Survey Report: Personal Finance Management in the Gambia

Data from the 2018 personal financial management survey in the Gambia shows a gap in financial literacy among youths.

Download the full report here: Report Personal Finance Among Gambians

The Report’s Conclusion

Financial freedom is important to economic growth as we all strive for a more inclusive society. However, financial freedom can be achieved through the application of the best financial management practices. For people to apply personal financial management practices they will need some form of financial education.

Many Gambians are not planning for their financial future. In the Gambia, 7-in-10 individuals do not have more than D50,000 in their savings and short-term investment accounts. Lack of savings means lesser funds in case of emergencies such as sickness, job loss or economic downturn.

Employment is the primary source of income for most educated people in the Gambia. However, the survey shows a positive relationship between the number of income streams and balance in the respondents’ savings account. The respondents who have multiple income streams have higher savings account balances than those with only one source, particularly employment only.

The way most people manages personal finances – such as borrowing for consumption, no personal budget, lack of insurance – illustrates a lack of financial capability among many Gambians. In the Gambia, 41% of individuals reported borrowing for consumption in the past three years. Additionally, 59% of respondents said they do not prepare a personal budget while 52% did not buy any form of insurance compared to 40% who bought motor vehicle insurance in the last year. This means that most individuals spend their little income without cause for any planning and they borrow to consume. Wealth protection through insurance is not common among Gambians, and the few who buys insurance are mostly to protect motor vehicles where they have no choice but to comply with the law.

Gambians demonstrate low levels of financial literacy and have difficulty applying financial decision-making skills to real-life situations. The study participants were asked two questions covering aspects of inflation and compound interest. Only 60% of the respondents were able to answer both questions right. This average is not good considering that 70.50% of the survey respondents are graduates. The knowledge about the effects of inflation and interest on personal finance is the core of effective financial decision making. Financial literacy has an impact on economic development, and financial literacy plays an essential role in creating a viable financial system (Faboyede et el 2014). Researchers have also found that adults who are financially literate are less likely to default on loans and more likely to save for retirement (Lusardi and Mitchell, 2014) as reported by Klapper et al. (2015).

A significant part of financial management practice is for individuals to have adequate savings, investments and feel satisfied with their financial conditions. The result indicates that half of the respondents are not satisfied with their current financial conditions. 11.51% rated themselves at a higher score of 4 and 5 while 38.13% are on the middle satisfaction rate of 3.

Download the full report here: Report Personal Finance Among Gambians