The Gambia Investment Law Regulation (GIEPA presentation)

Omar E. Garcia-Bolivar
omargarcia@bg-consulting.com
www.bg-consulting.com
Gambia Investment and Export
Promotion Agency Act 2010
June 13, 2011.
Banjul.

INDEX
 Best international practices for investments.
 Issues with the GIEPA Act.
 Some recommendations.

BEST MARKETING TOOL
Sound business
climate

SOUND BUSINESS CLIMATE
 Business opportunity.
 Easy to do business.
 Low cost.
 Good infrastructure.
 Access to credit.
 Rule of law.

A COUNTRY IN AFRICA
 Small.
 Difficult to reach.
 Not well known.
 Competition by close larger countries.

MAURITIUS
 Population 1,275,323
 Doing business rank: 20/183
 FDI inflows 2006-2010: US $ 256,680,712
 GDP: US $ 8,588,729,727
 GNI Per Capita (US$)7,240.00

IN ADDITION TO…
 Foreign investment policy:
 Investment law as a goodwill sign.
 Plan investment treaties (BITs, FTA):
 Content
 Countries to target
 Double taxation treaties.
 A rational system of incentives.
 Promotional strategy.

TAX INCENTIVES
 Limited in time for beneficiaries and for granting
agency.
 Granted automatically upon meeting the requirements,
e.g.: claim at time of tax return.
 Contributor not relieved from compliance, e.g.: file tax
return.
 Subsequent supervision.
 Administered by revenue authority.
 Tax credits and investment allowances directly related
to the amount invested are better options.

EXPORT PROCESSING ZONES
 Hassle free regime.
 Trade facilitation measures in place.
 Imports free of duties and VAT.
 Simplified tax regime.
 Exports not subject to tariffs or restrictions.
 Effective monitoring and supervision by Customs
authority.
 No subsidies in utilities, communications or
infrastructure.

WHAT NOT TO DO
“ The Gambia‟s investment promotion authority confers a special
status on investors, who are then awarded special investment
certificates that entitle them to benefit from incentive packages.
The investment promotion authority also states that, „Apart from
these specific incentive packages, others can be negotiated with
the Agency depending on the strategic nature of the investment.‟
To the extent possible, qualification for incentives should be
automatic, with investors receiving them if they satisfy the
conditions required by tax and other laws. Investors‟ costs
increase if they are asked to go through an approval process.
Moreover, most investment promotion agencies lack the
capacity to administer incentives —especially tax incentives.”
Source: Incentives and Investments:
Evidence and Policy Implications
Investment Climate Advisory Services of the World Bank Group. December 2009

The business climate in The Gambia
 Opinion of the business community:
 Too many and high taxes.
 Expensive and unreliable electricity.
 Difficulties to access to credit.
 Access to/from the world: hard.
 Doing business indicator: 146/183

THE GIEPA ACT
• It is an average law.
• Some terms need to be defined.
• Although it intends to create a rule based incentive system,
some discretion is present.
• According to the Act, GIEPA receives and process the applications and if approved, it
recommends the Minister to grant the certificate to the applicant. This procedure involves
discretion of the Board of GIEPA and it is very likely to cause delays and excessive costs for the
applicants.
• GRA in turn recommends to Minister of Finance for the tax or export component of incentive
package.
• No general time limit to cap the incentives.
• Excessive, distortive and contradictory incentives, e.g. tax
holiday and tax depreciation.
• Universal arbitral consent.
• MSME component.

How to attract business?
Sound business climate
Regulati

Recommendations
 Look closely at the law again.
 Others:
 Streamline the process of incentives.
 Have GRA actively involved.
 Try to emulate one-stop shops.
 Diminish discretion.
 Subsequent supervision.
 Database of MSME to matchmake.
 Play “dummy” with other MSME provisions.

End
 Thank you.

The Gambia Investment Law Regulation (GIEPA presentation)

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