Foroyaa Newspaper Issue No. 76/2003 Editorial Operation No Compromise The Facts and The Myths President Jammeh claims that the basic reason for the rise in the prices of commodities is the speculation on the dalasi and artificial price fixing by people he referred to as vampires. The president threatened that by last Thursday (October 2nd) he would deal with the problem of foreign currency. On Friday, the Secretary of State for Trade, Industry and Employment indicated that the exchange rate of the dollar had gone down. He claimed that this had proven the president right that speculators artificially create the depreciation of the value of the dalasi. In our view, the APRC government has a very simplistic understanding of the nature of the economic problems of The Gambia. The president seems to be surrounded with too many informers and very few technical experts on the economy. Anybody who follows the stock markets of the world would notice that any incident could lead to a rise or fall of the stocks. This is due to the fact that investors are human beings. They invest and take part in trade when they have confidence. They withdraw or hold back when they lack confidence. It is clear to those who are not even economists that the demand for foreign exchange and the scramble to buy and sell it is what leads to the depreciation of the dalasi. Those who can afford to buy it at a higher rate end up dictating the exchange rate. The only way to control the depreciation of the dalasi is to increase the supply of foreign exchange above the demand. President Jammeh however wishes to defy the reality and control the market through “operation no compromise”. Now they are announcing that he is successful. What he has succeeded in doing is to stifle demand through force by suppressing the competition for the buying and selling of foreign currency in the non banking market for trading in foreign currency. In fact, NIA officials have been posted where foreign currency used to be traded. How then can government announce that the depreciation of the dalasi has been halted? What could be said is that the official bank rate is reduced. This however has to be followed over a period to determine trends. What is clear is that while people can go to the banks to sell currency few can buy foreign currency from the banks. Some banks are buying the dollar at 33 dalasi while others are buying it at 36 dalasi. There is absolutely no doubt that if the banks cannot provide the informal sector with foreign exchange an underground market will grow that will intensify the depreciation of the dalasi. All Gambians want a strengthened dalasi and lower prices so that people can buy food and cement to build houses. However, this cannot be achieved through economic adventurism. Take the butchers in Brikama, for example. On Thursday, they were forced to sell meat and bone at D35 and steak at D40 per kilo. The butchers claimed that they bought the meat at D54 per kilo. On Friday, they suspended selling meat. If the government fails to do what FOROYAA suggests by stopping the economic adventurism and proceed to scientific study and objective action there will be scarcity of both foreign exchange and goods. This can lead to the flight of businesses. Pretentiousness paves the way to anarchy in economic management. Letter to the President & Others On Waa’s Remand in Custody Below, we publish a letter written by Halifa Sallah to the President and the Secretaries of State for Justice and the Interior. A government without principles cannot be trusted. A government with principles acts without fear or favour, affection or ill will, in accordance with the constitution and laws of a country. Mr President, a few days ago your newly appointed Secretaries of State swore to carry out their duties in accordance with the constitution and other laws of the country. Section 19 of the constitution states categorically that a person should not be detained for more than 72 hours without being taken before a court. The leader of NDAM was arrested in connection with a newspaper article published by The Independent. He was in police custody from Tuesday, September 30, 2003 to Friday, October 3, 2003. It was expected that he would be released on bail pending court action. Instead, he was escorted to Mile Two Prisons in gross contravention of the dictates of the constitution. A regime based on impunity would be insensitive to the dictates of the law. It would seek to punish before the law takes its due course. It would pass judgment on individuals on the basis of perceived threats. A truly secure and democratic regime cannot be pushed to honour the law with total disregard because of ill will. It would recognise that in the exercise of authority of government one must come into contact with those who are opposed to one’s mandate. They would try to say and do what would remove one from office. Such people may exercise their rights to the point of being suspected of violating the law. If that happens, the courts should be left to determine whether one’s actions have exceeded the bounds of what is considered reasonable and justifiable in a democratic society. The executive is too politically bias to assume the responsibility to determine the innocence or guilt of its opponents. If one has a fascist executive it could even torture and kill its opponents. This is why the courts are given the responsibility to determine innocence or guilt. When justice is allowed to take its natural course no