By Arret Jatta and Yusef Taylor
Some weeks back the International Monetary Fund (IMF) presided over a one-day dialogue on managing the high cost of living in The Gambia and possible ways of addressing it. This week the Minister of Finance and Economic Affairs, Hon Seedy Keita revealed that “headline inflation has reached 13.3% in September 2022, up from 11.7% in June 2022 and 8.2 per cent a year ago”.
Headline inflation is the raw inflation figure reported through the Consumer Price Index which is expected to be monitored by the Gambia’s Bureau of Statistics. It measures the overall inflation by checking the increase or decrease in prices of an agreed food basket of commodities that assess inflation in the overall economy.
Ms Saraphine Wakana, the United Nations (UN) Resident Coordinator highlighted that “in recent years, the world has witnessed unprecedented challenges in the form of climate change, the Covid-19 Pandemic, and the unfortunate Russia and Ukraine war which have directly and indirectly affected the livelihood of people across the world with The Gambia being no exception”.
She added that in recent months, inflation has increased faster and more persistently than previously anticipated which according to her has caused an increase in prices of essential commodities such as food, fuel and fertilizer which compiles a significant part of the country’s imports.
The Gambia Imports 90% of its Consumption
Hon Seedy Keita also spoke at the IMF event where he noted one of the challenges for The Gambia is that it imports 90% of its consumption, and the increased inflation is mainly through imported inflation. Similarly, during the Finance Minister’s speech on the tabling of the 2023 Draft Budget he noted that “the inflationary pressure and expectation have risen” and “this is fueled by surging food and energy prices coupled with other risk factors such as currency depreciation, [an] adjustment in transport fares and pump prices”.
Minister Keita also revealed that Government had paid subsidies “to the tune of D1.3 Billion as at the end of September 2022”, however, Oil Marketing Companies have complained in a press release issued on 12th October that “the Government is recouping 17.99 GMD per litre, compared to the OMC’s 0.78 bututs per litre”. This raised questions about the veracity of the Government’s subsidies.
Nonetheless, during the engagement which occurred in the first week of November 2022, the Minister of Finance recognises that the ongoing surge in food and energy prices has impacted the country’s economy.
One of the measures the government has adopted is to include a 20% discount on the Custom valuation rate on the import of all basic and essential commodities.
One means to reverse the importation dependency is to grow what you eat and eat what you grow. To boost Gambia’s prospects of producing enough food for local consumption and cutting down on importation, Minister Keita believes that Agriculture is crucial. He explained that the government has already started the implementation of agricultural projects together with development partners to support productivity, modernization and value addition of local production.
Mr Edrissa Jobe, the Chairman of the Gambia Chamber of Commerce and Industry (GCCI) highlighted that the big challenge is to eradicate poverty with the help of their partners. According to him by eradicating poverty, a high inflation rate needs to be controlled especially food inflation.
Mr Jobe who was the proprietor of one of the leading Oil Marketing Companies, Atlas Energy, and now proprietor of EMHoldings also added that high unemployment is a factor of poverty and that supply constraints and energy insecurity also need to be addressed.
Agriculture is Mostly Funded by Loans and Grants
Looking at the 2023 Draft Budget provides the approved funds for Government Local Funds (GLF) allocated to each Ministry and all funds including GLF, Loans and Grants. To ascertain how much funds are coming from Loans and Grants to fund Agriculture our researcher subtracted the number of funds allocated to GLF from all Funds. The results show how much the government is investing in Agriculture compared to how many Loans and Grants it expects to generate from international partners.
For a meaningful comparison, the same exercise was repeated for the President’s Office and National Debt Service. It can be seen that the National Assembly approved the 2022 Budget Allocation of D1.4 Billion to the Ministry of Agriculture, however, only D385.8 million of this total amount is coming from Government’s Local Fund. The remaining D1.02 Billion (73%) is coming from Loans and Grants with only 27% actually expected from Government sources.
Similarly, the 2023 Draft Budget proposes for a total allocation of D2.39 Billion toward the Ministry of Agriculture, however, only D282.9 million (12%) will be coming from the Government with D2.1 Billion (88%) expected to be generated from Loans and Grants. The danger with this is that it appears as if the government is allocating a lot of funds to Agriculture but the Minister has noted challenges in receiving partner support.
Minister Keita has noted that “the projected disbursement of budget support grants from the European Union of US$23 million and African Development Bank of US$7 million did not materialize” in 2022. This is a total of US$30 million and is equivalent to D1.8 billion GMD. This highlights that there is less reliability in accessing funds from International Partners as compared to Government Local Funding.
When compared to the Office of the President this trend is very different. Out of the entire D1.2 Billion allocated to the Office of the President in 2022, only D458.7 million (38%) was expected from Loans and Grants with over D755 million (62%) coming from Government Local Funds.
Similarly, in the 2023 Draft Budget, the Minister proposed a total allocation of D1.1 Billion towards the President’s Office. Out of this amount, only D459 million (41%) is expected to be funded from Loans and Grants with the majority of the President’s Office funding being D662 million (59%) coming from the Government’s Local Fund.