There has been a bumper rainy season and all over the nation certain farmers are claiming that they will enjoy a bumper harvest. These are the lucky ones because unfortunately many farmers all over The Gambia are suffering because of a lack of resources, fertiliser and equipment. We have in recent days seen and announcement from the Central Bank of The Gambia that economic growth is forecast to reach 6.5% for the year 2008. We must begin to ensure that this growth benefits all the people of The Gambia and not just the wealthy few at the top. The prediction is premised on a “strong rebound in agricultural output and the continued growth of the construction industry”.  We must assume that the “strong rebound” mentioned is restricted to the larger wealthier farmers because all through the regions the smaller farmers are suffering because of the constraints mentioned above.

Even the simple matter of weeding is made far more difficult by a lack of equipment. If a tractor is used, the depth of sod that is turned over is far greater and as a result it takes a much longer time for the grasses and weeds to grow back through the soil meaning that farmers can spend the intervening time using their energy for other chores. When the humble hoe is used then the sod is not as deep and the weeds and grasses grow back more quickly meaning that many more man-hours are wasted weeding again very soon afterwards.

Coupled with this reality is the issue of seed and fertiliser costs. Many farmers are struggling to meet these costs and their crop is suffering as a result.

We must ensure that we spread the wealth of this nation to benefit all people. We must empower our farmers and ensure that they can get optimum use out of their land for their benefit, that of their families and the benefit of the nation. Economic growth is certainly good news for The Gambia but we must ensure that it is also good new for all our citizens.

Leaks reaching the Daily Observer indicated that one Alasana Drammeh, an accountant at the Department of State for Water Resources, has been accused of absconding with at least D296,000.

The absconder, sources added, had drawn payment vouchers which were signed at the department with supporting documents.

Alasana, sources said, had taken the said vouchers to the Accountant General’s Office to process payment. He was alleged to have later withdrawn the money from the Central Bank.

According to sources, the suspect had already handed over the key to the department’s safe to his assistant.

Sources added that investigations of the alleged fraud have begun and that the police were preoccupied with, among other matters, ascertaining the authenticity of the signatures on the cheque issued.

When contacted for comment, Ousman Jarju, the director of Water Resources, declined to comment, saying that “I’m sorry, I cannot comment on this issue."

The Central Bank of the Gambia has undertaken restructuring and reorganisation measures geared towards fighting against money laundering by setting up a Financial Intelligence Unit at the bank.

Charged with the responsibility of collecting, analysing and disseminating information on suspicious transactions, the unit is seen by many as a move in the right direction as it comes at a time when money laundering has been the subject of discussion in many corners of society.

According to Basiru Njie, First Deputy Governor, Central bank of the Gambia, the bank intends to partially adopt Basel II capital Accord by 2010 that will enhance banks safety as well as strengthen, stabilize and improve the sector’s ability to serve as a source of sustainable growth.

“The legal and judicial framework does not ensure speedy recovery of bad debt. Given that the Mortgages Act and the Sheriffs Act (1992) cause delay in enforcing judgements, they are also being reviewed”, he said.

Mr. Njie noted that the Central bank, working with government of the Gambia, is also committed to further improving the legal environment.

“”The Financial Institution Act (2003) is being reviewed to not only address the deficiencies, but to transform it into the Banking Act. A Non-Bank financial Institutions Bill has also been drafted to give sufficient and clear responsibilities to the Central bank of The Gambia to effectively regulate and supervise non-bank financial institutions, including micro-finance institutions”, he asserted.

Despite the constraints and the challenges besetting the sector, Mr. Njie went on, the fundamentals of the banking industry are quite strong.

“Against the backdrop of empirical and survey evidence linking finance and growth and the identification of the dearth of access as an obstacle to the expansion of the private sector, it is logical that reforms should be directed at addressing the key obstacles”, Mr. Njie noted.

He however lamented that the most frequent criticisms of banks are that they take an excessively short-term approach to lending and investment. “Although the institutional structure of the banks is a contributory factor, high and variable inflation, which causes uncertainty and erodes the value of loan capital are also important explanatory factor”.

The Central Bank First Deputy Governor went further to reiterate the bank’s strong commitment to the implementation of prudent monetary and financial policies to sustain the macro-economic stability and the high growth trajectory.

In their efforts to improve the rural finance environment through the promotion of a cooperative policy framework in Africa, the Central Bank of The Gambia recently hosted a sub regional course. The course, which concluded yesterday, was organised by Africa Rural and Agricultural Credit Association (AFRACA) for the West African, English speaking sub region.

The theme of the seminar was “Innovation in Addressing Rural Finance Challenges in Africa”. The centre piece was a deliberation on initiatives which have the potential to improving small-scale enterprises which lack access to credit.

