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Momodou
Denmark
11744 Posts |
 Posted - 13 Jan 2007 : 17:08:19
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HALIFA ON THE FINANCIAL INSTITUTIONS
By Abdoulie G. Dibba
In his contribution to the budget speech, the minority leader and member for Serrekunda Central, Honourable Halifa Sallah, asserted that the existence of the of the financial institutions in the country has not impacted on the export, employment and the eradication of poverty. The rest of the speech runs as thus:
Honourable Speaker, we are told by the Secretary of State for Finance and Economic Affairs at paragraph 6 of his budget speech that :prudent Fiscal Policy needs to be complemented with strong monetary policies. He went on to say that “the Central Bank will continue its reforms to guarantee price stability, maintain a viable external position at the same time, promote a sound and flexible financial system.
‘Honourable Speaker, if one looks at the issue of the financial institutions, one would discover that the banks are actually engaged in providing credit, but the credit they are providing to the private sector is very limited. This fact, Honourable Speaker, could be seen under paragraph 20 where the Secretary of State indicated that “the Net Domestic Asset of the banking system rose to D3’4 billion at end of September, 2006 or 16.2 percent reflecting a strong domestic credit growth during the 9 months ending September 2006. Domestic Credit increased to D4.2 billion or 20.0 percent, of which credit to the private sector grew by 27.1 percent to D2.2 billion at end of September 2006". But… under paragraph 21, it indicates that “a sectoral analysis of the distribution of commercial banks credit revealed that 23.3 percent of the total loans went to the distributive trade sector. Loans and advances to the agricultural sector captured 19.9 percent, whilst personal loans accounted for 17.6 percent of outstanding credit.
‘Honourable Speaker, if one look at the bottom of paragraph 21, one would discover the government aspect, indicating that “the banking system’s net claims on government increased to D1.3 billion or 66.1 percent, largely reflecting government’s resource to bank financing of deficit.” There is absolutely no doubt, Honourable Speaker, that as long as government does not maintain a surplus and it goes to the banking sector to be able to get credit to meet its deficit, then the private sector will be clapped out from getting the type of resources that it needs for investment. Honourable speaker, it is also very clear that if the banking system does not invest in the production base and that if the interest rate remains as they are, then the productive base will not be impacted on, and in that sense, we will not be able to export more and in that case, the export will not be able to give us the type of foreign exchange that we need to be able to maintain the type of system that we are talking about as far as the monetary system is concern. It is my conviction that what is helping us is exactly what is stated in paragraph 22 of the budget speech and that is, we have sustainable inflows of foreign currencies through remittances, the travel trade which consequently helped the dalasi to be stabilized. Honourable Speaker, we also have a lot of re-export trade taking place which also means that we would inject more foreign exchange into the national economy. So, one can expect that as long as that proceed, we would be able to maintain the stability of our currency. But Honourable Speaker, the situation that we must bear in mind is that the remittance cannot be linked to sustainable development, we cannot also say that the re-export trade can be linked to sustainable development, we cannot also say that the travel trade can be linked to sustainable development. This is so Honourable Speaker because these are factors that we cannot completely control. Honourable Speaker, I must say that the best investment that Gambia can make is investing in good governance. As long as there is stability in the country, these processes can continue and as a result, we can benefit immensely from the foreign exchange that come into the economy, thus helping us to maintain our accounts outside and at the same time help us to stabilize our currency. It must also be emphasised here Honourable Speaker that my focus therefore is that we need to still work on development of the productive base of the economy in order to move towards sustainable development, otherwise, we would just be maintaining a very fragile economy which can sustain us as long as the situation of stability exists in the country. Honourable Speaker, I then move on to the other institutions of accumulation because investment must rely on the institution of accumulation and we have seen that in the banking sector than the other sectors, industries, manufacturing and other basis of employment generating.
Honourable speaker, we are told that macro finance institutions have emerged in the country but if one looks at these macro finance institutions, Honourable Speaker, one would discover that the level of capitalization of these institutions are so limited that when they give assistant, it must be for a very short period or at a high interest rate that is not affordable by the poor.
Honourable Speaker, we are told that the Visacas, as well as the other macro-savings credit institutions exist to be able to help the poor. They are suppose to be 62 village savings and credit institutions and 53 savings and credit associations called VISACAS. If you look at the level of resource accumulation for the Gambia Women Financial Association, we are talking about D18.1 million being part of its loan portfolio and you go to SDF, we are talking about D41 million being provided to 1,566 groups. Honourable speaker, we need to look at these institutions again, do a study and see the type of loan they are giving, the type of recovery that they are attaining and the type of social impact they are having in improving income or livelihood. It is not enough only to mention that this institution exist and that they have provided this amount of money. It is necessary for us to know the social impact.
Honourable Speaker, such a report would enable as to know whether these institutions are impacting on poverty or not’.
Source: Foroyaa Newspaper Burning Issue
Issue No. 005/2007, 12-14 January, 2006
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