Manufacturing sector under-exploited
By Sanna Camara
A trade fair meant to showcase products ‘made-in-The Gambia’ has ended up exhibiting more foreign products than those made locally.
Over twenty out of the 200 stalls erected at the trade fair held in December 2011 were occupied by businesses from the sub region. They include Mali, Senegal, Burkina Faso and Ghana. Five stalls were occupied by a Taiwanese business conglomerate, and the rest were occupied by Gambian businesses.
However, almost two thirds of the stalls were occupied by products made from outside The Gambia. Because of the culture of foreign products’ domination of The Gambian market the chamber decided into stage such trade fairs.
“The trade fair has become an annual event for Gambian businesses to showcase products and services. It is borne out of the realization to encourage ‘made-in-The Gambia’ products on a scale that is appreciable and interesting. We have also come to the realization that The Gambia cannot produce everything it needs or consumes. That is why the fair has expanded scope to include goods made from outside,” said Almami Taal. He is the Chief Executive officer of The Gambia Chamber of Commerce and Industry.
Government has a policy to encourage investors into the manufacturing industry. However, Taal said this has not succeeded in reversing the trend.
Value-added strategy through “niche manufacturing” is key to Gambia’s Investment and Export promotional strategies. It means focusing on areas where The Gambia has comparative advantages over its immediate competitors in the sub-region. Sectors such as agriculture, food processing, fisheries and horticulture are the key targets.
Tax holiday for investors
Newly established investment enterprise that falls within these priority sectors shall be granted a tax holiday. Corporate or turnover tax, depreciation allowance, and withholding tax on dividends, among others will be enjoyed by investors. In the case of a priority sector within the Greater Banjul Area, this package covers a period of five years. In the case of a priority area outside the Greater Banjul area (except Brikama), it is for a maximum period of eight years,” says the agency on its official website.
Under-exploited manufacturing sector
The Gambia’s manufacturing sector continues to be under exploited with limited concentration of inter-connected manufacturing companies. The Gambia’s investment and export promotions agency (GIEPA) says.
GIEPA says the sector’s share of Gross Domestic Product continues to be low. This has formed the basis of increased Government efforts to expand industrial production and development. The sector it says, consists mainly of medium-sized enterprises located primarily in the urban and peri-urban area.
Under 5% of GDP
The manufacturing value added percentage of GDP in The Gambia was last reported at 4.96 in 2010, according to a World Bank report released in 2011. In 2009, this figure stood at 4.94 in 2008.
In recent years, Gambia’s growth has been driven by expanding tourism sector and banking. Tourism is the country’s main foreign exchange earner. Tourism contributed 14.7 percent of GDP in 2009, 12 percent of real GDP in 2010, and it is projected at 14 per cent by end 2011. Close to 20 percent of the GDP comes from tax revenue. However, there has been a decline from 17.5 percent in 2007 to 14.5 percent in 2011.
New financing scheme needed to boost local manufactures
Financing investment is big challenge for investors
By Sanna Camara
A new financing scheme for investment is needed if The Gambia wants to boost local manufactures, says Mr. Almami Taal. He is Chief Executive of the Gambia Chamber of Commerce and Industry.
Mr. Taal said financing investment is one of the biggest challenges investors and other businesses face in The Gambia. Despite the existing investment-incentive packages available to investors, this is still a problem.
Unfortunately, the dominant financial services providers do not have the right solutions for investment financing. This has left a huge gap for investment financing in the country as businesses shy away from the lending terms and conditions of commercial banks.
Costs and competitiveness of Gambian products
He says high costs of financing, energy, logistics, and other inputs like raw materials needed for production impacts the final product on shelves. These add-up to the price, quality and competitiveness of Gambian products, Taal explains. In a country where prices and costs are high, he says it makes Gambian goods less competitive than others made from outside.
“However, government should establish new and different financing mechanism and framework or instruments. For example, a lot of people consider that Islamic banking has greater potential for investment financing than conventional banking,” Taal says.
Over-bearing interest rates
“In the conventional banking environment, it is a fact that borrowers are sometimes rendered miserable and frustrated. This leads to failure as a result of over-bearing interest rates. The irony is that while lending rates are always in an upward course, deposit rates are very low,” Professor Ekpo states.
He is the Director General of the West African Institute for Financial and Economic Management (WAIFEM). The institute was established in July 1996 by the Central Banks of The Gambia, Ghana, Liberia, Nigeria and Sierra Leone with the purpose of building sustainable capacity for improved macro-economic and financial management in the constituent countries.
Islamic banking is non-interest banking: “It is a banking model which is based on a profit and loss sharing system. It rests on the Islamic doctrine of ‘universal permissibility’ in business dealings, which states that everything is permissible unless it is clearly prohibited,” he stated.
Doing Business in The Gambia ‘more difficult’
The Gambia’s ‘Ease of Doing Business ranking in 2012 stands at 120 in 2012 from the 2011 ranking of 114. It means the ranking has gone down by 6 points. Also, starting a business ranking has gone down six points from 114 in 2011 to 120 in 2012.
According to the World Bank’s Doing Business Report, economies are ranked on their ease of doing business, from 1 – 183. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm.
Ranking of neighboring economies like Senegal in 2012 stands at 154 against 157 in 2011. Starting a business in Senegal ranked 93 in 2012 from 103 in 2011. This means Senegal has improved by 10 points. Mali was ranked 150 in 2011 and has improved by 2 points to 148 in 2012. Starting business also improved by 2 points from 117 in 2011.