Cement supply constraints and price controls in the Gambia
The Gambia’s Ministry of Trade, Industry, Regional Integration and Employment (MOTIE) has issued warnings in recent weeks calling on local actors to respect cement market price controls: 285 Dalasi (USD5.59) per 50kg bag at wholesale and 305 Dalasi (USD 5.98) per bag at retail. Perhaps counterintuitively, these interventions are the product of broad-based improvements in the Gambian country risk profile.
Significance – The price of growth
Since 2016, Gambian growth has increasingly outpaced its West African neighbours. Last year and 2021 are outliers driven by the shock of COVID-19 on major trading relationships. Recent figures show that economic activity has already begun picking up and the expectation is that the course will revert to mean from 2022 onwards. For example, the IMF’s 2021-2024 GDP projections put the Gambia considerably above global averages – see graph adjacent.
Private sector led construction activities are a central element in this story historically and looking forward. But they are constrained by cement supply. Cement in the Gambia costs more, while per capita cement consumption is well below Sub-Saharan African norms, which are in turn beneath global averages. The sector is dominated by two companies in particular. And it is in this context that MOTIE has fallen back on the tried and tested tool – price ceilings. Pressure may ease somewhat after after the impending raining season but the structural supply gap remains.
Outlook – Elections and growing confidence
Presidential elections are scheduled to take place in December this year. The incumbent, Adama Barrow, is running for a somewhat contentious second term. Contentious because (a) Barrow took office initially pledging to serve for a single term only, (b) these are the first polls since his predecessor, president for 22 years Yahya Jammeh was voted out, and (c) the elections will take place in the context of a beached constitutional reform process. And yet Gambian economic expansion and resilience is what it is, in part, because of high levels of confidence in political stability over the political cycle - exemplified by private sector construction activity before, during and after the 2020 slowdown.
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*Photo credit - Atamari, CC BY-SA 3.0
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