The situation in The Gambia is a goodexample of the many challenges small states have to dealwith.The country is faced with institutional capacityconstraints and due to a narrow resource base and a smalldomestic market, its production base and exports show littlediversification. Like other small states, the country tendsto rely heavily on external trade and foreign investment toovercome its scale and resource limitation, increasing itsvulnerability to external shocks. The objective of thisreport is to analyze the investment climate of The Gambia inits every dimension. It is the first time such acomprehensive report is prepared by the World Bank about theinvestment climate in The Gambia. Recent World Bank reportsonly look at specific areas of the investment climate and donot provide a global assessment of investment climate issuesbased on firm level data as does this report. A final andbrief chapter provides a synthesis of the report and somestrategic directions aimed at improving the businessenvironment in the country.