allegation of impunity will be levied on a government. I must emphasize again that no sovereign Gambian possesses the personal or divine power to rule the country with impunity. Power that is entrusted should be exercised in a just and fair manner in order to earn respect. It is hoped that this letter will alert your mind and that of the Secretary of State for the Interior to exercise direction and control on how cases are handled according to the dictates of law, conscience and justice. While anticipating a swift and just response I remain Yours in the Service of the Nation Halifa Sallah October 4th 2003 Edward’s Meeting With Business Community Absolves Foroyaa In an interview with Halifa Sallah on President Jammeh’s remarks during the swearing in of SoS Ceesay and SoS Bala Gaye, he said that there is need to address the economic problems of the country but that President Jammeh’s type of economic adventurism will only make matters worse. He called for action to be preceded by research. When SoS Singhateh asked the business community to diagnose the situation, Hatib Janneh the proprietor of Jimpex said that the issue was too complex to diagnose without setting up a committee to do a comprehensive review. SoS Singhateh initially said that the matter needed to be settled there and then. However, after a diagnosis he also concluded that a committee was needed to study the problem as quickly as possible. Even though President Jammeh claims that some of us have no credentials as economists, we now proceed to advance a series of articles that all his economic advisors will corroborate. The ultimate objective is to prove that President Jammeh is on a mistaken path and the security forces have been misdirected to engage in an economic wreckage programme passing off as “Operation no Compromise.” We will offer better options to economic adventurism. We agree with the Inspector General of the Police that the matter is beyond party political consideration. The Key to Understanding the Gambian Economy First and foremost, it should be clear that the more an economy is self reliant, the more it produces the goods and services required by the population, the more it creates a balance between imports and exports, the more it can stabilise prices, currencies and incomes through regulations and control mechanism. On the other hand, the more dependant an economy, the more it depends on others for the supply of goods and services, the greater the intolerance between imports and exports, revenue and expenditure, the less capable it is to control, regulate and stabilise prices, currencies and income. This is the tragedy of the Gambian economy which became evident since 1979 when scarcity of foreign exchange in the formal banking system eventually led to the low importation of essential commodities, scarcity of these commodities and price hikes. As the growing trading sector competes for foreign exchange they expanded their sub-regional trading outlets relying on the CFA as a sub-regional currency, which was then pegged and supported by the French Franc on the basis of equal value. Instead of depending on the banking system to get foreign exchange the traders in the Gambia expanded their trading links in the sub-region and received payments in CFA. The lower tariffs enabled the businesses in the Gambia to provide lower prices to consumers in the sub-region. Smugglers under the guise of religious sects and other developing routes through porous borders expanded the trade outlets of the country. Gambia also benefited from the economies of scale when groundnut prices were higher in the Gambia. Many Senegalese farmers in the border area would cross the frontiers and sell their nuts. Unable to utilise the dalasi in Senegal they often buy goods is the Gambia to take it to Senegal. This strengthened the Gambian currency. On the other hand when the prices of the crops are better in Senegal Gambian Farmers sold their crops in Senegal and brought the CFA to the Gambia, which they could utilise to purchase goods in the Gambia and this enabled the Gambian businesspersons to get foreign exchange. Hence Gambia was gaining from both sides. It was the Senegalese economy, which was losing from both sides since purchasing was being done in the Gambia to the detriment of the Senegalese industries. The volume of CFA hoarded by Gambian businesspersons became so much that the Senegalese regime wanted an economic and monetary union to address the problem. When this could not be realised the Senegalese government utilised the devaluation of the CFA and border restrictions to contain the businesspersons in the Gambia. These restrictions were short lived as Gambia started to benefit from another economics of scale when trouble in our sub-region and economic migration sent Nigerians, Ghanaians, Sierra Leoneans, Liberians, Bissau Guineans, Conakry Guineans and other nationalities to the Gambia. They sent CFA home as the dalasi also became a sub-regional currency as people accepted it in Nigeria, SierraLeone, etc. since they could send it to relatives in the Gambia. Those who migrated to the Gambia brought their skills or wealth. They became consumers and therefore expanded the volume of business transactions. The fact that Prsident Jammeh knows very little about economics and his economic advisers have failed to do a thorough study of the economic realities of the country made them to make very unintellectual like remarks regarding the CFA and the presence of foreigners in the