23.7 C
City of Banjul
Friday, April 19, 2024

Pathways to structural economic transformation in African countries – The Case of The Gambia

- Advertisement -

In the first part of this serial article, we covered the broad strategic perspectives on pathways for structural economic transformation in African countries. This second part, as promised, focuses on the specific case of the Gambia. In doing so, I would like to note from the outset that this particular analysis is purely based on the observed and recorded empirical trends and objective projections made for the medium to long-term for the Gambian economy.

In the first article, we forcefully argue that, as demonstrated by human history, the aspirations of any society, country or region for meaningful progress and sustainable prosperity cannot be realized without fundamental transformational processes. From the Roman and Ottoman Empires to the Malian (Mandeng), Asante or earlier Zulu Kingdoms, progress and dominance by these entities in their respective regions were made possible by significant transformations they achieved in many areas of human life. In less ancient times, the spectacular progress made by the now advanced industrialized and newly industrializing countries in either specific spheres of life in their societies and economies or the broader transitions from lower-level production systems (for example feudal and agrarian) to more advanced ones and subsequently to prosperity, have all been underpinned by far reaching transformational changes. As renewed interest for accelerated inclusive growth and prosperity for all is steadily taking root in African countries (see the AU’s Agenda 65), there has to be full realization that these aspirations cannot be attained without deep transformational changes in the economies and societies of the continent.

Undoubtedly, the Gambian people are known to aspire strongly for “good life and prosperity” and when one examines the various broad policy statements of successive governments over the years and the specific sectoral strategies for attaining them, one would invariably note the transformational aspirations expressed in them. For instance, I had the privilege to participate in, and contribute to, the promising seminars organized in 2017 by the Government of the newly elected President Adama Barrow with support from the UN family on transformational governance, recovery and development of the economy in the post President Yahya Jammeh era. But significant gaps cropped up eventually between the earlier expressions of those transformational aspirations on one hand and actual implementation of the framed policies and programmes for realizing them, on the other. Undeniably, the political turbulence that the new Government traversed following the collapse of the coalition that brought it to power partly contributed to that. The Government could also argue that the unexpected onset of the Covid 19 Pandemic and now the Russia/Ukraine War have had serious destabilizing impact on the implementation of its first National Development Plan. I leave the judgement call to the readers on all this. In the rest of the article, we will assess the Gambia’s track record with respect to growth and structural economic transformation as well as make proposals for accelerating them over the medium to long-term.

- Advertisement -

The growth and structural economic performance of The Gambia

In order to ensure that our assessment of the Gambia’s growth and structural economic transformation performance is backed by long term empirical evidence rather than what econometricians call blips, which implies significant but temporary occurrences, we started with historical data stretching back to 1966 i.e. one year after Independence, through to 2022. We also reviewed a wide range of policy statements and accompanying programmes of both the Gambia Government and a broad range of development partners for realizing them. In the course of this review process, we noticed a consistent convergence between the statistics published by the Government on one hand and those of the various international organizations, notably the World Bank, IMF, AfDB, USAID, DFID and UN agencies, on the other, which is encouraging regarding credibility of the data used here.

By the generally agreed international standards, the Gambia’s growth performance during this review period of about 60 years (58 years) has on the whole been laudable. The median real GDP growth rate over this period has been 7% while the average growth rate has been close to 5.5%. In fact, it is notable that the country’s real GDP growth reached 8 to 9% in several years during this review period. Before some readers jump upon me for this rather favourable assessment of the Gambia’s economic growth performance over the entire post-Independence period, I would like to acknowledge that it has not necessarily generated prosperity for the majority of the population. Nonetheless, Economists believe that for there to be any measurable improvements in the aggregate material conditions in developing countries, real economic growth has to be at least 5% and be sustained over some years. It is the OECD, UN and the World Bank that first made this proposition in the 1990s based on the realization that with the annual population growth in most developing countries hovering around 3%, meaningful improvements in real per capita GDP requires at least 5% annual real economic growth (5%-3% =2%). Later on, the African Union and the UN came up with the proposition that for there to be sustained poverty reduction as well as economic transformation, countries had to attain annual real GDP growth of at least 8%.

- Advertisement -

From the foregoing analysis, our overall assessment of the economic growth performance of the Gambia is that it has been relatively good on the whole, both vis-à-vis the African continent’s average growth performance during the same review period, which was 5%, as well as the minimum economic growth rates determined by economists as necessary for attainment of meaningful per capita growth and measurable poverty reduction. The successive Governments have also strived to put in place supporting planning and policy, institutional, incentives and legal frameworks for promoting private sector development (from a very narrow base at Independence), diversification and transformation of the economy. One might question the efficiency and consistency with which these policies and initiatives were implemented, but it is indisputable that efforts were made to establish and maintain them over the years. For readers who might be interested in a deeper and broader reading of these policy and institutional frameworks, I would recommend that they read the US State Department’s recent very comprehensive 2022 Investment Climate Statements for the Gambia.

