Authors : Adalbert Nshimyumuremyi, Yannis Arvanitis, Khadidiatou Gassama, Radhika Lal, Abdoulie Janneh
As a small and open economy relying on agriculture and tourism, Gambia remains highly vulnerable to climate change and external shocks. Policy inconsistencies, high spending and unfavourable weather conditions in recent years have negatively affected economic potential and fiscal performance. In addition, Gambia is characterised by high debt and high interest rates. Growth for 2016 is estimated at 2.1%, down from 4.4% in 2015. This is mainly explained by policy slippage on reforms, the crowding out of private investment, an average agricultural season and a year-end political scenario that tamed the tourism season. The outlook for 2017 and 2018 looks positive, with growth rates projected at 3.5% and 4.8% on the back of a peaceful political transition.
The election of President Adama Barrow in December 2016 led to Gambia’s first democratic executive change since independence. After the incumbent initially declined to leave power, mediation and military pressure from fellow West African countries led to his peaceful departure. The outlook for the country is thus greatly dependent upon the ability of the new administration to carry out a smooth and fast transition, shore up finances, regain the confidence of partners, stabilise the country to bring back tourists and set the basis for economic transformation. On the fiscal side, rebuilding fiscal buffers should become a top priority, notably through improved wage bill management, tightened control of spending, review and restructuring of public-sector enterprises and control of domestic borrowing.
Although Gambia has witnessed a degree of structural transformation over the past ten years, the country has not significantly increased the industrial sector’s share in the economy (15% in 2013, up from 12% in 2004), nor has it increased manufacturing value added. Hurdles to industrialisation include poor regional integration, the absence of reliable and cheap energy, and sub-optimal infrastructure and training. Similarly, entrepreneurship has yet to take off. Barriers include a shortage of entrepreneurial skills and structural gaps in the business environment including difficult access to finance and land, high taxes and sub-optimal administrative procedures.
Unlock the potential of African entrepreneurs for accelerating Africa’s industrial transformation, says the African Economic Outlook 2017
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