Aerial panorama view to city of Banjul and Gambia river, Gambia/Shutterstock

12 January 2023

The Gambia: Financial inclusion of small-scale farmers as central bank’s mandate

Part 1: 

The Central Bank of The Gambia, AFI member since 2017, launched its National Financial Inclusion Strategy (NFIS) this year, with special focus on women and youth. We talked to Governor Buah Saidy to learn about the central bank’s policies that are expected to bring up to 70 percent of adults into the formal financial sector over the next three years.

In the first part of the interview, Governor Saidy discusses implementing practical policies for financial inclusion of small-scale farmers who represent a backbone of the economy and how to build their resilience and help them mitigate impacts from climate change. In the second part of the interview, Governor Siady focuses on NFIS goals, how digital financial services can support these goals and the role of the central bank in the AFI network.

Governor Buah Saidy, Central Bank of  The Gambia

AFI: What role does financial inclusion for small-scale farmers play in the economic growth of The Gambia?

Governor Buah Saidy: Small-scale farmers struggle to succeed without financial inclusion. Farmers lack the financial access needed to expand their operations and are faced with liquidity challenges since banks consider the sector too risky to advance loans.

Farming is the most common profession of the poor. More than 60 percent of the Gambian labor force is employed in the labor sector, mostly as subsistent farmers. It is estimated that close to 1.33 million adult Gambians (Finscope Survey 2019), mostly farmers and microentrepreneurs, lack access to stable finance from formal financial institutions. This directly affects their ability to produce and upscale as they rely on volatile and unstable sources of funds from the informal sector (money lenders, friends and family, etc.). This limits their capacity to contribute to economic development, as most of them engage in subsistent farming as a survival mechanism.

Financial Inclusion provides farmers with economic empowerment, enabling participation in the market, growing and upscaling their businesses, increasing income and savings, coping with emergencies, and meeting their obligations, both socially and economically. These translate into greater participation and contribution to the economy in terms of value addition, output/Gross Domestic Product (GDP), as well as reducing government’s social welfare support and fiscal burden.

We at the central bank recently established Development Finance Department (DFD) that is partly focusing on improving the lives and livelihood of farmers, and creating employment for women and youths in strategic agricultural value chains including rice, cereals, horticulture, small ruminant, diary, aquaculture, poultry etc. This is expected to increase food self-sufficiency and security, thus mitigating the adverse impacts of reliance on food imports and counteract inflation. This is critical in these times of global disturbances including pandemics, regional wars, and climate change.


AFI: Is direct support for small-scale farmers part of the mandate of the Central Bank?  

Governor Buah Saidy: Yes. The Central Bank of The Gambia is empowered by the Central Bank Act 2018 to create favorable conditions to ensure inclusive growth and economic development. In this regard, the Bank has taken up this developmental role and as part of recent restructuring, created the Development Finance Department with the objective of supporting productive and real sector growth.

In a country where agriculture provides employment for over 60% of the population, there is a need to make sweeping reforms to support growth in the agricultural sector. Part of these reforms is empowering farmers through access to finance and providing support through infrastructure development for storage, processing, quality testing and value adding.

The Central Bank provides access to finance through agricultural implementing agencies and projects and under partnership agreements, while funds are managed by financial institutions.

A core mandate of the Development Finance Department is to intervene in the real sector of the economy. As such, the Bank has partnered with the Ministry of Agriculture (MOA) in various projects (ROOTs, GIRAV) to support women and youth farmers. Also, we have sent a request to the African Development Bank (AfDB) to support the creation of an Agricultural Development Bank to enhance access of credit to the small hold farmer. 


AFI:  How is the Central Bank of the Gambia bringing small-scale farmers into the formal financial sector, while building resilience and adaptation against the impact of climate change?

Governor Buah Saidy: Onboarding farmers into the formal financial sector is limited by the perception of formal financial institutions that lending to subsistence farmers is high risk. It is imperative to de-risk agriculture by encouraging formal lending. In collaboration with the UN Development Fund (UNCDF), we set up a Credit Guarantee Scheme (CGS) to encourage lending to small and medium-size enterprises (SMEs) in agriculture and tourism. However, due to the limited size of the fund (USD 200, 000), only microfinance institutions (MFIs) are participating currently. It is envisaged that the funds will grow to accommodate banks and non-bank financial institutions (NBFIs).

On a larger scale, we also closely work with the Ministry of Finance and Economic Affairs (MoFEA), Ministry of Agriculture (MoA) and other stakeholders to develop the Gambia Incentive-based Risk Sharing for Agricultural Lending (GAMIRSAL), which will be funded by the AfDB and the Gambia Government to support lending to agriculture. Furthermore, work is underway to establish an agricultural development institution through the current Social Development Fund.

It is also expected that the CBG’s Economic Transformation Agenda (ETA) will go a long way to economically empower them to participate in the financial sector and greater financial inclusion.

In terms of building resilience to climate change and adaptation, climate change and green finance issues have been incorporated in the NFIS, key activities have been identified in the priority action plan, under the relevant Working Group. These include active national campaign for awareness creation and education, incentives, and rewards for farmers engaged in environmentally sensitive farming projects, such as tree planting, elimination of bush fire for land clearing, access to funds for inclusive green financing, etc.

The CBG is a member of AFI’s Inclusive Green Finance Working Group (IGFWG) as well. The CBG will partner with the Ministry of Agriculture and Ministry of Environment to:

  • strengthen weather-based forecasting, currently available online
  • develop policies for agricultural insurance, including weather-based, micro-insurance and micro-takaful (Sharia compliant insurance product).

Please click here to read part 2 of the interview. 

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