A Market in the Shadows
Like many developing countries, The Gambia’s foreign exchange (FX) market is under persistent pressure. Our imports continue to far exceed exports, creating chronic trade deficits. Business owners routinely complain about uncertainty in accessing hard currency to pay suppliers, while individuals face fluctuating rates from one trader to another.
So, what lies beneath this volatility? Beyond trade imbalance, many developing nations—including The Gambia—operate FX markets that lack transparency, digital traceability, and firm regulatory oversight.
Unlike structured economies, The Gambia has no reliable system for discovering the true exchange rate. Market participants depend largely on word of mouth or informal dealers, leaving space for speculation and manipulation.
As Economists put it:
“When you don’t know the true value of your currency, the market decides it for you – often unfairly.”
The Core Problems Facing The Gambia’s FX Market
Three key issues continue to plague The Gambia’s FX market:
1. Opacity in the Official Market
There is no credible, real-time platform for FX rate discovery. Dealers often establish their rates by calling one another—or by checking with “Peul bi”, the Fula man trading FX in the parallel market. In Nigeria, these traders are known as Mallams or Aboki.
This information vacuum has allowed the parallel market to thrive. At the time of writing, the USD/GMD rate in the official market hovers around D72–D84, while the parallel market trades at D74–D76. This wide spread fuels arbitrage.
Why D84 in the official market? Bank charges and card-transaction fees are often overlooked. Though card transactions represent a small fraction of total FX volume, they still signal what levels are feasible in the real economy.
2. Weak Oversight on Major FX Suppliers
Large inflows from NGOs, foreign missions, and multinational corporations can sometime bypass the Central Bank systems. This makes liquidity management difficult and invites speculation.
While the CBG uses moral suasion to restrict banks from trading above specific levels (for example, D72.75), some inflows inevitably find their way into the parallel market, where rates are higher.
3. A Cash-Based Economy
With most transactions still done in cash, the CBG struggles to monitor money flows. The circulation of CFA and euro notes in local markets worsens the problem, feeding an underground FX ecosystem.
Nigeria’s Blueprint for Reform
Nigeria faced a similar currency battle not long ago. The Naira’s volatility threatened economic stability until a set of coordinated reforms by the Central Bank of Nigeria (CBN) restored relative calm.
Among the boldest steps was the introduction of the Electronic Foreign Exchange Matching System (EFEMS). The CBN approved the B-Match system (Bloomberg Matching System) as a market transparency tool that allowed banks and other authorized FX dealers to post both “buy” and “sell” rates- ensuring that everyone could see where the Naira stood at any given time.
It was, in essence, a two-way quoting system similar to how cryptocurrency P2P exchanges operate: transparent, competitive, and efficient.
The CBN also introduced targeted FX auctions, prioritizing strategic sectors like Agriculture, manufacturing and aviation, while tightening supervision of institutional players. Complementing this was a vigorous digital economy push – partly driven by the naira cash crunch during the campaign period of the 2023 Presidential Elections -promoting e-payments, limiting cash withdrawals, and rolling out the e-Naira (though the e-Naira in my opinion isn’t successful in meeting its goals).
These steps did not just stabilize the Naira; they sent a clear signal: the days of opacity and speculation were numbered.
What The Gambia Can Learn
1. Introduce a Two-Way FX Quoting Platform
The CBG should develop a transparent quoting system similar to Nigeria’s B-Match or even the order-matching format seen in crypto P2P markets.
Such a platform, accessible by banks and licensed forex dealers, would allow users to see both the “buy” and “sell” rates in real time. Daily opening and closing rates (based off matching trades in the B-match system) should be published for public information on the CBG website. This will help the public know where the levels are and approach official channels to trade FX.
This approach would:
- Improve transparency and price discovery.
- Reduce room for speculation.
- Build confidence in official rates.
2. Tighten Rules for Major FX Suppliers
The CBG should require stricter reporting by NGOs, embassies, and corporates that receive or use foreign currency. All inflows should pass through official channels or licensed banks.
Periodic FX auctions could be held where these entities trade transparently, just as Nigeria’s CBN does. Any unauthorized parallel-market dealing should attract penalties.
3. Accelerate the Shift to a Digital Economy
The Gambia has a land area of ~11,300 km² and a population size of c2.4m as per The Point publication on 2024 Census, Preliminary report. So a cashless Gambia is a controlled Gambia. The more transactions move through traceable electronic platforms, the easier it becomes for the CBG to monitor FX demand and detect illegal flows.
This means:
- Expanding mobile money and digital payment systems.
- Phasing out large cash-based FX deals.
- Discouraging foreign currency use in everyday transactions.
Nigeria’s experience proves that digitalization can complement FX stability. It’s time The Gambia treated it as a national priority.
A Call for Bold Action
Piecemeal reforms will not solve The Gambia’s FX crisis. Transparency, stricter regulation/enforcement, and digital transformation must work hand in hand.
As one policy expert noted, “You cannot manage what you cannot measure and right now, the FX market is largely invisible to the authorities.”
If the CBG introduces a real-time quoting system, enforces discipline among key players, and accelerates the digital transition, confidence in the Dalasi will rise. Investors, importers, and ordinary citizens will once again be able to plan with certainty.
The Road Ahead
The FX crisis is not unique to The Gambia – but its solution must be. By blending Nigerian-style policy reforms with the innovation of digital finance, The Gambia can chart a new course for monetary stability.
The path forward demands bold leadership, decisive regulation, and a willingness to embrace technology. If done right, the Dalasi can regain its footing not through speculation or decree, but through transparency, trust, and modern market systems.
About the Author
Pa Malick Bah is a Market Product Specialist, FX & Fixed Income with over decade of experience in West Africa’s banking sector, blending with a passion for data and cryptocurrencies. Mr Bah can connected via Linkedin.
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not represent the position or opinions of any organization with which I am affiliated. The data and insights shared are based on publicly available sources, including newspapers, the Central Bank of Nigeria (CBN) website, and informal market observations. The perspectives provided also draw on my personal experience of over a decade participating in and observing the foreign exchange market in The Gambia.
