The Gambia is the smallest country in continental Africa,situated along the Gambia River and has frontiers only with Senegal with a 60 kilometer border on the Atlantic Ocean. It has a population of 1.7 million and a Diaspora of around 0.5 million. The main languages are English, Mandinka, Wolof, Jola and Fula, and 90% of Gambians are Muslim. The 2010 Gross National Income (GNI) per capita is US$440 and the poverty rate is 55%.
The Gambian economy has remained remarkably resilient since the onset of the global financial crisis. Real gross domestic product (GDP) growth is estimated to have risen by 5.6% in 2010, down from a high 6.3% growth rate in 2009, and is projected to rise by 5.5% in 2011. The good performance of the agriculture sector in recent years, and of the groundnut sector in particular, explains The Gambia’s strong economic recovery since late 2008. The value added in agriculture has increased by almost 20% on average over the last three years, and within the agriculture sector the groundnut harvests have increased along with rising world market prices. This good performance can also be credited to good rains since the drought in 2008 and to the implementation of a reform program aimed at revitalizing the groundnut sector.
Since 2008, the country’s fiscal performance has deteriorated, however, leading to a rising public domestic debt. In 2010, the overall fiscal deficit is estimated to have reached 4.9% of GDP, up from 2.8% in 2009. Domestic public debt rose alongside growing public deficits, rising to 26.9 percent at end-2010, compared to 19.7% at end-2009.
Fiscal performance suffered in the first half of 2011 as a result of revenue shortfalls, even though spending was contained broadly within budget limits. These revenue shortfalls have been due to lower collection of taxes on international trade and non-tax revenues (which include external grants), as well as the high level of exemptions granted on custom and excise taxes.
The economy is relatively undiversified and limited by a small internal market.Services account for over half of GDP, reflecting the importance of the re-export trade, which has been driven by liberal trade policies and an efficient port infrastructure. The country’s advantage in transit trade is being gradually eroded however by investments by neighboring countries in transport infrastructure and the harmonization of trade policies. Tourism, which was once a key driver of the economy, remains the country’s most significant foreign exchange earner. Agriculture accounts for approximately one-third of GDP and over 70% of employment. It is dominated by groundnuts, which account for 60% of domestically produced exports. The sustainability of the country’s recent economic performance is contingent on the completion of actions aimed at further reducing energy costs, modernizing transport logistics and infrastructure, restoring growth and scaling up innovation in tourism, encouraging private sector-led agricultural export diversification, continuing the revitalization of the groundnut subsector, and promoting greater regional integration.
There have been important gains in education and health indicators in recent years: Over the five year period 2006-2010 actual enrollment increased by 9.7%, reflecting strong expansion in lower-basic education enrollment in private schools and Madrassas, growing by 90% and 70% respectively. Marginal declines in enrollment in government and grant aided schools shrank by 2.4%. These positive enrollment trends have been matched by continuously high primary completion rates (75%) and a low average repetition rate (less than five percent.)
Similarly, The Gambia has performed relatively well on a range of health indicators. Child immunization coverage is relatively high, consisting of 87% for diphtheria/pertussis/tetanus (DPT), 92% for measles and 97% for tuberculosis, according to 2005/2006 information from the National Center for Health Statistics (NCHS)/World Health Organization (WHO). A National Nutrition Agency (NaNA) and a cross-sectoral national Nutrition Council are implementing the National Nutrition Policy, including through community interventions based on nutrition education and provision of care to malnourished children at health facilities. Coverage is still limited, however, reaching approximately 16% of the population.
The Economic and Fiscal Situation
The Gambia remains a poor country with a GNI per capita of US$440 in 2010 according to the Atlas Method and a 2010 Human Development Index ranking of 151th out of 169 countries.
Real GDP growth is estimated to have risen by 5.5 percent on an annualized basis in the first half of 2011, down slightly from 5.6 percent in 2010. High real GDP growth rates have been accompanied by relatively large swings in sectoral contribution to growth, however. Agriculture has recovered since the large drop in the middle of the last decade, rising last year by 14.5% to account for almost two-thirds of real GDP growth in 2010. This recovery was possible thanks to improvements in the weather patterns and the successful introduction of new crop varieties, such as the New Rice for Africa (NERICA) rice. Industrial activity has also seen large swings in growth rates, rising last year by 12.7%, contributing to almost one-third of growth in 2010. Meanwhile, the service sector, which continues to account for the bulk of the economy (around 55% of output), had a mixed performance over the last few years, averaging only five percent of last year’s growth, reflecting the decline in tourism (down 35.7%) and the offsetting expansion in transport and communications services (up 12.1%).
