Opposition leader and economist Dr. Ousman Gajigo has warned that The Gambia’s rapidly rising domestic debt is crowding private firms and households out of the banking system, leaving businesses without the finance they need to expand, hire and supply goods and services.
Responding to last week’s Monetary Policy Committee (MPC) press release from the Central Bank of The Gambia, Gajigo said the headline figure — domestic debt of about D55 billion — confirmed a danger he has repeatedly flagged. He noted that Central Bank Governor Buah Saidy’s remarks echoed an article he published earlier this year.
The core problem, Gajigo argued, is not only the size of the debt but what it does to lending. When government borrows heavily on the local market, commercial banks prefer safe treasury bills and bonds over loans to private borrowers. The result is tighter access to credit, higher effective barriers for firms, and weaker job creation.
He cited the IMF’s latest assessment of The Gambia: over the past decade, about 60 percent of commercial banks’ assets have gone into government securities. Only a small share of bank balance sheets therefore finances the private economy.
That pattern, he said, also helps explain an unusual banking landscape. The country has about 12 commercial banks — roughly four per million people, among the highest ratios in the sub-region. Yet the economy gains little from that density because banks can survive by lending to the state rather than assessing private-sector risk.
Gajigo told Gambians who have been refused loans not to blame banks alone for high collateral demands, steep rates or the absence of grace periods. Those terms, he said, reflect reduced appetite for private lending once government has absorbed so much of the available funds.
He then challenged a central claim in the MPC statement. Paragraph 18 said credit to the private sector rose 41.3 percent from the previous year. Gajigo called that figure “highly unlikely.”
Paragraph 19 of the same release, he noted, showed commercial banks’ total assets growing only 19 percent. With about 60 percent of those assets still directed to government paper, a genuine 41.3 percent surge in private-sector lending was implausible.
The Central Bank itself inserted a caveat that “part of this growth reflects improvements in balance-sheet classification and reporting.” Gajigo argued that almost the entire claimed increase would have to be a statistical reclassification rather than real new lending.
Other banking indicators — deposits and capital adequacy — showed only modest gains. An expansion of that scale, he added, would amount to an unprecedented injection of capital that should have shown up in broader data, including a visible lift in GDP growth. No such lift has occurred.
Gajigo’s intervention frames the debt debate as a choice between financing government and financing enterprise. Until domestic borrowing is reined in, he said, Gambian businesses will continue to find credit scarce even as the number of banks remains high.
