Country Report of The Gambia

Economist Intelligence Unit, 4th quarter 1997

Economic structure

November 7th 1997 D10.07:$1

Principal exports 1993b	$ m	Principal Imports 1993b	$ m
Fish & fish preparations	2.7	Food	7 .5
Groundnuts (shelled)	1.5	Machinery & transport equipment	61.7
		Manufactures	52.7
		Minerals & fuel	15.7

Main destinations of exports 1995h	% of total	Main origins of Imports 1995h	% of total
Japan	29.2	China	20.3
Senegal	10.8	Cote d'Ivoire	13.9
Hong Kong	9.2	Hong Kong	9.8
France	7.7	UK	7.6

^a EIU estimates
^b Fiscal year ending June 30
^c Official estimate
^d Actual
^e Based on 1993 census
^f End-September
^g Crop years ending in calendar years
^h Derived from partners' trade returns, subject to a wide margin of error

	Outlook for 1998-99
New doubts arise over the army's stability--	The Gambia has just seen the fourth, possibly the fifth, attempt by rebel soldiers to overthrow President Yahyah Jammeh's regime in the three and a half years since he himself seized power by armed force. The events of July 20th 1997, when a group of disgruntled officers tried, and failed, to initiate an army uprising, will give Mr Jammeh cause to reflect on the security of his position. Like its predecessors, the latest attempt appears to have been a small-scale affair, not reflecting any general disillusionment within the ranks; but then, the president's own seizure of power in July 1994 came completely out of the blue, from the junior ranks of an army which, from the outside at least, appeared apolitical to the point of docility. The latest attempt, ill-conceived and poorly supported though it may have been, will have given Mr Jammeh a jolt, and the government will move swiftly to tighten discipline in the barracks.
--and the regime will become yet more security conscious--	Mr Jammeh may have complied with the demands of the international donor community and the Commonwealth, by resuming The Gambia to a more or less democratic form of government, but the fact is that, elected or not, he himself would not now be president had he not used the army to seize power in the first place. His remains a fundamentally military regime. The army will continue to back him for as long as it is paid and can enjoy a privileged role in Gambian society. Keeping the soldiers happy, while at the same time maintaining discipline and damping down rebellion, will always be a preoccupation of Mr Jammeh and his circle. The government may also be expected to keep up its harassment of the political opposition, centred around Ousainou Darbo, leader of the United Democratic Party, continuing to deprive him and other opponents of access to the media.
--while trying to prevent repercussions on the tourist industry--	It has been the image of a politically stable, free-and-easy haven which has given The Gambia its popularity as a winter sunshine destination for European tourists over the years. But the tourist industry is sensitive, and has already been badly hurt once. Mr Jammeh knows this, and will do what is needed to ensure that his problems with the army do not affect tour operators' confidence again. Western governments' advice to their nationals to stay away from The Gambia following the July 1994 coup virtually decimated the industry that season and it has taken until now for confidence to return. Bookings for the 1996/97 season have been promising, almost up to pre-coup levels. Hotels are already represented to be full for the peak season over Christmas and New Year. The tourist industry depends on the links between The Gambia's hoteliers, many of them Western expatriates, and the mainly European operators. Some of the old confidence has, however, already been undermined by the behaviour of loutish soldiers. A few more anecdotes about tourists being robbed or pushed around by uniformed men could result in the industry—on which the country depends as its largest source of foreign exchange—being hit again, however much the government seeks to play down its latest troubles.
--at a tie when the economy is highly vulnerable--	The Gambia is scheduled to switch in January 1998 to calendar year budgets, and its forthcoming budget may be expected to contain a financing shortfall of around D1,000m, to be made up from grants and loans. Barring political upheaval, and assuming that the Ministry of Finance and Economic Affairs is able to make progress in its current talks with the Bretton Woods organisations, a new structural adjustment programme should be in place and yielding financial flows at the start of the calendar/fiscal year 1999, which would enable the government to return to pre-coup levels of certainty in its financial and economic planning.
--and, with a difficult 1998 looming--	To add to the doubts over tourism and multilateral aid flows, groundnut production—the country's only significant source of foreign exchange after tourism, and the shadowy re-export trade with Senegal—has had two disastrous seasons, and this year's rains have been patchy, auguring a third poor year, with a crop of perhaps 30,000 tonnes or less. Farmers appear to be fuming away from this uncertain crop, but not to export-oriented alternatives such as flowers, and tropical fruit or vegetables for the overnight European markets, or at least not to the degree for which the government had hoped. Instead, people are tending to drift increasingly to the towns. The government and donors will want to see this tendency reversed quickly.
