GLOBAL ECONOMY IMPACT ON THE GAMBIA: VIEWS DIFFER

C O N F I D E N T I A L BANJUL 000385


E.O. 12958: DECL: 12/05/2028
TAGS: ECON EFIN GA
SUBJECT: GLOBAL ECONOMY IMPACT ON THE GAMBIA: VIEWS DIFFER

Classified By: Classified by Ambassador Barry L. Wells
reasons 1.4(b) & (d)


1. (C) Summary: Ambassador met with the Managing Director
of Trust Bank on a wide range of banking and finance issues.
The Director scoffed at a front page news article proclaiming
Gambia unaffected by the global crisis. He shared his views
on the recent proliferation of new banks opening in the
Gambia, and the general state of The Gambian economy. End
Summary.


2. (C) Managing Director of Trust Bank Macoumba Njie, in a
candid conversation with Ambassador, shared his views on the
current state of the Gambian economy. He disagreed strongly
with the news article in the pro-government Daily Observer
proclaiming The Gambia was as yet unaffected by the global
economic crisis. He pointed to a drop of a minimum of 30% in
foreign remittances, indicating that Trust Bank has over 60%
of the Western Union outlets in the country through which
they track remittances. He further indicated that it was
impossible to determine how much the informal foreign
remittance sector was affected, which likely is twice the
volume of the formal route. He also pointed to the TAF
housing development scheme as being stagnant. The upscale
homes were built for sale primarily to an expatriate retiree
or &snowbird8 visitor, which has slowed dramatically.

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EXPLODING BANKING SECTOR
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3. (C) Nigerian Banks have opened 13 branches in The
Gambia in the last 10 months. Njie commented that they add no
value and are not really vetted by the Central Bank before
being granted permission to open. He indicated that most are
seeking to gain a better reputation in the wider world since
Nigeria has such a bad reputation. He indicated that 2
additional banks had been chartered by the Central Bank
recently and would be opening soon. The Central Bank,s
argument is that it is good for competition, yet it has not
affected margins at all, according to Njie. The Gambia only
requires 2 million dollars in assets to open a bank and all
are branches of the 25 major banks in Nigeria.


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The Gambia Hosts Money Laundering Conference
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4. (C) Commenting on the Money laundering conference
sponsored by Inter-Governmental Action Group Against Money
Laundering (GIABA)last week in The Gambia, Njie indicated
that over 100 Nigerian bankers attended the conference along
with others. There was long discussion about the importance
of tracking deposits knowing customers and protecting against
laundering &money from ill-gotten gains8. He said Gambian
banking laws require banks to report cash deposits from
individuals in excess of 500,000 Dalasi ($19,231 U.S dollars)
and those over 1,000,000 ($38,462 U.S. dollars) from
businesses. He said this is not enforced very well as the
Central Bank has no effective financial intelligence
capacity.

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UNFRIENDLY BUSINESS CLIMATE
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5.(C) Mr. Njie discussed the high tax rate in The Gambia
which he identified as the primary deterrent to more foreign
investment. He drew on the World Bank Report, &Doing
Business in 20098 which ranks The Gambia as 175th of 181
countries for &Paying Taxes8 as an indicator of a business
friendly environment. In general, of the 10 indicators, The
Gambia ranked worse in 2009 than in 2008 in all but one.


6. (C) Comment: Mr, Njie made it clear that the banking
sector is as cautious about what it says about public policy
as most in The Gambia are. He sees the same threat that we do
regarding the potential for money laundering given the
poverty, porous borders and lax enforcement of financial
transactions. While unwilling to speculate on how this might
affect the countries stability he would only say, &Things
are tense8.


WELLS