The Investment Climate Statement Chapter of the CCG is provided by the State Department. Any questions on the ICS can be directed to EB-ICS-DL@state.gov.
The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.
Topics include openness to investment, legal and regulatory systems, dispute resolution, intellectual property rights, transparency, performance requirements, state-owned enterprises, responsible business conduct, and corruption.
These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.
Located in West Africa, The Gambia is the smallest country in mainland Africa with a population of roughly 2.25 million people. The Gambia has an active private sector, and the government has announced its support for encouraging local investment and attracting foreign direct investment. The government’s Gambia Investment and Export Promotion Agency is dedicated to attracting foreign investment and promoting exports and it provides guidelines and incentives to all investors whose portfolios qualify for a Special Investment Certificate.
The Gambia has a small economy that relies primarily on agriculture, tourism, and remittances for support. The Gambia remains heavily dependent on the agriculture sector, with 75 percent of the population dependent on crops and livestock for their livelihoods. However, recent economic growth has been mainly driven by the services sector, including financial services, telecommunication, and construction. The country also has a long trading history and is a party to several trade agreements, which have the potential to make it an attractive production platform for the region and beyond.
The Gambia’s largest trade partner is Cote D’Ivoire, a fellow ECOWAS member, from which The Gambia imports the majority of its fuel products. Other major trade partners include China and Europe. The Gambia is a member of the Economic Community of West African States (ECOWAS), a regional economic union of 15 countries located in West Africa.
With its young and rapidly growing population, Gambia provides a market with numerous opportunities for the sale of international products and services. Many Gambians have strong personal or professional ties to the United States, as well as a strong affinity for American brands. With a continued interest in new American brands, many Gambians have opened shops strictly selling American products. The quality and durability of American products are highly regarded. English is the official language and the business language. Local languages are also spoken by Gambians, and many of them are multilingual.
Registered property rights are crucial to support investment, productivity, and growth; however, the absence of a land policy means disputes over land are a major problem in The Gambia. Occasional disagreements occur in rural areas, mainly the West Coast Region, over land ownership or succession. Most conflicts result when community leaders sell a plot of land to multiple buyers. The Lands Office record-keeping system is manual and poor.
Frequent power outages, high data tariffs, and interruptions in internet services hinder businesses’ operational efficiency. Telecommunication operating costs remain high, and service is slow and subject to blackouts due to constant maintenance. In addition, the road system is heavily trafficked and can become impassable during the rainy season due to lack of drainage. The Gambia lacks the energy infrastructure necessary to support advanced commercial activities.
In December 2021, President Adama Barrow from the National People’s Party was re-elected for a second term five-year term. During his inaugural speech, Barrow pledged to jumpstart the economy and ensure broad-based development gains. In January 2021, the Ministry of Environment, Climate Change and Natural Resources launched the development process of Gambia’s Long-Term Climate Change Strategy (LTS), which aims to help in the full integration of climate into the country’s policies and strategies, better supporting the needs, priorities, and adaptive capacities of communities most affected by climate change. The plan, Vision 2050, has four strategic priorities and was intended to be released in late 2021, but is still in the works.
Domestic Economy Developments
The 2021 fiscal year was a challenging one for the Gambian economy, but it was an improvement from 2020. The economy was expected to grow by 3.2 percent in 2021 in comparison to the -0.2 percent growth rate recorded in 2020. The improved growth rate is attributed to a rebound in the economy, especially in the service sector. In 2021, the agricultural sector was expected to increase at a rate of 4.5 percent, a considerable decrease from the previous year’s 11.7 percent. Due to late rains resulting to an estimated decline in all agricultural sub-components except for livestock, which has an estimated growth rate of 4.2 percent in 2021. In essence, rain dependent agriculture continues to make the sector highly vulnerable to climate change.
The industry sector was predicted to register the same growth rate of 9.9 percent in 2021 as it did in 2020. This is due to the lingering impact of the pandemic on construction especially the new road expansion project funded by Organization for Islamic Countries.
Mining, quarrying, electricity, water, and construction sub-sectors are all projected to register a decline in 2021. Manufacturing is the only sub-sector projected to record an improved growth rate from -21.2 percent in 2020 to -1.7 percent in 2021.
The Service sector, which remains the largest contributor to GDP, was estimated to register a growth from -7.2 percent in 2020 to 0.2 percent in 2021. The growth in the sector is mainly driven by modest performance in most of its sub-components such as wholesale and retail trade; information and communication; financial and insurance activities; professional and technical activities; and education, all of which are all projected to grow by less than 10 percent over the review period.
Economy and Impact of COVID-19
Prior to outbreak of the pandemic, The Gambia had shown strong macroeconomic performance in the few years following the remarkable political transition in 2016-17. Economic growth accelerated, debt vulnerabilities decreased, external stability strengthened, structural and legislative reforms progressed, and key social indicators improved. However, the COVID-19 pandemic halted some of the hard-won progress, slowing economic activity and re-igniting extreme poverty. The Gambia experienced a third wave of the pandemic in mid-2021, which has receded.
The COVID-19 vaccination rate currently stands at about 12 percent of the target population. The first quarter of 2021 looked promising, thanks to a huge vaccination campaign and a dramatic drop in the number of cases and fatalities by the virus. However, the recent emergence of new strains, especially the omicron variant, has dampened this prospect. The economy took a hit due to the closure of businesses and schools, and a slowdown in tourism activities in 2020. The Gambia had projected the start of economic recovery in 2021, as economic activity began showing early signs of recovery from the pandemic-induced contraction registered in 2020.
The Ministry of Basic and Secondary Education reported COVID-19 related school closures affected about 674,300 students from Early Childhood Development to senior secondary schools in 2020. While most schools have since reopened, school closures resulted in many dropouts—highest among girls—and learning losses, which will likely have long-term detrimental economic and societal consequences. Limited digital infrastructure further hampered online learning.
Micro-, Small-, and Medium-Size Enterprises (MSMEs), which form the backbone of the Gambian economy by employing 60 percent of the active labor force and contributing approximately 20 percent to GDP, were particularly hard hit during the COVID crisis. The survival of MSMEs is crucial for mitigating the negative impact of COVID-19 on the economy and to sustain employment and create the conditions needed for future growth once the pandemic is over. Recovery efforts may provide an opportunity to “rebuild better” by prioritizing sustainability, resilience, and inclusiveness.
The World Bank indicated the key to The Gambia’s post-COVID economic strategy will require the creation of a skilled labor force that is more productive and better able to adopt and adapt to new technologies. This includes infrastructure improvements to increase productivity and create jobs. Inclusive and sustained economic growth remains one of the main objectives of the Government of The Gambia (GoTG), and the medium-term policy priorities will be anchored on achieving and sustaining a more diversified growth to improve the living standards of all citizens, in addition to creating a favorable environment for the private sector to thrive.
To access the ICS, visit the U.S. Department of Department of State’s website: https://www.state.gov/reports/2022-investment-climate-statements/the-gambia/.