- In 2010, the overall fiscal deficit is estimated to have reached 4.9% of GDP, up from 2.8% in 2009. Domestic public debt rose alongside growing public deficits, rising to 26.9% at end-2010, compared to 19.7% at end-2009. In the first half of 2011, fiscal performance suffered as a result of revenue shortfalls, even though spending was contained broadly within budget limits. These revenue shortfalls have been due to lower collection of taxes on international trade and non-tax revenues (which include external grants), as well as the high level of exemptions granted on custom and excise taxes. The resulting increase in the domestic public debt to 26.9% of GDP, up from 19.7% at end-2009, means that large debt service obligations will continue crowding out more productive expenditures and raising concerns about debt sustainability.
Average inflation for the first half of 2011 eased to 5.4%, down from 6.1% during the period from July to December 2010. Average inflation conceals large variations across items, however, with food inflation averaging 7.3% while non-food price inflati
A more recent pressure on inflation (not yet captured in the Consumer Price Index (CPI) rate) has been the introduction, by the government, of a new fuel pricing formula designed to better reflect rising crude oil prices in international markets. There have been three adjustments in fuel prices this year already, with domestic gasoline prices recently rising to an estimated US$1.40 per liter – the equivalent of US$5.30 per gallon.
The impact of the recent rise in food and crude oil prices has been mixed. Food imports meet around 50% of the country’s needs, while crude oil, which represents the country’s main energy source, equals 10% of overall imports. However, the country’s terms of trade have held firm over the last two years (2009-10), as rising crude oil prices have been offset by higher export commodity prices (groundnuts, in particular.)
The Gambian banking system has been one of the sources of strength of the country’s economy. Banks are generally adequately capitalized and liquid, with the banking system’s capital adequacy ratio reaching 19.3% at end-June 2011, well above the eight percent minimum threshold stipulated by the 2003 Financial Institutions Act.
Key priorities for reforms, in order to stem losses emanating from the weak performances of public enterprises, are the Gambia Groundnut Corporation (GGC) and the National Water and Electricity Corporation (NAWEC) which provides some of the most costly electricity on the continent. Telecommunications and port transport infrastructure operations are operated by the private sector.
The Gambia is scheduled to be connected to the ACE sub-marine cable system linking South Africa to Europe through a landing station in Banjul later this year. Securing competitive access to the cable will result in lower cost/higher quality connectivity for the country and, in so doing, will remove an important constraint to the country’s future economic development. The challenge is to mobilize both public and private funds in this effort to ensure competitive access to the cable, so that the benefits of lower pricing accrue to everyone.
Governance and Accountability
The Presidential elections passed without any major incident on November 27, 2012. The results are as follows: Yahya A. JJ. Jammeh, the incumbent candidate for the APRC Party (Alliance for Patriotic, Reorientation and Construction ), polled 470,550 votes out of 657,504 votes cast, representing 72% ; Mr. Ousainou Darboe,the main Opposition- UDP ( United Democratic Party ) led alliance including GMC (Gambia Moral Congress ) received 114,177 votes, or 17% of the total votes cast ; Mr. Hamat Bah, the Independent Candidate backed by a coalition of four parties dubbed United Front, polled 73.060 votes, representing 11% of the votes cast. There were 294 invalid votes.
The African Union Observer Team, which noted the heavy bias by the State TV and Radio toward the incumbent's party and, their use of state resources, and the need to review the law on the public financing of political parties declared the elections as transparent and conducted peacefully, a true reflection of The Gambian people. The Civil Society Organization Coalition, while noting the presence of under-aged voters in the queue in some polling stations, declared the elections as free and transparent.
The legislative elections held 29th March 2012 in a calm and peaceful manner. Given the Group of 6 boycott, the elections were a low-keyed affair, as elections were held in 23 constituencies out of 48. The total number of registered voters as of November 2011 is 796,929, but out of this only 303, 899 voters were expected to vote as 23 seats went unopposed. Out of this 303,899, only 154,950 actually voted representing 50.98%. Former members of the APRC who stood as Independent candidates won in 4 constituencies. Though the other 16 Independent candidates lost, they surprisingly did very well in the number of votes they got.