--desperate measures may be sought	The government is conscious that it must restore the major donors' confidence quickly, and preserve that of the tour operators. It must take steps to maintain the image of a democratic and law-abiding society, by bringing unruly soldiers under control in a way which does not upset the sensitivities of Western partners. If the target of 3.2% growth in GDP can be maintained beyond December 1997, urgent measures will be needed to bridge the financing gap. Mr Jammeh will use his personal links with the leaders of Libya, Iran, Egypt and Nigeria to seek further loans and grants, details of which may never be known, and Taiwan, which is increasingly desperate for allies, may be expected to maintain its already generous level of assistance. At the same time, the government appears determined to pursue its ambitious public-works programme, partly as a means of providing jobs, and partly to build confidence and hold social discontent at bay. A major roadbuilding programme has been announced for the coming months, although no details are known. Further developments are expected at the improved Yundum airport, and long-term work on the Banjul container port will continue, in expectation of an eventual upturn in re-exports to the francophone countries.
	Review
	The political scene
Renegade troops botch the latest coup attempt--	President Yahyah Jammeh easily survived the latest in a long succession of armed attempts to overthrow his three-year-old regime, when four disillusioned junior officers tried to instigate an army uprising on July 20th. The group broke into a military camp at Kartong on the border with Senegal's rebellious province of Casamance before dawn, seizing quantities of weapons and heading for Brikama, 25 km west of Banjul, the capital, where they ran into an army patrol. In the ensuing gunfight, one soldier was killed and three wounded, one of whom died five days later, while a member of the commando group, later named as Lieutenant Alieu Bah, was wounded and captured, the others fleeing towards the border. The fugitives were named as Lamin Jammeh and Lamin Jarjue, both former army lieutenants, and an army sergeant, Sheikh Cham. An unknown number of others were involved. The attack came less than a month after five men were sentenced to death in Banjul for having attempted to overthrow the government in November 1996 (1st quarter 1997, page 26).
--and the army quickly regains control	The two lieutenants took refuge in a border village where they sought help from local people in making their way across the border, but were handed over to police. Only Sheikh Cham managed to get away. The interior ministry put out a statement next day claiming that the army had regained full control of the situation. It said that all stolen weapons had been recovered. The four were said to have been involved in a previous attempt to overthrow Mr Jammeh in November 1994, four months after he himself seized power, while still a lieutenant, from the former civilian president, Sir Dawda Jawara, who now lives in exile in Britain.
Senegal is again implicated--	Military sources cited by a French press agency, Agence France-Presse (AFP), said that the wounded Lieutenant Bah had given contradictory versions of the group's objectives. He is said to have claimed that their aim was to seize Banjul prison, and hand out weapons to the inmates, but had also said that their target was the presidential palace. According to the sources, the four had launched their latest mission from a Senegalese gendarmerie barracks at Ziguinchor, in Casamance, where they had taken refuge after the failure of their previous attempt. On July 22nd the government called on citizens to help track down Sheik Cham "and any other armed dissidents". The three captives were paraded before the press in Banjul the following day, with officials claiming that they had intended to go to Yundum barracks to try to rally the troops to their cause.
--but the Casamance rebels deny any involvement--	Mamadou Nkruma Sane, the deputy secretary-general of the Casamancais rebel movement, the Mouvement des forces democratiques de Casamance (MFDC), denied on July 24th that the organisation was involved.
--and the Dakar authorities swiftly hand over five other suspects	Senegal acted promptly to deflect accusations of collusion from Banjul and on August 1st Senegalese security men arrived in the Gambian capital escorting five other wanted men all implicated in the failed November 1994 army counter-coup—who had taken refuge across the border. An independent Gambian radio station, Citizen FM, reported that the extradition followed a visit to Dakar the previous week by Lieutenant-Colonel Sansedine Saar, deputy commander-in-chief of the Gambian army, to request that the five be handed over. An AFP report on August 5th said that seven other soldiers involved in the latest attempt had sought refuge in the US.
The Court of Appeal orders a retrial	Four alleged mercenaries who were found guilty of trying to overthrow the government and sentenced to death on June 25th were granted a retrial after their sentences were quashed by the Court of Appeal in Banjul on October 3rd. The appeal court was reported to have concluded that the four had been wrongly charged at their original trial, and ordered that new charges be presented. The men—Essa Balde (a Senegalese), Sulayman Sarr, Mballow Kanteh and Omar Dampha—and a fifth man, Yaya Drameh, were said to have been part of an eight-man group of Libyan-trained mercenaries who had fought for the Liberian faction leader, Charles Taylor—now that country's president— during the Liberian 1989-95 civil war. They allegedly attacked an army barracks at Farafeni, eastern Gambia on November 8th 1996, but fled, leaving six people dead, when reinforcements arrived. They had apparently wanted to free the detained former vice-president, Sana Sabally, and overthrow the government. Three were captured by the Gambian army, and two were extradited by Senegal. Mr Drameh died in prison in May this year.