The Governor of the Central Bank of The Gambia, Mr. Momodou Bamba Saho, acknowledged, in his opening remarks, that microfinance is widely recognised as one of the tools in the fight against poverty as it can empower poor people in empowering their lives.

Mr. Saho cited Gambia as a typical developing country where a large part of the productive sector does not have access to basic payment services or savings accounts. Therefore the microfinance sector has the potential to fill the gap by serving the groups that the formal finance sector has difficulty reaching. In this regard Mr. Saho urged microfinance and related institutions to establish a strong bond with their customers to meet the customers needs and requirements.

The Vice-Chairman of AFARACA, Mr. E Mkwawa, said that rich countries scold poor countries for being solely responsible for their woeful poverty. He informed participants that the IMF/World Bank adjustment programmes were designed to address the four maladies assumed to underline all economic ills in Africa. These are the premise of poor governance, excessive governmental spending, excessive government interference and too much state ownership.

Mr. Mkwawa replied to these accusations by saying that the current African generation can end the corrupt relationship between powerful and weaker parts of the world which have been there for so long.

“This is Africa’s crisis so this is our crisis,” he added. He finally emphasised the importance of agriculture as an answer to Africa’s ills.   

Banks are the privileged partners of the Central Bank and the main media for the implementation of its monetary policy. In its capacity as Central Bank and Monetary Authority, the Central Bank of West African States (BCEAO) maintains diversified relations with the banks and financial establishments conducting activities in the member States of the West African Monetary Union (WAMU).

These relations mainly fall within the scope of the functions performed by BCEAO as far as the supervision of the banking sector and the control and distribution of credit are concerned.

Composition of the WAMU banking system

As of June 30, 1998, the Union comprises 59 banks and 28 financial establishments. Eight groups dominate the WAMU banking system through 25 establishments with relatively wide national networks.
They are:

• the affiliated branches of the "Société Générale", based in Senegal and Côte d'Ivoire ;
• the partners of the Banque Nationale de Paris (BNP), based in Burkina, Côte d'Ivoire, Mali, Senegal and Togo ;
• the branches of the "Crédit Lyonnais", established in Benin, Côte d'Ivoire, Mali and Senegal ;
• the branches of Citibank-NA, based in Côte d'Ivoire and Senegal ;
• the banks of the group Bank of Africa (BOA), established in Benin, Burkina Faso, Côte d'Ivoire, Mali and Niger ;
• the Ecobank group, which has four entities in Benin, Burkina, Côte d'Ivoire, Mali and Togo;
• the banks created in partnership with Lybia, in Burkina, Mali, Niger and Togo ;
• and affiliated bank of the Financial B.C. group in Benin.

Banking legislation

Banking supervision is exerted on the basis of laws which are applicable throughout the Union. As a matter of fact, the solidarity existing between the member States of the Union is materialised, as far as the banking system is concerned, by the adoption of a common law which is inserted into the legal system of each State. This law which is commonly referred to as Banking Law entered into force on 1st October 1990.

The Banking Law provides for an exact definition of banks and financial institutions, and of the credit and investment activities conducted by the latter. It specifies the conditions of entry and of exercise of the banking profession, and determines the obligations which must be met by banks and financial institutions in the execution of their operations. The Banking Law defines the scope of the control exerted by the Central Bank and the Banking Commission, and spells out the rules governing the Monetary Union and the sanctions applicable in case these rules are not respected.

Banks and financial institutions must be authorised and registered on the list of banks and financial institutions to be able to operate. This authorisation is granted by the Minister of Finance after BCEAO has examined the application and the WAMU Banking Commission has certified its conformity with applicable laws.

The conditions of approval are mainly based on:

• the name;
• the legal status of the establishment ;
• the minimum capital which stands at 1 billion for banks throughout the States, whereas that of financial institutions is 300 million in Côte d'Ivoire and Senegal, and 100 million in the other States;
• the adequacy between the resources and objectives of the establishment to be created;
• the quality of shareholders ;
• the worthiness and experience of managers;
• an activity programme showing the viability of the operation.

As far as activities are concerned, despite the fact that they are becoming more and more commonplace, banks and financial institutions operating in the Union are not authorised to conduct purely commercial, industrial, agricultural and service activities. Other operations are subject to restrictions.

In order to enable all banks and financial institutions of the Union to have access to the banking market of each member State, in optimal competition conditions, the Council of Ministers of the Union decided, at its meeting held on 3rd July 1997, to adopt the principle of unique approval. Thus, as from 1st January 1999, any bank or financial institution duly authorised by a State of the Union, may carry out a banking or financial activity in the other States of the Union, and provide services of the same nature in any other area in the Union, without having to request new authorizations.

