The simple reason why Yaya Jammeh is continuing to intervene in the Currency Market ignoring the advises of the IMF, World Bank and the rest of the international development community is GREED. There is no doubt that Jammeh and his crony business associates (I will not name names here for now) are profiting enormously from the artificial rate of the dalasis against the major currencies of the world as a result of the micro management of foreign exchange in the Gambia following the introduction of exchange restrictions that is affecting other small businesses and the traveling public.
One of the overriding factors that can influence the value of the dalasis is the inflation rate which to all indications has been rising. With a rising inflation it is difficult to ascertain why the dalasis exchange rate vis a vis the other currencies has remained fixed for some time when there have not been a significant reduction in the prices of essential commodities. The only logic explanation for this is the reckless disregard of the economic consequences of interfering in the market fundamentals of the exchange rate to satisfy the business interests of Jammeh’s KGI with two or three business cronies whose combined wealth have now reached staggering proportions.
There is huge profits being made now by KGI, Jammeh’s own business and the BIG BBs (businessmen/ bankers). The BBs and Jammeh each are major shareholders in the commercial banks. These banks are all authorized dealers exclusively in the foreign
exchange market. These prominent businessmen with their affiliated commercial banks have transformed the treasury departments of those banks into their foreign exchange collection branches. All foreign currencies collected are given to them before anyone else and Jammeh, as the bona fide foreign currency exchange controller now ( a role meant for the Central Bank by the Foreign Currency Control Act), would deliberately sit on or refuse to sign any currency shipment out of the country thus creating an artificial shortage of dalasis. That’s why for an unusually long period of time the dalasi has remained unmoved against the major currencies.
How are these closely run businesses profiting from the foreign exchange control?
Imagine a month before the foreign exchange control was introduced, KGI ordered goods worth of $ 100,000 and at that time the dollar was D52.00/ 1$ this would have been D 5, 200,000.00 . Now during this whole period there have not been any increases in the prices of the same goods being sold at KGI. Today, KGI ordered the same goods at the same value of $ 100,000, the exchange rate ruling today for the dollar is D39.00/1$ this is equivalent to D 3, 900,000.00
Since the prices of the same goods at KGI still remained the same, KGI will immediately make a profit of D 1, 300, 000.00 without selling any goods. Now with the same profit mark-up on those goods, let say 20%, they will still make a profit of $20, 000 plus the difference in the exchange rate between D52.00 and D39.00, which is D13.00 for every 1 Dollar which could easily be D 1,300,000.00
If Jammeh’s KGI and the other BBs are making exponentially high profits from the ‘controlled’ exchange rate of the dalasis. Will there be any reversal of this distorted economic policy? The answer is NO. It now remains a challenge to address the underlying economic imbalances and the blatant financial profiteering by the few greedy people to save the ordinary Gambians.
National Interest should be above individual personal interest. In an Islamic state, such illegally acquired profits are Ha ram.
God save The Gambia!
Written By An Insider