The Gambian Investment Policy is predicated on the following premises:
1. The Gambia is a democratic state dedicated to freedom, peace, progress and justice.
2. It has a stable constitutional regime that guarantees fundamental rights and liberties, including private property rights.
3. It is committed to a liberal, free market economy and an open society .
4.The Directive Principles of State Policy enunciated under the Gambian Constitution provide for a pronounced role for the private sector as it is reflected in the document "The Gambia Incorporated. ..Vision 2020" and the document "Economic and Financial Policy Framework for 1998- 2000".
5.The State is constitutionally obliged to pursue a policy of encouraging and protecting beneficial investment, both domestic and foreign, which is regarded as one of the driving forces in economic development as reflected in the membership of The Gambia in such organizations like MIGA (Multilateral Investment Guarantee Agency) and WTO (World Trade Organization).
6.The Gambia seeks to be a trade and an investment gateway to the sub-regional ECOWAS market by reason of its geographical location and close proximity to the European Union markets as reflected in the Trade Gateway Initiative.
Macroeconomic Environment and Investment Policy
Government recognizes that in view of The Gambia's limited resource base, the only way of overcoming the country's serious resource constraint is attracting investment. More particularly, Government recognizes that if development objectives are to be achieved, The Gambia needs capital, sophisticated technology, development of management skills and access to foreign markets. Investment, both domestic and foreign, is therefore welcome in The Gambia. Furthermore, Government appreciates that the creation of an enabling macro- economic environment is an essential pre-requisite to investment flows. Government has therefore initiated policies that promote economic growth, the diversification of economic activities and the expansion of the private sector.
The existence of a vibrant private sector is a necessary precondition for attracting both foreign and domestic investment. Government has therefore initiated and adopted appropriate measures to address the constraints on private sector development such as:
(i) the dearth of investment capital which is accentuated by limited facilities for long- term development financing, including the lack of development banks;
(ii) the traditional inclination of the commercial banks to support trade and not productive sectors;
(iii) the incidence of high interest rates which operates as a major disincentive to private business undertakings;
(iv) government borrowing through high yielding treasury bills which adversely affect the availability of capital for investment in productive activities;
(v) an uncongenial tax regime;
(vi) a legal system which is not sufficiently responsive to the demands and challenges of a liberal market economy;
(vii) prohibitive prices for utility services, in particular, electricity;
(viii) limited freight capacity leading to high freight charges;
(ix) shortage of a sophisticated and skilled labor force;
(x) limited system of training facilities for entrepreneurial development.
Macro economic Policies
The Gambia has demonstrated, during the last years, a significant development in her macro- economic environment. Nonetheless, there are underlying weaknesses to be addressed. These include the level of fiscal deficit in the current account, the high level of real interest rates, the pressure of debt service payment on the budget, the high level of impaired bank loan portfolio and the uncompetitiveness of the banking sector. The core of these problems has been identified as the fiscal deficit and the inadequacies in the monetary policy management. Government is trying to address these problems by adhering strictly to sound financial policies, prudent fiscal and conservative monetary management.
Government appreciates the need to provide strong support and encouragement to Gambian enterprises without embracing measures that are ultimately injurious to the principle of free competition. As a small country with a limited productive base, Government considers that the economic interests of The Gambia are best assured, not by erecting rigid protective barriers but by allowing free and unimpeded access to the larger markets of the neighboring sister countries in the West African sub-region and Africa, generally.
Priority Areas
Although foreign and domestic investment is welcome in virtually all sectors, the Government attaches the highest priority to investments in these following areas: agriculture, fisheries, tourism, forestry, manufacturing, energy, skills development, selected services, mineral exploration and exploitation.
The Government recognizes that the long term economic development lies in the services sector, which provides a competitive advantage to the Gambia. Services now account for 60% of the Gambia's GDP and the contry's competitive advantage lies in this sector. Government will therefore assign the higest priority to this sector and retake appropiate steps to ensure that by 2020, the Gambia serves as the entrepot for West African sub-region and information technology. Based economic with a strong service sector centered on transportation, telecommunications services, trade and financial activities, tourism, information technology services, Government and professional services (such as education, trainng, research, consultancy, health, legal, management, accounting, etc.)
The aboved services will be supported by a productive base in agriculture and natural resources aimed not only at self-sufiency and security, but also to support light agro-based industries. This would involve the export of high valvue crops.
The other priority in the productive sector will focus on light manufacturing and assembly concentrated in high technology and high value added industrial activities. The National Industrial Policy formulated in 1997 states that industrial policy in The Gambia will focus on two key elements, namely,
a) the development of a foreign investment driven 'export sector by designing a special incentive package for export oriented investment and ensuring the smooth functioning of a one-step investment service; and
b) domestic primary resource based industrial sector driven by both foreign and local investment comprising small medium and large enterprises and catering for export as well as domestic demand.
Government will support the establishment of free economic zones and special industrial zone, which will benefit from specials regimes to be established under a Free Zone Authority.
In short, Government will make full use of the country's competitive advantage to expand and strengthen the service sector to service the West African region.
