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Gambia

Gambia

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Key Facts

  • Capital: Banjul
  • Region: West Africa
  • Official language: English
  • Independence Day: February 18, 1965
  • Area: 11,000 sq km
  • Population (2018): 2.3 million
  • REC membership: CEN-SAD, ECOWAS
  • WTO membership: October 23, 1996
  • GDP (2018): US$ 1.633 billion
  • GNI per capita (2018): US$ 710
  • Currency: Dalasi

Economic overview

Following the 2016 political transition, GDP growth accelerated to 6.6% in 2018 driven by a recovery in agriculture, tourism, construction, and trade. It then fell to an estimated 5.4% in 2019 due to weak fiscal management and delays in budget support disbursements. Inflation subsided owing to a stable exchange rate, which depreciated by only 3.2% since September 2018, strong food supply, and declining commodity prices. Gambia’s dependence on food and fuel imports widened the current account deficit during 2015-18, but improvements in net services, private capital flows, and remittances from the diaspora mitigated the deficit in 2019.

Fiscal consolidation helped to reduce fiscal deficit to 4.1% of GDP in 2019, financed through budget support loans and grants and expensive domestic borrowing, crowding out private investment. Debt remains unsustainable (81.8% of GDP in 2018), and debt service consumed more than 53% of revenues in 2016-18, leaving limited fiscal space to finance priority spending. The high public debt and limited fiscal space kept poverty stagnant (48.4% in 2010 and 48.7% in 2015) and unemployment high (35.2% in 2018). Gambia faces major challenges in energy and infrastructure. And agriculture, despite its potential, has not contributed much to poverty reduction as 91% of the rural poor work in smallholder-based subsistence farming.

Real GDP growth is projected around 5.1% during 2020-21, led by agriculture, tourism, increased external financing for energy and roads, and trade boosted by the recent opening of the Trans-Gambia Bridge. As a small, highly open economy, Gambia could benefit from greater regional trade integration from the Africa Continental Free Trade Area and the adoption of a future regional single currency (eco). Investments in modernizing the Port of Banjul are crucial to generate revenues from transit trade and new business opportunities in transporting imported liquefied fuel products to the Sahelian hinterland.

This has potential to create jobs and reduce youth unemployment, currently 41.5%. Headwinds include institutional capacity shortcomings and slow progress on fiscal consolidation. These could reduce private sector confidence and disbursements of pledged development assistance and undermine investment and growth. The large public debt burden and contingent liabilities, notably from state-owned enterprises, leave little room for private sector credit expansion. The authorities could explore restructuring part of the debt by seeking relief from bilateral and multilateral creditors. Electricity demand is higher than capacity, with installed capacity at 99MW but only 55MW available.

Last updated: April 2020