The Gambia’s adjustment efforts since 1985/86 have contributed to a steady growth in real GDP and the stabilization, on average, in real per capita incomes, despite the stagnation in agricultural output. The increased availability of foreign exchange has facilitated greater imports of basic consumer and intermediate goods. The strong growth in activity in the industrial and services sectors stimulated the expansion of employment opportunities in the urban and formal sectors of the economy.
The benefits from economic growth have not, however, been evenly distributed to all segments of the society. The leveling off of agricultural output in the face of a rapidly expanding population, coupled with the marked decline in real groundnut producer prices, has resulted in a significant deterioration in the living standards of the rural population. These adverse effects reflected entirely the impact of unfavorable weather and the collapse of groundnut prices in world markets, and could not be attributed to the reform measures implemented by the authorities.27 At the same time, the increasing urban migration has strained the provision of basic utility services (such as water and electricity supply) in the capital city of Banjul, as well as in other major urban areas, and has given rise to a shortage of affordable housing. While the living standards of traders and those employed in the urban areas have improved, the living conditions of the urban unemployed and underemployed has most likely worsened.
In the context of the overall economic strategy, fiscal policy has played a key role in alleviating the impact of adjustment on the most vulnerable groups in the short term and reducing poverty over the longer term.28 The adjustment efforts pursued by the Government have focused on stimulating private sector activity and maximizing employment opportunities in both the rural and urban areas, as well as on improving the provision of basic education and health services and rehabilitating the economic and social infrastructure. Moreover, greater emphasis has been placed on the provision of agricultural extension and research services, and on improving the marketing arrangements for agricultural produce. As indicated in Section V, the share of outlays on education and health in total current government spending has been raised sharply in recent years. With donor assistance, the provision of health services in rural areas has been improved. Seven regional health centers have been upgraded to improve and expand services in rural areas, and maternal and child health services, including family planning, have been expanded. National immunization campaigns against childhood diseases have contributed to raising the national immunization average from 55 percent in the mid-1980s to 70 percent at present. A drug revolving fund was also established in 1988/89, with a view to generating sufficient resources for maintaining essential drugs and medical supplies at adequate levels.
To aid the retrenched civil servants, a special compensation package was provided to employees who had at least five years service, consisting of 1.2 months of salary for each year of service, over and above the normal pension benefits. In addition, a civil service resettlement program was established to provide (1) employment counseling; (2) access to basic entrepreneurial training and more specialized technical training, if appropriate; and (3) credit for the establishment of small business ventures in priority areas, such as agriculture, fishing, small-scale manufacturing, and tourism-related crafts.
Although the overall results of the adjustment efforts since 1985/86 have been positive, the Government has been aware of the hardships faced by the poorest segments of the population and has been monitoring closely the social impact of the reform program. In this context, women have been clearly identified as a particularly vulnerable group because of their relative economic and social status and the lag with which benefits reach them. A Women in Development project, financed by the World Bank and currently being implemented, is designed to (1) improve women’s productivity and income earning potential; (2) strengthen government institutions to enable them to deal effectively with women’s issues; and (3) contribute to bringing a change in the Gambian society’s perception of the role of women. With donor assistance, a Social Dimensions of Adjustment Project is also being implemented, with a view to establishing a data base and developing analytical capabilities for the preparation of action programs aimed at improving the living standards of the poorest. In addition, high priority is being attached to reducing The Gambia’s high rate of population growth, which is perceived as undermining the country’s development objectives. To this end, a comprehensive national population policy is close to being completed, which emphasizes, in addition to the need to improve and expand the family planning and health services, a broad range of population-related issues, such as education, the environment, internal and international migration, and employment.
The income position of groundnut farmers may have been alleviated in part by the sales of groundnuts across the border, where groundnut producer prices have in general been higher than those prevailing in The Gambia; the consumption of groundnuts by households in the rural areas may have also alleviated the impact of declining incomes on their nutritional intake, given the high calorie and protein content of groundnuts. The adjustment costs borne by individual farmers may have also been alleviated by the informal social security system that exists in many villages of The Gambia (complementing the traditional extended family system), whereby available staple food items are redistributed among participants through the local mosques; for more details on the informal social security system, see von Braun (1991).
For the role of fiscal policy in improving income distribution under Fund-supported programs, see International Monetary Fund (1986).