GAMBIA: An Introduction to General Business Law

Country Information 

The current population of The Gambia is 2,639,916 as of 2021, based on the latest World Bank data. Most of the population (57%) is concentrated around urban and peri-urban centres.

Economic Overview and Gross Domestic Product (GDP)

Economic growth decelerated in 2022 against its projected growth of 4.8% due to high commodity price and supply disruptions brought on by the war in Ukraine. This resulted in inflation reaching its highest level in three decades at 12.3%. Inflation is expected to moderate in 2023 with the retreat of global commodity prices, lesser constraints on supply chains, improved confidence and record tourist arrivals, with sound macroeconomic management helping to reduce the fiscal deficit, exit from debt distress, and increase international reserves closer to prudential levels. New businesses that add value may apply for a Special Investment Certificate which can grant them tax exemptions for up to five years.

The country’s immigration laws are quite strict and entry visas are required from non-ECOWAS and non-Commonwealth countries. There are significant numbers of foreigners engaged in business, mostly in the trade, tourism and export sectors. Non-Gambians may own land, and ownership of agricultural or industrial land or for tourism-related activities by non-Gambians is not restricted.

Tax exemptions, although declining, continue to be sizeable - without discretionary exemptions, however the deficit increased in 2022 to D4.4 billion compared to D3.6 billion in 2021. Non-tax revenue has been boosted by one-off items such as the sale of assets, which partly compensated for the tax decline. Great improvements have been made in infrastructural development over the last few years, with plans to construct over 20 new roads as an integral part of the National Development Plan, alongside the national power grid which has been extended to many parts of urban areas. While the road network is mainly around the capital and Greater Banjul area, it is in the process of being extended to the south and north banks of the Gambia River, which bisects the country. The country has one port and one international airport.

Headline inflation started increasing primarily driven by higher energy and food prices brought on by the Russia-Ukraine conflict, which is undermining household food security. Inflation reached an unprecedented high of 2.53% in mid-2022; however, it is expected to narrow down with exports rising again. The dalasi has remained stable thanks to the prudent exchange rate policy of the central bank. International reserves have steadily maintained their 2019 rates, along with private sector credit. While credit to the construction and distributive trade sector steadily increases, overall credit to the private sector has been on the decline. The agricultural sector has seen greater focus particularly through the funding of the African Development Fund, in addition to the tourism sector which has recorded some recovery post-COVID-19, with a 15% increase in tourist arrivals in 2021.

Trends and Developments 

Private sectors specific to national development such as tourism and energy continue to be the fastest-growing sectors since 2018. This was driven by growth in mining and quarrying (22.5%); electricity, gas, steam, and air conditioning (23.5%); and construction (19.9%). The mining and quarrying growth was due to licences being issued to British Petroleum (BP) and FAR Gambia Limited to prospect for oil. Improvements in the water and electricity supply also contributed to growth. Nevertheless, construction remains the largest industrial sub-sector, and continues to be a major contributor to GDP growth since 2019. This has been partially fuelled by the strong performance of remittances. Although agriculture continues to remain inconsistent due to limited diversification, it is a priority by the Gambian government and African Development Fund to finance this vital sector, particularly in rural areas. Erratic rainfall had severe impacts, especially on crops and livestock. Crops were also affected by the late supply and insufficient application of fertiliser, as well as farmers’ use of their own stored seeds, which are typically low quality. Hence, the crop sector continued to decline, along with livestock and forestry rates.

Due to consistent substantial growth since 2015, the fisheries and aquaculture sector replaced crops as the largest primary sub-sector since 2019, hence achieving sustainable growth and development. Overall, agriculture’s contribution to GDP continues to decrease from 21.6% in 2018 to 19.7% in 2021, shortly followed by the industry at 19.52% and services sector which accounts for the biggest contributor to GDP at 51.11%.

Remittances have been growing strongly, representing 63% of the GDP in 2021, and continued to increase by 78% in 2022.

Political Context 

Achieving macroeconomic stability will require improving spending efficiency and increasing tax revenues, as well as strengthening public financial management and SOE governance, combined with better service delivery for crucial infrastructure including energy, water, and telecommunications.

The Integrated Financial Management Information System project supports improvements in public resource management. The central government budget for fiscal year 2020 was prepared using a Comprehensive Budget Module System introduced through the project. The operation also helps advance reforms for state-owned enterprises (SOEs), with technical assistance in drafting the SOE Bill and performing a special audit of major SOEs. The project has helped pave the way for the design of an action plan to improve SOEs’ performance and governance and reduce fiscal risk.

Current Economic Conditions Affecting Clients and the Legal Profession

The Gambia has a mixed legal system based on a tripartite system: English law, including the common law and principles of equity and statute law; customary law, which is administered by district tribunals; and Islamic/Shari’a law, which is administered by a Cadi Court system. The latter two systems apply only to indigenous Gambians and/or Muslims.

The legal profession is regulated by the General Legal Council, who ensure annual calls to the Bar and enrolments. However, the profession is still affected by poor funding to the Judiciary, lack of quality control implementation and poor court infrastructure. Businesses in The Gambia also fail to utilise the ADR system within the country. While this could be a result of a lack of confidence in the system, it is primarily due to a lack of awareness on the part of Gambian businesses and the overall public that there are lawyers and community mediators available, many of whom practice corporate and business law, who are trained in settlement and other forms of ADR so litigation does not have to be the first and foremost option.

Labour force participation has been relatively low; however in recent years there has been a steady albeit lower rate of increase at 1.4% since 2020. Similarly, the unemployment rate of 11.2% in 2021 was a minimal increase from previous years - 11.08% in 2020 and 9.50% in 2019 with women, young people, and rural areas particularly affected. The services sector is the largest provider of regular employment. Tourism and agriculture are both highly seasonal, causing large fluctuations in employment over the course of the year. Half of all workers are classified as self-employed, reflecting the large informal sector, meaning they are unlikely to have access to benefits or pensions. They also tend to earn less than their counterparts in formal employment. Wages are relatively low, with an average daily minimum wage of D50.00 and average gross salary range from D17,000 to D60,000, and under 4% of employees earning more than GMD10,000 per month (around US$200).