Gambia, Republic of the

Africa

GDP per Capita ($)
$892.9
2.6 million

Assessment

Country Risk
C
Business Climate
C
Previously
C
Previously
C

suggestions

Summary

Strengths

  • Young, expanding, and quite literate population: it is the most densely populated country in Africa
  • Governance (fight against corruption), judicial, fiscal, public-sector, and procurement reforms under way
  • International financial support (IMF, World Bank, GCC, EU)
  • Extension of Banjul Port which serves as a gateway for landlocked countries and regions
  • Expatriates’ remittances
  • Fisheries, and tourism, albeit low value-added

Weaknesses

  • Small country along the Gambia river (risk of flooding), surrounded by Senegal, except for a 60km Atlantic Ocean front
  • Weak diversification: a low productive and rain-fed agriculture (vulnerability to climate shocks), tourism
  • Structural dependance on imported consumer goods and inputs for capital projects
  • Weak financial inclusion and labour force participation, informality, corruption, low productive state-owned enterprises
  • Lack of infrastructures, especially for transport (air, sea), energy, accommodation

Trade exchanges

Exportof goods as a % of total

Guinea-Bissau, Republic of
5%
Mali
53%
China
17%
Senegal
8%
Europe
5%

Importof goods as a % of total

Togo 21 %
21%
Europe 13 %
13%
Côte d'Ivoire 12 %
12%
China 8 %
8%
India 7 %
7%

Outlook

This section is a valuable tool for corporate financial officers and credit managers. It provides information on the payment and debt collection practices in use in the country.

Robust growth boosted by a new agreement with the IMF

Despite the impact of the pandemic and later the war in Ukraine, the economy remains solid and will continue to record sustained growth in 2024. Tourism (20% of GDP), despite capacity saturation, services (55%), agriculture (25% of GDP, but 70% of the population), construction (6%) and fishing will underpin activity. Growth will also be boosted by expatriate remittances (32% of GDP in 2023, mainly from North America and Europe), which will stimulate household consumption (79% of GDP) and domestic private investment. In addition, farm incomes should benefit from increased productivity and lower fertiliser and seed prices. Investment (22% of GDP, of which 9% is public) will also be boosted by international financing for the development of the energy, water and sanitation sectors, as well as the expansion of the port of Banjul. They will be encouraged by a new programme with the IMF. In January 2024, the IMF approved a three-year arrangement under the Extended Credit Facility (ECF), worth around USD 100 million. The programme is designed to help combat inflation and exchange rate pressures, reduce debt and promote growth. Exports of goods, including cashew nuts and shellfish, will have little influence given their limited contribution to GDP (4.1% in 2023). Moreover, due to its rarity, the export of rosewood has been banned since 2022.

The Central Bank of The Gambia (CBG) has raised its key rate by 7 percentage points since May 2022 – it stood at 17% in August 2023 – and may cautiously reduce it in the second half of 2024. While food prices (whether imported or locally produced) could fall further, the liberalisation of water and electricity prices will continue. A depreciation of the dali resulting from the gradual liberalisation of the exchange rate regime could fuel inflation. However, the impact of monetary policy should not be overestimated given the high level of informality in the economy and the low level of financial inclusion, which limit its effectiveness. Growth forecasts are mainly subject to downside risks, linked to developments in the war in Ukraine, the Middle East conflict and Chinese growth, as well as their impact on inflation and tourism (70% of visitors are Europeans), remittances and imports.