The composition of the new National Assembly is as follows confirming the dominance of the APRC with 43 seats, followed by Independent (4 s seats) and NRP (1 seat).
There have been arrests of various journalists and opposition leaders in 2009 on charges of sedition for criticizing the government and Amnesty International and Reporters Without Borders have drawn international attention to these events. In July 2010, eight men, including a former army chief, were sentenced to death for their part in an alleged coup plot the year before.
There has been progress in improving public financial management capacity. The establishment of an Integrated Financial Management Information System (IFMIS) has been crucial for the provision of timely and comprehensive within-year budget execution reports and in facilitating the preparation of the annual financial statements. The challenge now is to create the incentives to move beyond cost controls, focusing on the quality of public services delivery by making those responsible for budget execution more accountable for expenditure outcomes.
The government’s civil service reform program, which seeks to attract and retain qualified staff to the civil service by gradually raising public sector wages and allowances, especially for technical and professional staff, is constrained by the tight budgetary situation. In addition to pay reform, the government’s program also involves strengthening human resources capabilities in the Personnel Management Office (PMO) and conducting an actuarial study of the new contributory public pension scheme.
The Bank has been supporting the development of a pay and employment model to help plan pay reform. Working with the Personnel Management Office and the Ministry of Finance and Economic Affairs, the Bank has supported efforts to strengthen the government’s ability to develop a fiscally responsible human resource strategy. A new Institutional Development Fund grant will provide continued assistance for public management reform in The Gambia.
Historical Perspective on Collaboration of The Gambia with The World Bank
The Gambia joined the World Bank in October 1967, two years after independence. The first loan financed the rehabilitation of the Bathurst (Now: Banjul) port. Since then, IDA has approved 39 projects for The Gambia amounting to about US$371 million. The Gambia’s IDA-15 allocation, covering fiscal years 2009 to 2011, was SDR 12 million (about US$18-19 million), in addition to debt relief under the Highly Indebted Poor Countries (HIPC) initiative and the Multilateral Debt Relief Initiative (MDRI). Gambia recently received a substantial increase in IDA allocation under IDA-16 as a result of its improved portfolio management and increase in CPIA from 3.2 two years ago to 3.3 last year and 3.4 this year. The IDA-16 allocation of SDR 26.4 million (US$42.5 million equivalent) is more than double the amount for IDA-15.
Current World Bank Assistance to The Gambia
World Bank operations in the Gambia are based on a Joint Assistance Strategy for 2008-11 prepared with the African Development Bank. Its two pillars focus on the institutional framework for economic management and on growth and competitiveness. IDA is the largest donor partner after the EU, with a six-project, US$84.75 million IDA portfolio, a US$46.5 million TF portfolio and a US$19 million pipeline for FY2012 to 2013 that is funded both by regular IDA and by other resources.
The current portfolio consists of six IDA-funded projects totaling about US$84.75 million equivalent, covering the areas of community-driven development, basic education (complementary to the Education-for All/Fast Track Initiative), public financial management, private sector development for growth and competitiveness, regional communications and infrastructure and agricultural productivity. The Gambian component of the West Africa Agricultural Productivity Program (WAAPP), which will focus on sub-regional cooperation in order to strengthen agricultural research, was approved by the Board of Executive Directors in March 24, 2011. In May 26, 2011, the West Africa Regional Communications and Infrastructure Project (WARCIP) was approved by the board, assigning $35million for The Gambia’s connection to the ACE submarine cable.
In addition, several Trust Fund grants cover operations to increase agricultural production, strengthen basic education, provide support towards improving the nutrition of, specifically, disadvantaged women and children, and environmental protection. The Bank is also providing Technical Assistance on good governance with the strengthening of the Gambia’s CPIA rating as the entry point for dialogue in this area.
