By Alasana J.K. Njie (Pg Dip, BA (Hons.), MBA Finance).

 Hello Editor:

Please allow me space in your widely read newspaper to share this discussion and hopefully stimulate debate about the title of this analysis.

The Gambia’s economy has been undergoing a transition, not so much of a radical nature or a paradigm shift but albeit a significant transformation, for which it is inevitable for the effects to be felt on the wider economy as expected. A typical of such effects is the general rises in the price levels otherwise inflation. So much has been publicized about these effects and frequently we misinterpret them as a sign of impending economic collapse/degradation to befall our country. Let’s try to objectively put these developments into perspective, make sense of the changes taking place, to try and see the principle behind these transformations and the extent of their impact on the wider economy.  I believe we should only try to pass judgment on the effectiveness of the formulations, implementations and management of the policies, plans and programmes put in place to deliver the principles. This analysis will be based on the ‘free market ideology’ that has become a bye word for politics in the Gambia and how this is manifesting itself in our development transition and what its features and short, medium and long term impacts are on our daily experiences, as far as both micro and macroeconomics are concerned. For the benefit of those of us, who are not very conversant with economics, put in broad terms without going in to the intricacies of economic theory, free market refers to an economic model, which is based upon the concept that economic growth is best led by markets that best determines resource allocation and for that matter general price levels.  On paper and in the broader framework, this is achieved by giving the private sector a lead role in microeconomics decision-making. Its features involve less government participation in micro resource allocation and more as a body to regulate and stimulate the medium at macro level, through which the private sector fulfills this desired role. The fundamental principle is that it will foster competition in a vibrant private sector led economy, thus bringing about efficiency and competitiveness in resource allocation. The overriding concept is that this should lead to, in the long run, lower general prices, more quality resources and products. There are two aspects to this; the private sector should be responsible for microeconomic decisions while the Government should be responsible for macroeconomic decision making, which mainly should involve drawing up the long term strategic economic blue print of the country and the associated SHORT, MEDIUM and LONG-TERM policies, plans and programmes designed to achieve them. However, I intend to analyse the macro developments in The Gambia over the years and how this is manifested in micro terms, and thus the effects on short term living conditions on the populace.

 It will attempt to make sense of what we see today in The Gambia, at least from an economic perspective and this will include inflation and interest rates dynamics over the years, and how these impact on Dalasi in the currency markets, monetary policy developments and our international trade relations. It will also look at broad Fiscal policy developments of the government over the years of and their consequences on major economic indicators and will explore the inter-relations between these.

The Gambian Economy since our independence and as recently as year 2000, was based on an economic ‘management system’ centered on ‘redistribution’. ‘Redistribution’ not so much a systematic social model by conception and judgment but one based on a loose institutionalization by default, typically modeled on and nurtured by our values/perceptions as a society, in which authority by way of position in government and poverty are the key driving forces that shape up this pseudo social model. This system of redistribution did not become as an official economic model in a social setting but more of a perception as the natural state of affairs or accepted norm of behavior with only those in positions of authority with the undefined powers to redistribute albeit in an unofficial manner, with a huge leaning towards their close friends and family. The grassroots folks only enjoy a part of this mechanism only during times of elections. We therefore had a pseudo-social model were redistribution was not to the less well off through a clearly defined and objective mechanism but to elites and their associates. We never called this ‘accepted institutionalized corruption’ but see it as ‘generosity’ on the part of someone in a position of authority. But the worst of all is that party politics has taken over as a determinant as to who to distribute to, during non-elections times. A proper social model is based on the principles of social justice, based on objectivity, with clearly defined official mechanism of redistribution, typically through a well functioning welfare and tax systems, which are used to redistribute such resource. These are augmented by well-run and objective public services typically to provide a general good and /or service, particularly to the less well off.  THIS IS FUNDAMENTALLY ACHIEVABLE THROUGH ONE THING AND ONE THING ONLY: AFFORDABILITY. We use to have such public enterprises as Gambia Public Transport Corporation, Gamtel, NAWEC, publicly run hospitals, a public education system just to name a few, which were supposedly to offer public services at heavily subsides rates. Apart from the financial sector, microeconomic decision-makings in all major sectors of the economy were by the government, because this was how it was setup since independence and as a result there were no significant private sector participants in these sectors and no proper official strategies were designed to alter this. But what was clear was that these were failing institutions both financially and in terms of their objectives; institutions that were heavily dependent of foreign aid for such essential factors as their basic cost of operations. The fact of the matter was once those sources of foreign aid dwindled, these institutions became almost non-functional, as they became financially very challenging to offer viable services. The case of the GPTC is a classic example. A simple cost-benefit analysis at least from a resource input-output perspective provided that these institutions became an additional heavy drain on the meager contribution from public coffers to their running cost, thus taking away vital resources from our development initiatives.  The consequence was they became heavily indebted as they resort to borrowing to plug their worsening budget deficits. If these were private business, their owners would have wound up operations or file for bankruptcy because all of them were increasingly operating at a loss. Even rice was heavily subsidized thus pegging it in a band around D150 for almost ten years. These virtually unpoliced, unaccountable and ill-disciplined institutions became fertile breeding grounds for the ‘pseudo, unofficial redistribution’ that characterized public administration in the country and which was perceived and accepted as the norm. The result was that we were a poor country attempting to operate a social model but depended mainly on foreign assistance to make this functional. This highlighted three main issues (1) A lack of sound productive base for the economy to generate the necessary revenues to enable us to run sound and independent public services and (2) A lack of a proper model to guide and administer the system (3) An age-old approach of ‘dealing with problems’, with an overriding focus on the short-term rather than ‘dealing with the causes of problems’ with the long term in mind

The turn of the 1980s, which saw, countries like Russia and China begin to embrace free market policies albeit to differing degrees marked a significant turning point in international economics. The result was that two main issues, related at least from the perspective of international development institutions, made it increasingly impossible for us and African countries in general, to maintain the status quo of pseudo-social model through ‘unofficial redistribution. (1) The gradual drying up of foreign aid and this became more acute post July 22^nd 1994 (2) The increasing IMF and Washington led drive for free markets through trade and financial sector liberalization as well as internal reforms, which became intricately tied to economic and financial aid in the form of conditionalities. This was and is still very particular about fiscal policy, with strict conditions on austerity.  These presented deep-seated challenges, which should define the future of country and therefore became a critical phase in our development aspirations. This presented us with the best opportunity to effect fundamental reforms with the view to set the path to focus on ‘GROWTH’ rather than ‘REDISTRIBUTION’. This is why Tigan Nimaga’s interpretation of ‘social democracy’ attributable to PDOIS, which was featured on The Gambia Echo, raises the question: What planet is Nimaga dwelling on? Let’s forget about ideology and be pragmatic, developments in global economy and even international socio-politics means the building of a totally inward looking economy, means signing a death sentence not only for your economy but your very existence as a sovereign country.  Tijan’s interpretations and applications are a fantasy in today’s internationalized economy.