II. SCOPE OF INVESTMENT ACTIVITIES
The Gambia is an open society committed to a liberal economy, and subject to the minor exceptions below, Government does not intend to introduce any restriction on the range of business activities in which foreign investors may engage. Foreign investors may invest in sectors which are open to .Gambian private investors, and will not normally be subject to any restrictions not applicable to domestic investors.
Although, in principle, all sector') are open to investment, the following refinements of this policy should be noted:
(1) As intimated above, this open door policy does not detract from the Government's intention to take appropriate steps to stimulate investor interest in the high priority areas indicated above.
(2) To the extent that the existing Gambian law creates a statutory monopoly for state agencies in certain business activities for example, the generation and distribution of electricity, appropriate legislative amendments will be introduced to permit the participation of foreign and domestic investors in these areas.
(3) Government will encourage foreign investors to seek local equity participation in joint ventures with Gambian business entities in order to enhance entrepreneurial, technical and managerial skills of local investors. Government does not impose on foreign investors any requirement to that effect or any divestment in favor of Gambian nationals.
(4) With regard to public sector equity stake, Government does not oblige foreign investors to offer equity participation to Government or a Government agency. However, as in the case of the private sector, foreign investors may, in particular projects, establish by agreement, joint ventures with the state or with public sector entities. Government may seek equity participation in establishing projects, where the private sector is not engaged in and which are perceived to have potentials of impacting socio-economic development in the country .This is particularly significant in natural resource and infrastructure projects.
(5) Natural resources, including the resources of the territorial sea, the continental shelf and the exclusive economic zone belong to the state. An investor cannot acquire rights over them unless there is a grant by the State of a lease or a license under applicable legislation. Government anticipates that in the case of new investments in major natural resource projects, an investor will seek a comprehensive agreement with Government about the terms and conditions on which exploration for and production of resources may take place.
III. GUARANTEES AVAILABLE TO INVESTMENTS
Foreign exchange availability
The Gambia provides a very attractive environment to investors with regard to foreign exchange. The Gambia has liberalized her foreign exchanged system and therefore, places neither controls nor restrictions on the transfer of funds into or out of the country. However, in order to assuage any possible concerns by large scale investors, financial and monetary policies are in place that provide adequate guarantees for availability of foreign exchange in the market to enable them:
(a) to transfer after-tax profits to shareholders resident outside The Gambia in the foml of dividends, or, in the case of companies incorporated abroad and carrying on branch operations, to make remittances to head office out of funds representing after-tax profits;
(b) in the case of loans, for which foreign exchange availability has been guaranteed by the Central Bank, to repay the principal sum due and to pay interest and service charges on such loans as they fall due;
(c) to pay lincense fees and royalities due persons resident outside The Gambia; and
(d) where there has been a sale of the investment to a resident of The Gambia or a reduction of the share capital, to repatriate the proceeds.
Security of title
Government assures any investor in the security of title and guarantees that the investment will not be expropriated. It is not in the interest of The Gambia to expropriate private sector business, whether domestic or foreign. Any such policy would be at variance with its commitment to the growth of the private sector. While expropriation of private sector assets is not Government policy, all governments in the complex conditions of modem society require rights of eminent domain. In the unlikely event of expropriation, the Gambian Constitution provides that such a measure will be subject to stringent conditions as to the justification, procedures and compensation for the expropriation. Article 22 (1) of the Constitution stipulates as follows:
No property of any description shall be taken possession of compulsorily, and no right over or interest in any such property shall be acquired compulsorily in any part of The Gambia, except where the following conditions are satisfied:
(a) the taking possession or acquisition is necessary in the interest of defense, public safety, public order, public morality, public health, town and country planning, or the development or utilization of any property in such manner as to promote the public benefit; and
(b) the necessity therefor is suclt as to afford reasonable justification of the causing of any hardship that may result to 'aIly person having any interest in or right over the property; and
(c) provision is made by law applicable to that taking of possession or acquisition -
(i) for the prompt payment of adequate compensation;
(ii) securing to any person having an interest in or right over the property , a right of access to a court or other impartial and independent authority for the determination of his or her interest or right, the legality of the taking of possession or acquisition of the property, interest or right, and the amount of any compensation to which he or she is entitled, and for the purpose of obtaining prompt payment of that compensation.
Government reinforces the above guarantees and in particular provides for the reference of any dispute between the Government and, in particular a foreign investor, in respect of the said compensation and manner of payment to international arbitration for final determination.
IV. SPECIAL INVESTMENT AND INVESTMENT INCENTIVES
Special invesment
Government recognizes that the fiscal sector needs to be refonned in order to make it more competitive with regard to neighboring countries and the international market for investment. Until the refonn of the fiscal sector to provide a more competitive environment is implemented, Government deems it necessary to grant investment incentives to special investments.
Foreign as well as local investors that are not qualified for, or do not seek, the special regime of incentives will not be assessed for approval against any specified criteria. They will therefore not be subject to the requirement of prior authorization. They will, of course, be subject to the applicable laws of The Gambia in force from time to time and such business regulations as the requirement to incorporate or register a company or obtain a license for engaging in a particular business activity.
