The Gambia has experienced a gradual resurgence in the performance of its State-Owned Enterprises (SOEs) between 2023 and 2025. This transformation is largely attributed to the implementation of Performance Contracts (PCs). A key legislative step supporting this shift was the enactment of the SOE Act in 2023, which established the SOE Commission. This period of renewed focus and strategic intervention follows nearly three decades of significant challenges for the country's national assets.
A Golden Era Lost
The Gambia experienced a period of respected State-Owned Enterprise (SOE) performance during the 1980s and early 1990s, which ended with nearly three decades of SOE deterioration, financial distress, and governance failures from 1994 to 2022. This earlier era of success was characterized by strong oversight and strategic planning. The National Investment Board (NIB) was established in 1977 to monitor SOEs and provide policy guidance during this earlier period. The NIB was regarded as a center of excellence and received donor support from international partners including the World Bank, USAID, and KFW of Germany, showing its reputation and the confidence placed in its operational framework.
Under the NIB's diligent oversight, several key SOEs flourished, contributing significantly to the national economy and providing essential services. These included GAMTEL, GPA, SSHFC, GPTC, Gambia Airways, GPMB, and NTC. Each of these entities played a key role in their respective sectors, demonstrating efficiency and profitability that set a high standard for public enterprise. The GPA, for instance, functioned as the primary catalyst for the regional economy, recognized across West Africa as an efficient and profitable maritime gateway. Its strategic location and well-managed operations made it a critical hub for trade and logistics in the sub-region. Similarly, GAMTEL, the national telecommunications provider, was ranked second only to South Africa’s Telkom in telecommunications performance during this time, a testament to its advanced infrastructure and service delivery.
Gambia Airways, operating in a successful joint venture with British Airways, maintained a consistent and vital Banjul–London corridor with three flights per week. This partnership not only facilitated international travel but also strengthened economic and diplomatic ties. The GPMB, responsible for the nation's groundnut sector, demonstrated remarkable capacity at its peak, managing volumes up to 300,000 tonnes of groundnuts annually. This figure stands in stark contrast to approximately 40,000 tonnes in recent years, noting the significant decline in agricultural output and processing efficiency over time. The GPMB also innovatively introduced the “Groundnut Bill,” a bond mechanism akin to sovereign Treasury Bills, which provided a stable financial instrument for the agricultural sector and broader economy. The Performance Contract, a key instrument for SOE management, was initially introduced by the NIB in 1990, demonstrating an early recognition of the importance of accountability and target-setting in public enterprises. However, the military takeover of 1994 led to the NIB’s dissolution, marking a significant turning point for the country's SOE sector and ushering in a period of decline.
Decades of Decline and Drift
The period following the NIB's dissolution saw a concerted effort to address the burgeoning issues within the SOE sector, albeit with limited success. The Gambia Divestiture Agency (GDA) was established in 2001 with the mandate to oversee the privatization and restructuring of state assets. However, its operations yielded limited results before its enabling Act was repealed in 2009. This repeal left a critical void in the institutional framework for SOE governance. Following the GDA's dissolution, The Gambia lacked a dedicated institution for State-Owned Enterprise (SOE) oversight between 2009 and 2022. This prolonged institutional vacuum coincided with a significant deterioration in the financial health and operational performance of the country's national assets, leading to widespread inefficiencies and a growing burden on the national treasury.
By 2014, the financial strain from SOEs had become substantial, manifesting in several critical indicators. Uncollected tax obligations from these entities reached a considerable 0.6% of the national Gross Domestic Product (GDP), representing a significant loss of potential government revenue. Concurrently, the government was compelled to spend a substantial 4.5% of GDP to service external debt specifically incurred by three SOEs, noting their inability to manage their own financial obligations. An additional 0.6% of GDP was allocated to subsidize energy sector SOEs, further indicating their profound reliance on state support to maintain operations and provide essential services, often at below-cost prices.
The financial liabilities continued to accumulate rapidly, exacerbating the economic challenges faced by the nation. By the end of 2018, debts accrued by energy sector SOEs had escalated to a staggering 5.8% of GDP, reflecting persistent operational inefficiencies, inadequate tariff structures, and poor financial management within this critical sector. In the telecommunications sector, SOE debts stood at a substantial 3.8% of GDP by the same period, indicating similar issues of mismanagement and underperformance. This growing indebtedness reflected persistent operational inefficiencies and financial mismanagement across key state-owned entities, impacting public services and diverting funds from other essential development initiatives.