Mr Bojang loses the religious affairs portfolio--	On October 2nd Mr Jammeh stripped Momodou Bojang, the minister of interior, of responsibility for religious affairs, giving that portfolio to the youth and sports minister, Lamin Kaba Bajo. No official explanation was forthcoming, but the move was widely linked to Mr Bojang's reported use of strong language in dealing with members of the Pakistani sect, the Ahmadiyya, who fled the country in early September, complaining of persecution. Mr Bojang was much criticised in the local press for allegedly having threatened members of the sect.
--following a campaign of hostility to the Ahmadiyya	Gambian Imams were said to have preached against the Pakistani group for several months, drawing press complaints that religious tolerance in The Gambia was being undermined. A cleric at the mosque attached to the presidential palace was said to have called in a sermon for their expulsion. The reasons for the hostility were unclear. The Ahmadiyya members, who include approximately 50 medical doctors and teachers, had been active in the country for some 20 years, providing free healthcare, and secondary and primary schools.
A former MP sues the government	Lamin Juwara, who was a member of parliament under the ousted regime of Sir Dawda Jawara, was reported at the end of July to have commenced a lawsuit against the government, which he accuses of violating his rights, demanding compensation in the region of D20m ($2m). Mr Juwara alleges that he was detained without charge for lengthy periods on three occasions since the military takeover of July 1994. A delegation of the international parliamentary union was understood to have visited Banjul to investigate the human rights situation, in connection with Mr Juwara's case and those of two former ministers of the ancien regime—Omar Jallow, and Momodou Cadi Cham—who have been detained for over a year.
President Jammeh hosts his first summit	Heads of state of eight of the nine member countries of the Comite inter-Etats de lutte contre la secheresse au Sahel (CILSS, permanent interstate committee on drought control in the Sahel), attended the organisation's latest summit in Banjul on September 11th. That Banjul should host this event was hailed locally as a triumph of international recognition, but in fact the CILSS meets in all the member countries, on a rotating basis, and it was Banjul's turn. The other members are Burkina Faso, Cape Verde, Guinea-Bissau, Mali, Mauritania, Niger, Senegal and Chad. The only absent president was Blaise Compaore of Burkina Faso who was visiting Tunisia. The summit had been preceded by a three-day forum of 300 delegates to discuss the Sahel region's perspectives in the next century. Charles Josselin, France's secretary of state for co-operation, attended the summit.
New envoys are named to the US and the UK	Mr Jammeh has named Crispin Grey Johnson as ambassador to the US, Brazil, Venezuela, Mexico and Canada, with residence in Washington, and Bala Garba Jahumpa, the former finance minister, as High Commissioner (ambassador) in London.
	The economy
Mr Mendy attempts to clear up confusion on external debt--	The secretary of state for finance and economic affairs, Dominic Mendy, has announced a new figure of $347.2m for The Gambia's total external debt. Answering a question in parliament during July, in a debate on his six-month mini-budget announced the previous month (3rd quarter 1997, page 27), Mr Mendy said that The Gambia's debt to multilateral institutions totalled $279.4m at the end of May 1997. The figures are considerably at variance with a reported D182m given in his budget speech, which appears in fact to relate to debt-service payments during fiscal 1996/97, although the picture for that period remains far from clear. A recent report in a normally well informed Paris journal, Marches Tropicaux et Mediterraneens (MTM), put the current figure for annual debt-service repayments at D151.3, representing 4.5% of GDP. In his latest clarification, reported on July 7th, Mr Mendy said that bilateral debts to creditors such as Saudi Arabia, Kuwait, the Caisse francaise de developpement (CFD), Taiwan and Libya totalled $67.8m. Echoing recent statements by Mr Jammeh, Mr Mendy said that The Gambia was up to date with its debtservice obligations.
--but domestic debt appears to be the greater worry--	Negotiations under way during October, which the government hopes will lead to a structural adjustment programme with the IMF, are reported to be preoccupied with ways of reducing the high level of domestic indebtedness, which is estimated to swallow up 50-60% of budgeted government resources. The Bretton Woods institutions are concerned about what is seen as the government's excessive use of Treasury bonds which, according to IMF sources cited by MTM, have been used to finance government operations to the detriment of the private sector.
--hampering the growth of the private sector--	The government would like to bring local interest rates down, in the hope of boosting the private sector, but it knows that this would put pressure on the external accounts. Local interest rates are running at 17-20%, whereas Gambian private borrowers and government ought to be able to borrow on the international markets at rates of 7-8%, since the dalasi remains stable against the dollar, at around $D10:$1, and against other currencies. However, the authorities are aware that The Gambia's present poor international image is likely to discourage external lenders, and appear uncertain what to do next.
