Political Risk in The Gambia: Crime, Terrorism, Monetary Instability, Small Business Flight, and Protectionism

Journal of Political Risk, Vol. 1, No. 4, August 2013.

Figure 1: Comparison of Gambia and Sierra Leone on the Ease of Doing Business in 2013. Data Source: World Bank. [1]

Figure 1: Comparison of Gambia and Sierra Leone on the Ease of Doing Business in 2013. Data Source: World Bank. [1]

By Anders Corr, Ph.D., and Naheed Vadsaria

Political risk in the tiny West African state of “The Gambia” is high.  Named after the small river around which its borders fluctuate, the country hosts a dictatorship established in a 1994 coup. The country also hosts Hizbollah operatives who conduct international financial transactions, and is one of the top African cocaine transshipment points to Europe. Local businesses are considering fleeing to Sierra Leone to escape a raft of seemingly arbitrary and protectionist laws promulgated by the President for potentially personal reasons.

Many small business owners and foreign investors see Sierra Leone as a better alternative, and are considering migrating their businesses. However, according to Ease of Doing Business data from the World Bank (see Figure 1), The Gambia has a fighting chance against its nearest competitor. In 2013, The Gambia beat Sierra Leone in measures of taxation, getting credit, starting a business, and – of key interest to foreign investors – protection of investors. It fared less well on the other six metrics measured by the World Bank.

The President of Gambia is a colorful character with a long name: His Excellency Sheikh Professor Alhaji Dr. Yahya Abdul-Aziz Jemus Junkung Jammeh. The President outlined his goals for Gambia in his “Vision 2020.” According to official documents, “The fundamental objective of Vision 2020, is to map out clearly a strategy for socio-economic [improvement] that aims [at] raising the standard of living of The Gambian people by transforming The Gambia into [a] dynamic middle-income country.”[2]  The mission of Vision 2020 is to “transform The Gambia into a financial centre, a tourist paradise, a trading, export-oriented agricultural and manufacturing nation, thriving on free market policies and a vibrant private sector, sustained by a well-educated, trained, skilled, healthy, self-reliant and enterprising population and guaranteeing a well-balanced eco-system and a decent standard of living for one and all under a system of government based on the consent of the citizenry.”[3] In order to meet these goals,  President Yahya Jammeh will need to prosecute crime and terrorism, as well as rationalize laws related to small business, currency exchange rates, and foreign direct investment.

Hizbollah and the Drug Trade in The Gambia

Members of Hizbollah have been known to use West Africa as a central point to launder money and transport drugs to fund their operations, including supporting the Syrian Regime.[4] The United States designates Hezbollah, otherwise known as Hizbollah, “among the most dangerous terrorist groups in the world,” and it is known that Gambian businesses help finance its operations. [5] It was reported in June 2013 that the United States Treasury Department “placed sanctions on four Lebanese men, working with Hizbollah to extend influence across West Africa.   These influencers have been operating in Sierra Leone, Senegal, Cote d’Ivoire, and The Gambia.  They worked as self-styled members of Hizbollah’s Foreign Relation’s Department, involved in fundraising, recruitment, and coordinating travel for the organization.

In the case of The Gambia, the U.S. Treasury Department stated that 48-year-old Hicham Nmer Khanafer, born in Ainata, Lebanon, and living in The Gambia, “has been an active and influential Hizbollah member in The Gambia, where he has been involved in recruiting and fundraising.” His activities involved “[hosting] weekly meetings for local Hizbollah members and supporters at his home, and [holding] weekly Hizbollah fundraising and recruiting drives at a local mosque.”[6]

Tajco, a private company co-owned by Lebanese businessmen, Ali, Hussayn, and Kassim Tajideen, was reportedly placed under U.S. sanction in December 2010. The three brothers reportedly had affiliations with Hizbollah, and were known as “top financiers” of the organization. Mr. Hussayn Tajideen lived in The Gambia for 15 years, and was a close friend of the President of The Gambia.[7]  Further, in 2009, Mr. Kassim Tajideen was designated as a supporter of Hizballah.[8] According to the U.S. Treasury, Kassim Tajideen embezzled funds to Hizballah through his brother, a Hizballah commander in Lebanon.  “Belgian authorities arrested Mr. [Tajideen] for fraud, money laundering, and diamond smuggling.”[9]

In The Gambia, The Tajideen brothers own and operate Kariaba Supermarket. They also own a network of businesses throughout West Africa, Lebanon, Democratic Republic of Congo, Angola, and the British Virgin Islands.[10]

Tajco helped generate millions of dollars for the Lebanese movement Hizbollah.[11] One United States intelligence source said of the brothers, “The food import and supermarket business is a specialty of theirs. It is a lucrative and cash-rich business which allows them to generate revenues, create smoke and mirrors, and launder money from other activities.”[12]

The U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), considers Tajco to be a “Specially Designated Global Terrorist” (SDGT).[13]  “OFAC described Ali Tajideen as a former Hizbollah commander and the Tajideen brothers as Hizbollah fundraisers.  Their company, Tajco, was described as an international trade and real-estate company that purchased and developed properties in Lebanon on behalf of Hizballah and generated millions of dollars in proceeds used to provide financial support to Hizbillah.  Ali and Husayn Tajideen’s brother Kassim Tajideen, was designated a specially designated global terrorist on May 27, 2009.”[14]

Further, Tajco Limited affiliated with the Beirut-based Lebanese Canadian Bank (LCB).   LCB was acquired by Societe Generale de Banque au Liban (SGBL) in 2011.  Consequently, SGBL became the parent company, and Prime Bank (Gambia) Limited, became a subsidiary of SGBL.  Prime Bank (Gambia) Limited was established in Gambia on May 27, 2009. The Central Bank of The Gambia announced its liquidation in January 2013. [15] LCB, affiliated with Prime Bank (Gambia) Limited, has been known to “launder as much as $200 million a month in drug proceeds from cocaine traffickers.”[16]   It is not clear if Prime Bank (Gambia) Limited had indirect ties to this money laundering case. However, the Tajco case stems from the LCB money laundering case.[17] The U.S. Treasury “accused [the LCB] of facilitating money laundering by a network of drug traffickers spanning South America, Europe, the Middle East and West Africa.”[18]

Further, The Gambia has been used to transport drugs, specifically cocaine, cannabis, heroin, opium, and pharmaceuticals through its borders.[19]  In June of 2010, two tons of cocaine with an estimated value of $1 billion was headed towards Europe.  The dealers with Dutch and Venezuelan nationalities came from West Africa. [20]  West Africa has become a major “stop off point” for drugs coming from South America, and going to Europe.[21]  President Jammeh stated that Gambia will have a no-tolerance policy for drug trafficking within its borders and swears to prosecute the culprits.[22] It is unknown how genuine President Jammeh may be of enforcing his will on this matter, given the huge sums of foreign exchange, which can obtain the support of influential persons in The Gambia.