In addition to the Banking Law, the other legal texts which strengthen banking supervision are the following ones:

• the new prudential rules, which entered into force on 1st October 1991. They cover all the rules applicable to banks and financial institutions and pertaining to the conditions of exercise of the profession, accounting regulations, the regulations governing credit establishments operations, and management standards ;
• the decree relating to the classification, legal status and operations of financial institutions, which entered into force in 1992 ;
• the framework law defining and repressing usury, which has already been adopted by several member States or which is being adopted by the others for its ratification.

Regulation and control of credit establishments

The main duties entrusted to the Central Bank in the framework of the general rules governing the exercise of the banking profession and related activities are the following:

• examination of requests for authorisation;
• powers to exert off-site and on-site control;
• determination of effective equity;
• dispensation from banking conditions;
• financial sanctions;
• definition of the modalities for the implementation of the decisions taken by the Council of Ministers in the framework of its competences;
• accounting provisions applicable to banks and financial institutions;
• definition of banking conditions;
• determination of credit ceilings for banks staff and managers 
• determination of the amount of the special reserve.

Assistance of the Central Bank to credit establishments

In compliance with its statutes, the Central Bank grants assistance to the banks and financial institutions which are authorised to conduct activities in the States of the West African Monetary Union.
In that respect, it may :

• make advances against publics securities issued or guaranteed by the States of the Union ;
• discount, purchase, sell , accept "en pension" or take in pledge claims on the States of the Union, enterprises and private persons.

Other interventions of the Central Bank in favour of credit establishments

The other interventions of the Central Bank in favour of the banking system are mainly focused on the following operations:

• organisation of the money market ;
• participation in the capital of establishments or organisations whose activities are of general interest to one or several States of the Union ;
• opening in its books of accounts on behalf of banks and financial institutions ;
• execution of transfers on behalf of credit establishments ;
• centralisation of payment incidents reported by credit establishments ;
• organisation et gestion des chambres de compensation du système bancaire ;
• transmission by all credit establishments of all documents and information which are relevant for the performance of the duties assigned to the Central Bank ;
• teaching of banking techniques and training of the staff of administrations, banks and financial institutions.

http://www.bceao.int
Central Banks of West African States / Banque Centrale des Etats de l’Afrique de l’Ouest

Issue of currency

The Central Bank has the sole right of currency issue throughout West African Member States member States.
It issues the monetary signs, banknotes and coins which are legal tender and the territory of the members States of the Union. The creation, issue and cancellation of monetary signs are decided by the Council of Ministers.
Despite the development of srciptural payment media, banknotes and coins continue to be widely used by economic agents transactions. The exchange of banknotes between the member States of the Union is favoured by the single monetary signs.

As far as printing is concerned, the Central Bank is permanently seeking to improve the authentication of its monetary signs with a view to enhancing the security of the banknotes it issues. The decisions respectively taken in 1977 and 1991 for the renewal and completion of the banknotes and coins in circulation fall within that scope.

Monetary policy

The Central Bank of West African States is also responsible for the management of the monetary policy of the WAMU member States. This monetary policy is aimed at:
• adjusting global liquidity in the economy according to the evolution of the economic situation, so as to ensure price stability, and
• promoting economic growth
Organisation and supervision of banking activity
The Central Bank defines the regulations applicable to banks and financial institutions and ensures the supervision of their activities. In that respect, the Banking Commission, created on April 4, 1990 and chaired by the Governor of the BCEAO, is responsible for the organisation and supervision of the WAMU banking sector. BCEAO assumes the Secretariat General of the Banking Commission.

Assistance to WAMU member States

The Central Bank provides assistance to the Governments of the States of the Union at their request in relation with international financial and monetary institutions and its negotiations concerning the conclusion of international financial agreements. It may be charged with the execution of such agreements on conditions determined by conventions approved by the Board of Directors. As regards in particular the relations of the Member States with the International Monetary Fund, the Central Bank acts as a fiscal agent in accordance with the provisions of the Agreement of September 24, 1981, signed between BCEAO and the member States.

The Central Bank the States of the Union in the definition and follow-up of their adjustment programs and also in the management. In particular, it assists Government in their negotiations of their external debt rescheduling. The Central Bank may also lend its assistance in the definition, harmonisation and application of the regulations governing external financial relations. In that respect, it notably
establishes the balance of payments of the States.

Other activities

The Central Bank takes an active part in the discussion with the partners of the Franc Zone concerning the reform of the insurance, social security provisions, savings mobilisation, business law, the Franc Zone Monitoring Office for economic trends (Observatoire économique de la zone franc) and regional training centres.