country. The problem of the Gambian economy is neither the CFA nor the foreigners. The problem is the lack of building of the economy towards self reliance. We need short term measures to minimize the disequilibrium in the economy and the hardship of the people. We also need long term measures to stabilize prices, the currency and income. Let us now proceed to examine the true state of our current economic problems and then recommend the measures that are necessary for any patriotic government to adopt. The True State of The Gambian Economy The Gambian economy has ceased to depend largely on agriculture to enhance national income because of the failure to diversify and increase farmers’ income to ensure greater investment. Consequently, agriculture contributes between 22 and 25 percent of gross domestic product (GDP). Tourism contributes between 10 and 16 percent of GDP depending on the reports relied on. The service sector comprises 70.6 percent of GDP. While the trading sector which is a component of the service sector contributes 39 percent of GDP, industry contributes only 11 percent of GDP. The Gambian traders are not relying on Gambian goods to trade. They import from other countries and re-export what is imported to neighbouring countries. In this way, they earn CFA and other foreign currencies. There is nothing wrong in selling and earning foreign exchange form other countries. What needs to be done is to encourage a part of such earnings to be invested in the production of local goods and services for export and for local consumption in order to reduce dependency on foreign products and generate employment. It is now necessary to find out what has gone wrong with our economy to cause the depreciation of the dalasi, price rises and reduction of income. See next issue for Part II. Foroyaa Newspaper Issue Number 77/ 2003 9th. October, 2003 EDITORIAL “Operation No Compromise” breeds chaos and national discord. Those who govern are sitting idly by while the nation sinks into economic chaos. Every poor person wants lower prices. It is the duty of the government to find out why prices are high and find a solution that will not lead to the scarcity of goods or conflict between consumers and market women. The President’s claim that the price increases are deliberate actions to create economic difficulties has led to the intervention of the security forces and vigilante groups to force butchers, bakers and market women to reduce prices. For example in Tallinding Sicap Market, a vigilante group appeared to tell the women that they must sell Palm Oil at D3 per cup. The women claimed that they bought the barrel at 7000 Dalasis; that if they sell the palm oil at D3 per cup they would end up with 3,000 dalasis plus. This would make them incur a deficit of 3000 dalasis plus. They were also asked to sell oil at D2 per cup. It is also claimed that a basket of bonga is bought at the price of 300 dalasis while they are now being asked to sell bonga at a price of one dalasi each. The market women argued that if the government really wants to control prices it would have to force the suppliers to reduce prices and then go down to regulate it at the retail level. Butchers are being arrested throughout the country for selling meat and bone above 40 Dalasis and steak at 45 Dalasis per kilo. Many butchers complain that they get bulls from people and sell them to repay their loan. It is now becoming clear that many butchers are middlemen who take bulls from people only to sell them and repay their loans. It is very clear that many small-scale enterprises are now going underground, causing poverty and tension to increase. The words of the wise say: - “If one does not know where one is going one should go back to where one comes from”. The Jammeh regime has lost direction. It is now covering up its failures by showing the seed of national discord. Foroyaa calls on the people to replace national discord with national dialogue. Political Parties need to hold rallies and civil society organizations symposia and community meetings to explain what is going on in the country and map a way forward. Gambia is too important to be left in the hands of those who have proven their incapacity to ensure liberty and prosperity to the people. How can one promote security by making non-Gambians in particular and Gambians in general feel economically insecure? JAMMEH TEACHING THE WRONG LESSON Lamin Juwara’s Unlawful Detention “When a government is insecure it can be frightened by the citing of a ‘Wolf! Wolf!’ even if no wolf is forthcoming. This is the state of the regime,” says Halifa Sallah. Asked about the state of Lamin Juwara, Halifa said that the enforcer of the law is now proving to be a breaker of the law. He added that he has contacted the authorities to tell them that no person should be detained in The Gambia for more than 72 Hours without being taken before a court or granted bail. He said that he has put it to them that, one cannot teach others to respect the law if the teacher is a lawbreaker. Halifa indicated that the order to detain Juwara is from above; that he is classified as a security detainee. This means that he is not only charged with an offence, but has been transformed into a political prisoner. Halifa argued that pressure is being intensified for the regime to respect the law and release him or take him before a court. He said that the issue is not about Juwara; that it is a national issue; that it is a question of whether a nation