Race to the next income frontier: How Senegal and other low-income countries can reach the finish line
Opening remarks by IMF Managing Director Christine Lagarde at the Center for Global Development book launch
Good afternoon. Thank you, Masood, for your kind introduction. It is a pleasure to be back at CGD.
CGD is certainly a very appropriate venue to discuss the new book being released today: Race to the Next Income Frontier. Why is that? Because CGD is not just a “think-tank”, it is an institution focused on finding practical solutions to the most pressing issues facing developing countries. And that is precisely what this book does. This new book goes beyond the often-discussed “what needs be done” and focuses on the too-often forgotten “how can this be done effectively”.
Part 1. Senegal as a good example of policy experiment with innovative learning
Senegal is a good example of a policy experiment with innovative learning. Senegal has made considerable progress in building macroeconomic stability over the past few decades. Economic growth has been robust – at or above 6 percent in the last three years. But Senegal faces major demographic challenges – just like many of its neighbors. Moving forward, Senegal will need to maintain growth rates of 7 to 8% to create jobs for the next generation. Indeed, today, 45 percent of the Senegalese population is under the age of 14.
Fortunately, the government has a roadmap and a plan of action. The pdf “Plan Sénégal Emergent” (7.20 MB) aims to make Senegal an upper-middle-income emerging market economy by 2035. The plan calls for a radical break with the past to broaden, accelerate, and deepen reforms. These reforms will provide opportunities for small and medium enterprises to flourish and improve the climate for foreign investment. The goal is to build a first-class business environment, make energy available at fair prices for companies and households, improve governance, and facilitate the diversification of exports.
Part 2. Beyond the Roadmap – Peer to Peer Learning to Reach the Next Frontier
However, a roadmap by itself is not enough. As lawyers like to say, it is a necessary but not sufficient condition for lasting growth. What is required is moving past prescription – what to do – and into practice – how to do. The task is not easy, but Senegal and other low-income countries have an advantage. They can learn from the successes of other countries who have been here before.
Cabo Verde, Mauritius, and Seychelles faced significant economic challenges in the past and have now managed to reach middle income status. This is where the IMF comes in. I believe the IMF – with our 189 members – is uniquely suited to be a hub for best practices and knowledge sharing between nations.
This book is a fitting example of how knowledge can turn into action. It brings together different perspectives and offers invaluable lessons on how best to navigate the reform process. In fact, we are already seeing some of the dividends.
Part 3. Early Dividends
The drafting of this book has enabled policymakers to identify 11 critical reforms in areas ranging from good governance to social protection. The government recently established a monitoring committee with representatives from the key ministries involved in implementing the measures identified by the book. I hope during the discussion Mr. Sembene will provide an update on the status of these reforms.
Senegal and ten other nations are now leveraging the new partnership under the pdf G20 Compact with Africa (1.65 MB) to promote private investment as a way of better integrating their economies with the global economy.
And this is just the beginning of what can get done. Recently the IMF and the Senegalese Ministry of Finance organized a “Hackathon” in Dakar to find ways to improve the government’s tax collection system. 100 young entrepreneurs came to share their ideas and make sure they had a role in writing the next chapter of their country’s development.
The objectives are clear and a good agenda of policy reforms has been put together through the “Plan Sénégal Emergent”. Nevertheless, the road ahead will require continued efforts to improve policies and adapt to new challenges. Let me mention a couple of these challenges. First, despite the recent high growth performance, public debt has continued to grow; this implies that looking ahead, the authorities will have to find a way to mobilize more domestic revenues to preserve debt sustainability while continuing to sustain a high growth performance. Second, the recent discovery of significant oil and gas deposits is of course positive, but the challenge will be to preserve good governance and fiscal transparency in the management of these oil and gas revenues.
This book can help with these challenges. It is not only a call to action, it is a roadmap to reform. Ben Franklin once said, “either write something worth reading or do something worth writing.” Well, the authors here have done both. They have written a book worth reading and they have done it in a way that begins the hard work to make a real difference in people’s lives for years to come. Let me seize this opportunity to congratulate the authors of the book: our IMF colleague and former IMF mission chief for Senegal, Ali Mansoor, Daouda Sembene, the IMF Executive Director representing Senegal, and Salifou Issoufou, former desk economist for Senegal.
Let me conclude by simply saying that I welcome this book’s focus on “how to” get things done rather than just on “what to do.” The world needs more books like this one. The IMF will continue to be part of this dialogue and a strong advocate for peer to peer learning. I hope that by sharing this book more widely we can inspire more countries to reach the next income frontier.
Thank you very much.