The Central Bank has developed a training policy for its staff members which it has subsequently extended to banks and financial institutions, economic and financial administrations of member States and of some sub-regional countries. This training is provided by the West African Centre for Banking Studies and Training (COFEB), which is located at the Head Office of BCEAO. The creation of this centre was motivated by the necessity to harmonise the training of the banking sector senior executives and to give to it a more regional scope. Since its inception in August 1977, the COFEB has trained 988 executives representing 0 sessions divided as follows : 380 trainees for National Administrations, 214 trainees for Banks and Financial Institutions and 394 trainees for BCEAO. The COFEB succeeds the Training Centre of Abidjan which formerly ensured the training of BCEAO senior executives.

In another connection, the Conference of Heads of State of the West African Economic Community (CEAO) which met in Ouagadougou, Burkina Faso, on March 15, 1994 decided to dissolve CEAO and all its specialised institutions. On that occasion, the BCEAO desirous to rationalise and optimise the training potential in the sub-region and wishing to safeguard the achievements of the African Centre for Higher Studies in Management (CESAG) which started its activities in 1985 in Dakar, took the fixed assets of this training centre. The two protocols defining the terms and modalities for the transfer of CESAG to BCEAO were signed on September 6, 1995 at the meeting of the Council of Ministers of BCEAO, and on November 16, 1995, with the Republic of Senegal

http://www.bceao.int
Central Banks of West African States / Banque Centrale des Etats de l’Afrique de l’Ouest

The editorial department ofThe Pointwould like to apologise to Arab Gambia Islamic Bank, Mrs Njoba Sankareh and our general readership on account of an error contained in our lead story of yesterday, on the lawsuit involving Jatto Ceesay.
The error concerns the statement that Mrs Njoba Sankareh is a guarantor when, as the following letter from AGIB clarifies, her only connection to the matter is that her address was used by the defendant, Jatto Ceesay, for correspondence purposes.
The reaction from AGIB runs thus:

Dear Sir,

CORRECTION ON ARTICLE IN THE POINT NEWSPAPER CAPTION: JATTO CEESAY SUED FOR 2.5M

We refer to the article in your newspaper of Thursday 14th February 2008 in the front page captioned:JATTO CEESAY SUED FOR D2.5M.

The case of Jatto Ceesay is presently in the High Court of The Gambia and was mentioned on Wednesday 13" February 2008, and adjourned to the21st February 2008.

We have observed that the article stated that the facility to Jatto Ceesay by the Arab Gambian Islamic Bank Ltd(AGIB) was guaranteed byNJOBA SANKAREHof the Central Bank of The Gambia, Ecowas Avenue, Banjul, which is not correct.

Mrs. Njoba Sankarehof the Central Bank of The Gambia is not the Guarantor for the facility extended to Jatto Ceesay. This facility is fully secured by a Legal Mortgage of the Defendant’s property.

Mrs Njoba Sankareh’s address was being used by the Defendant(JATTO CEESAY)to facilitate correspondence between the Plaintiff and the Defendant.

Mrs Sankarehhas never been a party, or a Guarantor to the facility provided to the Defendant by the Bank(AGIB).

We therefore wish to solicit your cooperation, in regularizing this portion of your article in order to show the real story and to relieveMrs. Sankarehfrom any involvement in this matter as soon as possible.

The Central Bank of The Gambia, in line with international best practices, is said to be on the verge of putting the finishing touches to the introduction of a risk-based supervision. The supervision will operate on a pilot basis in 2008. This, when developed, will emphasise a thorough understanding of the supervised entity’s risk profile and thus map out the challenges faced in carrying out the assessment and determining the level of risk. This has been a major challenge faced by regulators in the sub-region in the past.

Risk-based supervision, according to Mr. Bamba Saho, Governor of Central Bank of The Gambia, is about the targeting of resources on the richest institutions with a view to achieving a more effective and efficient supervision. Mr. Saho’s comments came from a statement read on his behalf by Mr. Basiru Njie, first Deputy Governor of the Central Bank of The Gambia, at the opening of a week-long seminar on risk-based supervision.

“Like price stability, financial stability - a situation where the financial system is both operating efficiently and able to withstand large economic and financial shocks - are important prerequisites for sustained non-inflationary growth,” he said.

The maintenance of financial stability, he went on, is an important concern to the Central Bank of The Gambia and supervisory authorities worldwide.

The Central Bank Governor underscored the ongoing challenges as part of the rapid innovation and continuous structural evolution which, he says, characterises financial systems. “Relatively recent changes have included the development of a wide array of new financial instruments and a growth in the number of new cross-sectoral financial participants, many of whom have a global reach,” Governor Saho said. He added that such developments have resulted in an increase in the number of potential channels through which economic and financial shocks can be created and transmitted.