would allow a head of state to behave like a monarch who can order the detention of persons with impunity. Pointing out that the President may think that he is teaching a lesson but it is the wrong type of lesson, said Halifa. He emphasized that he has said over and over again that the President has no personal divine power. What he is teaching is that he is capable of abusing the power of the people and utilizes it to make the security forces to behave with impunity. The lesson he should learn is that leaders come and go. They should treat others how they wish to be treated. Juwara is a party leader. He should be treated with respect, he should not be sent to prison by executive order. This is tyranny, pure and simple, said Halifa. He called for a public outcry against the detention. Asked what would be done if the government fails to listen, Halifa indicated that he has engaged in consultation with all the other political parties and is continuing to meet religious leaders, trade unions, women organizations, youth leaders and all those who are opinion leaders. In his consultations he discusses the state of the country and what is necessary from both the side of the parties for an alternative government and the existing regime to ensure peaceful coexistence of people with different political opinions and affiliation and how to ensure the peaceful transfer of state authority should the masses wish to bring about change. What to do would be certain after such consultations. He concluded that it is time for political parties for an alternative government to show that we can manage crises to earn the respect of the people. “We will show that the liberty of the people is safer under our humble stewardship than under a regime which does not hesitate to display arrogance in running the affairs of the country. We will utilize every wrong step of the regime to prove to the Gambian people that it is unfit to govern a civilized, dignified and sovereign people. We shall continue to share with the people the view that they should never despair or mystify the regime. But they should never lose sight of their ownership of power. Instead of being frightened by the abuse of the power they put under the care of leaders, they should simply consider the perpetuation of the abuse as unfit to govern, take back their power and entrust it under the care of those who can be trusted to exercise it to enlarge their liberty and prosperity.” Asked what he thinks of Juwara’s statement, Halifa said that the interview is a reported one and the matter is under investigation. He added that Juwara simply expressed an opinion, that he even said that other opposition parties could be consulted. He argued that this is enough to show that the opinion should not be taken as a threat to state security. Halifa said that as far as he is concerned, the parties for an alternative government are out to organize the people to replace the regime and would not allow themselves to play a cat and mouse game with the regime through street protests. The aim is to build a force, which the regime can respect and take seriously and which the people can have trust and confidence in. Halifa argued that he frankly does not think anybody who is bent on undermining state security can be as adventurist as to declare one’s intention without preparing a force to act should one find himself/herself in a state of confrontation with a regime. Halifa said that those who wish to subvert a regime would prepare themselves in secret. He said that the count would finally decide on the matter. Halifa further observed that for a state to disregard the law and try to teach lessons by using might is best described as tyranny. The alternate price of tyranny is the alienation of a regime and its demise. Halifa cautioned the APRC regime to pay heed to what he referred to as the irrevocable verdict of history. PART II THE TRUE STATE OF THE GAMBIAN ECONOMY The attempt to control the depreciation of the dalasi and prices by security might continues as Jammeh’s “Operation No Compromise”, go into full force. The regime has concluded that speculators cause the depreciation of the dalasi and it has ordered the security forces to stop the operation of the parallel market. It has also concluded that prices are artificially inflated and it has instrumented for retailers to be forced to sell at prices determined by government instruction. Banks are selling foreign exchange to their customers and are willing to buy foreign exchange from anyone. The dollar is being sold at D32, the CFA at D205, and the Euro at D36. A bag of rice is still being sold by the Youth Development Enterprise at D395. The price of petrol is still nineteen 19 dalasis per litre; gas oil is fifteen 15 dalasis and kerosene 9 dalasis, oil is being sold at 6 dalasis per cup. A bottle of soft drinks is still seven 7 dalasis. A bag of flour is still at D510, a bag of sugar is still at D465. However the security forces are bent on forcing the retailers to sell oil, meat, vegetables at fixed prices without controlling the wholesale prices. The end result of the exercise is to make the small retailer bankrupt, make the big retailer to hoard goods or withhold the purchasing of new goods and create artificial scarcity. This can lead to the creation of underground markets where people buy and sell foreign currencies and goods at higher rates. Foroyaa has made is clear that every Gambian is concerned with the rising of prices and the depreciation of the