Dear Editor,
Please allow me space in your widely read newspaper to analyse and bring to the fore hidden facts about the US$50m loan arrangement between The Gambia government and Arab Bank for Economic Development in Africa (BADEA).
Readers will recall that in June 2023, the finance minister laid before the National Assembly a bill for ratification to borrow US$50m from BADEA to on-lend to “Gambian businesses involved in the importation of food and other essential commodities to ease price pressures in the market”
I want to look at the whole arrangement from the point of view of the 1997 Gambian Constitution, The Gambia Public Finance Act 2014 and the lending criteria set by BADEA vis-à-vis what The Gambia Government fails to tell the public.
The bill was introduced to the National Assembly by the finance minister in accordance with Section 155, Sub-section 3 of the 1997 Constitution which reads: “No loan shall be raised by the Government on behalf of itself or any other person or authority otherwise than by or under the authority of an Act of the National Assembly”. Looking at the above provision of the constitution, the fact that the loan proposal was laid before the National Assembly makes The Gambia government the loanee. What this means is that the contract was between The Gambia Government and BADEA. If the finance minister insists that The Gambia government was not a party to this loan agreement, then clearly, there is a breach of the spirit and letter of Section 155, Sub-section 3. I want to also present sub-sections 4, 5 and 6 as per the 1997 Constitution:
(4) “An Act of the National Assembly authorising the raising of a loan shall provide –
(a) that the terms and conditions of a loan shall be laid before the National Assembly and that the loan agreement shall not come into operation until they have been approved by the National Assembly; and
(b) that any money received in respect of a loan shall be paid into the Consolidated Fund or some Other public fund of The Gambia.
(5) An Act of the National Assembly may provide for the application of this section, with any necessary modifications, to –
(a) any guarantee by the Government; or
(b) an international business or economic transaction to which the Government proposes to become a party.
(6) The President shall, at such times as the National Assembly may require, present to the National Assembly such information as he or she may have relating to –
(a) the granting of loans, their servicing and repayment;
(b) the payment into the Consolidated Fund or other public fund of money derived from loans raised on institutions outside The Gambia”.
Considering the provisions of Section 155 and the relevant sub-sections, it is evident that the US$50m loan contracted was between The Gambia government and BADEA and should therefore be recorded in the Meridian System.
I will now reference the provisions of Section 43, sub-section 2 of the Public Finance Act 2014 which states “The National Assembly shall ratify international loan agreements between the state and other subjects of international law, and approve any loan agreement with a financial institution located outside The Gambia”. Section 46 deals with state guarantees where The Gambia government guarantees a loanee. If the minister believes that the US$50m loan falls under the category of state guarantees, there is an issue here and I will explain. Sub-section 3 of Section 46 of the Public Finance Act indicates that where the government serves as a guarantor, the minister shall assess the risks of such a guarantee and produce a risk assessment report. The risk assessment report must also include the level of loan guarantee fee to cover the credit risk of the state. Putting section 46 of the Public Finance Act 2014 into consideration, the D48m fee bandied around as a condition of this BADEA loan was set by the Gambia Government and not BADEA. It is disheartening to see both the trade and the finance ministers insisting that the D48m condition and all related collaterals placed on this loan was a condition put by BADEA. It is my view that this is far from reality and has been negated by the lending criteria in place for any entity who wants to borrow from BADEA.
Mr editor, BADEA has in place a lending criteria for borrowers borrowing between US$20m and US$75m as shown in the diagram below:
It is evident that the D48m fee levied on the US$50m loan is nowhere seen in the above criteria. This is the reason why I opined that the government has put conditions on this loan to tilt it in favour of the candidate of their choice. I will encourage the finance and trade ministers to come out and clarify which law the US$50m loan falls under.
In conclusion, Mr Editor, I will summarise the loan arrangement under the provisions of section 155 of the 1997 Constitution, Section 43 and 46 of the Public Finance Act and the lending criteria in place at BADEA. Assuming that section 155 was applied to secure this loan, it makes The Gambia government the loanee and the money was then given to Jah Oil in an on-lending arrangement. The fee of D48m could not have been set by BADEA but rather by the government for their lending arrangement with Jah Oil. Looking at Section 43 and 46 of the Public Finance Act 2014, if the loan falls under these sections, therefore, The Gambia government became the guarantor and has set the fees of D48m to ensure that Jah Oil becomes the only business to fulfil that condition. Finally, it is clear from the lending criteria from BADEA that there is no indication that the D48m was not put on the loan by BADEA. In fact, it does not make sense to ask a potential borrower to pay you before you can lend them money.
Lastly Mr editor, I will urge Gambian journalists to refuse to be fed by the authorities they are investigating. It is okay to accept documents from them but they should embark on independent research to critically analyse all evidence. This way, they will not be used by the government to do the bidding for them.
Nuha Ceesay
Leeds, United Kingdom