For those who might be surprised by the Gambia’s relatively strong economic growth performance over the post-Independence period as a whole, particularly when significant periods during this time were marked by sheer economic mismanagement by an autocratic regime, it should be remembered that the country has had a very resilient private sector. This should be sufficiently borne in mind by the Government in the future endeavours for transforming the economy.

It is also noteworthy that looking ahead, the World Bank, IMF and AfDB’s assessments of the medium-term growth prospects of the African continent have placed the Gambia among the possible strong performers for 2023 through to 2025. According to these prognoses, barring any serious unforeseen shocks, the Gambia is expected to maintain real economic growth rates of 6% and above.

However, with respect to structural economic transformation, despite its rather impressive economic growth performance over the years since Independence, the Gambia has not attained the desired progress towards meaningful structural changes in its economy that could guarantee its resilience and sustainable prosperity. In this connection, any cursory examination of the sources of the country’s economic growth since the late 1960s will clearly show that its narrow base has not significantly changed. The country has remained heavily dependent on the agricultural sector (crops, livestock, forestry and logging) as well as fishing. Depending on which measure is used, agriculture accounts for about 35% of GDP formation and close to 40 % of foreign exchange earnings, while about 70% of the population relies on the sector for their livelihoods. On the other hand, the industrial sector accounts for only 7.5% of the GDP. The rest is accounted for by the tourism and service sectors.

At Independence, the agricultural sector of the Gambia was mainly rainfed and predominantly of a subsistence nature, with only groundnuts serving as cash crops. Over the ensuing years, efforts were intensified to modernize the agricultural sector, introduce irrigation schemes, diversify the crops, develop the livestock subsector as well as the fisheries. In the late 1960s and 1970s, integrated programmes were developed for expanding the infrastructure and accommodation facilities for increased arrivals in the tourism sector. A couple of serviced industrial parks were developed for increasing the size of manufacturing accompanied by special incentives for investors in the sector as a whole. The Gambia also relied significantly on re-exports to the West Africa subregion, but its competitiveness in this area was steadily eroded with effect from the mid-1990s following the substantial CFA devaluation in 1994. On the other hand, the role of remittances in the country’s economy has steadily increased over the years as more and more Gambians migrated abroad, although it has been noted by several analysts that much of the resource flows from the remittances has mainly been utilized for consumption purposes rather than for productive investments. Admittedly, there has been a steady flow in the past few years of remittances into the real estate subsector and a few new agricultural activities, such as poultry and cashew farming.

Importantly also, although the services sector has been expanding at a rapid pace, it is dominated by low level or low productivity sub-sectors. The professional activities have continued to lack sophistication and remain behind the competitive curve. The tourism sector has yet to transit into the high income, luxury tourism subsector as it remains stuck in the cheap tour categories. The infrastructure for the tourism sector is also in need of much upgrading and modernization. Technological development is also a critical element of structural transformation. But here also, Gambia’s relatively strong growth trajectory over the past decades has not been accompanied by any measurable technological innovation and development. After the country’s promising showing in the information and communications technology sub-sector in the 1990s, there has not been any notable deepening and broadening in this subsector either. Although there have been some promising developments recently through the Quantum Net group of companies and a few other private sector actors, including the gradual introduction of Fintech, the Gambia has a long way to go on the path of technological innovation and integration into other sectors. According to the United Nations World Intellectual Property Rights Organization (WIPO)’s Global Innovation Index, which ranks all the countries in the world in terms of investments and progress made in technological innovation, Gambia’s position is very close to the bottom.

It is also important to note that Gambia’s relatively positive economic growth performance during our review period has neither been poverty reducing in any meaningful way nor sufficiently inclusive. The latest available statistics on the country’s poverty situation clearly indicates increasing deprivation within the population, with the per centage of people living below the national poverty line rising close to 50% presently.  In fact, the poverty situation in the rural areas is significantly higher than this national average, with the poverty rate in these areas assessed to have reached by now 70%. This is not surprising given that a high per centage of the rural population normally works in low productivity agricultural sector, which is also mostly seasonal, as well as in the informal sector. Regarding the issue of inequality, available statistics from both the national sources and international development agencies indicate that the Gini Coefficient (an established measure of inequality) for the Gambia is 0.36 (the closer the Gini Coefficient is to 1, the higher the rate of inequality). It should be acknowledged that the Gambia’s Gini Coefficient is lower than the average for Africa, which is 0.46. But it is revealing that the Gini Coefficient for the Gambia’s urban areas, at 0.34, is significantly higher than that for the rural areas, which 0.28. This is attributable to the fact that there has been increasing concentration of the poor in urban areas owing to rapid rural urban migration over the past few years. It is important that the Gambia’s leaders and policy makers pay close attention to this in the next cycles of planning to ensure inclusivity of the country’s transformation trajectory.

