In 2024, The Gambia received over D46 billion in remittances, representing 31.5% of GDP. This increase of US$28.8 million from the previous year is attributed to better monitoring practices, formal channels by the Diaspora, and fintech advancements. Key uses of remittances include household consumption and construction, highlighting their economic importance. There remains an opportunity to enhance remittance impact through improved regulations and reduced fees.
The Gambia experienced remarkable remittance inflows in 2024, amounting to over D46 billion (approximately US$775.6 million), demonstrating a crucial contribution of 31.5% to the nation’s Gross Domestic Product (GDP). This surge, amounting to an increase of US$28.8 million from the previous year, can be attributed to advancements in monitoring methodologies, the growing preference for formal remittance channels among the Diaspora, and the integration of technology in sending funds. The emergence of fintech companies has further reduced the costs associated with remittance transfers, making it more economical for recipients.
Significant findings from a survey conducted by the Central Bank of the Gambia’s Economic Research Department reveal that the principal sources of these remittances are the United States, Europe, and various African nations hosting the Gambian Diaspora. The survey indicates that remittance funds were predominantly utilized for consumer spending, education, healthcare, and small-scale investments, contributing to the development of households and communities.
Mr. Njie reported that a substantial 36.9% of total remittance inflows were allocated to household consumption, while 51.8% were spent on private construction, illustrating the critical role of remittances in bolstering domestic demand and stimulating economic growth between 2021 and 2024. He also noted that 7.5% of these funds were designated for personal savings, enhancing liquidity for investment purposes within the domestic financial system. The remaining 3.8% was earmarked for health, education, and other family expenditures.
Despite the evident benefits of remittances, Mr. Njie emphasized the need for strategies to enhance their impact. He advocated for an enabling environment that encourages the Diaspora to engage in larger, more sustainable investments, which would necessitate improving the ease of doing business, providing attractive investment incentives, and ensuring political and economic stability.
Furthermore, he suggested exploring partnerships with financial institutions to reduce the cost of remittance transfers, aiming for the global objective set in the Sustainable Development Goals (SDGs) of limiting the fees associated with sending $200 to 3% by 2030, down from 7% in 2019. High transaction fees hinder the potential benefits of remittances, impacting family income and overall economic contribution. Leveraging technology and promoting competition among service providers could facilitate more affordable remittance services.
Mr. Njie also revealed ongoing efforts by the Central Bank of the Gambia to strengthen the non-bank remittance sector, intending to boost the formal remittance channels. Recent revisions of fintech and forex bureau guidelines are aimed at regulating remittance operators and implementing anti-money laundering measures. He underscored that enhancing the non-bank remittance sector would lead to heightened market competition and a subsequent fall in remittance costs, striving towards the target of 3% by the year 2030.
In conclusion, while The Gambia has made significant strides in increasing remittance inflows and optimizing their use, there remain abundant opportunities to further harness these funds for individual and national development. Effective collaboration, regulatory improvements, and cost-reduction measures can enhance the pivotal role remittances play in the economy.
Remittances are an essential part of the economy in The Gambia, contributing to significant economic metrics such as GDP. In recent years, the country has seen a rising trend in remittance inflows, reflecting both the diaspora’s engagement and the changing landscape of financial technology. Improving remittance channels and reducing associated costs remain vital for maximizing their impact on local development.
The Gambia has experienced a noteworthy increase in remittance inflows, underscoring their significance to the national economy. Continued efforts to enhance the remittance environment, lower transfer costs, and engage the Diaspora in sustainable investment are critical for leveraging these funds for broader economic development. The potential for further growth in this sector remains substantial and essential for the country’s prosperity.
Original Source: thepoint.gm
