By Yusef Taylor, @FlexDan_YT
On Tuesday 30th July 2019, the Gambia National Assembly ratified a $93 Million USD financing agreement with the Saudi Fund for Development (SFD). The speech read out by the Minister of Finance and Economic Affairs, Hon. Mamboury Njie highlighted that The Gambia requires “significant investment in infrastructure and other social amenities in the country … for the successful hosting of the 2022 OIC summit in The Gambia”.
According to the 2019 Budget Speech authored by the current Finance Minister “currently our public debt to GDP is about 88 percent, highlighting an unsustainable trajectory. This requires close attention to bring it down to a level that meets the prudential limit of 40 percent, which is the desirable position for a developing nation.”
Overview of Financing Agreement
The breakdown of the financing agreement which includes loans and grants is as follows.
- $50 Million USD for Roads Project in the Greater Banjul Area
- $10.5 Million USD for Construction of VIP Lounge Project at Banjul International Airport
- Both loan agreements include a 1% loan charge, 5 years grace period and 30 years Maturity
- $22.5 Million USD for Rehabilitation of Water and Sanitation Networks Project
- $10 Million USD Electricity Network Enhancement Project
- Both grants are facilitated through a Memorandum of Understanding
Ratification before Signing? Rubber Stamp National Assembly
Earlier in June, the President’s Office issued a press release announcing “the signing of a $92.5 million funding agreement”. The agreement was penned between “Vice Chairman and Managing Director of the SFD, Dr. Khalid S. Alkhudairy and the Gambia’s Finance Minister, Mamboury Njie”. This raises an important question for the National Assembly who should question if deliberations on loans and grants should be subjected to National Assembly scrutiny before being signed by the Finance Minister.
After the agreement was ratified on Tuesday, National Assembly member (NAM) for Bundugnka Kunda, Hon. Bakary Njie highlighted that “National Assembly cannot allow themselves to be manipulated or to be taking sides. If a bill come or a loan agreement it should be properly looked at we have a job to do and we must do that job properly”.
According to the UDP NAM, he was informed of a caucus meeting before the loan sitting which he didn’t attend. In his view “before we [NAMs] were very united. Now looking at things it seems that people are starting to take sides. We said we are not rubber stamp are we now turning ourselves to be a rubber stamp?”
Signing of $93 Million USD finance agreement, SFD Vice Chair (l), President Barrow (m) and Finance Minister (r) in June 2019
$200 Million in 32 years, where are the funds going?
According to the aforementioned state house press release, Hon. Mamboury Njie highlighted that “within 32 years of the country’s membership of the SFD, the bank has invested nearly $200 million in the Gambia in areas of health, education, and infrastructure, among others”. This raises the question where all the $200 million has been spent, as health, education and infrastructure are all still in a dilapidated state. Perhaps a critical look at the Government’s recent activities can shed light on how public funds are being spent.
Last week the Gambia Government sent a delegation of 18 officials to the funeral of a Senegalese Politician, this week President Barrow received the Indian President and apparently visited Mauritania using a private jet, leaving the Indian President behind. All these activities consume funds which could have been used on development initiatives. This highlights that acquiring loans and grants is not an impossible task for Gambian authorities. How we spend it, however, is something we need to seriously consider. According to NAM for Wuli West, Hon. Sidia Jatta “it is not bad to take loans, but we must take loans to do away with taking loans. We don’t take loans to be takers of loans forever”.
Instead of acquiring more loans on initiatives which generate no revenue can the Government prioritise loans for profitable ventures which can generate enough funds to repay loans? For example a loan acquired to improve the capacity of The Gambia’s fishing industry combined with a cancellation of all external fishing agreements to enable Gambia to sell fish at a larger scale to international market. The revenue generated from these activities can be used to pay off loans. There by exiting the debt trap.
According to the 2019 Budget Speech “The 2019 budget will continue to be anchored on limiting Net Domestic Borrowing to 1.3 percent of GDP. This will be achieved through applying fiscal discipline to narrow down the deficit and control domestic borrowing.”
Was OIC funding supposed to be Grants or Loans?
Many have expressed concern that they were under the impression that the Gambia’s OIC bid wouldn’t cost Gambian taxpayers a butut. On the contrary, both the Finance Minister and a PDOIS NAM rejected this notion. Questioning the possibility of the OIC being free Hon. Sidia Jatta opined that “it’s not possible for Gambia to become a member and not to spend anything when a conference is going to be held in The Gambia. It does not make sense. Are we beggers?”
Questioning Hon. Mambouray Njie on the OIC being a bunya “free for Gambian taxpayers” he explained that “if you say 60% is bunya “free” but we also determine and we want to make sure it’s in line with our National Development Plan”. According to the Minster “We have our National Development Plan…. If it was like we just take our hat and just said ngirri yallah “begging for help” maybe it will be different but … we said Infrastructure and Energy these are the priority areas. So when you [donors]come in we make sure you fall we in [line with the NDP]we have to also contribute.”
Back in May 2019, OIC PRO, Essa Bokar Sey told journalists that “the money for maintaining the OIC is not from the Gambia Government it’s from the OIC Secretariat”. Mr. Sey made this statement at a period when headlines were rife of The Gambia relinquishing the OIC 2019 summit.
Mostly Loans or Grants?
According to the details provided by the Finance Minister $60.5 Million USD are loans and $32 Million USD are grants. In simple mathematics this equates to 65% loans and 35% grants. Meaning a large share of the financing agreement is “soft loans”.
However, in an exclusive interview with the Finance Minister right after the loans were ratified he explained that the amount of loans is calculated using an economic model. “When you calculate the grant element there is a model. It includes the grace period, there’s obviously a grant element which is imported that’s why it is 60% grants. When you look at the two grants for water and electricity … it also has a grant element.”