CHAPTER 2: INTRODUCTION

 

2.1. The Country and Political Context

 

The Gambia is located between latitudes 13º28N and 16º36W, occupies an area of 11,300 sq. km and is one of the smallest countries in West Africa. A small tropical country, with two distinct dry and rainy seasons, the country is surrounded by the Republic of Senegal in all sides except to the West where lies an 80 km coastline with an exclusive fishing zone of 200 nautical miles. This lack of open borders has been hampering the country’s trading opportunities as there were several border closures in the recent past but could be counterbalanced by the country’s membership to ECOWAS that has a market size in excess of 300 million people.

 

Banjul is the capital city, the Dalasi is the local currency and English is the Official language. The country has dubbed the smiling coast of West Africa for its peace derived from peaceful co-existence of religious and ethnic groups. The constitution recognises it as a secular state even though Islam accounts for 96 per cent of the population and Christianity 3.8 per cent and other traditional religions less than one per cent. The total population was estimated at 1,857,181 inhabitants with an average annual growth rate of 3.1 per cent, according to the 2013 National Census.

 

The Gambia gained her independence in 1965 and became a Republic in 1970. It is a multiparty democratic Government with a unicameral legislature called the National Assembly. Political power had shifted only three times since 1965 with President Jawara dominating the reigns of power from 1965 to 1994 with his rule brought to end by a bloodless military coup that saw President Jammeh with his heavy handed and dictatorial leadership for a period of 22 years. In January 2017, the third President Adama Barrow took over power, in a peaceful transition after defeating Jammeh in a stiffly contested democratic election, under the banner of the Coalition Government.

 

The ground breaking development that followed the December 2, 2017 Elections that led The Gambia, after a 22 years of dictatorship, to peacefully transfer power to a democratically elected Government. This historic event ushers in renewed hopes of expanded freedoms, much more conducive economic and business environments. However, the new Government is confronted with the daunting tasks of urgently addressing an economy in crisis, increased security challenges, a total collapse of national institutions and the rule of law and a demoralized and traumatized population.

 

The Gambian economy measured in terms of GDP of about US $0.9 billion is relatively small and its growth is influenced by both external and internal factors subjecting it to unpredictable swings. The high population growth of about 3% and the low growth of real GDP averaging around 3% for the past 15 years too left real per capita income almost unchanged at about US 500 and is now above US $711 with the recently rebasing of the GDP. The Manufacturing sector contributes 45 percent of GDP. However, the sub sector’s contribution to GDP continues to decline over time. The economy is emerging from gross mismanagement and severe threats and occurrences of macroeconomic instability and significantly falling Official Development Assistance and FDI, due to political and economic governance issues, to an improved country with huge political capital that can be cashed in for a scaled up investment inflows.

 

Government’s role had always been restricted to regulator and facilitator of economic development based on ideals of transparency, fair and level playing field for both foreign and domestic investors as well as a provision of a predictable policy environment for all  to maximize their potentials. The country veered away from these principles during the past 22 years of dictatorial regime and there is renewed determination to remove this limitation on government’s role as strongly underscored in the National Development Plan. This commitment comes against the strong goodwill of the international community that pledged to support the country with Euro 1.45 billion is historic. This very high goodwill from the international community is also a very strong indicator to investments and investors.

 

The 1999 Investment Policy is both outdated, very narrow in focus and have little relevance to the current investment contexts of changing priority sectors from the financial sector, which attracted lots of investments and is narrower in focus on the tourism sector by targeting 4-5 Star Hotels, ecotourism and rural tourism. The context has also changed starting from the policy and macroeconomic environment as well as the planning context (ESAF to NDP), the governance and political situation, the kind of guarantees investor need is becoming more sophisticated as opposed to availability of foreign exchange and security of title that was assured in the 1999 policy. The special investment incentives are better targeted in the new GIEPA Act than before but the institutional arrangement remains almost the same from GIFZA to GIEPA with little refocusing.

 

In the recent past, especially during the past regime, there were evidences of interference in business operations through price fixing on the exchange rate, unpredictable and inconsistent policy statements. This made the macroeconomic environment to be very unstable and unpredictable for informed business decision-making but with The New Government’s commitment to improve both economic and political governance, brightens the investment climate.

 

Recently, the World is persistently facing pressing socio-economic and environmental challenges coupled with a very youthful population especially in the developing world. Therefore, strategically harnessing economic growth for sustainable and inclusive development using investments as a primary driver of growth is very relevant now. Mobilizing investment and ensuring that it contributes to sustainable development objectives is indeed a priority for The Gambia in particular.

 

Read the document below for the complete investment policy 2018.