The Gambia: Your money and debunking the myths


By Burama Jammeh

Have you ever wondered what The Gambia needs money (or economic resources) for? How The Gambia gets its money and how Jawara, Jammeh and now Barrow have managed or are managing this money (economic resources)? In this article I attempt to debunk certain myths related to these ideas.

Each modern nation-state is large enough to have needs and wants that no single member can effectively or efficiently provide for oneself.

Some of these needs and wants could be prohibitively expensive and others simply not feasible. Try having your own road from Banjul to Koina – not feasible. Or educate your kids from kindergarten to university in your own school – not practicable.

How about having your own fully-equipped hospital or airport, and so forth? These are the common welfare needs and wants of each society – roads, schools, protection/security, sanitary environment, and so forth.

All of us have to pay into one “gold pot” through taxation to be able to procure society’s needs and wants. Central to this approach is the economies of scale – the collective can provide most (or all) of these needs and wants cheaply and efficiently. For instance, in 1999, my last year in Banjul, my annual wage income tax was about D30,000 from which I used the road network, police services, hospital services, schools and so on. By myself that sum cannot afford me all those services.

No president can provide his or her nation with all of their common welfare needs and wants. Not Jawara or Jammeh and certainly not Barrow! These men were or are our employed servants. As president, they’re managers-in-chief of our nation’s economic resources. We handsomely compensate them monthly for their services.

To be charitable with words, these three men came from very humble (or even distressed) backgrounds. Even if they wish to provide for The Gambia they do not or did not have the means.

Long before the creation of modern nation-states, people devised taxation to pay for the upkeep of their lands. Rulers taxed their subjects for territorial security.

They wage wars to expand their territories and increase their streams of tax.

Modern nation states fine-tuned the practice to finance social amenities (needs and wants). In a supposed democratic republic like ours, the authority to tax citizens and residents implicitly and explicitly comes from the sovereign people of The Gambia.

Those tax revenues are exclusively meant to procure our common needs and wants.

Consequently, taxes are the seed money of The Gambia. The Department of Treasury is charged with the tax collection and the Ministry of Finance the management of the funds. That’s a central, core, and traditional function of a democratic government. Yet former president Yahya Jammeh created an institution called the Gambia Revenue Authority and Barrow has maintained it.
The Treasury is supposed to account for what comes in.

It pays government’s bills and makes investment decisions to create additional values.

It also saves for the rainy day.

That is good management of people’s money. Judicious and prudent management is important because nature dictates that our needs and wants always surpass our resources. Economics taught us issues around scarcity and choices.

Look at The Gambia’s reported revenues/incomes a year under each president.

The basic takeaway is our annual tax revenue of under US$200 million which is simply too small.

In The Gambia anywhere from 45 to 65 bututs of every dalasi earned and spent goes to taxes. Hence, of an economy of about US$1.3 billion (D65 billion) GDP our tax revenue should be about US$585 million (D29.25 billion) to US$845 million (D42.25 billion).

The second table down illustrated how taxes affect each dalasi earned and spent in The Gambia. GDP is the final market value of annual aggregate production of the whole of The Gambia. That’s the production supposedly taxed and/or should have been taxed.

May be the Finance and Economic Affairs minister can explain why the reported budget revenues are only 15% of GDP. Equally non-tax revenues of less than D1 billion are unacceptable.

This is the pool among others, should account for payments of contractually agreed performance dividends of all the state owned Enterprises.

Failure to meet such contract terms for any extended period should result in firing of board members and directors at the least. We haven’t heard any such action.

Table below shows reported budgeted revenues for specified years/presidents.

Taxes: As stated earlier, taxes are the seed money of The Gambia.

From taxes on personal income such as wages and business earnings to consumption taxes such as when you buy candle, rice, sugar or gasoline.

Buying a cup or bag of rice or sugar is a taxable event.

Our government taxed importers of these commodities at ports of entry which costs are transferred on to consumers.

