy Has Been Growing Steadily. Will This Translate into Better Living Standards for the Ordinary People? Neil Ford Has Been Finding Out

By Ford, Neil | African Business, December 2003 | Go to article overview

Reforms Reap Strong Growth: Several Years of Painful Economic Reform Now Seem to Be Bearing Fruit and the Gambia and Its Economy Has Been Growing Steadily. Will This Translate into Better Living Standards for the Ordinary People? Neil Ford Has Been Finding Out


Ford, Neil, African Business


The Gambia finally seems to be seeing the benefits of years of painful economic reform. Annual growth hit 7% in 2002 and, despite the impact of low rainfall cm agricultural output this year, national GDP is still expected to rise by over 4%. Although donor support remains a major source of income and attempted reform of the peanut sector threatened to destabilise the country, there is now real hope that living standards can improve.

The country's relations with the IMF are dominated by its Poverty Reduction and Growth Facility (PRGF) programme. Since the end of 2000, the country has been awarded interim debt relief under the Heavily Indebted Poor Countries (HIPC) initiative, resulting in a 43% reduction in debt service repayments in 2001 in comparison with 2000.

External debt stood at $489m in 2002, 70% of which was owed to multilateral creditors. Although the Fund has commended the government's economic reforms, including the sale of state owned assets, and improved fiscal discipline, it does not believe that budget cuts have been deep enough and the government is being forced to reduce fuel subsidies.

Despite the reforms, little progress has been made in reducing dependency on the production of groundnuts. As in much of the northern part of West Africa, few crops other than groundnuts can be grown in commercial quantities. This has resulted in the old story of over reliance on a single crop with fluctuating international prices, which translates into oscillating export revenues and uncertainty for the country's many groundnut farmers. Moreover, there is little room for expansion in the agricultural sector as arable land comprises just 15% of the tiny country.

The government took control of the country's main privately owned groundnut company Alimenta in 1998, leading to speculation that the government was pursuing a policy of re-nationalisation.

However, the Minister for Trade, Industry and Employment, Musah Silla, attempted to overcome these fears and their impact upon overseas investment by explaining the government's decision. "The groundnut is not just an agricultural issue but also a political one," he said, "The groundnut industry and oil mills were privatised by the previous government, and, since the private agents never really complied with the conditions, it was consequently repossessed by the government." Nevertheless, further reforms and the dislocation of the peanut marketing system triggered a great deal of unrest in 2000, including street protests and a foiled coup.

After agriculture, the tourist sector is the biggest contributor to national wealth, accounting for 12% of GDP in 2001. Visitor numbers have grown substantially since the 1970s, although the 1994 coup and political instability in 2000 led to short-lived falls in tourist revenue.

TOURIST NUMBERS INCREASE

The government set up the Gambia Tourism Authority in 2002 to promote the country abroad and diversify the sector away from pure reliance on beach holidays. At present, most tourists come from the UK and many others from Germany and Scandinavia.

Erosion of the country's beaches has proved to be such a great problem that Opec and the African Development Bank provided loans for a $12.6m coastal protection scheme.

Work on the project, including the transfer of 1.7m cubic metres of sand, has already begun and is being carried out by Dutch dredging contractor D. Blankevoort. Some hotels have completely lost their beaches over the past five years and the foundations of others are threatened by the sea.

In addition to maintaining existing facilities, the tourist sector continues to expand. Kuwaiti company Nassa Mohammed al-Karrazy and Sons is considering investing $50m in a new hotel and conference centre near the beach in the district of Kombo South. The facility, which will be man aged by the Sheraton Hotel Group, would provide 500 long term jobs, although a final decision on the project has not yet been taken. …

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