The World Bank has, in the recent years, undertaken a number of studies in order to contribute to analytical underpinnings for the country’s reform agenda and launched Technical Assistance (TA) operations in the following areas:
- Energy Policy Note (delivered in 2010)
- Report on the Observance of Standards and Codes (ROSC) with focus on Accounting and Auditing (delivered in 2010)
- PER/PER Update (delivered in 2011)
- Strengthening Capacity for Nutrition Outcomes TA (ongoing)
- Long-term impact of Nutrition in Gambia (ongoing)
- TA to Support Gambia ICT Connectivity (ongoing)
- Gambia Civil Service Reform/ Payment Reform TA (ongoing)
- Gambia Governance Support TA (under preparation)
- Education Country Status Report (ongoing)
- Strengthening the Framework of Accounting & Auditing TA (ongoing)
- Study on Reaching out-of-School Children and Building Skills (ongoing)
- Impact Evaluation for CDD operation (ongoing)
The IFMIS Project
The Integrated Financial Management Information System (IFMIS) Project, which became effective in August 2010, builds on the initial introduction of the Integrated Financial Management System (IFMIS) to The Gambia under the preceding Capacity Building for Economic Management Project (CBEMP) which closed in December 2008. The Gambia IFMIS is an enterprise resource planning software application that bundles budget preparation, budget execution, accounting, payroll, financial management and reporting activities. In the first phase of the establishment of the application in The Gambia (supported through the CBEMP), the set-up of the system was accompanied by organizational restructuring, re-engineering of operational procedures and extensive training of staff. The system is now processing all central government transactions and producing the annual accounts and monthly fiscal reports in a timely manner. IFMIS has also helped reduce the substantial backlog of annual audits dating back to the early 1990s. With the improved reporting and better documentation provided by the system, the IFMIS is expected to facilitate the more timely preparation of future audits.
In this second phase, IFMIS Project has been rolled out to 39 additional government ministries and agencies, and is expected to be rolled out to the Central Bank later this year, therewith enabling sectoral resources to be better managed thanks to access to real time information on the status of their budgets. The Project also aims at ensuring that the government will be able to operate and maintain the IFMIS in the future without external support, in order to sustain beyond the duration of the Project the gains that have arisen from the establishment of the system.
Third Education Sector Project
Under the Third Education Sector Project, the World Bank Group has supported The Gambia in making exemplary progress on increasing the coverage of basic education. The education sector is a top priority for the country’s leadership, and the government has moved decisively to address challenges in teaching and learning in recent years. As part of a broader program financed by the Government of The Gambia, donor partners (specifically DFID and Japan), and by the Education for All-Fast Track Initiative, the Third Education Sector Project has delivered strong results: unqualified teachers are being offered opportunities to become qualified, managers across the system (at central, regional and cluster/school levels) and are being offered training opportunities to improve their performance; performance management systems and service level contracts are now in place to recognize good work and increase accountability; and learning assessments are enabling the education system to accurately measure the gains across multiple years.
Teaching materials continue to be made available in all core subjects to all students in lower basic education, and teachers are receiving visits from cluster monitors at least twice (and sometimes 4 times) a month; increasingly, these visits are providing pedagogic support to teachers and school heads. Overall, combined donor support has contributed to an increase in the primary gross enrollment rate from 65 percent in 2000 to 92 percent in 2009, including madrassa enrollment.
The success at the primary level has however increased pressures to extend opportunities at the secondary and tertiary levels for primary and secondary school graduates, as well as the need to upgrade the quality of teaching at these levels. The government is endeavoring to meet these demands and has turned to the Bank for support via Additional Financing to the on-going Third Education Sector Project, which would focus on higher education.
Community Driven Development
Poverty in The Gambia is pervasive but is particularly deep in rural areas. Fifty-eight percent of Gambians live below the poverty line and three-quarters of the poor live in rural areas. The development objective for The Community Driven Development Project for Gambia is therefore oriented to creating opportunities for the rural poor. The objective is that rural communities, in partnership with local government authorities, be in a position to plan, implement and maintain their priority social and economic investments. Progress towards achieving this development objective has been good. Thus far a total of 684 subprojects (villages and wards) have been financed, of which two-thirds have been completed, reaching a total beneficiary population of 328,787 persons. The sub-projects implemented cover a wide range of areas, including: (i) agriculture (farm implements and inputs, post-harvest milling machines, animal rearing, vegetable production); (ii) food security (cereal banking); (iii) health (construction of waiting sheds); (iv) energy (provision of solar for household use); (v) water and sanitation (provision of hand pump wells and extension of pipe borne water); (vi) education sector (classroom blocks for nurseries), and (vii) communication and basic infrastructure (rehabilitation of feeder roads). These investments have all emerged as priorities based on locally formulated strategic development plans. Overall, the project has had a substantial impact, increasing awareness on issues related to citizenship, transparency in community driven development (CDD) projects and social cohesion within the villages.