Kebba,
I might be wrong on this but my understanding is that the Commercial Banks
are not allowed by the Central Bank to venture outside Banking. That is they
can not invest in things like real estate, insurance or any other major
investments. They can rescue failing corporations at the request of the
government but must divest as soon as those are up and running. I do not
know why this continues to be the case but it can be a major obstacle to
your
plan.

Malanding


----- Original Message -----
From: "Dampha Kebba" <[log in to unmask]>
To: <[log in to unmask]>
Sent: Thursday, June 28, 2001 10:40 AM
Subject: Moving Forward ---- We WILL BUY the Groundnuts


> It is obvious that Yaya and his cohorts have woefully failed the Gambian
> people. Gambians today are poorer than they were seven years ago when Yaya
> and his gang of bandits stole power from a democratically elected
> government. They promised to improve the lot of Gambians. That promise
never
> materialized. Instead, Gambia has declined over the years.
>
> It is also a known fact that the government of the day cannot employ the
> bulk of Gambians in high-paying government jobs. We cannot have a
> comprehensive social security system that can be used as a safety net for
> the poor and vulnerable in our society. But what the government CAN and
> SHOULD do, is at least provide a conducive environment where hardworking
> Gambians (mostly self-employed farmers) can thrive. The next government
MUST
> ensure that our farmers sell their groundnuts (major export product) at
> competitive rates.
>
> How do we do that? My humble suggestion is to first of all form a
> corporation that would be in charge of the marketing of groundnuts. The
> Gambia government would be the major shareholder in the corporation. I
will
> explain why. Other shareholders can include cooperative unions I will also
> talk about later. The general public (including commercial banks and
> 'para-statals') will also be encouraged to become investors in this
> corporation.
>
> The major objective of this corporation would be to raise funds to buy the
> groundnuts from the farmers and then sell it in the international market.
In
> order to raise the desired funds, the corporation can depend on capital
> contributions from shareholders and debt instruments such as bonds floated
> both locally and internationally. There  has always been a lucrative
market
> in treasury bills in Gambia. Commercial Banks do not need to lend money to
> the general public in Gambia. They can just deposit their money at the
> Central Bank and lend the money to the government at exorbitant interest
> rates. This requires no innovative thinking from the commercial banks. The
> last time I checked, the banks can get money from their customers and pay
> them 5% interest (0% for Sarahulehs that do not want 'ribar') and then
give
> the money to the government and get a 15% return. Every six months they go
> to the Central Bank, get their interest payments and leave the principal
> there. From their interest payments, they can declare hefty profits for
the
> bank and repatriate same to their foreign shareholders. Meanwhile their
> principal is intact. Almost no risk of the government defaulting. Typical
> 'Ponzy Scheme' in American parlance.
>
> The new government has to tackle this laziness and stagnation of our
> economy. Apart from the commercial banks, institutions such as Social
> Security also spend millions lending money to the government at exorbitant
> interest rates. The government in turn does not use this money wisely.
Civil
> servants use the moneys for paying government salaries and financing bogus
> overseas trips. In any case, this money is not reaching our farmers.
>
> Why can't we have a highly rated bond from our groundnut marketing
> corporation that would take the place of the Treasury and Central Bank
bills
> that lazy commercial bankers and managing directors of 'para-statals' are
so
> fond of? The government can stand behind this bond offering and offer
> lenders the same guarantees they get vis-a-vis the current government debt
> instruments we have. This would also be an opportunity for the government
to
> at long last do something tangible with our high interest rates when it
> comes to borrowing money from the banks. If the banks and 'para-statals'
do
> not see the high rates coming from the current bills, they will look up to
> the next best thing.
>
> The bond from this corporation can also be marketed internationally. A
> guaranteed 10% per annum return on investment is attractive in any market.
> Rather than asking for hand-outs from certain donor countries, let us ask
> them to stand behind our bonds in order to give the offering credibility
in
> the international market. United States has done that for the Mexicos of
> this world.
>
> I am sure others can come up with other innovative ways of raising funds
for
> our groundnut marketing corporation. Once the funds are in, we can buy the
> produce directly from the farmers at very good prices. We save our farmers
> the anxiety of thinking about working the whole year round just to have
> nothing to show for their sweat and toil. Another thing is that by buying
> the groundnut directly from the farmers before the corporation markets it,
> we also benefit from the economies of scale. We also benefit from the de
> facto monopoly the corporation will have. I must hasten to add here that
the
> monopoly status should not be abused.
>
> The corporation would have studied the international groundnut market
> thoroughly and be familiar with the players. That way, the corporation
will
> be able to use its inherent advantages (economies of scale, monopoly,
> government backing etc.) in order to sell the groundnuts at competitive
> rates in the international market. The stellar research done by the
> corporation would help in fixing good prices for our farmers. Our
> corporation should also be in a position to make modest profits for its
> shareholders.
>
> I mentioned cooperative unions earlier on. I believe the local farmers
> should be given a lot of say in shaping their destiny. To empower our
poor,
> we have to go to the grassroots and give them an environment and a vehicle
> to contribute to their well-being. How do we do that? I suggest we group
> farming communities to form unions with members ranging from 100 to 300
> people. These cooperatives will be run under democratic ideals. The union
> leaders will represent their members in a global body made up of all the
> cooperatives in the country. This body can be a non-profit making
> organization that looks after the welfare of the farming community. They
> will liaise with government officials (Ministry of Agriculture), aid
> agencies and other bodies in the country to ensure that they get the 'raw'
> material necessary to produce their groundnuts. It would also be wise for
> the union to come together and purchase shares in the groundnut marketing
> corporation envisioned above. That way, the union can look after the
welfare
> of the local farmers when our corporation is attempting to set prices for
> the purchase of the groundnuts from the farmers. On the other hand, if the
> corporation comes out better in this arrangement in any given year, the
> farmers will also benefit from the profit sharing the union will get
thanks
> to its shares in the marketing outfit.
>
> Let us NOT have a government that will say to the most vulnerable in our
> society (poor people) that: 'we cannot help you. We are not responsible
for
> buying your groundnut.' Let us be accountable for this vital sector of our
> economy. Let us tell our farmers that we will INDEED buy their groundnuts
at
> very good rates. Our government should not give up on our people like Yaya
> and his cohorts; bunch of High School drop-outs that do not have the
> wherewithal to move the country forward. When they CANNOT ensure that the
> groundnuts are bought, they cowardly and callously declare that it is NOT
> their job. Well, it would be the job of our next government. We have to
come
> up with a way to help our farmers. We can't just give up on them like Yaya
> and his cohorts.
>
> Again, I encourage people more conversant with this industry to help
> brainstorm. Our Opposition Parties have been criticized on numerous
> occasions for failing to articulate a plan for a post-Yaya government.
Some
> of the criticism might be justified. In order to have the moral authority
to
> further criticize the Opposition, I thought it would be better to give
them
> ideas and see what they are going to do with it. I hope by the time we are
> done (hopefully before the end of July) people will be in no doubt that
the
> Opposition have a plan to move the country forward after Yaya. This is NOT
> premature counting the chickens. This is to preempt a vicious lie told by
> our opponents that the Opposition does not have a plan to move the country
> forward.
> KB
>
> _________________________________________________________________
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