Research on structural adjustment, liberalization and privatization in sub-Saharan Africa has not focused on the consequences of these policy initiatives on the financial sector. This paper documents and discusses the consequences of these reforms on the financial sector in The Gambia. Marked changes in the market structure and portfolio composition of the bank sector severely ration loan activity, particularly in rural areas. This creates a vacuum in which non-bank intermediaries currently operate with varying degrees of moral hazard and principal agent problems. The institutional design for non-bank intermediaries necessary to ensure a viable sustained supply of financial services for a rural clientele in Africa is discussed.