By Omar Bah
The Minister of Finance and Economic Affairs has expressed frustration over the cement and flour industries’ failure to meet the country’s demand despite government’s massive subsidies over the past four years.
Cement industries in The Gambia have argued that the influx of Senegalese cement into the country is running them out of business. Last month, Jah Oil announced it has ceased producing cement and instead joined the rest to be importing from Senegal because operations in the local factories are not sustainable with Senegalese cement flooding the market.
But speaking at the in-country launching of the IMF April 2022 Regional Economic Outlook for Sub-Saharan Africa, Seedy Keita said the government has expended over D4 billion in subsidies into the cement and flour industries over four years. He said the incentive scheme was meant to support cement and flour industries to substitute importation.
“We have spent in the last four years D4 billion as incentives in terms of wavers of duties and taxes to the cement and the flour sectors, respectively but unfortunately, these industries have not been able to grow up to scale to be able to utilise this fiscal incentive,” Minister Keita said.
Minister Keita said the government’s plan to have agriculture as a substitute to stop importation of rice by now has also failed despite receiving so much donor funds over the years.
“If you look back from the seventies, agriculture is one ministry that has not been without a donor intervention and all types of trainings but unfortunately, our intervention has always been pro-government driven,” he said.
To address this menace, Mr Keita said the government has designed a new project to leverage on the private sector to look at agriculture as a business.
“On that note, we are trying to invite investors to go into rice production and that way, we expect to see development of the sector,” he said.
According to the Regional Economic Outlook, investing in electricity is the best for developing countries like The Gambia. The report said the country’s revenue collection declined due to slow economic activities, causing public debt level to decline at a slower pace than anticipated. The Gambia’s fiscal deficit, the report added, will remain high in 2022 due to the impact of the Ukraine war affecting both revenue (oil subsidies) and high spending cost on the OIC projects.
“Slow tourist arrivals lowered service exports but strong remittance inflow helped support a strong reserves accumulation that was amplified by the US$ 85 million SDR allocation in August-2021,” the report added.
According to the report, exchange rates remained broadly stable during the pandemic with some recent depreciation against the Dollars associated with some appreciation against the Euro and the Pound as the Dollar strengthened globally.
“Soaring food and energy prices linked to the Ukraine war will put additional pressure on the current account and on international reserves that have slightly declined in recent months. Current account is projected to remain high in the medium term to accommodate recovery- induced imports and high commodity prices,” the report noted.