Author: Tao Zhang
Organization affiliated: International Monetary Fund
Type of publication: Article:
Date of publication: 2019
We are very pleased to see that the Gambian economy has rebounded strongly. Growth in 2018 reached 6.6 percent and prospects for sustained growth are positive over the medium term. Inflation has dropped to just above 6 percent, and gross official reserves have increased to about 3 months of imports. This remarkable progress has been achieved through your government’s efforts to stabilize the economy with support from Gambians living abroad, the private sector, and international partners.
There also has been progress in developing infrastructure, which is crucial to ensuring sustained growth. The recently opened Senegambia Bridge is a prime example of this progress. It is a symbol of The Gambia’s efforts to deepen economic ties to the rest of the region.
The bridge is also a good segue to the theme of my speech: The Gambia’s pathway to prosperity. As a road, it is a pathway in the literal sense. But it is also a pathway in figurative sense, symbolizing the role of enhanced trade and connectivity in building prosperity. At the same time, domestic policy efforts will be needed to build this pathway.
This remarkable progress has been achieved through your government’s efforts to stabilize the economy
Enhanced trade is one pillar of the pathway to prosperity. Africa is now moving ahead with creating the Continental Free Trade Area, which The Gambia recently endorsed. This initiative has the potential to boost intra-African trade and growth across many dimensions. It can add jobs, foster competition, help increase investment, and spur the spread of knowledge and technology. All of which could provide significant benefits to The Gambia.
The agreement itself, however, is but one step. To fully benefit from it, the significant nontariff bottlenecks to trade that exist across the region will also need to be tackled. These include infrastructure shortcomings, logistical costs, and other hurdles that hinder cross-border trade.
If these issues are addressed, regional trade integration can help maximize the returns on important public investment, such as the Senegambia bridge, and consolidate the recent pick-up in private sector activity and lending that is integral to sustainable development in The Gambia. On this point, it is important to note that this private sector-led growth needs to be supported through responsible lending by financial institutions to Gambian businesses large and small. Vigilant supervision of banks and other credit institutions will help to ensure financial stability in the face of growing private capital inflows.
Trade integration will also help frame the reforms of this country’s state-owned enterprises. In many cases, the long-term viability of those companies will depend on increasing their regional orientation.
Take the example of the energy sector. The stabilization of electricity output has contributed to your country’s stronger growth. So, the ongoing investment in the electricity transmission not only will link the Eastern and Northern parts of the country, it will also open doors to West Africa’s power networks by enabling cross-border energy trading, including under the flagship OMVG project uniting The Gambia, Guinea Conakry, Senegal, and Guinea Bissau with the aim of harnessing the water resources of The Gambia River Basin to produce low-cost renewable energy for the member countries.
In the same vein, investment to upgrade the port of Banjul could create a new trans-shipment hub for the region. Seen in this context, the Senegambia Bridge could be just one step in the development of the Trans-Gambia corridor within Economic Community of West African States (ECOWAS).
In the future, weather tracking, satellite imaging and other sophisticated technological solutions will be needed to modernize agriculture
Regional integration and cooperation are particularly important for improving the structure of the economy and enhancing competitiveness. Let me offer two examples:
First, agriculture could be an important contributor to The Gambia’s pathway to prosperity. Regional trade integration and improved infrastructure will be key to growing this important sector of the economy.
In the future, weather tracking, satellite imaging and other sophisticated technological solutions (including artificial intelligence) will be needed to modernize agriculture. They will help to create a farming sector that is more environmentally attuned and resilient to climatic shocks. This is especially important for small and fragile ecosystems like The Gambia’s. Agriculture will then be better able to meet national goals of food self-sufficiency and creation of new export markets.
Second, tourism and other services also remain essential to your future. Regarding tourism, it is great to see The Gambia attracting record numbers of visitors. New hotels, roads, and other amenities will attract more tourists and will help rebrand your country’s tourism offerings, including by branching out into eco-tourism and water sports. The ongoing expansion of transport infrastructure will facilitate tourism, including better connections to the region. These connections, importantly, will also allow goods to move around the region and help develop trade-related services, including re-exports.
Regional economic integration and cooperation will also strengthen The Gambia’s external position. Exports, private capital inflows, and remittances from Gambians working abroad are rebounding and are likely to increase further with regional integration. This will help build foreign exchange reserves and strengthen confidence in the Dalasi.
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