Equally, those businesses faced several establishment taxes, surcharges and royalties, which costs are also transferred to consumers.

A fraction of all (or most) at the door price of any goods or services accounts for taxes levied and/or will be charged in the near future.

The matrix below illustrates how an income earned and spent in The Gambia pays taxes. Even a checking account in The Gambia pays a value added tax (VAT).

The rates in this sample are not actuals but educated guesses.

My effective tax rate comes at 48.05%. In other words, every dalasi earned and spent in Gambia D0.4805 bututs go to the government towards paying one form of tax or another.

That number is within the range of the actual.

Government may or may not classify collected taxes either by source and/or purpose. For instance, taxes levied on fuel are usually designated for road construction and/or road repairs.

General funds are mainly for general common welfare needs or wants.

Non-taxes: This pool accounts for revenues realised from goods and services offered by government such as fees charged for issuance of passports, birth certificates, fines, airport arrival or departure fees, driver’s licences, identification cards and so on.

This is also the pool that house The Performance Contract Dividends from SOEs – assuming they’re paying anything.

Notice that for 2019 government projected a dismal D1 billion (US$200m) for non-tax revenues.

Assume only 300,000 passports, ID cards, birth certificates, etc. were issued in 2018. Supposed the combined costs of these services per person are D6,000. Supposed D1,000 is cost of production of such services person.

Hence, government revenue should be 300,000 x D5,000 = D1.5b. Supposed each of the 8 or so SOEs pay in dividend of D500,000. That will add up to D0.4b.

State land sales, forest product royalties, water resources/fisheries charges, environmental fees, etc.

are another pool worth generating more than a billion dalasis above costs. Our conservative estimation already produced about D3b in non-tax revenue.

Grants: Begging is another source of revenue of The Gambia Government. However, it’s difficult to determine and/or accurately project expected grants for budgeting.

Furthermore, givers are under no obligation to fulfill promise of gift. In fact, the latter is why some accounting principles frowned on any inclusion of promised grant(s) until delivered.

General grants are usually cash handouts, they usually involve small amounts and invariably short-term.

Although general grants are usually cash hand-outs they are not always determined at budgeting

. To the extent they are determined and allowed by applicable accounting principle, they could be accounted as revenue Gambia government also enjoys an annual stream of funds they called ‘Budget Support’.

These are cash support to pay wages of public service employees. The earlier stream of these funds was tight to the famous Economic Recovery Program (ERP) and the subsequent Sustainable Development Program (SDP).

Now begging and expecting such funds are live-as-usual. This is so entrenched we called these donors (usually Old-EU and USA) development partners is not simply a misnomer but a defeatist national attitude for an independent nation to consider another nation a partner in her development.

That’s like me calling my brother, father, mother a partner in providing my fish money. I would be considered a failure.

Gambians are the only developers of The Gambia. Old EU and USA are simply old, traditional, primary helpers – period! Like many other grants this so-called “budget support” is not necessarily determined at budgeting to be included with any appreciable accuracy.

Other grants come as technical aid. They could be a single/multiple project(s)/program(s) and/or single/multi-year program(s).

Often such grants are directly managed by donor expatriate with local counterpart staffing. Good examples of such programmes are the Gambian-German Forestry Project (GGFP), CRD Forestry Project and so forth.

These were multi-year and billions of dalasis but directly managed by GTZ representatives. The Independence Stadium and Friendship Hostel is another such project – both the loan and grant components were managed directly by China.

Lowland Agricultural Development (LADEP) sponsored by African Development Bank is different. It was multi-year programme and almost entirely run by The Gambia. Almost 75 percent of funds went to vehicle purchase, fuel, computers (Dell desktops), office renovations and perdiems. Due to these complexities, it was extremely difficult for planners to determine how much grants will be assessed for a budget period.

Where it could be accurately assessed and allowed by applicable accounting principle it could be included.