Small Businesses in The Gambia

Most current small business entrepreneurs in Gambia initially decided to invest to utilize their academic and professional skills, acquired from studying and training in The Gambia, other African nations, and internationally.  Some Gambians have even decided to return home to improve the economic conditions of The Gambia, which include providing employment for low-income Gambians.[23]  One Gambian entrepreneur stated “I get much pride and satisfaction by providing employment for others in The Gambia.”[24]   Further, compared to other African nations, the public image of the nonviolent and peaceful nature of The Gambia, including even the coup, which was bloodless, gave these entrepreneurs hope that their business would thrive and prosper in the future.  Examples of small businesses that opened in this small African nation since 2006 are restaurants, supermarkets, electronic supply and service stores, print and media businesses, health and beauty parlors, gyms, and import and export businesses.

Political Tensions

Nonetheless, political threats do occur for there have been attempts to overthrow President Jammeh, who overthrew President Dawda Kairaba Jawara in a coup on July 22, 1994.  In 2006, Former Navy Chief Sarjo Fofona, ex-Army Chief of Staff General Langtombong Tamba, former intelligence chief Lamin Bo Badjie and former deputy chief of Police Modou Gaye, were accused of being part of an attempted coup.[25]  These individuals were sentenced to execution by The Gambian court for charges of treason.[26]

Gambia has ten registered opposition parties.[27]  The director of Amnesty International Africa reported that “death sentences are known to be used as a tool against the political opposition.”[28]  Further, West African regional leaders stated that The Gambian government has been accused of intimidating the opposition party during the last 2011 elections.[29]  The Economic Committee of West African regional bloc has stated “the political environment for the said election is adjudged by the commission not to be conducive for the conduct of free, fair and transparent polls.”[30]  During the recent local elections on April 4, 2013, six opposition parties boycotted the elections.[31]  One party acted differently — the National Reconciliation Party (NRP), The Gambia’s third-largest opposition party.  The leader, Hamat Bah, believes that running against APRC during elections will improve the democratic process.[32]

With the inability of opposition parties to express their views and campaign freely, there may be the possibility of more attempted coups in the future.   Previous attempts have been nonviolent and have yet to seriously affect businesses. However, there is a possibility that future political strife could be more forceful and disrupt business practices.

The Gambia’s Economic Status

The environment of economic growth and prosperity these entrepreneurs optimistically envisioned for their businesses has grown slowly more volatile.

According to the World Bank, the Gross Domestic Product (GDP) of Gambia was 0.92 billion US dollars in 2012, which represented a tiny 0.01 percent of the world economy.[33]  In 2013, The World Bank ranked The Gambia 147 out of 184 overall in ease of doing business.[34]  The Gambia suffered a fall in ranking from 143 to 147 between 2012 and 2013.[35]  In 2012 The Gambia was ranked as 121 in the category of starting a business, however, now the ranking has fallen to 123 in 2013.[36]

Many entrepreneurs believe the instability of the government in The Gambia, the increasing inflation rate and devaluation of the dalasis[37], high business taxes, changes in import policies and laws[38], and lack of confidence in government support of businesses, have caused an increase in prices and decrease in revenues and profits.   As a result, many small business owners are considering relocating their ventures.[39]

Currency Fluctuation and Controls

The Governor of the Central Bank of The Gambia, Mr. Amadou Colley, reported in July 2013, “the Dalasi has depreciated against the British Pound by 12.62%, the US dollar by 11.87%, and the Euro by 12%.”[40] Because of the decrease in the value of the Dalasis against other hard currencies, and because of the economic downturn in the country, The Gambian government has restricted foreign exchange, and instituted currency fixing.[41]  On July 29, 2013, the President declared that 1 US dollar (USD) would be fixed to 37 Gambian dalasi (GMD) and foreign currency can only be shipped through authorized banks in The Gambia.[42]

The Central Bank suspended three major money transfer operators in The Gambia, namely Rai, Money Express, and Wari in June.[43]  The Central Bank of The Gambia stated that “the speculative activity of operators in the local foreign exchange market continue to exert pressures on exchange rates, resulting in continuing depreciation of The Gambian dalasi.”[44]   Where the real reasons for the suspension have not been publicized, there has been allegations that the suspension took place because businesses were hoarding foreign currencies in order to speculate on prices.[45]  However, the U.S. State Department in June and July 2010 reported that the Dalasis appreciated 22% at this time against other currencies.”  There was no obvious reason for the climb and the government blamed illegal money changers who were speculating on the currency.”[46]

Fixing the exchange rate has caused the price of imports to increase. It encourages import substitution, but is also an impetus for foreign investors to take foreign currency outside of The Gambia.  Therefore, the President has permitted a maximum of 10,000 USD to be taken out of The Gambia and required that currency be declared at each exit point.[47]

Business Taxes

Taxes imposed on businesses are continuously increasing.  These taxes include corporate income tax, municipality tax, social security contributions, a national education levy, municipal business licenses, and the Value Added Tax (VAT).  Entrepreneurs and consumers blame tax increases for increased prices of goods and services.[48] Both entrepreneurs and consumers blame price inflation on the increase of taxes and tariffs.[49]   For example, the price of a bag of rice (a staple food), has risen from GMD 900 to GMD 1200. In a confidential interview, one businessman stated that his profit margin has decreased every year, since he has to increase prices due to increases in taxes.

