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The European Union’s Financial Regulation and Policy in The Gambia: A Crucial Partnership

In the realm of international relations, the partnership between the European Union (EU) and The Gambia is a cornerstone of their bilateral ties. This relationship is guided by the principles and objectives outlined in the Cotonou Agreement, which governs the EU’s relationships with African, Caribbean, and Pacific (ACP) countries.

Economic Growth and Challenges

The Gambian economy is predominantly driven by a robust agricultural sector, which accounts for approximately 30% of the country’s GDP and 40% of total export earnings. However, there remains substantial untapped potential in this sector, with less than half of arable land being cultivated and yields for most crops lagging behind the global average.

  • Tourism contributes around 20% to the country’s GDP
  • Manufacturing is relatively small and uncompetitive due to a limited domestic market and a problematic business environment

The real GDP is expected to grow by:

  • 3.5% in 2017
  • 4.5% in 2018 following a contraction in 2016 due to the negative impact of El Niño on agriculture. Inflation is anticipated to moderate from 7.4% in 2016 to:
  • 6.5% in 2017
  • 6.8% in 2018 as global oil prices rebound.

Policy Slippages and Economic Difficulties

The Gambian government has struggled with policy slippages, including failing to meet fiscal targets and limiting domestic borrowing. This has exacerbated the country’s economic difficulties.

  • Public enterprises such as the National Water and Electricity Company (Nawec) have large financial deficits
  • The Gambia Telecommunication Company (GAMTEL) is facing a shrinking customer base

Progress with tax reform is likely to be slow, and the reform of parastatals will take even longer to implement. The 2017 budget remains expansionary, driven by rising debt interest payments, which will need to be financed through short-term Treasury bills.

EU Support for Development Aid

The EU provides financial support for development aid in The Gambia under the National Indicative Programme (NIP).

  • A key focus of the NIP is agriculture, given its importance in food security, jobs, trade opportunities, and boosting the country’s economy
  • Investment opportunities can be obtained through the Gambia Investment and Export Promotion Agency and The Gambia Chamber of Commerce

Incentives for local and foreign investors are outlined in:

  • The Gambia Investment Promotion Act
  • Gambia Free Zones Act

The EU is committed to supporting The Gambia’s development strategy, which includes Vision 2020 and Programme for Accelerated Growth and Employment (PAGE).

EU Development Assistance

The main source of EU funding for ACP countries is the European Development Fund (EDF). The EU aims to provide flexible and adaptive support responding to the specific needs of beneficiary countries as identified in their national development plans.

  • The Gambia benefits from funding under thematic initiatives, such as:
    • EU Food Facility
    • Global Climate Change Alliance

As a member of ECOWAS, The Gambia can also benefit from projects and programmes implemented by the ECOWAS Commission and the West African Economic and Monetary Union (UEMOA) Commission in areas like trade and competitiveness development, peace and security, regional infrastructure, and transport facilitation.