Towards a reduction in the public deficit through fiscal consolidation

Fiscal consolidation will continue in 2024, leading to a further reduction in the deficit. Domestic revenues, mainly from indirect taxes and import duties, represented only 12% of GDP in 2023, while external grants accounted for 7.8% (5% for project aid and 2.7% for budget support). Expenditure represented 22% of GDP, half of which was allocated to projects largely financed by foreign donors. External debt accounts for 61% of public debt, the vast majority of which is owed to multilateral and bilateral creditors (mainly from the Middle East) on concessional terms. Public debt is considered sustainable by the IMF, with its domestic and external services amounting to 4.2% and 3% of GDP respectively in 2023, and interest alone representing 10% of public revenue (2% of GDP). However, the risk of over-indebtedness is considered high, especially in view of the increasing debt servicing. The Gambia will have to service its debt for 2020 and 2021; debt servicing was suspended under the DSSI initiative and due in 2025. As a result, the fiscal consolidation plan aims to further reduce the debt burden by reducing the overall deficit and achieving a small primary surplus in 2024 (i.e., excluding interest). It involves improving revenue collection and management through digitisation, as well as extending taxation to rental property. In addition, higher water and electricity prices will lead to a reduction in subsidies to government agencies. The government also plans to rationalise redundant agencies and abolish the tax exemption on fuel. However, investment and social spending will continue thanks to external funding.

In 2024, the current account deficit will widen, dragged down by a very negative trade balance (32% of GDP in 2023). In fact, import billings (36.2% of GDP in 2023) will rise as a result of heavy reliance on imports of foodstuffs, fuel and capital goods needed for infrastructure. Exports will also rise, but will remain below their pre-pandemic levels, partly because of the slowdown in Chinese growth (the main export destination after India). Thanks to the continued recovery in tourism, the services surplus will increase. Transfers from expatriates and official partners (budget support) amounted to 22.3% and 2.7% of GDP respectively in 2023. The deficit will be financed by aid for projects, concessional loans (favoured by the new programme with the IMF) and foreign direct investment (4.3% of GDP). In January 2024, foreign exchange reserves are estimated at the equivalent of 5 months' imports.

Essential socio-political reforms on hold

Despite prolonged use of the State of Emergency during the pandemic, which was used in particular to crack down on dissent and critical media, Adama Barrow was elected for a second five-year presidential term in the December 2021 elections, which were considered democratic by international observers. His re-election was based on promises to develop rural infrastructure, increase public sector salaries and introduce reforms to combat corruption and improve transparency. His party, the National People's Party, won a small relative majority in the parliamentary elections of April 2022 and, with the support of two minor parties, a tiny absolute majority. Reform of the undemocratic institutions inherited from the previous authoritarian regime is still under way. The reform of the security forces must be completed in order to bring the Economic Community of West African States mission in The Gambia to an end (ECOMIG). This peacekeeping mission, made up of Senegalese soldiers and deployed in 2016 for the elections, is a source of frustration for some of the population and the security forces. In December 2022, a few soldiers tried unsuccessfully to stage a coup. The constitutional review has stalled, largely due to disagreement over the retroactivity of the two-term presidential limit. The revision would need a 75% majority in the Assembly before being put to a referendum.

As far as foreign relations are concerned, the peace agreement signed in August 2022 during the presidency of Guinea-Bissau between an emissary of the Senegalese president, Macky Sall, and the Casamance rebel leader, César Atoute Badiate, appears to have put an end to a 40-year conflict. Until then, Gambia had been the focus of attack from rebels of the Movement of Democratic Forces of Casamance (MFDC). The MFDC was seeking independence for the Senegalese province of Casamance, which is separated from the rest of Senegal by the Gambia. The MFDC had been waging a low-intensity conflict since 1982, causing several thousand deaths. The Casamance rebels, accused of trafficking in cannabis and endangered Gambian rosewood, had often taken refuge in Gambia or Guinea-Bissau. The conflict remained latent until the Senegalese army launched a major offensive in January 2021.

Last updated: April 2024

Other country with similar country risk

  • Guinea

     

    C C

  • Angola

     

    C C

  • Algeria

     

    C C

  • Belize

     

    C C

  • Barbados

     

    C C

  • Bahrain

     

    C C

  • Colombia

     

    C C

  • Cambodia

     

    C C

  • Cameroon

     

    C C