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- GDP (PPP):
- $3.1 billion
- -0.2% growth
- 2.5% 5-year compound annual growth
- $1,599 per capita
- Inflation (CPI):
- FDI Inflow:
Much-delayed economic measures undertaken to improve macroeconomic stability and enhance economic growth include reforming fiscal policies and strengthening management of public finance. There has been little progress in terms of privatization, however, and implementation of the overall reform program has been inconsistent.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 57.1 (down 0.4 point)
- Economic Freedom Status: Mostly Unfree
- Global Ranking: 119th
- Regional Ranking: 21st in Sub-Saharan Africa
- Notable Successes: Investment Freedom and Management of Public Finance
- Concerns: Corruption, Property Rights, and Business Freedom
- Overall Score Change Since 2012: –1.7
The poor judicial system has diminished the government’s ability to protect property rights, undercutting dynamic development of the private sector. Corruption and protectionism remain major impediments to economic freedom. Despite some reforms in customs automation, tariffs and investment restrictions continue to undermine productivity growth in the private sector.
Yahya Jammeh, who came to power in a bloodless coup in 1994, won his fourth term in 2011 in flawed elections. Jammeh’s Alliance for Patriotic Reorientation and Construction won a major victory in the 2012 legislative elections, which were boycotted by opposition parties. The government restrains civil liberties and harasses political opponents. In 2013, President Jammeh withdrew The Gambia from the British Commonwealth. The Gambia has few natural resources. Government revenue depends heavily on peanut exports, leaving the state vulnerable to price fluctuations and market shocks. Because of its unique location along the Gambia River, the country is also a natural hub for tourism and trade.
Official corruption and impunity are serious problems, and government officials reportedly participate in drug trafficking. President Jammeh’s erratic rule through a combination of patronage and repression was a factor in an attempted coup in late 2014. Although the constitution provides for an independent judiciary, Jammeh selects and dismisses judges. The judicial system recognizes both customary law and sharia (Islamic) law.
The top personal income tax rate is 35 percent, and the top corporate tax rate is 32 percent. Other taxes include a capital gains tax and a sales tax. The overall tax burden equals 14.3 percent of GDP. Government spending amounts to 27.1 percent of total domestic output. The deficit has moderated, but public debt equals 100 percent of GDP. Tax administration and spending reforms are underway to improve government financial stability.
Regulatory inefficiency continues to hamper the business environment. There is no minimum capital requirement, but business start-up costs exceed the level of average annual income. The labor market remains stagnant. In 2015, contrary to IMF guidance, the government continued to incur debt to heavily subsidize the parastatal water and electricity companies that are among the least efficient in Africa.
The Gambia’s average tariff rate is 12.5 percent. Foreign and domestic investors are generally treated equally under the law. State-owned enterprises operate in several economic sectors. The financial sector has gradually expanded and benefited from increased competition. Almost all commercial banks are majority-owned by foreign banks, and credit to the private sector has been rising.