EYEGAMBIA

EYING GAMBIA, AFRICA & BEYOND.

The Gambia’s $588 million diaspora remittances offset tourism revenue losses

Since the outbreak of Covid-19 last year, and restriction of movements all over the world, states across the Continent have had to devise new economic strategies to sustain their essential economic sectors. The spread of Covid-19 and ‘stay at home’ measures in response to it have dramatically reshaped global activities and economies, especially the tourist sector.

Tourism forms part of the development Pillars in The Gambia, constituting close to 20% of the country’s national income. However, it was the first sector to get hit during the outbreak of the pandemic. Hotels and Lodges, Restaurants & Bars, and the informal sector linked with this sector were immediately hit once the virus spread to Europe.

The Gambia’s tourism sector is strongly dependent on the European markets, which is the main explanatory factor of the effect of Covid-19 on the entire economy. Between just February and March, declined by 53.7 percent and brought to almost a halt at the end of the year. The Financial Minister, Mr. Mambury Njie has earlier warned that the effects of Covid-19 on the tourism sector could stand at a $292 million loss by the end of 2020.

However, the country’s high record of remittance inflows has offset the loss felt in the tourism sector. This is according to the International Monetary Fund (IMF) country representative, Messrs Barry. 

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In the review of its first current IMF program report, IMF indicates that The Gambia and remittance and capital transfer at $588 million for 2020, represents a 78% rise compared with 2019. According to Mr. Barry, the country’s record of remittance “… has more than compensated for the losses in tourism and re-export trade inflows…“Gross international reserves continued to increase," IMP country representative Mr. Barry revealed.

Last year, the World Bank forecast that global remittance flows could fall by 19.9% and flows to Africa particularly, could fall by 23.1% in 2020. The projected decline of this scale could affect the capacity of many African countries to address and exit from numerous crises if adequate measures are not taken to address the gap.

Falling remittances would continue to remove a major source of income for many African countries. According to a Technical report by the Joint Research Centre (JRC), “Covid-19 and Remittances in Africa” of the European Commission’s science and knowledge service, 2020, “Remittance inflows have outstripped Foreign Direct Investment for Sub- Saharan Africa since 2015 and did for North Africa and the Middle East from 2013 to 2018. In seven African countries, remittance inflows were valued at more than 10% of GDP in 2019”.

Like The Gambia, other Sub-Saharan African tourism-dependent peer countries are projected to record an average negative 10%to 11% GDP growth in 2020, underlining the staid effect of Covid-19 on tourism.The countries facing the greatest convergence of economic dependence of the population on remittances in Africa are Niger, Burkina Faso, Mali, Lesotho, Zimbabwe, Eswatini, and Liberia.

It is expected that with the trade deficit across the continent, especially for 2020, slower growth in the tourism industry will have significant effects on the economy of the continent, particularly tourism-dependent countries. However, an increase in remittances and other sectors could make up for the loss in output in the tourism sector like is the result in The Gambia.

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