By Tabora Bojang
The Governor of the Central Bank Buah Saidy has explained that the current depreciation of the Gambian Dalasi against the CFA franc is caused by among others things, the increased usage of Dakar port for goods destined for Gambia.
The demand for major foreign currencies like the CFA franc, Euro and the U.S. dollars to import basic food and non-food commodities have led to substantial shortages in the Gambian market as it continues to drive inflation and interest rates hikes.
Many Gambians blamed the government for failing to institute sound economic policies as well as failing to address the structural challenges at the Banjul ports and attendant high tariffs for importers which saw high volumes of goods bound for Gambia being transited through Dakar.
Speaking to journalists at the CBG’s MPC yesterday, Governor Buah Saidy said the situation of the CFA franc in the Gambia is a ‘bit tricky’ because it is not in “our official foreign exchange market.”
“The Francophone countries have the bulk of their reserve at the French Treasury and when the Euro was created, the Central Bank of West African States [BCEAO] made a pronouncement that shipment of CFA from third countries for conversion would not be honoured as a result of that the CFA is not quoted in the Gambian foreign exchange market. Banks in The Gambia are not trading in CFA and the Central Bank doesn’t have CFA as part of our reserve currency,” Governor Saidy said.
He said the CBG could have intervene to slow down the on-going depreciation of the Dalasi against the CFA but the bank is limited since it does not have a stock of CFA.
“The CFA is traded in the country but it is not in the official foreign exchange market. So, the depreciation of the Dalasi against the CFA is a recent occurrence and this is because of what is happening in the Gambian economy attributed to structural rigidities at the Banjul port. The port is a major structural bottleneck and that is an open secret but the Gambian authorities are working on that. Some of the goods destined for Gambia are landed at the port of Dakar. If the importers have to go and clear their goods from Dakar, they need CFA. So that increased the demand for CFA and it is a factor in the recent depreciation of the Dalasi against the CFA. We also have most of our other goods coming from Senegal, especially vegetables and other construction materials,” the governor said.
He also explained that the depreciation of the Dalasi against the US Dollar, Euro and the Pounds are due to developments in the global economy.
“The advanced countries have to tighten their monetary policies to fight inflation and asa a result interest rates in these countries went up and the demand for their currencies increased as a result of that the Gambian Dalasi weakened against these international currencies,” Saidy added.