Nonetheless, there has been speculation on whether or not the money obtained from taxes by the government has been used towards improving services and infrastructure of The Gambia.  Major 2010 government expenditures include health at 11.28% of GDP, education at 22.81%, and military at 0.6% of GDP in Gambia.[50]

Allegedly President Jammeh uses taxpayer’s money for luxury goods and even purchased a 3 million dollar home in Potomac Maryland.[51]  Tax money dedicated to maintain Gambia’s National Water and Electricity Company (NAWEC), is widely thought to have been misappropriated, for NAWEC is still not providing the electricity needed to power The Gambia.[52]  Power outages occur on a daily basis.

The lack of a constant flow of power has caused business owners to expend funds on generators and fuel, costs that have been passed to consumers in increased prices of goods and services.

Restriction on Imports

The restriction on imports of food products affects how investors assess the risk of opening an import/export business in The Gambia. It is disadvantageous to the livelihood of Gambians, at least in the short run, because they rely on and can afford cheap imports.

Business in Gambia, Africa’s smallest nation with only 1.9 million people,[53] can be intensely personal and complex. The recent case of a Lebanese/Gambian businessman, Hussayn Tajideen of Tajco as mentioned previously, illustrates the complexity of allegiances and risks.

On June 4, 2013, he was given 72 hours to leave The Gambia. The government claimed Tajideen was selling expired food products at his chain of grocery stores and had affiliations with Hizbollah.  Tajideen was one of the biggest importers of rice, flour, and chicken.

In addition, the President banned chicken leg imports.  Presidential sources stated: “The move to ban the importation of chicken was a reaction to [Tajideen's] way of doing business.”[54]  However, President Jammeh may be following the recommendation of the International Monetary Fund’s (IMF) Poverty Reduction Strategy Paper. The paper advised The Gambian government to provide “safeguards for the poultry sector against unfair competition from imports.”[55]   The Ministries of Trade and Health has banned frozen chicken legs due to “trade and health related issues.”[56] Nonetheless, The Gambian public has speculated in interviews that the President will open his own chicken farm, and banning the import of chicken legs will give him a competitive advantage.[57]

Further, the President announced in June 2013 that in 2016, The Gambian government would ban the import of rice.  The President of The Gambia stated, “Come 2016, we will ban the importation of rice into this country in order to strengthen local food industries as well as promote food self-sufficiency and good health.”[58]  Rice is a staple and one of the biggest imports in The Gambia, for farmers only have the capability to produce a small amount of rice in The Gambia.

The average Gambian is a subsistence farmer and does not have the tools, skills, or enough seasonal rain to produce at a minimal scale to produce for their families. The IMF Poverty Reduction Strategy Paper reported that Gambians have “an annual consumption requirement of 160,000 metric tonnes of rice of which only about 7,400 metric tonnes [or 4.6%] of clean rice is locally produced.”[59]  Further, between April to September 2008, the price of rice has increased by 40%.

Nonetheless, it can be argued that in order to reduce dependency on imported food and industrial products such as rice, chicken legs, and 59 other food crops, the National Planning Commission of The Gambia and Ministry of Trade is implementing import substitution.  Import substitution is a strategy used to ensure food security and meet the goals of President Jammeh’s Vision 2020 of improving the socio-economic conditions of Gambia. [60]

There are positive and negatives to import substitution.  Whereas, The Gambia public may not see it now, import substitution could be beneficial for Gambians if it can increase employment for farmers through private sector development. Import substitution could be good for the economy if the capacity to produce rice and chicken legs is available. Specifically for poultry production, the government needs to invest in human capital, cold chain storage, food safety systems, processing plants, etc.  If the government does not invest fully in machinery and human capital to produce the rice and chicken legs to grow within Gambian shores, production output maybe poor.  Further, the lack of competition from imports will likely cause at least a short-term increase in food prices.  The poor quality of foodstuff and high price of food would be detrimental to the citizens of The Gambia, and could lead to massive political instability leading to the 2016 deadline.[61]

Mining Opportunities and Conflict

Entrepreneurs may hesitate to invest in businesses such as hotels and beach bars due to the perception that The Government does not support and/or protect their interests.  The Department of Physical Planning was ordered by The President to audit hotels and beach bars along the southern coast of The Gambia in the Gunjur and Kartang regions to ensure that owners acquired legal business registration paperwork (i.e., Business Registration and Tax Identification Numbers), authorizing them to operate their businesses and giving proof of tax payments.  Those hotels and beach bars that did not have the appropriate documentation, or were not regularly paying taxes, would be demolished.  Because the Department of Physical Planning did not conduct the audit, the Government allegedy directed the organization to demolish hotels and beach bars, even those that were legal.  Now these former legitimate businesses are taking the government to court.  Whether the entrepreneurs of these businesses will receive a settlement equal to the value of the property demolished by the government is questionable.

There is speculation that The Gambian government’s unstated purpose for demolishing these businesses is to expand mining operations in regions with glass and quartz sand deposits. These regions are in the southern parts of The Gambia, including Batukunku, the Kartung, and the Sanyang mineral sand deposits in Brufut.[62]  Gambian mineral commodities include Laterite, Ilmenite, and Silica.  “Carnegie Minerals (Gambia) Ltd. (CML), which is a joint venture of Australian companies Astron Ltd. and Carnegie Corp. Ltd., is involved in legal disputes regarding mining rights to the Batukunku, the Kartung, and the Sanyang mineral sands deposits in Brufut.”[63] There are allegations that the company is no longer welcome to mine in the area, because the government would like to take over operations.[64]

Another issue that may cause entrepreneurs to develop a lack of confidence in the government and feel the government is unsupportive are the arbitrary laws imposed by The Gambian Government.  These laws include assessing a penalty of GMD 500 to GMD 1000 (equivalent to USD 17 to USD 30) against those who complain in public about their business operations.  This penalty not only violates Section 25, Freedom of Speech of The Gambia Constitution, it causes entrepreneurs to lose confidence in the Government.[65]  To be unable to voice their opinion on business operations, implies that The Gambian Government does not plan on having a conversation with these entrepreneurs on the current business climate. A lack of communication from businesses to government will invariably lead to increased economic inefficiencies.