dalasi. The APRC government is always quick to accuse people of lack of patriotism for not approving its measures. Foroyaa wants to make it abundantly clear that it strongly sees the need to address the crisis in the commodity and money markets but has long told the government that such crises in the markets are a reflection of a larger economic crisis, which the government has always denied. The government’s practices are the cause but the government is blaming those who are simply finding ways and means of keeping their heads above water while the others drown to be the cause of the drowning of the masses in a sea of poverty. This is a self-righteous government, which never accepts its faults. This is why it is now engaged in economic adventurism, which is going to create artificial scarcity of goods, economic insecurity and the deepening of the economic crisis. One may now ask: What do we need to know about the crisis of the Gambian economy, how is the government the main culprit and what is the way forward? In part one, we have shown that the Gambian Economy is a service based economy with services contributing approximately 65-70% of GDP, trade is contributing as a component of the service sector about 40% of GDP, agriculture is contributing 22-25% and Industry approximately 11%. The Cause of the Depreciation of the Dalasi Our agricultural and industrial sectors are very low in productivity. The country is exporting very little. This is why the export earnings for 2002 stood at 417 Million. The country is importing most of what it is consuming. In 2002, the country imported 2.9 Billion or 2900 Million dalasis worth of goods. In simple economic terms our earnings from exports could not pay for imports. How then does the country earn foreign exchange to pay for imports as well as to meet International Obligations? The Sources of Foreign Currencies Gambia earns foreign exchange from imports. Tourism also contributes its quota. Of course the bulk of the foreign exchange from tourism stays with the tour operators who share their earnings with the airlines, etc. The country benefits from the out of pocket allowances of tourists. They have been relying on hotels, foreign exchange bureaus and the parallel market to exchange their foreign currencies. Furthermore Gambians and non-Gambians who have relatives abroad often receive foreign currencies from them. Infact, with the depreciation of the dalasi many Gambians and non-Gambians have been investing in real estate. Land speculation has intensified, which is also accompanied by new construction schemes. Foreign currencies are derived from such investments. Needless to say, Gambians are going to Angola and other countries in search of diamonds. Those who succeed also make investments in the Gambia. It is also clear that foreign currencies are derived through the free and secret movement of goods across the boarder. Many smugglers and businessmen do not depend on banks to get foreign exchange. They simply sell goods in neighbouring countries and earn foreign exchange currencies. Now one may ask: What gave rise to the depreciation of the Dalasi? The Depreciation of the Dalasi The demand for foreign currency had exceeded supply in 2002 and the Central Bank had to intervene by selling foreign exchange in the inter bank market to enhance the availability of foreign currency. There is increase in demand for foreign currency by government. In order to maintain a foreign reserve of 1.6 billion dalasis in 2001 and 1.7 billion in 2002 government has to have foreign exchange to repay its debts and meet its external obligations. This is one reason why the demand for foreign exchange exceeds supply. Furthermore, the business community has been creating their own foreign exchange reserves to continue their trade without relying on the commercial banks entirely. This has led many of them to establish foreign exchange bureaus or have their mobile foreign exchange dealers. The scramble for foreign exchange went in the favour of the big business persons who could purchase foreign exchange at higher price and sell their good at high prices. It should therefore be clear that the competition for scarce foreign exchange is what gave rise to the purchasing of the foreign exchange at a higher rate to drive competitors into bankruptcy. The depreciation of the dalasi also led to rise in the prices of imported goods such as the prices of petrol, rice, sugar, flour and other essential commodities. As the prices of locally produced goods were pegged to them, this led to general rises in the prices of all commodities. How can this problem be handled? The Way Forward First and foremost, the government must accept its own mistakes in the development of the present crisis. It should pursue means to regulate the economy that do not pit the people against each other. How is this to be done? See next issue for the Conclusion. _________________________________________________________________ Get a FREE computer virus scan online from McAfee. http://clinic.mcafee.com/clinic/ibuy/campaign.asp?cid=3963 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ To Search in the Gambia-L archives, go to: http://maelstrom.stjohns.edu/CGI/wa.exe?S1=gambia-l To contact the List Management, please send an e-mail to: [log in to unmask] To unsubscribe/subscribe or view archives of postings, go to the Gambia-L Web interface at: http://maelstrom.stjohns.edu/archives/gambia-l.html ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~