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Senegal

Senegal

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Key Facts

  • Capital: Dakar
  • Region: West Africa
  • Official languages: French
  • Independence Day: June 20, 1960
  • Area: 197,000 sq km
  • Population (2018): 15.9 million
  • REC membership: CEN-SAD, ECOWAS
  • WTO membership: January 1, 1995
  • GDP (2018): US$ 24.13 billion
  • GNI per capita (2018): US$ 1 410
  • Currency: CFA franc

Economic overview

Real GDP growth has been above 6% on average since 2015, propelled by the Plan for an Emerging Senegal (2014-18). Growth slipped to 6.0% in 2019 from 6.7% in 2018. Public investment in infrastructure, agriculture, and energy kept the fiscal deficit at 3.6% of GDP in 2018 and 2019, above the WAEMU convergence threshold of 3%. Given the low fiscal pressure (15% of GDP) and domestic savings, this deficit was partially financed by external borrowing, which raised the public debt to 54.7% of GDP in 2018 from 47.7% in 2017. Inflation in 2019 remained low at 0.2%.

Worsening terms of trade due to rising oil prices and equipment imports increased the current account deficit in 2019 to 8.8%, projected to rise to 9.7% in 2020 and 9.8% in 2021. The mobilization of external resources (direct foreign investment and eurobonds) as well as healthy migrant remittances made it possible to meet current account financing needs.

The poverty rate fell from 57.3% in 2001 to 46.7% in 2011. Unemployment is rising (14.6% in 2018), driven by the weak labor force participation of women (21%) and the entry of young people (18%) to the labor force.

Real GDP growth should reach 6.3% in 2020 and 6.8% in 2021. The second Plan for an Emerging Senegal (2019-23) calls for implementing reforms to stabilize the macroeconomic environment, stimulate private investment, and accelerate the economy’s structural transformation. The country faces a low risk of debt distress, according to the IMF.

To improve the productivity and competitiveness of businesses and to lower production costs, the government created industrial clusters and established a broad program to shift its energy mix toward renewables (from biomass and fossil fuels). A cluster development strategy has been adopted for the creation of agricultural processing zones in the northern, central, and southern regions. The government also created a program for youth entrepreneurship and a program to professionalize occupations.

A new bridge over the Gambia River opened in January 2019 and the Rosso bridge connecting Senegal to Mauritania is scheduled for completion soon. Both will foster interregional trade. The adoption in 2020 of a single currency, the eco, by ECOWAS members will also strengthen regional integration and reduce transaction costs.

The economy faces constraints related to energy distribution, water control, basic infrastructure development (particularly in agriculture), and access to land – limiting productivity and reducing competitiveness.

The private sector, particularly small and medium business, struggles with high borrowing costs, complicated administrative procedures, and a relatively unattractive legal, fiscal, and regulatory framework. A shortage of skilled workers (roughly 70% of the labor force is unskilled) remains a major challenge in revitalizing the public sector.

Budget constraints over the past two years linked to the increase in energy subsidies led to a build-up of domestic arrears to the energy and fuel sectors and to private businesses.

Last updated: April 2020