Fluctuating Economic Growth

The increase in inflation, devaluation of the Dalasis, increase in taxes, lack of government support and confidence, and decrease in revenue and profit margins have affected businesses throughout all industries in The Gambia, including tourism, supermarkets, gyms, beauty salons, electronics stores, and manufacturing.  Consequently, many entrepreneurs have considered closing their businesses and moving to other parts of Africa for better economic opportunities, with a specific focus on Sierra Leone.[66]  Small business entrepreneurs have acknowledged that The Gambia will eventually experience an economic downturn because the government lacks funds and is increasing taxes and closing businesses to benefit special interests.[67]  Small business owners believe that investing in small businesses solely in The Gambia is not ideal. Rather, they are diversifying, including investments in nearby countries. Many have already gone to Freetown, the capital of Sierra Leone, to assess the risks and rewards of establishing business ventures in a post-war country relatively devoid of foreign investment.

Figure 2: A comparison between GDP Growth rate of The Gambia and Sierra Leone. Data Source: World Bank. [78]

Figure 2: A comparison between GDP Growth rate of The Gambia and Sierra Leone. Data Source: World Bank. [78]

While there may be some question as to the accuracy of the government-reported data, both Gambia and Sierra Leone’s annual GDP Growth is currently increasing compared to most of the rest of the World, according to the World Bank. To compare the two countries, Gambia’s GDP growth rate has significantly fluctuated over time.  Figure 2 compares GDP growth rates between Gambia and Sierra Leone.  The following are major events that impacted Gambia’s GDP growth rate.

  1. The world economic crisis, increase in price of imports,  a major drought (Gambia is an agriculture-based economy), low world prices for groundnuts, decrease in foreign aid flows, high international interest rates, poor planning, mismanagement, and inapt fiscal and monetary policies, resulted in a recession between 1975-1985, which led the GDP Growth rate to decline to -0.8%.[69]  To resolve this issue, between 1985 and 1986, Former President Dawda Jawara, with the collaboration of the World Bank, the International Monetary Fund, the Harvard Institute of International Development, and other donors, instituted Gambia’s Economic Recovery Program (ERP).[70]  The ERP improved the economy by reducing the budget deficit, increasing foreign exchange reserves, and eliminating Gambia’s debt service arrears.[71]  At this time, the GDP growth rate increased to 10.9% in 1983, but steadily declined  by -0.8% in 1985.   The decline was due to the decrease of aggregate real income growth. Average per capita income fell, inflation accelerated, the foreign exchange rate depreciated, and foreign debt increased.[72]
  2. The GDP growth rate declined from 3% in 1993 to 0.2% in 1994, which was when President Jammeh overtook President Jawara in a military coup. Eventually, the growth rate slowly increased to 4.9% in 1997.[73]
  3. In 2002, unstable fiscal and monetary policies, and another major drought, were factors in a steep decline in the GDP growth rate.[74]
  4. Fortunately, in late 2003, the government worked to tighten fiscal and monetary policies, which led to sustainable macroeconomic growth, and a GDP growth rate of 9.4%.[75]
  5. Gambia’s GDP growth rate rose between 2005 to 2010, but came to a sharp declined in 2011 due to the Sahelian drought crisis which caused major crop failure and affected food security among households.[76]  The crisis led to a decrease in government revenues,[77], and GDP declined by 4.3% in 2011.[78]
  6. In 2012, the African Development Bank reported that agriculture growth increased. Annual GDP Growth recovered to 6.0%.[79]  Further, the inflation rate declined to 4.2% in 2012.[80]
  7. According to The African Development Bank, The Gambia’s real GDP is projected to increase from 4.3% to 5.1% between 2013 and 2014.[81]
  8. The budget deficit has been projected to increase to 5.2% of GDP in 2013 from 4.0% in 2014, because of fiscal adjustments such as the VAT. Inflation is predicted to increase from 5% to 5.1% between 2013 to 2014 due to the implementation of the VAT.[82]  Despite what Gambian entrepreneurs are speculating, economic indicators forecast a growth in The Gambian economy.

Similar to Gambia’s economy, Sierra Leone’s level of economic growth has had a volatile history.

  1. The country’s economy relies heavily on the mining sector, which includes diamond, gold, and bauxite mining.[83]  In the early 1980s, the economic growth rate decreased because of a decline in the mining sector and rising government corruption.[84]
  2. In 1991, Sierra Leone’s civil war broke out, destroying much of the formal economy and shrinking GDP by 19% in 1992.[85] GDP growth fluctuated until 2002, when the war ended.[86]
  3. Foreign investors started to assist in reviving the economy after the war ended on 18 January 2002.[87]  Sierra Leone’s annual GDP has risen from 5.3% in 2008 to 15.3% in 2012.[88]
  4. According to the African Development Bank, Sierra Leone’s growth is due to the mining, agriculture, services and construction sectors.[89]  Iron ore production is contributing to the growth of the economy.  The iron ore production sector contributes to the GDP growth rate, which is projected to stabilize in 2013 at 7.2% and increase in 2014 to 12.1%.[90]

Even though Sierra Leone has the highest 2012 growth rate of any country in the world according to the International Monetary Fund, Sierra Leone’s ranking in the World Bank’s Ease of Doing Business has declined by 8 from 140 in 2012 to 148 in 2013.  Further, in 2012 Sierra Leone was ranked 69th in the category of starting a business, but the ranking has decreased to 76 in 2013. [91]   Therefore, West African investors and Gambian entrepreneurs may want to consider keeping existing investments in The Gambia.

