FOREIGN DIRECT INVESTMENT IN THE GAMBIA AND ITS DILEMMAS
In order to acquire a meaningful effect on the living standards in the
Gambia, which I know has always been one of the president$B!G(Bs highest
priorities; effective economic restructures must gain position in order to
generate a fast-moving growth. Too much attention has being put into trying
to capture Foreign Direct Investment (FDI) and too little attention put into
domestic savings, effective financial management and the enhancement of
other economic institutions and programmes. Political, social stability, the
rule of law and government$B!G(Bs accountability are also very significant
concern for any FDI. This is why in spite of all the effort i.e. Incentives
and other programmes put into place by the government, foreign capital flow
has been tremendously low. If some of these issues stated above are not
solved, then I bet the status quo will continue to prevail and government$B!G(Bs
economic programmes will fail, period.
Nevertheless, there is an enormous amount of economic optimism from
President Jammeh, which is a positive thing in order to keep the hopes and
expectations of people alive. Nevertheless, much more has to be done in
order to increase economic prospect and to bring what I would call a Gambian
Economic Renaissance. Public institutions must be strengthening with more
funding and effective management system.
Foreign Direct Investment will enable the country to acquire technology
through the import of capital equipment, re-enforce financial institutions,
labour forces be better organised, better production management skills, and
will also train people on new technical skills. It will create jobs and
enhance the country on diversifying its export. The Government must consider
FDI seriously, establishing a business environment suitable to increase
investor confidence and attract foreign investment.
Political stability is driving factor for FDI, that$B!G(Bs why we have seen very
low flow of FDI in Africa compare to other parts of the world. There has
thus been positive developments when President Jammeh$B!-(Bs recent political
action taken to achieve understanding and reconciliation between political
parties which was a judicious step forward. I hope that the same will remain
eternally, not to be impaired.
Most of our Social, environmental and financial institutions are poorly
managed and therefore require careful examination. In what I would refer as
$B!H(Bas a desperate call for FDI,$B!I(B there are tendencies not to address these
issues appropriately. However, these issues strongly affect FDI and for that
reason, cannot be jumped over or sacrificed. Competing interests as well as
government$B!G(Bs impact on businesses must be properly addressed and managed in
order to acquire and maintain a healthy investment climate.
The $B!H(BPull$B!I(B and $B!H(BPush$B!I(B factors are said to be the answers for FDI. The
Pull factors comprises of conditions that motivate investor trust by
minimising both costs as well as risks, also by making presentations that
enable maximisation of profit. Some of these factors include political and
economic reforms, liberalization of the exchange rates and capital account,
the quality of human resources available, the improvement in policy
transparency and the physical infrastructure.
The Push factors includes the business climate at home which has to do with
profitability, repeated economic downturns, taxation, as well as the pressed
condition of competition.
President Jammeh has done some reform in order to affect these Push and Pull
factors, but an increasing effort has yet to take place before things get
better. Apart from the factors stated above, institutional reform directed
at producing an effective bureaucratic system as well as a legal and
regulatory system enable to protect the rights of economic actors and
sanctions lawbreakers. I know that Investment codes as well as tax reforms
have been put in place, but I think it still needed some adjustments. It is
important to reconsider a yearly modification of these written policies.
There is a very poor quality of competition on the Banking sector in the
Gambia too, which requires regulation. There are no other financial
operators other than the few Banks available, which are charging
astronomical ca. 30 per cent interest rates for lending, plus bad quality
services. This negative manner of cartel building in the Banking sector is
bad for domestic business and consumption as well as FDI.
Since the domestic market in the Gambia is very small, government must be
able to formulate coherent import and export policies which promotes
domestic (however small), regional and international markets. An
Export-Promotion strategy, together with programmes on national capacity
building in trade promotion and export development should be a priority.
This will help both the domestic and the foreign investors to expand into
export activities. We do have a strong base of regional export which is the
best place to start before engaging into international export. Regional
market integration and cooperation must be an important part of government$B!G(Bs
domestic economic strategy.
Moreover, remember, FDI is the most useful channel for importing best
practices.
Mr. Sulayman S.Jawara
27th.February 2006
Stockhom, Sweden.
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