Economic challenges impeding Gambian entrepreneurship

The consultants said indigenous entrepreneurs and producers based in the rural countryside grapple with the consequences of limited markets and logistical and economic challenges in country, which prevent them from growing.

The EPMDP focuses on reducing socio-economic imbalances in The Gambia by increasing social and economic opportunities for poor and vulnerable groups, by diversifying income generation sources, and improving access to financial services.

The team of consultants had worked with the SDF, the Rural Finance Project, the Central Bank of The Gambia and other stakeholder institutions, to undertake a comprehensive assessment of the microfinance landscape in the country. The mission which began on October 19th 2010 is expected to finish by the end of February 2011.

According to the preamble of the study the government of The Gambia had received a grant of $8.97 million from the African Development Bank Group (ADB) towards the cost of financing the EPMDP.

According to the consultants, Joan C. Hall and Ruth Dueck Mbeba, the objective of their mission was to undertake an assessment of the status of financial service providers in The Gambia in order to identify their strengths and weaknesses, and identify specific areas for capacity-building interventions.

They observed that in general, the Gambian microfinance sector is characterized by good intentions as stakeholders remain passionate about providing increased financial access to all Gambians. However, they said this sense of goodwill was not enough for the sector to improve. They spoke of on-going high subsidies, uncoordinated policy and donor support, duplication of efforts, and inappropriate incentives amongst technical service providers and projects competing for the same funding and training opportunities as factors negating the rise of the sector.

“Governance is generally weak, particularly with VISACAs and rural credit unions, due to the low literacy levels of rural populations. Gambian entrepreneurs and rural producers face limited markets and logistical and economic challenges in this very small country. Having multiple actors at many levels of the microfinance sector creates a rather crowded, supply-led context for a modest market” the consultants asserted.

The experts also outlined general recommendations which favor a capacity building framework that supports market-led and inclusive financial services, focuses on the end-customers and their changing needs, promotes best practices (for donors and services providers), supports a dynamic approach, and instills sound and responsible financial management, which according to them should be based on improving performance, and is found to be sustainable.

According to them, capacity-building efforts in the international development arena have often been challenged as ineffective, mainly because they entail multiple activities, with impact only realized in the long term. They also highlighted a number of risks that must be managed when implementing a capacity building framework by way of capacity development interventions which consider the broader institutional and national context. They added: “Efforts on individual capacity without addressing the broader context will not be effective, an individual and an organization’s capacity does not and cannot develop without active supervision, support and leadership from managers and leaders. The distorted incentives and management processed of many donors can actually contribute to the failure to develop local capacity. These incentives need to be managed from the start, capacity development activities must be prioritized in order to achieve maximum results, since the needs will be endless and that no capacity-building activity in itself will guarantee better performance. An individual must also have the willingness, support and accountability structure in place to implement new skills”.