Gambian entrepreneurs are not hesitating to invest in Sierra Leone. They perceive the lack of competition in Sierra Leone as another element beneficial to their investment.  There is a saturation of businesses in the Banjul/Kombo Saint Marys Division of The Gambia, which only encompasses 93 Square Miles.[92]   Currently, The Gambia has over 145 hotels and lodges, over 15 supermarkets in the Banjul/Kombo Saint Mary’s Division. A plethora of additional small local shops sell similar products to supermarkets.  The Banjul/Kombo Saint Mary Division also has around 55 beauty salons and stores and 66 electronic stores.[93]   Of course, Gambian small business owners are aware that they will face certain challenges when migrating to Sierra Leone.

Recommendations

There are several ways that The Gambian government can improve their economic situation and increase small business owner and foreign investor confidence in investing in The Gambia.  To increase GDP, The Gambian government should:

  1. Change the fixed exchange rate to a flexible exchange rate, which would decrease the price of imports to The Gambia.  As a result, investors are more likely to keep their money in The Gambia.
  2. Decrease taxes and tariffs as stipulated in the trade policy of The Gambia and the proposal towards a new trade regime.[94]  Ensure that taxes are used for infrastructure, including to build roads, and invest in The Gambian National Water and Electricity Company Ltd.  Business owners have complained that “huge electricity bill[s] [are] swelling the cost of production, [negatively affecting how businesses function] in the country.”[95]  Investment in these entities will improve the ease of doing business in The Gambia, and increase The Gambia’s competitiveness with countries such as Sierra Leone.
  3. If The Gambian government is banning the import of rice and chicken legs, it must be planning to implement import substitution for these two entities. Overall, import substitution does not seem beneficial to The Gambia, which has too small of an economy to successfully implement this strategy.  Prices of these goods will likely increase, quality will decrease, and thereby political instability will rise.  If The Gambia does implement import substitution, several factors should be considered.  Ensure that Gambia has a competitive advantage in the world market in producing rice and chicken legs.  Currently, Thailand, Vietnam, Pakistan, India, and Cambodia have an advantage in producing and exporting rice.  It is cheaper to enforce low import duties on rice coming from these countries rather than growing rice in The Gambia. Invest in human capital and machinery.  As mentioned previously, The Gambian government needs to invest in, (which also means maintain), cold chain storage, food safety systems, and processing plants.  Farmers must have proper education, resources, and tools to grow sufficient rice and chicken needed to sustain citizens of The Gambia.  Therefore, utilizing the faculty and staff of the Agriculture and Environmental Sciences department at the University of The Gambia to conduct train-the-trainer workshops for distribution of information to farmers upcountry will be necessary.  Budgeting for transportation costs for importing new and not obsolete machinery, and training is important for sustaining this endeavor.  The quality and low cost of goods produced are two factors in implementing import substitution.[96]  It is important to keep import food products upon which the population heavily relies.  Gambian farmers are currently unable to produce quality rice and chicken, due to inadequate resources.
  4. Increase small business owner confidence by having town hall meetings between entrepreneurs and representatives of The Ministry of Trade, Regional Integration & Employment, which would enable businesses to more effectively express their concerns regarding the current economic situation. Participants must be immune to retaliation for voicing concerns and criticisms of the government.  This includes discussing the demolition of the hotels and beach bar in Kartung and Sanyang, and compensating owners of hotels and beach bars who had the legal paperwork to operate their businesses in The Gambia.
  5. Enforce The Gambia Investment Incentive Package for new investors, which is authorized under The Gambia Investment Promotion Act 2001 and Free Zones Act 2001. These acts should be enforced for all economic sectors.”[97]
  6. Provide new and old small business owners with incentives to keep their businesses in The Gambia.  This includes providing tax incentives for those entrepreneurs who have consistently paid their taxes on time.   Incentivize businesses that have abided by government rules and regulations to invest provits in improving their businesses.
  7. President Jammeh should continue to rigorously prosecute drug traffickers in The Gambia.  The government should also work with law enforcement agencies throughout West Africa to ensure that drug trafficking is monitored.  Military officials and Ministries should participate in U.S. Africa Command’s Counternarcotic and Law Assistance Division assistance program.  The program provides “$20 million in annual assistance to African partner nations to help improve the capacity to combat transnational narcotics trafficking.”[98]

To meet its Vision 2020, The Gambian government can work hand in hand with entrepreneurs already invested in The Gambia, and foreign investors with an interest in The Gambia.  The government has the ability to keep entrepreneurs from relocating their businesses, by demonstrating to its investors that their businesses are valued, contribute to the growth and prosperity of The Gambia, and by working with business owners in improving their investments.  When entrepreneurs feel that the government is cooperating with them, they will be able to more readily seek foreign investors for opening business in The Gambia.

Ms. Naheed Vadsaria is a specialist in field research. Dr. Anders Corr is the owner of Corr Analytics Inc., a political risk consultancy.

JPR Status: Working Paper. Peer reviewed (2/3). Updated 9/15/2013.



[1] International Finance Corporation World Bank Group. “Ease of Doing Business in Gambia, The, Doing Business Measuring Business Regulations, Last modified 2003, accessed June 30, 2013,

http://www.doingbusiness.org/data/exploreeconomies/sierra-leone/; http://www.doingbusiness.org/data/exploreeconomies/gambia/

[2] Yahya A J J Jammeh, “Vision 2020,” May 1996, accessed July 20, 2013,  Link removed due to blacklist warning.

[3] “Department of State for trade industry & employment (DOSTIE).” Gambia Trade Policy, accessed July 21, 2013, Last modified 2004, http://www.gambia.gm/Trade.htm.

[4] Samuel Rubenfeld, “Treasury Sanctions: Hizballah Operatives in West Africa,” U.S. Department of The Treasury, July 11, 2013, accessed July 30, 2013, http://www.treasury.gov/press-center/press-releases/Pages/jl1980.aspx.

[5] Pascal Fletcher and Mark John, “An African supermarket with a sinister side,” Reuters, July 13, 2012, accessed July 30, 2013, http://www.reuters.com/article/2012/07/13/us-hsbc-launder-sidebar-idUSBRE86C19I20120713.

[6] Samuel Rubenfeld, “Treasury Sanctions: Hizballah Operatives in West Africa,” U.S. Department of The Treasury, July 11, 2013, accessed July 30, 2013, http://www.treasury.gov/press-center/press-releases/Pages/jl1980.aspx.

