From FOROYAA Burning Issues NO: 1/2003 2 - 5 January, 2003
Focus On Gambia's Economic Situation
Government Does Not Manufacture Foreign Currency, So Why Blame Them?
Dear Editor,
I am a keen listener of the "Indepth" programme over the GRTS moderated by
Neneh Macdoll. Many of what the panelists say were understood except
something said by Mr. Saim Kinteh which appears incomprehensible to me and
that is "The Gambia government does not manufacture foreign currency and
therefore no one should blame the government for the shortage of foreign
currency in the country. The audience who appears to be APRC supporters
chorused that "yet they want to blame the government for that too." This
was followed by laughter.
Can you shed more light on this matter?
Thank you very much;
Yours Sincerely,
Tapha M. Baldeh.
Thank you very much, Mr. Baldeh. I am happy that many people are now
interested in what is said about our economic situation either over the
GRTS or the FOROYAA.
The question you have raised is an interesting issue, that is the issue of
manufacturing foreign currency. I think even the lay person in the street is
aware that it is not the Gambia Government that produce the dollar, the
Euro or the CFA. That is a non issue.
In our earlier issues, we have analysed the issue of printing money even
though we manufacture the Dalasi, there must be a limit to what should be
printed not to talk about the printing of the Dollar; that would tantamount
to counterfeit which is a crime in itself.
It is only desperate governments who because of the need for revenue may
increase the money supply even though they are aware that the resulting
increase in inflation erodes the real value of all financial assets with
the exception of those that are fully indexed, thereby creating what is
termed as inflation tax.
So as you can see even though our government can manufacture the Dalasi to
use their term, they may do so to the detriment of the economy when the
amount printed does not commensurate or is not equal to the total value of
the products and services produced in a country.
So as you can see it is not whether government manufactures foreign
currency or not. the issue is whether it is government's responsibility for
foreign exchange to be available in the country. The other issue is
whether we can blame the government for the lack or shortage of foreign
currency. These are the issues that you have raised.
Now if we look at the overall role of the government it will be clear to us
as to whether it is the responsibility of the government to make sure that
the foreign exchange is available in The Gambia. The President of the
Republic himself has acknowledge that it is government's responsibility to
create what he calls an enabling environment that would make it possible
for foreign exchange to be available in the country. The panelists
themselves including Saim Kinteh himself accepted that at least it is
government's responsibility to create the enabling environment for the
acquisition of foreign exchange.
Now the question that comes to mind is whether the government of the day has
created such an enabling environment, and how is the enabling environment
created.
Well any intelligent person would have thought that since the government
itself has to pay a sum of over 500 million Dalasis equivalent in the
foreign currency annually to the IMF, the World Bank etc, they should not
only be interested to see that the country earns foreign currency but take
the necessary practical steps to see to it that they earn outside currency
by themselves without having to compete with the private sector in the
acquisition of it.
Secondly, a good government is one that is not only engaged in creating the
enabling environment for production to take place but is one that actually
invest in production where necessary to boost production, generate
employment and expand internal and external commerce. There are many areas
where government can invest such as the fisheries sector, the agricultural
sector, the industrial sector etc which would complement the efforts of the
private sector and not relegate it to the side line. What about the energy
sector which is hardly introduced. To create an enabling environment for
development is not just going to the television to chat about it but it is
to take concrete measures that would facilitate or bring about development
in that particular sector.
The government or agents of government or people who government depends on
for advice should seize the bull by the horns and advice it to take
concrete steps that would reduce the country's dependence entirely on
outside commodities.
Many analysts at GRTS refused to even mention the liberalization programme
that this government has muddled itself in because of IMF manipulation and
misguidance. The analysts should explain to the people the reality of the
country's economy and explain why for example, government cannot engage in
importation of fuel, building of industries and helping farmers by way of
subsiding fertilizers, seed nuts, implements etc? They should also explain
to the people that as long as the investments are not done in the country,
the country would not have enough commodity to consume, let alone export to
gain the foreign currency needed to import even the essential and most
important items needed by this country not to talk about the expensive and
most extravagant items such as luxurious vehicles displayed by the
executive and our bureaucrats.
Imagine that the public sector accepts to invest in rice production in
whatever way, wouldn't that not reduce the amount of rice imported into the
Gambia? Wouldn't that not reduce the food import bill for this country?
Wouldn't that not as well reduce the foreign exchange pressure on both the
government and the private entrepreneurs? Of course it would. Again it is
demagogic to portray that the government has no hand to enable the country
to gain foreign currency except by way of creating a socalled enabling
environment. The people did not vote for a private sector, so they have no
authority to hold them responsible for the lack of improvement in their
lives, but they have voted and paid taxes to a government who promises them
to be utilizing those taxes to bring about development not only
infrastructurally in the country but improving in the general welfare of
the population.
Even the Secretary of State for Finance has mentioned that our import bill
is far more than what we earn from our exports. He further said the country
needs to boost their export potential so as to reduce the deficit. But this
imbalance cannot be eradicated without investment from either the private
sector or the public sector which is run by the government. The private
sector as we know it is almost non-existent by virtue of the fact that
their capacity to invest in the productive base is so limited. Since that
is the reality, what should be done then?
The fact that remains to be seen is that the government or the public
sector has been collecting taxes and earning revenue from its institutions
of accumulation such as AMRC, SSHFC, NAWEC, Gamtel, GPA etc. and this can
of course be reinvested in the other sectors of the economy which are badly
needed to precisely address this over dependence on outside commodities
which is the main cause for the shortage of foreign currency.
So if the lack of foreign exchange is the cause of skyrocketing prices
which of course is disenabling the vast majority to purchase commodities at
the market without which life in general is becoming unbearable, who can
now honestly assert that that is not government's responsibility and
therefore should not be blamed for that. Only apologist of that government,
who are only interested in privileges and not the people can gloss their
eyes over that reality.
"It's easy to lose touch with reality when you are surrounded by people too
nervous to tell you the truth," says Sir Paul Smith.
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Source: FOROYAA (Freedom) NO: 1/2003 2 - 5 January, 2003 ISSN: 0796- 08573
Address: FOROYAA, P.O.Box 2306, Serrekunda, The Gambia, West Africa
Telephone: (220) 393177 Fax: (220) 393177
Email address: [log in to unmask]
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