Investing in Global Stocks & Bonds from The Gambia: Challenges & Potential Solutions

Gambia Stock Exchange Market © Askanwi AI Generated Image

By Mougnyan Cox

The recent establishment of the Gambian Capital Market is a landmark moment worthy of commendation. Investing in publicly traded companies can allow working Gambians an avenue to protect and grow their savings, outpacing inflation over time. An investment scheme consisting of the modest but consistent purchase of the equity and debt (stocks and bonds respectively) of public companies can provide a robust nest egg to fund retirement once paychecks finally stop. Supplemented with income from a pension, such a retirement portfolio may provide a standard of living that is not dissimilar from one's working years (and potentially even higher).

Consider the following example; an individual who saves a thousand dalasis a year from the time they begin working at age 25 to the time they retire at age 65 will amass 40 thousand dalasi. A substantial sum in nominal terms to be sure, but considerably less impressive in real terms (or in terms of purchasing power) once inflation has been taken into account. A thousand dalasi saved and invested for 40 years at an annualized return of 10% however will become just over 485,000 dalasi after compound interest does its work. Essentially a 10-fold difference, almost entirely due to the fact that one sum is saved, and the other is saved and invested or 'put at risk'. These calculations become even rosier the more one saves. Increase the savings amount to a thousand dalasi a month (12,000 a year), and after 40 years the portfolio has amassed over 5.5 million dalasi. Fantastic results! Compound interest may indeed be the eighth wonder of the world, but where to find such returns?

The S&P500 is an index of the largest 500 publicly traded companies in the United States by market capitalization, with a long term annualized return of 10% [1, 2]. In fact, since 2020, the annual returns for the S&P 500 have been +18.4%, +28.7%, -18%, +26%, +25+, +17.8%, with a greater than 100% cumulative return since that time. An investor who invested 10,000 dalasi in the S&P 500 at the beginning of 2020 would have doubled their money by the end of 2025, and this is in spite of the global COVID-19 pandemic, the war in Ukraine, recent tariff policy, and global widespread inflation. Mutual index funds (or tracker funds in the UK) that invest in this index are widely available to millions of investors worldwide. By investing in this broad index, individual and institutional investors can prudently take on market risk while avoiding stock-specific or company-specific risks, as well as risks related to any particular portfolio manager. Diversifying further into a total world stock market index or global index further reduces country-specific or geographic risks. The US is home to roughly half of the largest publicly traded companies in the world, but Gambians need not limit their choices to any single country or region or continent. In many cases, with the appropriate documentation and a few clicks of a mouse, individual workers from all walks of life the world over can anonymously and safely invest in some of the most profitable companies in existence today (Apple, Meta, Google, Tesla, Nike, Shell, Nestle, Starbucks, and soon SpaceX). Household names, the products and services offered by many of these companies are easily purchased by willing and able Gambians living in The Gambia. Investing in the shares of these multinational public companies from The Gambia and partaking in their profits however is another matter. Potential workarounds are convoluted and fraught with third-party risk. They include sending money abroad to a trusted individual to invest on one's behalf, or using a brokerage firm like Interactive Brokers LLC which requires a US bank account for ease of verification and transaction.

A more enterprising solution could be for the Central Bank of The Gambia (or a forward-looking commercial bank in The Gambia) to buy these low-cost index funds and make them available to Gambians for purchase. These funds could then be administered by the bank for a reasonable fee with a potential lockup period or surrender penalty to discourage frequent trading or speculation. Shares of these funds could even trade on the Gambian Stock Exchange, allowing Gambians to buy and sell their shares anonymously and at a distance should they truly need to cash out/redeem their shares. At least one Ecobank in West Africa (Ecobank Ghana) already has a fund under its collective investment scheme that allocates a small portion to global equities, albeit with moderate fees and not in an obvious indexed fashion [3,4]. A similar fund could be offered here in The Gambia but in the form of a low-cost, broadly diversified stock fund indexed to the S&P 500 or MSCI World Index, balanced with a modest allocation to bonds (also indexed) to reduce volatility of the overall portfolio. The first bank to do so would establish a significant first-mover advantage, and a well deserved one at that. The investment gains that accrue from this fund would represent profits that are not directly/necessarily tied to local business conditions in The Gambia, diversifying the pool of assets owned by the bank.  Aside from providing a new source of revenues for the bank, this liquid pool of investments would also generate tax receipts for the Gambian government, which can be used for public investment in the home country. Over time, as more Gambians become familiar and comfortable with investing in securities, local private companies may be encouraged to go public and list their shares on the nascent Gambian Stock exchange. This will allow homegrown companies to access another pool of resources in the form of equity finance from a large group of investors, rather than relying on debt at punishing interest rates or equity from a much smaller group of private investors.

One caveat; an investment in US or foreign stocks is an investment in the profits of those companies, but it is also an investment in their denominated currencies (which is usually but not always the US dollar, British Pounds, or Euro, or Yen). However, for the average Gambian investor (particularly the retiree), preservation of purchasing power is paramount. An overseas investment denominated in dollars provides a hedge against unfavorable movements of the home currency against the dollar, and the long term evidence suggests it may be a prudent hedge.

Another caveat: investing as described in this article refers to purchasing shares in a low-cost, broadly diversified stock fund indexed to either the S&P 500 or a global index. The global index in particular contains companies from over 20 countries that do business all over the world. While many companies fail or their business prospects decline with some regularity, in aggregate these companies tend to do well over the medium to long term (5 to 10 years minimum), with their shareholders benefitting from their success. Investing in any particular individual company however is fraught with risk, especially for the retail investor and is more aptly described as speculation for the average investor. While stock markets tend to rise over time, the stock of individual companies may suffer serious declines and fail to recover in any meaningful period of time, if ever. Most investors in individual stocks fail to beat index funds over the long term [5].

In summary, this is an exciting time to be an entrepreneur and an investor in The Gambia. Growing familiarity with investments in local and foreign securities will provide yet another way for enterprising Gambians to profit, and use those profits to provide for financial security for themselves and their families. Pensions funds and local charities and university/school endowments may also benefit from these investments, allowing them to use their profits to invest in the most important form of capital of all, our collective human capital.

References:
1. Siegel, Jeremy J. "Stocks for the Long Run by Jeremy Siegel." (2022).
2. SP500 Average Returns and Historical Performance. Investopedia (https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp) accessed 4/22/2026
3. https://ecobank.com/corporate-investment-banking/wsa-management/collective-investment-schemes?id=29 (accessed 4/23/2026)
4. https://ecobank.com/upload/fundsDocs/20260129023729306b.pdf (accessed 4/23/2026)
5. https://www.spglobal.com/spdji/en/spiva/article/spiva-us/ (accessed 4/28/2026)