Banks and policymakers alike would like to see the exposure ratio return to the long-run average over time, if the emergence of lending opportunities, both large-scale investment projects and retail credit, can be supported by the banks without compromising their financial soundness and overall financial stability. Gambian banks are trying to return to a more balanced portfolio structure in the medium run following the secular decline in private sector lending relative to investment in government securities. The Central Bank of The Gambia (CBG) staff contends that the decline in the ratio was delayed by foreign banks entering the local market with an aggressive lending strategy to capture market share.

The country does not have its own stock market. Sufficient liquidity does not exist in the markets to enter and exit sizeable positions. There is no effective regulatory system to encourage and facilitate portfolio investment, or policies to facilitate the free flow of financial resources into the products and factor markets. Credit is allocated on market terms. Foreign investors can get credit from the local market. The private sector has access to a variety of credit instruments. The Government respects the IMF Article obligations for member countries, including refraining from restrictions on payments and transfers for current international transactions.

Currently, the total number of customers in The Gambia stands at 772,101 and only 14 percent use E-Banking. The Gambia currently has 80 branches and 208 point-of-sale (POS) terminals.

The banking system has been resilient to shocks and this includes challenges posed by COVID-19.

The total assets of the banking industry as of the end of December 2021 increased to $1.4 billion from D58.82 billion ($1.2 million) in 2020 due to increases in balances due from other banks, investments and loans and advances. The country’s asset quality improved, mirroring improvement in the non-performing loan ratio. The ratio decreased by 1.2 percentage points to 5.2 percent at the end of December 2021. The industry’s capital and reserves exposure to foreign exchange activities declined to a long position of 0.37 percent in December 2021 from a long position of 4.6 percent in the corresponding period a year ago. The Gambia’s gross loans amounted to $175 million.

The banking system had been adequately capitalized, liquid and profitable with a capital adequacy ratio of 32.6 percent in December 2020, the ratio of liquid assets to total assets at 63.8 percent and the ratio of non-performing loans to total loans at 6.82 percent. The two largest banks account for $513 million and 36.6 percent of the industry’s total assets.

Most of the industry’s banks are foreign subsidiaries locally incorporated in The Gambia. However, no foreign branch operates in the country. Further to this, they are subject to prudential measures or regulations in line with the Central Bank’s Banking Act and guidelines.

The country has a central bank system. Foreign banks or branches can establish operations in The Gambia. They are subject to the banking regulations of The Gambia. No correspondent banking relationships were lost in the past three years. There are no restrictions on foreigners opening a bank account.

Finance companies dominate the non-bank financial sector with robust financial indicators for the period under review. Assets of FCs at end-December 2021 stood at D2.39 billion ($45 million) compared to D2.01 billion ($37 million) same period a year earlier. The increase in assets size was largely driven by gross loans, cash, and bank balances. Capital increased by 31.0 percent to D378.13 million ($7 million) in December 2021 surpassing the minimum requirement of D50.0 million ($932K).

Mobile money financial services, similarly, grew in terms of customer base, but declined in terms of transactions. Year-on-year, the value of cash-in and cash-out transactions decreased by 20.8 and 20.7 while number of account holders surged by 93.8 percent.

Neither the host government nor a government affiliate maintains a Sovereign Wealth Fund.