Commentary

Economic gains benefit insignificant percentage of people

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By Mathew K Jallow, Associate Editor

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To understand how Gambia’s economic engine functions, and the forces that are driving it, one only has to examine how Gambia's stated economic policy objectives are operationalized. First, the point of departure has to be Yahya Jammeh’s perspective on how the state ought to operate in the process of implementing policy objectives in an increasingly globalized and competitive market. To begin with, Jammeh's rejection of a democracy and development dichotomy, equating it to corruption, is perhaps the most intellectually bankrupt argument that can be made against the duality of democracy and development. Democracy is designed to provide social and political stability, engage people in their development, and encourage unleashing the creative genius of a people. There is no institutionalized system of social organization that has proven more effective; in fact, all other competing forms of social organization have failed to deliver a more equitable and effective system of human organizing. By agreeing with the theoretical definition that the country or the state comprises of an eclectic body of conflicting and contradictory interests groups pursuing similar national goal objectives, each utilizing agendas and platforms that often intrude into and could potentially limit the growth spaces of competing interests, we can then value the crucial role democracy can play in harmonize naturally occurring conflicts engendered by the very existence of the state itself. The totality of government interest, civil society organizations beginning with the family unit, the media, the business sector, communities organized by geography and by other interests, political parties and other group interests; constitute the state, and to the extent that each pursues interests that benefit the country, each in their own different way, often means that their interests sometimes overlap, and their methods of achieving their singular objectives, are often in conflict with each other. Clearly, tensions arise from this dynamic relationship, and in The Gambia, the perennial state and media strained relationship over the past decade and half is an example of the conflict. For governments like ours, which operate in secrecy, and has something to hide from public scrutiny, has developed into the natural enemy of our media, which, acting in the best interest of the state and its people, is equally determined to bring government activities into the open for public examination. The limited definition often attached to the concept of democracy, particularly in most developing countries, has not done any justice to the broad spectrum of its reach. The practice of democracy transcends the issues of human rights and recurring electoral cycles; rather, it is a necessary and imperative conduit to good governance. The rule of law, a pillar in the broader definition of democracy, is crucial in engendering security and stability in a country to ensure the operation of stable business environments that allow business to flourish, grow and prosper; create jobs, and increase the revenue base government needs to provide public services. In a nutshell, a democratic system of social organization, promotes accountability, participation, equal opportunity, equality before the law, citizen inclusiveness and responsibility, so government works in the interest of all the people. The success of business and the expansion of capital investment in The Gambia are directly tied to the institutionalization of democracy. But democracy also espouses a legal and regulatory infrastructure, which allows the harmonious interplay of conflicting and often contradictory group interests, and when seemingly irreconcilable conflicts do occur, mechanisms for resolving them exist in the structure of democratic rule of law. In The Gambia, Jammeh has replaced existing legal and regulatory structure of the state, by directly engaging the business community, often in a threatening and dysfunctional manner, which has the potential to harm business and impact the security of our economy. 

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This relationship is not unlike the contentious and certainly deadly one that has developed between Jammeh and the Gambian media, and in an increasingly globalized world, this antagonistic relationship can potential have a lethal effect on foreign investment prospects and the crucial bilateral and multilateral relationship with foreign governments. The more Jammeh assumes the role of the legal and regulatory body, the more he usurps the remediation powers of the law. The constitution of the civil and administrative laws should be broad enough to provide effective and efficient regulatory mechanisms that protect consumers from abuse and the government from corrupt business practice. Implementation of economic development policies must be preceded by far reaching legal reforms, from the Constitution to local and municipal level of regulations, to ensure a strong and vibrant economic growth potential. So far, anecdotal and empirical evidence suggests that The Gambia has neither the ability nor the capability to implement a structured development program that encompasses the main highlights of good governance; financial accountability, operational efficiency, predictability, probity and regulatory guidelines that support an efficient and effective utilization of time and resources. By default, every country is endowed with the necessary basic framework to engage in, produce, participate and compete in the marketplace; both materially and creatively; the most important of which are the available human resources, creative ingenuity of its people, and the means of production. The primary function of the state is, therefore, to release the creative genus of its human capital by establishing an enforceable regulatory framework, which expands the scope for innovation and human and capital investment. It is necessary to underscore the word enforceable, since officials of the state have the proclivity to break the rules and render existing legal and regulatory frameworks not only redundant but unenforceable. The economic policies constructed by government, must be supported by strong and enforceable legal and regulatory structure, which rejects the paternalistic and nepotistic geography of our cultures. Gambia’s weak legal system has compounded the challenges of our economic development, particularly relating to investors who suffer economic losses due to unscrupulous state officials, lack of effective legal recourse to recover lost investments, and absence of legal enforcement. But in addition, the cost of doing business in The Gambia has become prohibitively high both in terms of capital outlay and the amount of time needed to secure business licenses, and such cost primarily relate to bribery of officials during the process of establishing new business. There are other cultural factors, which, like our deeply ingrained cultural paternalism, inhibit business development, consequently, the climate for business development is not favorable to investors. To make matters worst, Yahya Jammeh’s overreach and constant meddling in the activities of the business sector has also proven to be problematic.

