E-Bantaba

Gambia’s Inflation Challenge: A Deep Dive

Over the last decade, The Gambia has grappled with a steady rise in inflation—jumping from about 5% in 2013 to over 10–12% by 2023. This persistent increase has steadily eroded the value of the dalasi, pushing ordinary Gambians to seek ways to preserve their hard-earned income. With exchange rates hovering around 1 USD ≈ 62 GMD and 1 CAD ≈ 46 GMD, wages in dalasi don’t stretch as far as they did just a few years ago.

1. Overview: A Decade of Rising Prices

Historical Inflation:

  • 2013: Inflation was around 5% according to data from the Central Bank of The Gambia (CBG) and the Gambia Bureau of Statistics.
  • 2023: It has risen to approximately 10–12%, depending on the data source and timing.

Currency & Exchange Rates:

  • The Gambian Dalasi (GMD) has steadily depreciated against major currencies like the U.S. Dollar (USD) and the Canadian Dollar (CAD).
  • Late 2023 estimates: 1 USD ≈ 62 GMD and 1 CAD ≈ 46 GMD (subject to real-time fluctuations).

Why It Matters: When inflation grows faster than wages, the dalasi loses purchasing power, compelling people to look for alternative ways to secure their savings.

2. Impact on Wages and Cost of Living

Average Wage: Many workers in urban areas earn around 4,500 GMD per month (approximately $72 USD or $98 CAD). Actual wages may vary widely, with some in tourism or specialized jobs earning more, and those in the informal sector often earning less.

Key Monthly Expenses:

  • Electricity: 800–1,000 GMD (~$13–16 USD or ~$17–22 CAD)
  • Internet: 1,000–1,500 GMD (~$16–24 USD or ~$22–33 CAD)
  • Food: ~2,000 GMD (~$32 USD or ~$43 CAD)
  • Rent: ~1,500 GMD (~$24 USD or ~$33 CAD)

In Banjul and surrounding Kombo areas, rent can be higher than 1,500 GMD for a modest apartment. After covering these essentials, many families are left with little—if anything—to save.

Other Costs:

  • Transportation: Public transport fares (e.g., 10–15 GMD per short trip) add up for daily commuters.
  • Healthcare: Out-of-pocket expenses can be significant, especially for those without health insurance or needing specialized care.

Result: A large number of households spend more than they earn, forcing them to cut back on essentials or find multiple income sources (small businesses, remittances, etc.).

3. Why Tangible Assets Are So Attractive

Eroding Currency: The more inflation rises, the faster the dalasi’s purchasing power declines. Holding cash becomes risky when 100 GMD today buys less food or services tomorrow.

Traditional Safeguards:

  • Cement & Building Materials: Popular in urban areas for their resale value, cement can be stored and sold later when prices go up.
  • Farmland & Livestock: In rural regions, farmland produces crops for either sustenance or sale; livestock can be sold or consumed as needed.
  • Bulk Commodities: Some families invest in staples like rice or sugar to avoid future price hikes—and sometimes resell at a profit.

Bottom Line: Tangible goods often withstand inflation better than a devaluing currency. Converting dalasi into physical assets helps people protect (and sometimes grow) their savings.

4. Broader Socio-Economic Effects

Remittances: Many Gambian households depend on funds sent from relatives working abroad (often in Europe or North America). These remittances are in stable currencies, which gain more spending power when exchanged for dalasi.

Tourism Sector: Tourism has been a major economic pillar, particularly with visitors from Europe. High inflation raises business costs, potentially discouraging some foreign investors or travelers.

Informal Economy: As formal jobs struggle to keep pace with inflation, the informal sector expands. People turn to side hustles or barter arrangements, further reducing reliance on the dalasi.

5. Government and Policy Measures

Monetary Policy: The Central Bank of The Gambia (CBG) uses tools like interest rate adjustments to manage inflation. However, global price fluctuations (especially for imported items) limit their effectiveness.

Fiscal Policy & Imports: The Gambia depends heavily on imports for essential goods (fuel, rice, etc.). International market changes directly affect domestic prices. Efforts to boost local production—like rice and groundnut farming—are ongoing but not yet fully mitigating import reliance.

Infrastructure: Recent improvements in energy and transportation aim to lower long-term costs. However, electricity remains expensive, and supply can be inconsistent, contributing to overall economic strain.

6. Potential Solutions and Outlook

Diversifying the Economy: Encouraging growth in sectors beyond tourism and agriculture—such as small-scale manufacturing or technology—could help cushion the impact of global price swings.

Financial Literacy Programs: Better public understanding of inflation, saving, and investment options can empower individuals to protect themselves from currency devaluation.

Regulatory Reforms & Safety Nets: Strengthening oversight on essential services (electricity, internet) may help control runaway costs. Social safety net programs or food subsidies can offer short-term relief to vulnerable families.

International Partnerships: Working with ECOWAS (Economic Community of West African States) and global organizations (IMF, World Bank) can bring policy guidance and funding to support economic stability.

Looking Ahead: Achieving lower inflation and stronger economic stability requires a blend of careful monetary policy, infrastructural development, and external partnerships. Until the currency is more resilient, many Gambians will continue relying on physical assets—like cement, livestock, or farmland—to safeguard their income from the ravages of inflation.

References & Further Reading

  • Central Bank of The Gambia (CBG) Publications – Regular updates on inflation and economic policy.
  • Gambia Bureau of Statistics – Official data on wages, cost of living, and demographics.
  • IMF Country Reports – Analyses of macroeconomic performance and policy recommendations.
  • World Bank Data – Stats on GDP, remittances, and sector breakdowns.
  • ECOWAS – Regional trade and economic reports involving The Gambia.

Disclaimer: All figures and conversion rates are approximate and subject to change. Actual living expenses and wages can vary by region and over time.