Economic Deep Dive: The Gambia Lost at Least $100 Million in the Africa50 Deal

SeneGambia Bridge © State House

By Dr. Ousman Gajigo

The deal that the government of The Gambia signed with Africa50 on the Senegambia Bridge should forever live in infamy. Upon further inspection and reconstruction of the financial model, I can now say with confidence that the Minister of Finance, Mr. Seedy Keita, has lost the country more than $100 million.

To refresh everyone's memory, the Adama Barrow government mortgaged the Senegambia Bridge to Africa50, which it erroneously referred to as an "asset recycling” scheme. The government of The Gambia is expected to receive a lump sum payment of $100 million. Africa50 would then take control of the bridge for 25 years. In their haste to receive the $100 million from Africa50, I can now show that the government committed far more blunders than I previously mentioned.

First and foremost, the $100 million the government is expected to receive is a significant undervaluation of the bridge. The appropriate valuation of the Senegambia Bridge should be based on the net present value of the future stream of income it can generate over its economic life. Its future stream of income is based on toll revenue, and toll revenue generation is based solely on traffic flow. So, the present and projected traffic flow is the most important parameter in determining the value of the bridge. The average annual vehicle traffic between 2019 and 2023 at the Senegambia Bridge was about 530,000 —ranging from 340,000 in 2019 to 670,000 in 2023. These figures include all traffic, from motorcycles to heavy trucks. The average annual revenue reported at the bridge during this period was about D327 million.

Prior to the agreement, Africa50 hired a consultant who conducted a traffic study and constructed a model with traffic projections. In that financial model, they included traffic projections all the way to 2048. By contrast, the government of The Gambia, represented by the Minister of Finance, Seedy Keita, never conducted their own traffic study or projection. They relied completely on their negotiating counterpart—a major abdication of responsibility.

I reconstructed a traffic model based on known facts. Based on the growth of traffic in its first five years of operation, it is straightforward to determine that annual traffic volume on the bridge would exceed 800,000 by 2025. By 2035, annual traffic volume should exceed 1 million, and by 2048, the traffic should reach close to 1.4 million. Knowing the existing tolls for different classes of vehicles, which range from D50 to D2,000 per crossing, and accounting for adjustments in toll rates during the 25-year period, it is easy to arrive at a reasonable estimate of what the bridge can generate in total toll revenue.

The estimated total value of revenue from the bridge between 2023 and 2048 should be about $500 million. After subtracting the $100 million that Africa50 is supposed to pay to the government, you are left with about $400 million. But we are talking about an essentially brand-new bridge that would still not have reached the end of its economic life even at the conclusion of the 25-year agreement. Accounting for operations and maintenance costs would only subtract a tiny percentage from that amount. Even taking into account that the country would have a share in the operating company of the bridge still shows that the country has been heavily fleeced in this deal. The government of The Gambia should have received a lump sum, at the very least, $200 million from the deal. Mr. Seedy Keita, our incompetent Minister of Finance, who committed the country to this deal, should be a shining example of the kind of official that no country should have the misfortune of ever having as a minister.

If the Ministry of Finance disputes my calculations, I challenge them to release the financial model that formed the basis for their agreement with Africa50. It is a document that Gambian citizens are entitled to receive so that we can accurately see the level of economic malfeasance involved in this deal.

By the way, the country will not receive the full $100 million that has been announced. The construction costs of toll and weighing facilities will be deducted from that amount. So, the country will actually end up receiving several million dollars less than the announced figure.

Another point that Gambians have not been made aware of is the fact that Africa50 will pay zero tax during the 25-year concession. This simply makes no sense at all. Africa50 has made no infrastructural investment in the country. The infrastructure, the Senegambia Bridge, is already constructed and operational. Furthermore, it has been generating revenue from the very first day of its operation and will continue to do so until the last day of the agreement. In particular, there will be no period of negative cash flow for Africa50. In fact, it will have a high internal rate of return in this deal. In other words, there is absolutely no basis for Africa50 to enjoy a single day of tax holiday, much less for 25 years.

We must also not forget the truly terrible clause that limits our development for the next 25 years. Specifically, during the 25-year agreement, the country is not permitted to build any infrastructure that could draw traffic from the bridge. It is important for every single Gambian to know that the country would need numerous bridges across the River Gambia to ensure maximum connectivity across the whole country. It takes a profound lack of patriotism for a high-level government official to agree to the inclusion of such a debilitating clause in an agreement.

This agreement with Africa50 represents an unprecedented betrayal of the country's trust by senior government officials. It demonstrates an unbelievable level of incompetence, a lack of civic responsibility, and no sense of national duty. In any well-functioning government, officials who negotiated this agreement should be held accountable. Hopefully, that day will soon arrive in The Gambia.