The rise of multitude private banks in the Gambia

Why So many Commercial Banks in Gambia

Without matching gains, a proliferation of commercial banks invading a weakening domestic economy is nothing to silence about. Velocity of cash flow generated by domestic business does not need the number in commercial banking service providers. There is genuine reason to speculate that the banks are engaged in gainful activities that may not be fuelled by domestic business.

Gambians opposition politicians have an issue to take up in the advent of economic threats imposed by capital flight and other commerce inducement that benefit only the banks and their special clientele. Banks are regarded as financial intermediaries. The vulnerability of financial markets to market failures makes financial markets politically sensitive. Banks are supposed to play significant role in the development process. Banks are key partners to every government in the handling and control of national wealth. The Gambia is a small country with little or no natural resources. Without any credible industries that can create us wealth to the magnitude of us having several banks operating within a narrow square miles of each other, it leaves curious observers wondering why we have so many commercial bank?

Experiments with the defunct Gambia Commercial and Development Bank GCDB produced enough results to confirm how less ready the country’s traditional business relates to Commerce and Industrial institutions. Most of the money that was borrowed for commercial and industrial purpose as neatly documented business plans actually ended up used for domestic purposes. Not much has changed in Gambia since the 80s, 90s as a whole. Even the new millennium provides no better hope.

Every concern Gambian monitoring the global financial climate should be worried about the escalating pace of foreign banks in the Gambia. Private Banks being partners to a country’s central bank in the control of fiscal cash and foreign exchange, it is highly likely for our country to mortgage itself and her citizenry through increase level of debt and borrowings.

The call is for opposition politicians to investigate and scrutinize the underlining reasons recent upsurge of banks in the Gambia with so weak an economy. There is no so much commercial and development activity to engage the full service range all these new banks. Any investigation should critically look at the role of banks in the Gambia and the cost and benefits of having so many of them in our country. It should also look at the main reason why foreign banks are springing up in our country. What is their bait of attraction? Total savings or deposit rate of domestic customers should also be looked at. It is possible that these banks have overseas customers whose may not have any good to the local economy. Where is the money coming from?

Another critical area worth looking is the extent to which the Gambian civil servants and other informal sector employees are making use of loan to undertake for extra financial engagements. In a recent visit to the Gambia, I have heard of many senior civil servants taking huge loans in building house and buying cars and so on. How sustainable is that? Further questions come to mind. What will be the repercussion for our country in cases of financial crisis with a high level of borrowing and low wage payment to this civil servant? Who are using these banks on a regular basis? Is there any case of money laundering and financial misappropriation taking place in collusion with banks? What are Gambia’s banking watch dogs or regulators doing to monitor the activities of these banks?

Banks are good when the economy is performing well and the citizens are engaged in productive ventures for increasing gains. With many banks, the need of free market forces will be more competitive and business malpractice may result. How many banks do we have today? What mechanisms are in place to counter any financial crisis? A bank in the U.K has experienced liquidity problem recently, the Northern Rock Building Society. The main cause of the bank’s problem was lending heavily to low income earners and the shortage of access to inter-bank lending.

The U.K has huge economy with high level per capita income. The government had to nationalize the bank to save it from insolvency. This caused considerable loss to some people with life savings and share holdings. If UK banks can run into trouble which affects thousands of their citizens what will stop our country experiencing similar problem?

Gambia’s opposition parties need to take a look at what is happening in our country’s banking sector. Your findings should be published. We shouldn’t allow the government to mortgage our country. Every bubble busts. That is true even for the bigger economies as they are seen experiencing a recession, let alone for us. If the government is in cahoots with the new foreign banks, you the potential rulers of our country should be prepared to stop our nation falling into financial crisis which occurred in South East Asia.