The cumulative impact of these challenges became starkly evident by the end of 2022. State-Owned Enterprises collectively recorded an aggregate net loss of D3.5 billion, a clear signal of their precarious financial state. Their total liabilities reached an alarming D25 billion, a figure equivalent to 21% of The Gambia's GDP. This monumental debt burden showed the profound financial strain they posed to the national economy, threatening fiscal stability and hindering overall national development. The situation necessitated urgent and full reforms to prevent further economic deterioration.
Reintroducing Performance Contracts
In response to the dire state of the SOE sector, the Gambian government initiated a significant reform agenda, central to which was the reintroduction of Performance Contracts. The State-Owned Enterprise (SOE) Commission, established through the enactment of the SOE Act in 2023, has been instrumental in spearheading this revitalization. The Commission has successfully enrolled six SOEs in Performance Contracts, marking a significant reintroduction of this critical management tool in The Gambia. These contracts are meticulously designed to establish clear incentives and disincentives for performance, creating a framework of accountability that was largely absent in previous decades.
Under this new framework, SOEs that successfully meet their defined targets are eligible to receive a bonus equivalent to a maximum of three months' salary. This incentive structure aims to motivate management and staff to achieve operational and financial objectives, fostering a culture of performance and efficiency. Conversely, entities that fail to achieve their objectives face potential consequences, which can include the dissolution of their boards, the termination of management personnel, or reductions in salary. These disincentives are key for ensuring accountability and addressing underperformance decisively, signaling a serious commitment to reform.
A key development in the renewed Performance Contract framework is the incorporation of enhanced financial transparency and accountability measures. Recognizing the historical issues of opaque financial reporting and audit backlogs, the SOE Commission has included the timely submission of audited accounts and the clearing of existing audit backlogs as key performance indicators (KPIs) within these contracts. This strategic inclusion aims to address historical issues of financial reporting and oversight, providing a clearer picture of each SOE's financial health and ensuring greater fiscal discipline. To enhance focus and practicality, the number of KPIs in the Performance Contracts has been streamlined significantly. The previous range of 15 to 18 indicators, which often led to diffused efforts, has been reduced to approximately nine or ten strategic indicators. This more targeted approach allows for a clearer, more focused evaluation of SOE performance, ensuring that efforts are concentrated on the most critical areas for improvement and driving more impactful results.
Measuring the Impact
The reintroduction of Performance Contracts and the diligent oversight by the SOE Commission have yielded remarkable results in a relatively short period. The Gambia's State-Owned Enterprises (SOEs) collectively transitioned from an aggregate net loss of D3.5 billion in 2022 to an impressive aggregate net profit of D2.5 billion in 2025. This represents a substantial D6 billion turnaround over just three years, demonstrating the efficacy of the new management approach. This shift marks a significant 171% growth in profitability, indicating a profound improvement in the financial health and operational efficiency of the SOE sector.
A significant portion of this improvement, specifically D4.2 billion (70%) of the D6 billion turnaround, was generated by SOEs operating under Performance Contracts. This statistic shows the direct positive correlation between the implementation of these contracts and improved financial outcomes. Of the D2.5 billion aggregate SOE net profit recorded in 2025, a dominant D2.1 billion (84%) originated from the six SOEs that had enrolled in these contracts. This clearly illustrates that the SOEs under the performance contract framework are the primary drivers of the sector's resurgence and profitability.
Total SOE revenues also experienced substantial growth during this period, reinforcing the positive trend. Revenues increased from D12 billion in 2022 to D17.5 billion in 2025, reflecting enhanced operational capacity, better market positioning, and improved service delivery. The six SOEs under Performance Contracts were responsible for generating a dominant D14.8 billion (85%) of this D17.5 billion total revenue in 2025. This further notes the central role these contracted entities play in the overall economic contribution of the SOE sector. For the first time in recent history, five SOEs paid dividends to the government based on their 2025 performance, marking a significant milestone in their journey towards financial self-sufficiency and contribution to the national budget. Notably, three of these dividend-paying entities are enrolled in Performance Contracts, providing concrete evidence of the financial benefits derived from this strategic management tool. The Gambian experience serves as a compelling case study on how structured accountability and performance-driven management can transform a struggling public sector into a profitable and sustainable contributor to national development.