“Diaspora Remittances Are Preventing the Dalasi From Collapsing,” Says Economist Gajigo

Dr. Ousman Gajigo, Economist

By Makutu Manneh

Dr. Ousman Gajigo, an economist and politician, has underscored the critical role of remittances from Gambians in the diaspora in sustaining the country’s currency, warning that the Dalasi would face far greater pressure without these inflows.

In a statement shared on his Facebook page, Dr. Gajigo argued that remittances are a key factor preventing the Dalasi from collapsing, noting that the country’s economic fundamentals offer limited support for currency stability.

He explained that the nominal exchange rate is primarily influenced by factors such as the trade balance, foreign direct investment (FDI), and remittances. “The key drivers of the nominal exchange rate include (though not exclusively) trade balance, foreign direct investment, and remittances. A trade surplus contributes to currency appreciation,” he noted.However, he added that The Gambia has consistently recorded a trade deficit—where imports exceed exports—now approaching US$700 million.

Dr. Gajigo further observed that higher levels of foreign direct investment can also strengthen a currency, but said this channel has been ineffective in The Gambia. “Unfortunately, FDI in The Gambia has been anemic, which means this channel cannot be counted on to arrest the slide in the exchange rate.”

According to him, the country’s investment climate has failed to incentivise or attract the right investors, leaving remittances as the most significant stabilising force. He stressed that remittances have a positive impact on the exchange rate, explaining that higher inflows generally translate into a stronger currency.Dr. Gajigo noted that remittance inflows into The Gambia have continued to rise and now far exceed both foreign direct investment and even the entire national government budget.

“There are other factors (e.g., growth, inflation, interest rates, etc.) that determine a country’s exchange rate. But in the Gambian context, those factors pale in comparison to the effect of remittances. In other words, the major factor preventing the Dalasi from collapsing is remittances from the diaspora,” he said.

He added that recent official figures indicating that remittances exceeded US$800 million in 2025 are likely understated, as they do not capture funds sent through informal channels.At the Ninth Stake in the Nation Forum (SNF9), the Central Bank of The Gambia announced that remittances from Gambians living abroad surged to approximately US$872 million in 2025, accounting for more than 30 per cent of the country’s gross domestic product.