By Tabora Bojang
The Central Bank of the Gambia has disclosed that economic activity in the country was strong in the first quarter of 2024 and the medium-term outlook remains favorable.
CBG further forecast the economy will grow by 5.7 percent to be supported by anticipated better “cropping season, strong public and private investment spending, household consumption and a rebound in tourism.”
Governor Buah Saidy, who made these remarks at yesterday’s Monetary Policy Committee press conference, however warned that this outlook is clouded in significant risks such as global trade fragmentation, volatility in commodity prices and geopolitical tensions.
He further revealed that the banking sector has cut down its lending to the private sector from 17.4 percent in 2023 to 1.9 percent in 2024, explaining that this significant moderation is caused by several factors including high interest rates.
“People’s decision to borrow from banks depends on several factors: interest rate is one of them-if the (interest) rates are high, it reduces incentive to borrow and the monetary policy rates have been at 17 percent for some time,” he added.
The governor did not clarify if the 17 percent monetary policy rate stipulated by the Central Bank in its bid to “tame inflation” will be reduced anytime soon.
According to him, the “performance of the economy and people’s prediction of the outlook in terms of economic activity” also influence their decisions against borrowing money from commercial banks.
“Economic activity is projected to remain strong. This year we hope to register a growth of 5.7 percent and projections for next year 2025 is even higher than that. So we are hoping that private sector lending will increase in the near future.”
The governor also reported that the banking sector remains stable with robust performance in the third quarter of 2024 with an asset base of 64.7 percent of the GDP.
Similarly, customer deposit at banks which continues to be their main source of funding stands at D66.1 billion.
Domestic foreign exchange market
Governor Saidy reported a decline in liquidity in the domestic foreign exchange market. The markets total activity volume stands at US$479.4 million compared to US$560 million reported in the previous quarter. “The quarter-on- quarter decline in activity volumes partly reflects the moderated inflows of private remittances from US$204.1million in the second quarter of 2024 to US$182.5 million in the third quarter of 2024.”
