Gambia Economy

Gambia Economy


  • Basic data
  • Public finances and the state budget
  • Banking system
  • Tax System

Basic data

The Gambia is the smallest country in continental Africa, has limited resources and ranks among the least developed countries in the world (HDI 172nd out of 228). After the establishment of political stability in 2016 and before the outbreak of the coronavirus pandemic, Gambian economic growth reached relatively high values ​​exceeding 6% per year. However, the economy shrank by 2.1% in 2020. The country has long been highly indebted (74.5% of GDP). Inflation is stable but relatively high (around 7%). The official unemployment rate is around 11%. Check ebizdir for economical facts of Gambia.

The primary sector accounts for almost 20% of GDP, employs more than 70% of the working population and the main product is peanuts. The secondary sector accounts for only 14% of GDP, while the services sector dominates with more than 65% of GDP (telecommunications and digital technologies). Tourism (mostly British and German) accounts for 20% of services.

The Gambia mainly exports raw timber, groundnuts, cashews and fish. The target destinations are China, India, Mali, Chile and South Korea. Gambia mainly imports cotton, refined petroleum products, rice, sugar and palm oil. The goods travel from China, India, Senegal, Brazil and the Ivory Coast.

Gambia’s serious problems include deforestation, water pollution and desertification (a 30% decrease in rainfall over the last 30 years), in addition to a high level of corruption. Water pollution is a significant problem due to the lack of adequate sanitation facilities. Poor water quality contributes to high infant mortality.

The Gambian economy is expected to grow by 3-4% per year. In the coming years, the drivers of economic growth will be agriculture, tourism and infrastructure development (energy and roads). Of great importance is the recent opening of the Trans-Gambia Bridge. The modernization of the port and the planned establishment of an autonomous trade zone in Banjul are part of efforts for greater regional trade integration (within the AfCFTA).

Pointer 2019 2020 2021 2022 2023
GDP growth (%) 6.1 -2.1 3.2 4.2 4.9
GDP/population (USD/PPP) 2,320.00 2,280.00 2,360.00 2,490.00 2,600.0
Inflation (%) 7.1 5.9 7.4 7.1 6
Unemployment (%) 9.5 11.1 ON ON ON
Export of goods (billion USD) 0.1 0.1 0.1 0.1 0.1
Import of goods (billion USD) 0.6 0.5 0.7 0.8 0.8
Trade Balance (Billion USD) -0.4 -0.5 -0.5 -0.6 -0.5
Industrial production (% change) ON ON ON ON ON
Population (millions) 2.4 2.4 2.5 2.6 2.6
Competitiveness ON ON ON ON ON
OECD export risk 07.VII 07.VII 07.VII ON ON

Source: EIU, OECD, IMD

Public finance and state budget

Public finance 2021
State budget balance (% of GDP) -4.2
Public debt (% of GDP) 74.7
Current account balance (billion USD) -0.2
Taxes 2022
F.O 30%
VAT 15%

The pandemic has greatly disrupted the implementation of the economic reforms planned by the government in 2020 and 2021. The main challenge for the Gambian authorities in the long term is the mobilization of domestic revenues to finance public expenditures. The state budget balance reached 4.2% of GDP in 2021, and public debt rose to 74.7% of GDP. The new government of A. Barrow condemned the massive embezzlement of funds by the former regime, especially at the level of public enterprises, which depleted the government’s reserves and led to significant fiscal shocks.

Public revenues are largely influenced by income from agriculture and tourism, both highly sensitive sectors to external influences. Public debt, both external and total, is unsustainable according to the IMF’s latest analysis. Debt service accounted for more than 45% of household income in 2018. The country is engaged in a public debt restructuring process with its bilateral and multilateral creditors. Since the restoration of political stability, international development agencies and partners have committed significant support to the Gambian economy. The IMF has approved an increase in quick loans to The Gambia under the ECF agreement to $47.1 million. The goal is to help the government meet the financial needs of the balance of payments from the state budget and at the same time support the post-pandemic economic recovery. The Gambia is among the countries

In the future, government policy will focus on mitigating the socio-economic impacts of the pandemic and reviving the economy in 2021-22. In 2021–22, progress will also be made on legislative reforms to improve public financial management, as prescribed in the ongoing IMF programme.

Banking system

There are 12 commercial banks operating in Gambia, one of which is Islamic. The banking system is supervised by the Central Bank of The Gambia. The sector is dominated by subsidiaries of Nigerian banks. It should be noted that these subsidiaries are largely independent of their parent institutions and are mostly majority owned by Gambian entities.

The banking system is highly liquid, most banks are profitable and meet the central bank’s capital adequacy and liquidity requirements. Although the industry is profitable, local banks are disproportionately dependent on government assets (treasury bills) to invest their money. Loans to individuals and businesses are not high because interest rates are still too high (15%).

There are no restrictions on foreign businesses opening accounts in The Gambia. Investors can repatriate funds through the banking system.

Tax system

Value added tax (VAT) is set at 15% by default. Exemptions include: staple foods (rice, flour, sugar and milk), financial services, educational services and some imports, prescription drugs, life insurance, health insurance, residential rental properties.

Income tax is 30% of annual turnover, capital tax is 27% (of net income) or 15% (of sales price). Exempted are capital gains from gifts and inheritances and property transfers up to DAL 7,500 ($262).

The rental tax is 10%. There are no property taxes. Non-residents are taxed only on Gambian income. Spouses are taxed together (a married woman can be taxed separately only if she has a steady income from gainful activity).

Dividends, interest and royalties are subject to 15% tax.

Social security contributions paid by the employer are 10% (Social Security and Housing Finance Corporation -SSHFC) + 1% (Industrial Injuries Compensation Fund -IICF).

Gambia Economy