By Abdoulie M Touray
Few issues constrain The Gambia’s economic transformation as profoundly—and as persistently—as limited access to affordable, long-term capital for businesses. While policy documents speak eloquently about private-sector-led growth, job creation, industrialisation, and youth empowerment, the financial architecture needed to translate these aspirations into reality remains structurally weak. At the centre of this challenge lies an uncomfortable truth: capital in The Gambia is scarce, expensive, short-tenured, and largely misallocated in favour of imports and short term lending.
Capital as the lifeblood of development
Economic history is unequivocal: no country has industrialised or diversified its economy without deliberate, targeted, and patient capital flowing into productive sectors. Agriculture, manufacturing, agro-processing, housing, tourism, renewable energy, transportation , digital technologies, telecommunications, logistics, and the digital economy do not grow on policy statements alone; they grow on credit that is affordable, predictable, and aligned with national priorities.
In The Gambia today, however, most businesses—especially SMEs—face lending rates often exceeding 20 percent, with tenors rarely extending beyond three to five years. Such conditions are fundamentally incompatible with productive investment. They encourage trading and speculation over production, consumption over capital formation, and short-termism over long-term value creation.
The consequences of policy neutrality
The CBG has, understandably, focused on price stability, banking soundness, and macroeconomic prudence. These are necessary functions. But neutrality in credit allocation—treating all sectors as equal from a regulatory and incentive standpoint—has had unintended consequences.
Without sectoral lending targets or differentiated regulatory incentives, commercial banks rationally gravitate toward:
· Government securities, which are risk-free and highly liquid
· Trade finance, imports, and consumption-oriented lending
· Short-term facilities with quick turnover and minimal exposure
Meanwhile, sectors critical to national development—agriculture, manufacturing, housing finance, SMEs, start-ups, and green energy—remain chronically underfinanced. The result is a structurally imbalanced economy: high import dependence, weak domestic production, persistent trade deficits, and limited job creation.
Why sectoral lending targets matter
Sectoral lending targets are not a return to reckless directed credit. When well-designed, they are a developmental tool used by many successful economies to correct market failures and align finance with national goals.
Such targets:
· Signal national priorities clearly to the financial system
· Reduce excessive concentration in government securities
· Encourage banks to build sectoral expertise and risk-assessment capacity
· Catalyse complementary institutions such as credit guarantees, development banks, and blended finance vehicles
Countries at similar stages of development have used variations of this approach—often supported by partial guarantees, concessional refinancing windows, or risk-sharing mechanisms—to crowd private capital into productive sectors.
The missing middle: Development finance architecture
The absence of sectoral lending targets also exposes a deeper gap: The Gambia lacks a coherent development finance ecosystem. There is no fully operational Development Bank with scale, no mortgage refinancing institution to unlock housing finance, and limited risk-sharing instruments for SMEs and agribusiness.
In this vacuum, commercial banks are left to play a role they are not structurally designed to fulfil. Expecting them to finance long-term development projects without policy support, guarantees, or refinancing mechanisms is both unrealistic and unfair.
A strategic role for the Central Bank
This is not a call for the Central Bank to abandon prudence. It is a call for the CBG to complement stability with development. Central banks across Africa are increasingly embracing a dual mandate—maintaining macroeconomic stability while enabling inclusive growth. Unfortunately in the Gambia, the IMF prescription are cast in stone.
Practical steps could include:
· Introducing indicative (not punitive) sectoral lending benchmarks aligned with the National Development Plan
· Creating preferential refinancing windows for priority sectors
· Supporting credit guarantee schemes to de-risk SME and agricultural lending
· Encouraging longer tenors through regulatory incentives
· Working closely with development partners to mobilise blended finance
The cost of inaction
Without decisive action, The Gambia risks remaining trapped in a low-investment, low-productivity equilibrium. Youth unemployment will persist, industrialisation will remain elusive, and our dependence on imports and aid will deepen. Policy coherence without financial alignment will continue to disappoint.
Access to capital is not a peripheral issue—it is the engine of transformation.
By championing a more deliberate, development-oriented financial policy framework—one that includes sectoral lending targets and a strengthened development finance architecture—Government has the opportunity to unlock Gambian enterprise, energise local production, and place the economy on a genuinely inclusive growth path.
The private sector stands ready. What it needs is capital that works for development, not against it.
The banks in the developed world lend on CHARACTER and most of our Gambian Banks lend on COLLATERAL, COLLATERAL & COLLATERAL.
Respectfully Submitted
Ambassador Abdoulie M Touray
SaHel Knowledge Campus Think Tank (SKCTT)
15 December, 2025