[7] “Gambia expels grocer, bans chicken legs,” News24 Home, June 7, 2013, accessed July 30, 2013, http://m.news24.com/news24/Africa/News/Gambia-expels-grocer-bans-chicken-legs-20130607.

[8] “Treasury Targets Hizballah Network in Africa,” U.S. Department of The Treasury, March 27, 2009, accessed September 12, 2013, http://www.treasury.gov/press-center/press-releases/Pages/tg149.aspx.

[9] “Gambia expels grocer, bans chicken legs,” News24 Home, June 7, 2013, accessed July 30, 2013, http://m.news24.com/news24/Africa/News/Gambia-expels-grocer-bans-chicken-legs-20130607.

[10] Pascal Fletcher and Mark John, “An African supermarket with a sinister side,” Reuters, July 13, 2012, accessed July 30, 2013, http://www.reuters.com/article/2012/07/13/us-hsbc-launder-sidebar-idUSBRE86C19I20120713.

[11] “Gambia expels grocer, bans chicken legs, News24 Home, June 7, 2013, accessed July 30, 2013, http://m.news24.com/news24/Africa/News/Gambia-expels-grocer-bans-chicken-legs-20130607.

[12] Pascal Fletcher and Mark John, “An African supermarket with a sinister side,” Reuters, July 13, 2012, accessed July 30, 2013, http://www.reuters.com/article/2012/07/13/us-hsbc-launder-sidebar-idUSBRE86C19I20120713.

[13] Specially designated global terrorist (“SDGT”) pursuant to Executive Order 13224

because it had committed, or posed a significant risk of committing, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of

the United States.  Entities such as companies, in addition to individuals, can be labeled ‘terrorists’ by the OFAC.

[14] Preet Bhara, “United States of America vs. Lebanese Canadian Bank Sal, et al,” United States District Court, Southern District of New York, December 15, 2011, accessed August 1, 2013, http://www.investigativeproject.org/documents/case_docs/1861.pdf.

[15] The Central Bank of The Gambia reported that Prime Bank (Gambia) Limited underwent voluntary liquidation, for Societe General de Banque Liban (SGBL), the parent company of Prime Bank (Gambia) Ltd opted to divest its subsidiary in The Gambia, hence the decision not to augment the capital of Prime Bank (Gambia) Ltd to the required minimum capital of D200 million.”

[16] “US Accuses Lebanon-Canada Bank of Hezbollah  links.” Al Arabiya News, February 10, 2011, accessed August 2, 2013, http://www.alarabiya.net/articles/2011/02/10/137148.html.

[17] Pascal Fletcher and Mark John, “An African supermarket with a sinister side,” Reuters, July 13, 2012, accessed July 30, 2013, http://www.reuters.com/article/2012/07/13/us-hsbc-launder-sidebar-idUSBRE86C19I20120713.

[18] “Treasury Labels Lebanese Canadian Bank A ‘Primary Money-Laundering Concern,’” Wall Street Journal Blogs, February 10, 2011,  accessed July 30, 2013, http://blogs.wsj.com/corruption-currents/2011/02/10/treasury-labels-lebanese-canadian-bank-a-primary-money-laundering-concern/.

[19] Andrew Novak, “The Abolition of the Death Penalty for Drug Offenses in The Gambia,” Commonwealth Law Bulletin, Legislative Notes,  Vol. 38 1, (March 2012): 61-65. http://www.academia.edu/1214981/Abolition_of_the_Death_Penalty_for_Drug_Trafficking_in_The_Gambia.

[20] “Gambia puts 12 on trial for drugs trafficking,” BBC News Africa, June 9, 2010,  accessed August 5, 2013, http://www.bbc.co.uk/news/10278734.

[21] “Police seize billion-dollar cocaine haul in Gambia,” France 24 International News, September 6, 2010, accessed August 5, 2013, http://www.france24.com/en/20100609-billion-dollar-cocaine-seizure-gambia-uk-investigation.

[22] Andrew Novak, “The Abolition of the Death Penalty for Drug Offenses in The Gambia,” Commonwealth Law Bulletin, Legislative Notes,  Vol. 38 1, (March 2012): 61-65. http://www.academia.edu/1214981/Abolition_of_the_Death_Penalty_for_Drug_Trafficking_in_The_Gambia.

[23] Anonymous, Personal Interviews with Small Business Entrepreneurs in Banjul, The Gambia, May 2013 to June 2013.

[24] Ibid.

[25] “Gambia Coup plotters Sentenced to Death,” BBC News Africa, 15 July, 2010 accessed August 24, 2013, http://www.bbc.co.uk/news/world-africa-10650294.

[26] Ibid.

[27] “Political Parties,” Independent Electoral Commission The Gambia, 2013, accessed August 24, 2013, http://www.iec.gm/political-parties.

[28] “Gambia leader draws reproach for vow to execute all on death row,” Los Angeles Times, August 22, 2012, accessed August 24, 2013, http://latimesblogs.latimes.com/world_now/2012/08/gambia-leaders-vow-to-execute-all-on-death-row-widely-condemned.html.

[29] “Gambia, The”, Freedom House, 2012, accessed August 24, 2013, http://www.freedomhouse.org/report/freedom-world/2012/gambia.

[30] Saikou Jammeh, “To Boycott or Not to Boycott The Gambia’s Election,” Inter Press Service News Agency, April 2, 2013, accessed August 24, 2013, http://www.ipsnews.net/2013/04/to-boycott-or-not-to-boycott-the-gambias-elections/.

[31] “As Gambians go to the Poll, Six Opposition Parties are Boycotting the Elections,” News Time Africa, April 3, 2013, accessed August 24, 2013, http://www.newstimeafrica.com/archives/31446.

[32] Saikou Jammeh, “To Boycott or Not to Boycott The Gambia’s Election,” Inter Press Service News Agency, April 2, 2013, accessed August 24, 2013, http://www.ipsnews.net/2013/04/to-boycott-or-not-to-boycott-the-gambias-elections/.

