The International Monetary Fund (IMF) has called on The Gambia to place productivity growth at the centre of its long-term economic strategy, warning that while the country has made notable progress since its democratic transition in 2017, sustaining economic expansion and improving living standards will require structural reforms that go beyond headline growth figures. The recommendations, contained in a study published on 27 July 2026, argue that strengthening institutions, investing in human capital, improving the business environment and building climate resilience will be essential if The Gambia is to achieve inclusive and durable economic development.
The report comes at a critical point in The Gambia’s economic trajectory. According to the IMF, the country has recorded average real gross domestic product (GDP) growth of between five and six per cent annually between 2018 and 2023, driven by a recovery in tourism, increased construction activity, higher remittance inflows, public investment and improved political stability. While these sectors have supported economic recovery following years of political uncertainty, the Fund notes that economic growth has not yet translated into broad-based improvements in employment, poverty reduction or economic diversification.
According to the IMF, much of The Gambia’s economic expansion has been driven by increased labour participation and capital investment rather than improvements in productivity. Although expanding the workforce and investing in physical infrastructure have supported higher output, this model is unlikely to sustain long-term prosperity without corresponding gains in efficiency, innovation and technological advancement.
The Fund argues that raising productivity will require businesses to produce greater economic value using existing resources while enabling workers to benefit from improved skills, better technologies and stronger institutions. According to the report, countries that successfully transition towards productivity-led growth generally experience stronger income growth, greater competitiveness and improved resilience against external economic shocks.
For Africa, the findings carry significance beyond The Gambia. Many African economies continue to rely heavily on labour-intensive sectors, commodity exports and public investment to drive economic expansion. While these factors have contributed to growth across the continent, development economists increasingly argue that long-term prosperity will depend on improving productivity through technological innovation, industrial upgrading and institutional reforms rather than simply expanding factor inputs.
The IMF identifies governance reforms as one of the most important priorities for strengthening productivity. According to the report, maintaining macroeconomic stability while improving public financial management, strengthening public institutions, modernising tax administration and creating a more predictable regulatory environment would improve investor confidence and support more efficient allocation of public resources.
A stronger governance framework could also encourage greater domestic and foreign investment by reducing policy uncertainty and strengthening confidence in public institutions. According to the Fund, improving institutional quality remains fundamental for attracting long-term private capital capable of supporting economic diversification and industrial development.
Human capital development represents another central recommendation. The IMF notes that The Gambia possesses one of Africa’s youngest populations, presenting an opportunity to benefit from a demographic dividend if education systems, vocational training and workforce development are aligned with labour market requirements.
According to the report, investments in education, technical skills and digital literacy could improve labour productivity while enabling businesses to adopt new technologies and compete more effectively within regional and international markets. Strengthening workforce capabilities is also expected to support entrepreneurship and private sector development, both of which remain important drivers of employment creation.
Climate resilience also features prominently within the IMF’s recommendations, reflecting the increasing interaction between economic performance and climate-related risks across Africa. Agriculture continues to employ a significant proportion of The Gambia’s population while remaining highly dependent on rainfall, leaving rural livelihoods vulnerable to changing weather patterns, prolonged droughts and flooding.
The report recommends expanding irrigation infrastructure, promoting climate-smart agriculture, strengthening disaster preparedness systems and investing in resilient infrastructure capable of reducing future economic losses associated with climate variability. These measures are increasingly recognised as necessary investments that protect economic productivity while reducing fiscal pressures associated with disaster recovery.
According to the African Development Bank and other regional institutions, climate change is expected to impose growing costs on African economies through reduced agricultural output, infrastructure damage and increased expenditure on adaptation measures. Integrating climate resilience into national development planning therefore represents both an environmental and economic imperative.
The IMF further highlights the importance of strengthening financial markets and improving access to credit for businesses. Expanding private sector financing, attracting foreign direct investment and deepening domestic financial markets could increase productive capacity while supporting enterprise growth, innovation and job creation.
The report encourages development partners to continue supporting reforms through technical assistance, blended finance mechanisms and investments that strengthen private sector development. According to the Fund, coordinated support from international financial institutions could accelerate structural reforms while improving economic resilience and investment readiness.
Economic diversification also remains a recurring theme throughout the study. While tourism has played an important role in supporting recent economic recovery, greater diversification into manufacturing, agro-processing, digital services and higher value-added industries could reduce vulnerability to external shocks while expanding employment opportunities.
For Africa, this reflects a broader policy debate around moving beyond growth models that depend heavily on a limited number of sectors. Several African governments are increasingly prioritising industrialisation, regional value chains and digital transformation as strategies for building more resilient and competitive economies capable of generating sustainable employment.
The IMF concludes that The Gambia has established an important foundation for future development through political stabilisation and sustained economic recovery. However, maintaining this momentum will require reforms that improve productivity, strengthen governance, diversify the economy and enhance resilience against both economic and climate-related shocks.
According to the report, successfully implementing these reforms could enable The Gambia to generate more inclusive growth while improving public finances, strengthening investor confidence and creating broader economic opportunities for its rapidly growing population. As African economies continue navigating global economic uncertainty, the Fund’s recommendations reinforce the growing consensus that long-term prosperity will increasingly depend on productivity-driven development rather than expansion based primarily on labour and capital accumulation.
For policymakers across the continent, The Gambia’s experience illustrates the importance of combining macroeconomic stability with institutional reforms, climate resilience and human capital development to create economies that are not only larger, but also more competitive, inclusive and sustainable over the long term.
