The Gambia’s Finance Minister has promised universal access to electricity by 2025 as Parliament approves over two billion Dalasi loan and grant agreement from the European Investment Bank.
By Edrissa Jallow and Yusef Taylor
The Gambia’s National Assembly approved a thirty-five-million-euros (EUR€35.08 million) loan and grant agreement between the Government of The Gambia and the European Investment Bank on Monday 6th March 2023, the same day parliament convened its first ordinary session for the 2023 Legislative year.
The loan and grant agreement is equivalent to over two billion, three hundred and sixteen million dalasi (D2.316 Billion) at a rate of D66.18 to EUR€1 according to The Gambia’s Central Bank. Tabling the loan and grant agreement before lawmakers, Finance Minister Hon Seedy Keita highlighted that the agreement is for “The Gambia Electricity Restoration and Modernization Project (germp)”.
According to the Finance Minister’s speech, “the overarching goal of the GERMP is to improve the electricity services of The Gambia”. He revealed that the country “is experiencing an acute electricity crisis which arises from the inability of the sector to meet domestic demand”.
“Nevertheless, the government strives to attain universal access to electricity for all Gambians by 2025,” promised Minister Keita. To achieve “this objective,” the Minister prescribes “sustained investments to improve our transmission and distribution networks, governance of the energy sector and investments in renewable energy”.
During his speech, he noted that the main beneficiaries of the loan and grant agreement are the “Ministry of Basic and Secondary Education (MoBSE) and the Ministry of Health (MoH) with 1,000 schools and 100 health facilities across the country to be ‘solarised’ by SESCO [Sustainable Energy Services Co. Ltd]”.
Back in July 2022, Gainako published an article on two loan agreements ratified by the Sixth Legislature. The two loans totalling USD$27 million, equivalent to D1.4 billion were approved during the first extraordinary session of the 2022 Legislative year.
The first loan was a total of USD$20 million for the expansion of the Bertil-Harding highway road construction from the Kuwaiti Fund for Arab Economic Development (BADEA). While the second loan agreement came to USD$7 million for the development of the University of The Gambia’s Faraba campus the Islamic Development Bank (IsDB).
EUR€8million Loan To Be Paid Over 25 Years
Explaining the different elements of the financing agreement Minister Keita notes that “Component 4 of the GERMP is a tripartite funding package,” which means it is split in three. The three various elements he detailed include “a Loan of EUR€8million coupled with a Grant of EUR€24.08million and Technical Assistance (TA) of EUR€3million”.
The repayment terms for the EUR€8million Loan element are over a 25-years tenure including a 5 years grace period attracting a 1.25% interest rate.
According to the former Minister for Trade and now Finance Minister “the above terms have a Grant element result of 37.97%, which is above the threshold of 35% for any new borrowing as per IMF guidelines”.
According to calculations by his Ministry “combining the loan and grant, the overall financing package has a Grant Element result of 84.53%, which is highly concessional”. More importantly, Minister Keita revealed that “the Government of The Gambia doesn’t have any monetary ‘counterpart contribution’ under Comp. 4 of the GERMP”.
In his closing remarks, Minister Keita urged Parliamentarians to support the loan and grant agreement, adding that “the effective implementation of this project will contribute significantly to the attainment of the NDP objectives specifically the strategic priority of ‘building our infrastructure and restoring energy services to power our economy’ as we strive to attain universal access to electricity for all Gambians by 2025″.
A few days ago Gainako published a story highlighting that a number of foreign institutions have increased their grants pledged to The Gambia between the submission of the Draft 2023 Budget to the Approved 2023 Budget. One of the Institutions mentioned in that report is European Investment Bank.
According to our research comparing the Draft and Approved 2023 Budget the European Investment Bank has added D500 million in grants. This increase almost doubles the D553 million pledged in the Draft 2023 Budget.
The Gambia now anticipates benefiting over D1 billion in grants from the European Investment Bank in 2023. Coincidentally, The National Assembly has now approved a loan and a grant totalling over D2.3 Billion in March 2023.