[33] “Gambia GDP,” Trading Economics, August 8, 2013, accessed August 13, 2013, http://www.tradingeconomics.com/gambia/gdp

[34] International Finance Corporation World Bank Group. “Ease of Doing Business in Gambia, The, Doing Business Measuring Business Regulations, Last modified 2003, accessed June 30, 2013, http://www.doingbusiness.org/data/exploreeconomies/gambia/#registering-property.

[35] Ibid.

[36] Ibid.

[37] “Inflation increases as Gambia Dalasi loses value,” Gambia News Online, May 22, 2013, accessed July 29, 2013, http://gambianewsonline.blogspot.com/2013/05/inflation-increases-as-gambian-dalasi.html.

[38] Osman Kargbo, “Gambia: No Control Over Price Hikes If…,” allAfrica, July 11, 2013, accessed July 29, 2013, http://allafrica.com/stories/201307111371.html.

[39] Anonymous, Personal Interviews with Small Business Entrepreneurs in Banjul, The Gambia, May 2013 to June 2013.

[40] “Inflation increases as Gambia Dalasi loses value,” Gambia News Online, May 22, 2013, accessed July 29, 2013, http://gambianewsonline.blogspot.com/2013/05/inflation-increases-as-gambian-dalasi.html.

[41] Ousman Njie, “Millions could be lost in Fixing Exchange Rates, Editorial,” Forayaa Newspaper, July 18, 2013, accessed July 29, 2013, http://www.foroyaa.gm/editorial/13770-millions-could-be-lost-in-fixing-exchange-rates.

[42] “Govt. fixes dollar exchange rate at D37,” The Point, July 29, 2013, accessed July 29, 2013, http://thepoint.gm/africa/gambia/article/govt-fixes-dollar-exchange-rate-at-d37.

[43] “Central Bank suspends three major money transfer services,” The Point, June 21, 2013, accessed July 29, 2013, http://thepoint.gm/africa/gambia/article/central-bank-suspends-three-major-money-transfer-services.

[44] “Gambia’s economic woes worsening, major financial bureaus suspended,” ASN American Street News, June 25, 2012, accessed August 3, 2013, http://americanstreetnews.com/news/gambias-economic-woes-worsening-major-financial-bureaus-suspended.

[45] Bubacarr Sowe, “Ria, Money Express and Wari suspended,” The Dispatch, June 21, 2013, accessed August 3, 2013, http://dispatch.gm/2013/06/21/ria-money-express-and-wari-suspended/.

[46] U.S. Department of State, Diplomacy in Action, “2011 Investment Climate Statement-The Gambia, Bureau of Economic, Energy, and Business Affairs”, Last Modified May 2011, accessed August 10, 2013, http://www.state.gov/e/eb/rls/othr/ics/2011/157281.htm.

[47]“Central Bank suspends three major money transfer services,” The Point, June 21, 2013, accessed July 29, 2013, http://thepoint.gm/africa/gambia/article/central-bank-suspends-three-major-money-transfer-services.

[48] “Statement by an IMF Mission to The Gambia for Concluding Discussions of the First Review of ECF Arrangement,” International Monetary Fund, April 12, 2013, accessed July 29, 2013, http://www.imf.org/external/np/sec/pr/2013/pr13118.htm.

[49] “Gambia: High Cost of Living,” The Point, March 26, 2013, accessed August 4, 2013, http://allafrica.com/stories/201304081180.html.

[50] “Health Expenditure; Public (% of Government Expenditure) in Gambia, Public Spending on Education; Total (% of Government Expenditure) in Gambia, Military Expenditure (% of Central Government Expenditure) in Gambia,” Trading Economics, 2013, accessed August 24, 2013,  http://www.tradingeconomics.com/gambia.html

[51] Ebrima G. Sankareh, “Echo Exlusive: Jammeh Regime Killed Sgt. Ello Jallow! First Lady buys $3 million Potomac House, Maryland,” The Gambia Echo, March 4,2013, accessed August 24, 2013, http://thegambiaechos.com/index.php/permalink/3854.html.

[52] “NAWEC Spends Millions of Gambian Taxpayers’ Money in Vain,” Daily News from Gambia, September 12, 2011, accessed August 24, 2013, http://dailynews.gm/africa/gambia/article/nawec-at-it-again.

[53] Central Intelligence Agency. “The Gambia.” CIA World Factbook, 2003, accessed August 4, 2013, https://www.cia.gov/library/publications/the-world-factbook/geos/ga.html.

[54] “Gambia expels grocer, bans chicken legs, News24 Home, June 7, 2013, accessed July 30, 2013, http://m.news24.com/news24/Africa/News/Gambia-expels-grocer-bans-chicken-legs-20130607.

[55] International Monetary Fund, “The Gambia: Poverty Reduction Strategy Paper-Progress Report,” International Monetary Fund Country Report No, 11/27, (January 2011) 41, accessed August 1, 2003,  http://www.imf.org/external/pubs/ft/scr/2011/cr1127.pdf

[56] Mustapha Jallow, “Gambia: Frozen Chicken Legs Importation, What is Responsible for the Ban?” allAfrica, June 18, 2013, accessed September 2, 2013, http://allafrica.com/stories/201306181133.html.

[57] Anonymous, Personal Interviews with Small Business Entrepreneurs Banjul, The Gambia June 1, 2013; Mustapha Jallow. “Gambia: Frozen Chicken Legs Importation: What

is Responsible for the Ban?” All Africa,  June 18, 2013, accessed August 4, 2013, http://allafrica.com/stories/201306181133.html; “Gambia expels grocer, bans chicken legs, News24 Home, June 7, 2013, accessed July 30, 2013, http://m.news24.com/news24/Africa/News/Gambia-expels-grocer-bans-chicken-legs-20130607.

[58] “Gambia to ban rice imports from 2016, Agence France-Press, June 16, 2013, accessed August 8, 2013, http://www.globalpost.com/dispatch/news/afp/130616/gambia-ban-rice-imports-2016.

