Wednesday, May 6, 2015
The looming threat of withholding remittances to Gambia
The World Bank is projecting a slowing down of the rate of growth in remittances in 2015 because of weak economic growth in Europe, the depreciation of the Euro and the Russian ruble and the depreciation of the Russian economy. A lower global growth rate will most likely affect the volume of remittances in the Gambia in 2015 and beyond, unless the causes for the slow down are mitigated.
All indications are Gambians will continue to migrate, one way or the other, because of the deteriorating economic and political circumstances in the country. Therefore, remittances will continue to be a very important component of the country's GDP, and it is for the reason that the debate in the Gambia diaspora communities has centered around how to use this potentially potent economic power against a repressive, corrupt and incompetent regime.
The recent decision by the regime to interfere in the foreign exchange market, by determining exchange rates, has accentuated the debate because of the potential financial losses Gambian migrants are likely to incur. The regime's foray into the forex market is viewed with suspicion in the Gambian migrant communities in the United States and Europe which led one to opined that "[T]his is Jammeh dipping his hand in expatriate Gambians wallet as they are the main source of foreign exchange."
The fact that many Gambians abroad see the regime's decision to step in what is, by law, the exclusive domain of the Central Bank of The Gambia, is purposefully designed to enrich the Gambian dictator at the expense the Gambian migrants.
Withholding remittances is one option being debated. The practicality of this option is always open to debate, since in poor countries, remittances are essentially spent by parents and relatives of migrants on their basic needs to sustain themselves. Studies have shown that the portion of the remittance that is spend on basic needs, contributes significantly to poverty reduction.
There are also investment and saving components, with the former constituting the second biggest expenditure item, usually handed by third parties ( a friend or a contractor ). The portion that goes into savings is relatively small, and getting smaller - both in the form of bank saving deposits or T- bills - as the commercial banking system becomes suspect because of recent bank failures, and others that appear to be raise solvency issues.
These two components are, therefore, prime candidates. Withholding portions of the remittances that would otherwise have gone to, say, building a house or investing in a business venture and into savings, would achieve the dual effect of impacting negatively in the regime's economy and financial profile as well as making a political statement.
The potency of this strategy will depend, to a large extent, on the size of the Gambian migrants communities in the United States, Europe and across the globe willing to take part in this mass demonstration of anger and frustration of Gambians at their corrupt and ineffective government. Who will coordinate the effort will be a question worth pondering over.