The Gambia, a small West African nation, plans to launch its first stock exchange to diversify its financial sector and provide more business funding options. The country’s economy has been struggling with high debt, low growth, and the impact of the Covid-19 pandemic.
The Central Bank of The Gambia announced the establishment of the Capital Market of The Gambia on September 29, 2023, following the enactment of the Capital Market and Securities Act (2021). The bank will also oversee the Securities and Exchange Commission (SEC) and the Gambian Stock Exchange, which will initially operate at the central bank premises to reduce costs.
The vice president of The Gambia, Muhammed B.S. Jallow, said the capital market will serve as the principal regulatory framework for the capital and security markets, ensuring a dynamic, fair, transparent, and efficient system that supports economic development. He added that the capital market will offer diverse products and financing mechanisms that align with the green recovery focus of the national development plan for 2023–2027 and the long-term development vision to 2050.
The finance minister of The Gambia, Seedy Keita, said the country’s financial architecture has been limited since independence and has failed to meet the country’s and its citizens’ financial and economic needs. He said the capital market will provide opportunities for ordinary Gambians and private sector actors to invest in securities such as stocks and bonds and to raise affordable capital to fund their investments and grow their businesses.
The governor of the Central Bank of The Gambia, Buah Saidy, highlighted the benefits of having a capital market in The Gambia. He said capital markets facilitate the mobilization of long-term savings and investment, assist in price discovery, enhance disclosure, and promote financial stability.
The Gambia is not the only African country seeking to tap into local and foreign investors through a stock exchange. Ethiopia also plans to set up its first stock exchange by 2024 after passing a law establishing a capital markets authority in July 2021. Countries such as Rwanda, Ghana, and Nigeria have also developed capital markets to attract more investment and boost economies.
According to the central bank governor, the Gambia’s stock exchange is expected to start trading by 2024. The bank is currently working on developing the necessary infrastructure, regulations, and guidelines for the market. The bank also engages with potential issuers and investors to create awareness and interest in the market.
If well-managed and regulated, the Gambia’s stock exchange could be a game-changer for the country’s economic prospects. It could provide a platform for raising funds for key sectors such as agriculture, tourism, energy, and infrastructure. It could also foster innovation, entrepreneurship, and financial inclusion in the country. However, challenges and risks are involved in establishing a capital market, such as ensuring adequate liquidity, transparency, governance, and investor protection.
The Gambia’s stock exchange is a bold initiative that reflects the country’s ambition to transform its economy and achieve sustainable development. It is also a sign of hope for a nation that has endured decades of dictatorship and political turmoil. The success of the stock exchange will depend on how well it can meet the needs and expectations of its stakeholders and contribute to the country’s social and economic progress.
Source: Bloomberg
