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Quick Facts
- Population:
- GDP (PPP):
- $3.6 billion
- 3.5% growth
- 3.1% 5-year compound annual growth
- $1,713 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
The Gambia’s economic freedom score is 52.4, making its economy the 146th freest in the 2019 Index. Its overall score has increased by 0.1 point, with gains in scores for government integrity, judicial effectiveness, and labor freedom exceeding losses on government spending, investment freedom, and trade freedom. The Gambia is ranked 30th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.
The economic revival sparked by transition to democratic rule has been reflected in higher agricultural output, recovery in trade and tourism, strengthened investor interest, and a resumption of aid inflows. After decades of economic mismanagement, new policy initiatives such as regulatory reform, lower corporate taxes, and easing access to land are planned with the aim of rebuilding investor confidence. Pervasive corruption has been a critical problem, and weak protection of property rights has undermined the rule of law.
Background
Geographically surrounded by Senegal, The Gambia gained independence from the United Kingdom in 1965. Longtime dictator Yahya Jammeh took power in 1994 and won a fourth term in 2011 in flawed elections. Adama Barrow defeated Jammeh in the 2016 presidential election. After Jammeh refused to step down, Economic Community of West African States (ECOWAS) member countries intervened militarily early in 2017 and forced him to leave the country. ECOWAS later extended the mandate of its approximately 500 troops remaining in The Gambia for another year. The new government is courting Chinese investment and has signed a duty-free trade agreement with China. Revenue depends heavily on peanut exports, leaving the economy vulnerable to price fluctuations and market shocks.
Protection of property rights is weak. Multiple overlapping land tenure systems are complex and lead to inadequate enforcement of titles. Historically, the judiciary has suffered from executive interference, but the Barrow administration has taken steps to restore judicial independence. The judicial system recognizes customary law and Sharia (Islamic law). Anticorruption laws are ineffective, and legal institutions are not yet fully developed.
The top personal income tax rate is 35 percent, and the top corporate tax rate is 32 percent. Other taxes include capital gains and sales taxes. The overall tax burden equals 17.9 percent of total domestic income. Over the past three years, government spending has amounted to 31.3 percent of the country’s output (GDP), and budget deficits have averaged 7.3 percent of GDP. Public debt is equivalent to 123.2 percent of GDP.
Regulatory inefficiency continues to hamper the business environment. Chronically high unemployment and underemployment persist in the inefficient labor market. The large financial deficits of the state-owned National Water and Electricity Company (NAWEC) and other public enterprises are a particularly acute problem. Growing debt leaves little room to stimulate economic growth.
The combined value of exports and imports is equal to 60.8 percent of GDP. The average applied tariff rate is 14.2 percent. As of June 30, 2018, according to the WTO, The Gambia had one nontariff measure in force. Foreign and domestic investors are generally treated equally under the law. Credit to the private sector has increased, but the overall banking and financial system remains underdeveloped. There is no stock exchange.