[59] “International Monetary Fund, “The Gambia: Poverty Reduction Strategy Paper-Progress Report,” International Monetary Fund Country Report No, 11/27, (January 2011) 41, accessed August 1, 2003,

[60] “Home/Sectors/Agriculture,” National Planning Commission The Gambia, http://www.npc.gov.gm/sectors/agriculture, 2013.

[61] Personal email communication to the author, August 27, 2013.

[62] Yadira Soto-Viruet, “The Mineral Industries of The Gambia, Guinea-Bissau, and Senegal,” U.S. Geological Survey,  Science for a changing world, 2010 Minerals Yearbook, The Gambia, Guinea-Bissau, and Senegal [Advance Release ], (March 2012): 18.1.

[63] AZoMining, “Gambia: Mining, Minerals and Fuel Resources,” June 11, 2013, accessed August 2, 2013, http://www.azomining.com/Article.aspx?ArticleID=113.

[64] Anonymous, Personal Interviews with Small Business Entrepreneurs Banjul, The Gambia, June 29, 2013

[65] Constitution of The Republic of The Gambia, 1997, Chapter IV Protection of Fundamental Rights and Freedoms, Section 25 (1) Freedom of Speech, Conscience, Assembly, Association and Movement; Anonymous, Personal Interview with Small Business Entrepreneurs in Banjul, The Gambia, July 13 2013.

[66] Anonymous, Personal Interviews with Small Business Entrepreneurs Banjul, The Gambia June 1, 2013; “Gambia: High Cost of Living,” The Point, March 26, 2013, accessed August 4, 2013, http://allafrica.com/stories/201304081180.html.

[67] Ibid.

[68] “The World Bank,” GDP Growth (annual %), Gambia, The, Last Modified 2003, accessed August 1, 2013, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/1W-GM-SL?page=4&display=default.

[69] McPherson, Malcolm F.; Radelet, Steven C., eds. Economic Recovery in The Gambia: Insights for Adjustment in Sub-Saharan Africa. (Harvard Press: 1995).

[70] Ibid.

[71] Ibid.

[72] Ibid.

[73] “The World Bank,” GDP Growth (annual %), Gambia, The, Last Modified 2003, accessed August 1, 2013, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/1W-GM-SL?page=4&display=default.

[74] Gambia Information Site, “Economy of Gambia: Overview,” Last Modified 2013, accessed August 10, 2013, http://www.accessgambia.com/information/economic-profile.html

[75] Ibid.

[77] “Gambia Economic Outlook,” African Development Bank Group, Last Modified 2013, accessed August 19, 2013, http://www.afdb.org/en/countries/west-africa/gambia/gambia-economic-outlook/.

[78] “The World Bank,” GDP Growth (annual %), Gambia, The, Last Modified 2003, accessed August 1, 2013, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/1W-GM-SL?page=4&display=default.

[79] Ibid.

[80] “Gambia Economic Outlook,” African Development Bank Group, Last Modified 2013, accessed August 19, 2013, http://www.afdb.org/en/countries/west-africa/gambia/gambia-economic-outlook/.

[81] Ibid.

[82] Ibid.

[83] “Sierra Leone: Economy,” Globaledge, Michigan State University, Last Modified 2013, accessed August 19, 2013, http://globaledge.msu.edu/countries/sierra-leone/economy.

[84] Ibid.

[85] “The World Bank,” GDP Growth (annual %), Gambia, The, Last Modified 2003, accessed August 1, 2013, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG/countries/1W-GM-SL?page=4&display=default.

[86] “Sierra Leone: Economy,” Globaledge, Michigan State University, Last Modified 2013, accessed August 19, 2013, http://globaledge.msu.edu/countries/sierra-leone/economy.

[87] “Sierra Leone Profile,” BBC News Africa, 18 June 2013, www.bbc.co.uk/news/world-africa-14094419.

[88] Ibid.

[89] “Sierra Leone Economic Outlook,” African Development Bank Group, Lase Modified 2013, accessed August 19, 2013,  http://www.afdb.org/en/countries/west-africa/gambia/gambia-economic-outlook/.

[90] Ibid.

[91] International Finance Corporation World Bank Group. “Ease of Doing Business in Gambia, The,” Last modified 2003, accessed June 30, 2013,

http://www.doingbusiness.org/rankings.

[92] “Greater Banjul Area,” The Atlas of The Gambia, Last Modified December 16, 2013, accessed July 30, 2013, http://www.columbia.edu/~msj42/GreaterBanjulArea.htm.

[93] Gambia Information Site, “NAWEC Gambia Limited,” Last Modified 2013, accessed August 10, 2013, http://www.accessgambia.com/information/nawec-water-electricity.html.

[94] “The Gambia has an open-door, liberal trade policy. The country is seeking an export led growth through value added productivity and, to that end, the government is committed to elimination of tariff and non tariff barriers. There are no quantitative restrictions on imports and tariffs have been reviewed and lowered. Consequent upon this review a tariff rationalisation has been effected and includes tariff reduction to a maximum of 18% and the reduction of tariff bands to four (4) economic groupings. Tariff levels in The Gambia will be subject to further review in order to ensure that The Gambia remains competitive.”  “Gambia Trade Policy,” Department of State for Trade Industry & Employment, Last Modified 2009, accessed August 19, 2013,  http://www.gambia.gm/Trade.htm.

[95] Osman Kargbo, “Gambia: No Control Over Price Hikes If…,” allAfrica, July 11, 2013, accessed July 29, 2013, http://allafrica.com/stories/201307111371.html.

[96] “Industrialization in Sub-Sahara Africa and Import Substitution,” accessed August 26, 2013.

[97] Gambia Information Site, “NAWEC Gambia Limited,” Last Modified 2013, accessed August 10, 2013, http://www.accessgambia.com/information/nawec-water-electricity.html.

[98] Nicole Dalrymple, “AFRICOM-Funded Projects Assisting African Partners Development Capacity to Counter Drug Trafficking.”  U.S. AFRICA COMMAND (AFRICOM), Last Modified January 20, 2012, accessed August 5, 2013, http://www.africom.mil/Newsroom/Article/8759/africom-funded-projects-assisting-african-partners