--and the government is worried about a financing gap	The government desperately needs to resume normal relations with the World Bank, which have been at a standstill since the coup in July 1994, if it is to restore the level of international budgetary assistance The Gambia was receiving in the Jawara era. The World Bank is expected to finalise a country assistance strategy early in 1998, but what the country really needs is the seal of approval that an IMF enhanced structural adjustment facility (ESAF) represents, if it is to get meaningful financial flows going again. The earliest this is thought likely is at the beginning of the 1999 financial year (July-June). With government spending clearly on the rise, there is likely to be a substantial financing gap throughout 1998, observers say. The Gambia's present six month budget is to end on December 31st, since as part of the harmonisation process with its partners in the Economic Community of West African States (ECOWAS) it is to switch over from January 1st 1998 to calendar-year budgets (3rd quarter 1997, page 27.) A report during September cited local economists as saying that the authorities simply lack the skill to implement either the six-month budget, or the accompanying austerity measures, and anecdotal reports suggest that the corruption which marred the latter years of Sir Dawda's presidency is again having a serious undermining effect on sectors of the economy, although hard evidence for this is lacking.
	Tourism, transport and infrastructure
There is a recovery in tourism--	With the groundnut industry in its most depressed state for years, following two disastrous crops, the government is pinning its hopes on the continuing upswing in tourism—which is The Gambia's largest single source of foreign exchange earnings in normal circumstances. The first sign of a return to normality came during the 1995/96 season when, after its collapse in the wake of the previous year's coup, the number of visitors climbed to 70,000. The official figures for the number of visits by tourists vary widely, but a figure of 100,000120,000 annually was usual before 1994. The chairman of the Gambia Hotel Association, Lai Mboge, cited recently in a London weekly newspaper, West Africa said that association members had confirmation of 80%, of their forward bookings for the 1997/98 (November-May) season. A London-based operator, The Gambia Experience, had announced a 50% upturn in business, increasing its weekly London-Banjul flights from one to two a week. If the optimism is confirmed, the coming season could see 100,000 Europeans flocking to The Gambia's Atlantic beaches in search of the sun.
--with signs of renewed local confidence--	Indications that investors believe the sector may expect a return to growth are visible in the construction work along the beaches. A Gambian group, Taf Construction, was reported to have completed a block of holiday chalets having 100 rooms, in an investment said to total D45m-50m ($4.5m-5m). A new luxury resort was also reported to have been completed recently at Kololi.
--as is the case in other service industries--	Recently reported government estimates indicate the degree to which hopes are being pinned on the development of the service and infrastructure sectors. Obviously, tourism is at the forefront of these expectations, but continuing infrastructure development at Banjul port, where work on a $300m extension instigated by the previous regime is going ahead with World Bank, African Development Bank and local financing, is important, both as a job creator and in maintaining a level of service-sector activity. Government officials, cited by MTM, estimate that the services sector will have seen 5% growth in real terms during the 1996/97 fiscal year, with transport and communications growing by 11%, largely as a result of public investment in roads.
--including development of Yundum airport--	On July 21st in the course of festivities to mark the third anniversary of his coup, the president opened the new sea container port and a new terminal at Yundum international airport. The Gambia Civil Aviation Authority announced details of new facilities at the airport during September, although not all of these are understood to be in operation yet, including: a new passenger terminal building with a throughput of 1m passengers per year; a powerhouse with an upgraded electrical distribution system and backup; a modern fire station and equipment; expansion of the aircraft parking apron to accommodate 14 aircraft stands; new cargo-handling facilities; construction of general aviation and equipment maintenance facilities; and the modernisation of technical buildings and the control tower.
--in parallel with that of Banjul port--	Before the devaluation of the CFA franc in January 1994, 800 containers were being handled monthly at Banjul port, and that has fallen to around 500 per month. Despite the decline in goods in transit to Senegal, which had already begun in 1993 when that country closed its borders with The Gambia on the advice of the IMF, the growth in container traffic to Guinea-Bissau and Conakry, Guinea continues to fuel Gambian optimism. Current work includes the development of container storage areas, container loading and unloading bays and an administrative centre. A third project, also conceived during the heyday of The Gambia's re-export trade, is the development of a $65m free-zone. Of this sum, SlOm has been pledged by the Islamic Development Bank, SlOm by the government and the remainder is to be sought from international investors.
--while President Jammeh announces a roadbuilding programme	The president made much in his July 22nd speech of his intention to launch a major programme of roadbuilding, but gave only the sketchiest of outlines. The programme would be the government's priority in the coming months, he said. There would be three new main roads and four bridges. Such major schemes will obviously depend on the goodwill of donors who observers believe are unlikely to come forward until the country receives the IMF's seal of approval in the form of an ESAF.