Mr Hamat Bah said the banks are reluctant to give out loans or invest on the economy, for they could make huge profits from the government’s use of treasury bills to take loans from them.
He told The Standard: “The government takes loans from the local banks and that has a serious implication. By using treasury bills to take loans from the banks, our domestic debt goes up. There is even more. That is, most of our banks are using it as a lucrative means to make money, profit. So, instead of actively participating in the local economy, they fold their hands because when the government uses treasury bills, they can easily make two or three hundred million dalasi and this comes from Gambian taxpayers. Most of our banks would not even invest in new projects.
“Why would they take the risk when they can get the money from the Central Bank and make easy money? Why should they also give you loan to open a poultry, a processing plant or a newspaper company? They will not take the risk because they can make easy money by buying treasury bills. This is why when you go for loan, they do not look at you. This attitude is being created and encouraged by our own government by spending beyond their means. They will ultimately have to resort to borrowing from the local banks, who should be investing on the economy. This is just one of many implications of too much borrowing. The government must invest in boosting the productive base of the local economy. Otherwise, they can never bail the country out of this mess. And, by also increasing your local or domestic debts, your lending rates also go up. The Central Bank will not be in the position to reduce lending rates because the government is borrowing more money and incurring more debt and that does not help the dalasi too.”
He continued: “As a bank, you should be investing on the economy and supporting companies to grow because by doing that, you are supporting growth and creating jobs. Banks should make sure that companies that are viable are granted loans and that people with good project proposals are financed and jobs will be created to enable the economy be on the move.”
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