A Certificate of Special Investment to be issued by the Secretary of State for Trade, Industry and Employment for a period of three years and shall be monitored to ensure compliance with the under-mentioned eligibility criteria and that the incentives granted have been utilized for the purpose they were granted. The incentives shall be subject to review after two years or as soon as a reform of the tax system is completed and a more competitive tax regime is in place.
Eligibility Criteria.
Investors who seek to receive the investment incentives will have to apply for the status of special investment, which should confirm with the following eligibility criteria:
(i) The investment must be organized as a company or a partnership under the Laws of The Gambia;
(ii) The minimum investment of fixed assets must be of the value of 100,000 US Dollars or the equivalent amount in local or any other freely convertible currency or currencIes;
(iii) Investment must be made in the sectors as described in annex I.
Invesment Incentives
The following incentives will be awarded to Special Investments.
(a) Exemption from customs duties on the following items:
(i) the approved capital equipment, machinery, appliances, furniture and fittings to be used in establishing the project; Investment Policy
(ii) the approved quantity ofsemi-finished products, spare parts, raw materials and other supplies to be used in the production process.
(b) Exemption from the sales tax on the above mentioned imported goods.
(c) Exemption from the turn-over tax.
(d) Special scheme of accelerated depreciation as follows:
The foregoing incentives will be administered as part of the general tax law.
(e) Preferential treatment for the allocation of land for the site of the proposed investment and the provision of infra-structural facilities.
Appropriate regulations will be issued by the responsible Secretary of State to spell out detailed guidelines for the implementation of the above incentive scheme.
V. THE INSTITUTIONAL FRAMEWORK
Government will establish an appropriate institutional framework to ensure the implementation of the investment policy, the encouragement of investors and the promotion of The Gambia to investors. Such an institutional framework will, as far as possible, eliminate the cumbersome bureaucratic procedures that operate as a disincentive to dynamic investment activity and, as far as practicable, constitute a "one-stop shop" mechanism. For this purpose, an Investment Promotion Agency (called "Agency" from here on) will be established under the responsibility of the Department of State for Trade, Industry and Employment.
The Agency will have four distinct but interconnected functions with regard to investment:
(a) It will be responsible for initiating and coordinating the investment promotion activities of the government. This will involve identifying a range of investment opportunities and making sure that relevant information about them is available in The Gambia and abroad. In this capacity, the Agency will be the focal point for all inquiries by prospective investors. The Agency will act in close relation with the private sector;
(b) It will function as a one-stop agency for investors to support them in obtaining certificates, licenses, permits needed for establishing the investment in the country;
(c) Where application is made for a Certificate of Special Investments, the agency will be responsible for coordinating the activities of the various Departments of Government contributing to the appraisal of the investment proposal;
(d) The Agency will undertake, using its own specialist staff and the expertise available from technical Departments as well as from the private sector, an appraisal and analysis of investment proposals in the light of the criteria mentioned above. In that capacity it will prepare briefs for, and make recommendations to the Board of Directors of the Agency whose role in processing applications for Special Investments status is described below. The Agency will also provide advisory services and make available such services from other government institutions and related external organizations, if needed by the investor.
It is envisaged that a procedure will be established to be followed whenever an application is made seeking Special Investment status. In that context;
(a) All applications will be made to the Agency;
(b) The Agency will be responsible for ensuring that the investor provides sufficient information to enable a judgment to be made on the merits of the investment in the light of the eligibility criteria set out above. This will involve consultations with Departments of State directly concerned; for example, in mining or petroleum projects, the responsible Departments of State will be consulted on work programmes and other technical aspects of the proposed investment;
(c) When the Agency is satisfied that the inforn1ation necessary to assess the merits of the investment is available, and, using its own and other expert staff, appraised the investment proposal, the application will be referred to the Board of Directors of the Agency;
(d) The Board of Directors will be responsible for reviewing the proposed investment, after considering the brief and appraisal submitted by the Agency, and determine whether a Certificate of Special Investment be granted or withheld and advise the Secretary of State accordingly. Following a favorable decision, the Board of Directors of the Agency recommends to the Secretary of State for Trade, Industry and Employment to issue a Certificate of Special Investment to the Investor concerned.
VI. DISPUTE SETTLEMENT
The Gambia has a well established legal system and courts whose integrity and independence are guaranteed by the Constitution. All investors in common with Gambian nationals will have access to the courts to establish and protect their rights.
Furthermore, investors have the right to the following:
(a) As indicated above, if the investment is nationalized, any dispute between the investor and the Government about compensation will be referred for settlement to international arbitration;
(b) In the event a dispute arises between the Government and an investor about the status of Special Investment, or about the continued validity of a Certificate of Special Investment, the matter in dispute, if it cannot be resolved by agreement, may, at ~e instance of the investor, be referred for settlement to international arbitration.
Investors, particularly those making major investments in the natural resources sector, may enter into comprehensive agreements with the State which will provide, in the event of a dispute, for reference to international arbitration.
