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CBG Governor Says “External Shocks” Threatened Anticipated Economic Recovery

Buah Saidy, Governor, Central Bank of the Gambia addressing the 44th Annual Assembly of the Association of African Central Banks (AACB) at the Sir Dawda Kairaba Jawara International Conference Centre in Banjul 4th August 2022

By Landing Ceesay

Mr. Buah Saidy, Governor, Central Bank of the Gambia said effects of “major external shocks” like Russia-Ukraine war threatened this year’s anticipated strong economic recovery.

He added that the latest forecast by the IMF painted a gloomy picture of the prospects of the global economy and downgraded its growth forecast to 3.2 percent for this year, compared to 6.1 percent a year ago.

“Since the food crisis of 2006 that affected some countries in Africa, we have continued to witness major external shocks, including the financial and economic crisis of 2008/9, the commodities crises of 2014, the COVID-19 pandemic, and now the Russia-Ukraine war,” he said.

The Governor said the mentioned consequences provide lessons and opportunities, despite the harms they caused to African economies.

“While the crises cited above have devastating consequences on our economies, they provide lessons and opportunities to consolidate African Solidarity, adhere to multilateralism, and shift global markets towards Africa. Being proactive is essential. We have everything in our arsenal to build economies that are robust and resilient, improve food self-sufficiency and disaster preparedness and reduce dependence on other parts of the world for survival,” he said.

Mr. Saidy urged fellow central bank governors to act against climate change, Africa being the most-exposed and disproportionately affected by its impact, although the continent is contributing the least to global warming.

“Needless to say that Africa is contributing the least to global warming, but we are the most-exposed and disproportionately affected by the dreadful impact of climate-change. Few days ago, we experienced in our country (a) record 30 hours of torrential rainfall that caused severe flooding, devastated communities, and resulted in loss of lives and property. The world must act now and as we gather here today, fellow Governors, we should be aware that Central Banks have a role to play in this regard. This is because climate-related risks have economic and financial stability implications,” he said. 

The CBG Governor said it is now evident that low-income countries are enduring the most of the economic consequences of the shocks through sharp increase in the cost of living, debt sustainability challenges and rising external vulnerabilities. 

Meanwhile, Mamadou D. Barry, IMF Resident Representative for The Gambia said it is worth noting that the hosting of the AACB face-to-face ordinary meeting in Banjul demonstrates the significant progress they have made in the fight against the COVID-19 pandemic. 

He said the risks to economic recovery from the pandemic remain, and the economic consequence of the war in Ukraine is already compounding the socio-economic impact of the pandemic confronting central banks in the region and around the world, leaving them with a difficult policy tradeoff between addressing elevated inflationary pressures, and fostering the nascent post pandemic economic recovery.  

Mr. Barry said it is important to note that central banks have always been at the cutting edge of financial technology and innovation and in the past, the invention of banknotes, the processing of payments through debits and credits in book-entry accounts, and the evolution of interbank payment systems from the telegraph to internet protocols were all transformative innovations.  

“Today, central banks are facing new and unprecedented challenges such as distributed ledger technology, new data analytics (artificial intelligence and machine learning), and cloud computing, along with a wider range of mobile access and increased internet speed. The rapid and ongoing progress in digital technologies has increased the prospect for adoption of new forms of money with the potential of transforming the financial landscape. In Sub-Saharan Africa, the use of mobile money as (a) percentage of the population aged-15 years and above almost tripled between 2014 and 2021 – going from 11.6 percent to 33.2 percent. 

“The concept of digital money is not only diverse, but also evolving swiftly. It includes publicly issued central bank digital currencies, which are digital forms of fiat money fully backed by the central bank, and intended as legal tender; and privately issued digital currencies or payment systems such as e-Money (like Kenya’s mobile money transfer service, MPesa); the stable-coins (which are digital tokens backed by external assets, like the USD-coin); and crypto-assets like the Bitcoin, which are not only unbacked, but are also subject to the caprices of market forces with extreme volatility to truly qualify as money,” he said. 

Buah Saidy, Governor of the Central Bank of the Gambia and Mamadou D. Barry, IMF Resident Representative for The Gambia made the remarks at the 44th Annual Assembly of the Association of African Central Banks (AACB) underway in The Gambia.

The weeklong event at the Sir Dawda Kairaba Jawara International Conference Centre started on 31st July and would end 5th August 2022 (today).

The official opening presided over by the Gambian President, His Excellency Adama Barrow happened on 4th August 2022 at the conference centre.

The idea of the Association of African Central Banks was first introduced on 25th May 1963 at the Summit of African Heads of State and Government in Addis Ababa, Ethiopia.

African Heads of State and Government unanimously agreed to set up a preparatory Economic Committee to study a large range of monetary and financial issues, in collaboration with Governments and in consultation with the Economic Commission for Africa (ECA).

The first meeting of Governors of African Central Banks was held in Addis Ababa on 15th February 1965, essentially to consider a mechanism for co-operation and to discuss ideas for setting up its organs. 

The 15th February 1965 meeting also agreed to set up sub-regional committees as defined by ECA that would be composed of members of the Association or their representatives.

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