The Gambia's light sandy soil is well suited to the cultivation of groundnuts, which is the country's principal agricultural export. About 75% of the population is engaged in crop production and livestock raising. However, groundnut production has fallen in recent years, and in 1990, tourism overtook groundnut exports as the nation's number one export earner. Significant export revenues are earned from fishing and reexport trade.
The military's takeover of the country in 1994 resulted in a loss of $50 million in aid from the West, equal to about 10% of national income. In addition, tourism declined dramatically; and Senegal, which surrounds The Gambia on three sides, closed the borders because of smuggling. As a result of the 1994 CFA devaluation, The Gambia's goods were no longer competitive in the reexport trade. During the late 1990s, the tourism industry rebounded, as did trade. Tourism declined in 2000, but record crops supported healthy economic growth in 2001. Tourism in 2002 accounted for 10–15% of GDP. Because most tourist packages to The Gambia were all-inclusive, and tourists rarely left their hotels, the government banned all-inclusive tourist packages in 1999 in an attempt to funnel money into the local economy.
Average annual growth of GDP was at 2.7% for 1988 to 1998, but GDP growth was 5.7% in 2001. The inflation rate was low in 2001. Corruption remains an ongoing problem, and the pace of privatization was slow in 2003. The government anticipated debt relief under the World Bank/IMF Heavily Indebted Poor Country Initiative in 2003.