Pathways for meaningful structural economic transformation in The Gambia

In the first part of this two – part article as well as in the current one, we have strived to demonstrate the critical importance of structural economic transformation to sustainable growth and broad – based prosperity for any nation or society in the world in general and for the African people in particular. We also made the general point that both theoretical and empirical research has amply shown that the lower the level of development the greater the need for accelerated and deeper transformational processes. Currently, it is indisputable that the Gambia, like many other African countries, belongs to this latter category of countries regarding the need and urgency for transformation. Our foregoing analysis clearly indicates that despite its relatively good track record as far as economic growth is concerned, the Gambia has a long way to go on the path of inclusive and equitable structural economic transformation.

This is reflected in large measure in the numerous and significant development deficits the country is experiencing presently: continuing narrow productive base; predominance of low level productivity agricultural activities; virtual lack of a vibrant industrial sector; huge gaps in infrastructure development, including the energy and ICT subsectors; highly inadequate generation of productive and decent jobs, especially for the youth and women; low level of technological innovation and development, including in the Fintech area; a relatively thin and shallow capital market; weak planning, institutional and legal frameworks, particularly public administration; high levels of poverty and inequalities; serious problems in the social sectors, particularly health and education; and lack of meaningful participation in regional and international trade. Together, all this constitutes the flip side of a very low level of structural economic transformation in the Gambia.

The Government of President Adama Barrow need not take an unduly defensive stance regarding this apparently unfavourable picture regarding the Gambia’s level of structural transformation. The expressions of frustration regarding this were made by Gambians across the entire political spectrum of the country, and not solely from members of the opposition. For in the preparations for this article, I conducted both random and targeted sampling, to ensure that views of people of all political persuasions are captured. The current Government could claim that the implementation of its First National Plan (2017 – 2021) has been severely impacted first by the significant disruptive effects of the Covid-19 pandemic and then the deleterious global effects of the Russia-Ukraine War. Nonetheless, it cannot completely run away from its own internal weaknesses, including weak implementation and accountability frameworks. All this notwithstanding, recouping the lost time is not a total lost cause. But for the country’s march on the path of much needed structural economic transformation to be accelerated, certain critical measures have to be urgently taken, as detailed out in the first part of this article.

First of all, we strongly recommend that the notion of a “Developmental State” be put to effect in the Gambia as soon as possible. The concept of a Developmental State was first formulated to describe states which follow an aggressive model of economic planning and management. In this regard, it was initially used to describe post-1945 Japan’s rapid modernization, growth and transformation. A simple definition would be that: “A Developmental State is a state where the government is intimately involved in the macro and micro economic planning in order to grow the economic whilst also actively pursuing measures for developing better lives for the people”. The notion of a Developmental State has so far been put to good effect in countries like Cote D’Ivoire, Ethiopia, Ghana, Rwanda, Senegal, South Africa and Uganda in Africa in the context of their structural economic transformation programmes. It requires high level political commitment as well as strong, visionary and persistent leadership. It is not too late for President Adama. Barrow to embrace again in a more aggressive and explicit manner this transformational posture towards Gambia’s renewed efforts at accelerated growth and sustainable development. Going beyond this high-level political commitment, the President and his Government also have to ensure that transformational governance mechanisms steadily take root in the country. One important area in this regard is strengthening of the planning and implementations frameworks. The other is reinforcement of accountability mechanisms. There is currently widespread perception that corruption within the Government is growing without adequate and effective checking mechanisms. Such a state of affairs is the biggest enemy to sustainable transformational efforts.

Regarding what is generally agreed to be the necessary policy mix for any successful structural transformational programme, in the absence of sufficient space here, I would recapitulate what I put forward in the Part 1 of this article: “The policy content for ensuring inclusive and equitable transformational processes necessarily has to include the following: putting in place robust and agile public administration systems; development of a vibrant industrial sector and modernization of agricultural activities; expansion of productive and decent employment creation, especially for the teeming youthful segment of the populations and women; significantly higher investments on infrastructure and social services provision, in both urban and rural areas; strengthening of social protection schemes; reinforcement of measures aimed at promoting gender and spatial equalities; and active promotion of trade within the sub-region, the Africa continent as a whole, particularly taking advantage of African Continental Free Trade Agreement as well as the wider world. Importantly also, policies aimed at stimulating and nurturing innovation, scientific research and technological adaptation are essential. Added to all this should be robust measures for sound environmental management and protection and acceleration of transitions to green economies/growth”.

As the First National Development Plan of President Adama Barrow’s Government is scheduled to end in 2022, the preparation of the Second one which is expected to cover 2023 to 2028 provides the Government with a unique opportunity for fully integrating in the country’s planning process the broadly accepted principles of inclusive structural economic transformation.

Join The Conversation
- Advertisment -spot_img
- Advertisment -spot_img