Gambia, The : Economy

Economy

GNI: 
US$889m
GNI PC: 
US$500
GDP Growth: 
3.5% p.a. 2007–11
Inflation: 
4.8% p.a. 2007–11

The Gambia, with its command of an important river system, has considerable potential in trade – depending on development of the hinterland. It is an economically disadvantaged country, hampered by its small size, lack of mineral or other natural resources, and rudimentary infrastructure. The economy rests on agriculture (especially on groundnut production) and tourism, though there is a small-scale processing industry. The largest trading activity by far has been the re-export of imported goods to neighbouring countries (Guinea, Guinea–Bissau, Liberia, Mali, Mauritania and Senegal). Agricultural production suffered during the droughts of the last two decades, although The Gambia is less vulnerable than its Sahel neighbours. Tourism, the most important source of foreign exchange revenue, flagged in the wake of an abortive coup in 1981 and again after the successful coup of 1994. However, tourism revenue recovered in 1996, and by 1998 the number of tourist arrivals had overtaken pre-coup levels. Foreign aid has been vital in developing the infrastructure. From 1985, policy was focused on economic reforms backed by the IMF, leading to a long period of sustained growth with relatively low inflation. The reforms were continued after the 1994 coup, including some privatisation. In 2000, South African electricity company Eskom purchased a 50% stake in electricity and water utility NAWEC. The country’s stock of external debt fell from 110% to 50% of GDP after completion of the IMF/World Bank Heavily Indebted Poor Countries and Multilateral Debt Relief Initiatives at the end of 2007. Growth was sustained at more than 5% p.a. 2008–10, despite the extremely adverse economic climate due to the global recession. The good growth of the 1990s continued into the 2000s and was interrupted only by a dip into recession in 2002; it averaged over 5% p.a. 2003–10, despite the global economic downturn of 2008–09. This impressive growth was sustained by the construction, tourism and telecommunications sectors, and a steady flow of foreign investment. The economy shrank when harvests failed and tourism was depressed in 2011 (–4.3%) and 2012 (about –1.6%) but made a strong recovery in 2012–13.