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The performance of our economy has been lackluster at best in spite of the glowing and often misleading reports from The World Bank and the IMF. The World Bank and IMF have over time, prepared periodic progress assessment reports on Gambia’s economic performance, but contradicting views about the performances of our economy are made apparent by uncontestable indicators; not the least of which are the increasing poverty rate, capital flight, lack of skilled manpower, declining productivity particularly in the agricultural sector, and a marked drop of our GDP, among others. The defective appraisal methodologies The World Bank and IMF’s utilizes to measure our economy are prone to conclusions that have absolutely no bearing on the reality, primarily because the data provided by the regime, is based on fudged and manufactured records, and false and deceptive accounting procedures and practices. Most of the reports The World Bank and IMF have prepared on our economy are disproportionately rosy, but contradictions to their reports are manifest in the lack of improvements in the quality of life of Gambians. Moreover, marginal gains registered, has primarily benefited an insignificant percentage of the population, most of who either have direct access to foreign aid funds by virtue of their positions in government, or can access government administered funds through the crony culture. In spite of the World Bank and IMF reports, Gambia has accrued a massive international debt of $1.6 billion, which is stifling economic development. Additionally, the Gambian economy is burdened by pervasive illegal practices in the financial sector, exacerbated by corruption, chronic lack of accountability, and recurrent budget deficits. But one of the great failures of our economy is our dependence on foreign capital as the primary engine of economic growth. The existing financial institutions are not setup to provide investment capital, either because of lack of liquidity, or they are designed to suit small savings and micro lending; hardly enough to spur economic growth. The necessity to overhaul our banking and financial institutions is overwhelming for several reasons; but mainly to exclude banks that lack the capital viability to lend for investment, growth and economic expansion; secondly to protect Gambian consumers from losses they could incur from possible bank failures. Banks setup to launder illegal drug money, counterfeit currency, or for the sole purposes of generating quick profits at the expense of Gambian clientele, must be excluded from participating in the economic activity, due to the likelihood of failure they pose. The mere presence of such illegal financial activities is devastating to the economy, and to Gambians who entrust these banks with their savings. However, one of the most contentious issues facing our country is Jammeh’s multiple business interests, which spread the breadth of our economy; from butchery, transport and communication, bakery, construction, retail, agriculture, manufacturing, processing, export and import, property management as well as land speculation. These businesses are not only stifling competition, but Jammeh’s use of and monopoly of state resources and the state apparatus to expand his business ventures is creating unfair advantages for competitors, even as it dampens the morale of business owners, discourages investment and entrepreneurship, creates monopoly, and adversely affect the business sector to the detriment of our economy.

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Despite the positive spin The World Bank and IMF reports put on the performance of our economy over time; our GDPs have contracted significantly every year since 1975. And our government’s annual working capital, or the budget if you will, is dependent on and financed by foreign aid, principally from Britain and the U.S. Gambia’s productivity is insufficient to generate adequate revenue from personal and business taxation in order to fund public projects, make payroll for the civil service, invest in the education of our children, build our road infrastructure, provide adequate medical care and security for our people. To date, Gambia's debt forgiveness, or debt relief, amounts to billions of dollars, and the government has become reliant of debt-forgiveness to stave off bankruptcy. The Gambia's productivity has dropped significantly from $378 per capita GDP in 1985, to $353 in 2000. And agricultural production, which accounted for 75% of our GDP and export earnings a decade ago, now accounts for a paltry 22%, but employs 74% of our labor force. The service industry; hotels, communications and electricity generation among others, now account for 64% of our GDP, yet employs a mere 15% of our labor force; producing nearly two thirds of our annual GDP. The anomaly can best be explained as amounting to 50% or more unemployment and underemployment of our labor force. Significantly, our export earnings have dropped from $.044 billion in 1975 to $.019 billion in 2000. In short, Gambia is producing far less for export and local consumption now, than we did only generation ago. The rural population, who were self-sufficient in food production, are for the first time in our history, reliant on rice imported from Asia for their daily sustenance. Over the past decade and half, an increasing number of farmers have abandoned farming life and the rural countryside to migrate to metropolitan centers. There is no longer any incentive to farm due primarily to lack of markets for their cash crops. Additionally, farmers across the country are owed monies for crops relinquished to private merchants and traders acting on behalf of the state, but have been unable to recover their hard earned monies, some for several years now. The result is that many farmers cross the border into Senegal to sell their harvest; a great loss to our national economy. A theory of market economy posits; “capital, inherently growth generating yet constantly limited by the market in which it has grown, has historically attempted by all means-including conquest, banditry and piracy-to push the frontiers of its market.” This fitting analogy aptly explains the phenomenon of farmers abandoning the inadequate market outlets in our country for alternative markets sources across our border in Senegal. In other areas, it is a misnomer to describe the 16 miles long costal bright lights and the few sparsely spread projects undertaken by Jammeh’s regime as development, especially since funds used to construct these few projects are borrowed from IMF, The World Bank or are secured as grants from friendly governments around the world. The Jammeh regime will be hard pressed to show where the $1 billion or 29 billion dalasis of our external debt was spent in The Gambia. With our schools in terrible state of repair and lacking teachers and educational supplies, our health centers and hospital under-staffed and short of drugs and equipments, roads in the metropolitan centers and around the country in poor state of repair, productivity dropping significantly, monopolization of the business sector by Yahya Jammeh’s business empire, demoralized civil service, institutionalized corruption, and the country turned into a drug haven for South American drug lords, The Gambia has a long, long road to walk to redemption. For Yahya Jammeh is heading a cartel of drug dealers in a country where mediocrity has become a virtue. The future looks bleak for our country, but we cannot lose hope. Somehow and someway, The Gambia will persevere and emerge from this political inertia a better country.

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Mathew K Jallow holds an undergraduate degree in Business Administration and a graduate degree in Public Administration.

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