General grants can simply be added to governments general funds while funds tight to specific projects or programmes should be offset by such projects and programmes at expense-accounts otherwise it will seem we have excess money.

Loans: The Gambia borrowed huge sums of money since independence. The first table shows the debt per specified year.

Government is a complex set of structures with many working systems, processes and procedures. In a democratic republic like ours the people of The Gambia are the government. Because all two million Gambians can’t perform these tasks effectively, we elect representatives – a subset of Gambian society.

That government is tasked to improve the quality of lives of the people of The Gambia with the collected tax resources.

Thus, the elected, hired or contracted are paid for their time, knowledge, skills and for goods or services rendered.

The tools and equipment they use for work are purchased.

The places of work are set up in certain ways to allow their work.

These operational costs are not the reason for paying taxes.

They are incidental to the purposes of paying taxes.

They are overhead costs. The Gambia government budget reflects these costs as personnel emoluments and recurring costs.

As a general rule, all costs should be kept to the lowest possible. Ideally, the government shouldn’t cost more than 25% of national revenue and it should strive harder to bring it down to 10% or lower. That will free-up greater proportion of our monies go to service the intended purposes.

The table below shows costs of government of a given year under each of the 3 presidents.

Notice that costs of government are 163% of National Revenue (only taxes and non-taxes) in 1994. That was Jawara’s last budget.

For 2017 (Yahya last full year in office) costs of government are 68% of National Revenue.

Barrow’s first full year in office show costs of government at 211% of National Revenue.

Although the 2018 budget was drawn by Yahya’s administration, Barrow/Amadou Sanneh revised that budget in June 2018.

The 2019 budget is entirely Barrow’s and 77% of national revenues went to pay for government. Given these numbers, no wonder we are poor and will remain so.

These numbers suggest educated Gambians, particularly those in charge in the government think the purpose of tax paying is to pay for their lifestyles.

If The Gambia is a private equity by now, it would have been closed, drastically changed and or divest to a turnaround venture capitalist. With this, do not expect uninterrupted electricity or clean, treated water or roads, schools or hospitals any time soon.

Observe the huge difference between numbers of 2017, 2018 and 2019. Wage increases may explain some of the upward increases but not from D2.68 billion to D7.51 billion.

What would bring the same costs centre down to D4.1 billion in 2019? What would conceivably account for recurring costs increase from D2.8 billion in 2018 to D12.58 billion in 2091? These are erroneous for whatever reason – in the real-world Gambia government did not shrink or expand exponentially year to year to allow such large swings.

National debt and debt interest: The Gambia has national debt portfolio of about D75 billion. This is about 130% of GDP (size of our economy). The debt per capita (debt per person) is about D37,500.

That means a dead Gambian leaves behind an unpaid debt of D37,500 and one born picks up a debt obligation of that sum right away.

The comparison of national debt to GDP is simply a demonstration of its size.

GDP doesn’t directly pay off debt although increases in GDP are potentially more tax revenue hence increased ability to service the debt.

National revenues go to pay off or service debts. Our debt is 7/8 times larger than our annual revenues/incomes. The structure of the national debt is roughly 3:2.

That is 60% of our debt is owed to Gambians (internally) while 40% owed to outside creditors. That has serious economic consequences in the event of default in repayments.

The principal of national debt do not mature at once or even in short-term but interest becomes due almost always annually.

A debtor nation, such as ours, is expected to service such due interests on time.

The table below presents the reported interests due on our debt per the specified years

Debt interest as a percentage of National/Domestic Revenues: 1994 – 19%, 2017 – 43%,2018 – 42% and 2019 – 21%.

We can neither keep up payment of such high percentages while meeting vitals to living of our people nor default.

Timely payment of due-interests are not only economic consequences but as well a legal liability.

Again, the great swing in the numbers from 1 year to another tells that somethings is not right. Notice debt interest dropped almost by 1/3 from 2018 to 2019 – is possible but not likely.