Senegal is located in the western most part of Africa’s Sahel region and has a national territory that spans 196,722 km². Senegal’s population is estimated at 15.3 million as of 2016. According to the latest population census conducted in 2013, 23% of the population lives in the greater Dakar region (0.3% of the territory), and 40% lives in other urban zones.
Senegal is one of the most stable countries in Africa, and has considerably strengthened its democratic institutions since its independence from France in 1960. Senegal has had three peaceful political transitions with four presidents: Leopold Sedar Senghor (1960-1980), Abdou Diouf (1981- 2000), Abdoulaye Wade (2000-2012), and since March 2012, Macky Sall.
On March 20th, 2016, Senegal held a referendum to strengthen its political system by reducing the length of the presidential term from seven to five years, creating a new consultative assembly, allowing an independent candidate status for all elections, establishing an official status for the opposition leader, and establishing the intangibility of some articles of the constitution (republican form of the State, mode of elections, term of the presidential mandate, consecutive number of mandates). The next presidential election is expected in 2019 while legislative elections are planned for 2017.
Over the course of 2015, Senegal’s macroeconomic performance has been strong with a growth rate of 6.5%, a rate that hasn’t been achieved since 2003, making Senegal the second fastest growing economy in West Africa, behind Côte d’Ivoire.
Growth remained strong in 2016, with a rate of 6.4% during the first quarter. The primary sector is the fastest growing sector boosted by extractives, fishing, and agriculture. In agriculture, good rainfall and strong outcomes from sectors targeted by government programs (including groundnuts, rice, and horticulture) explain this outcome. Industry decelerated somewhat despite strong performances in construction, chemistry and energy, while services – which represent more than half of the total GDP – is still growing rapidly, thanks to advances in the transport and communications sectors. From the demand side, all sectors are performing robustly with exports growing rapidly, mainly due to stronger output and exports from primary sectors.
On the external front, rapidly growing exports helped reduce the current account deficit from nearly 9% in 2014 to 7.6% in 2015, despite higher imports linked to stronger growth. Similarly, higher revenues supported government efforts to progressively close the fiscal gap, which passed from a deficit of 8.5% of GDP in 2014 to 7.7% in 2015. Debt increased to close to 57% of GDP, but remains sustainable.
The economic outlook remains favorable with growth projected to reach 6.6% in 2016 and progressively higher rates in the years to come. Agriculture should continue to have strong growth rates, under the condition that both the secondary and tertiary sectors perform robustly. In addition to low oil prices – despite some recent recovery – the economy could benefit from the continued implementation of the Plan for an Emerging Senegal (PSE), which aims to ease structural bottlenecks to growth and facilitate private initiative. Both the external and the fiscal deficit will continue decreasing as production, exports and fiscal revenues increase. This is true despite higher imports and stronger public investment. Public debt, as a share of GDP, should stabilize before gradually reducing in the medium-term.
Important challenges are linked to the implementation of the PSE. Accelerating public investment may challenge the fiscal discipline, despite the manageable level of public debt. Also, despite ongoing efforts to enhance the quality of public investment, the PSE’s structural impacts could be lower than expected thus reducing medium-term expectations. If improvements in the investment climate are slow to come, there will be less incentive for further private investment. Finally, while Senegal is slowly diversifying its economy, the volatility of agricultural production may also affect growth outcomes.
Oil and food prices should recover more rapidly than expected, thus pressuring the external balance. Main trade partners (including Europe and China) face their own growth challenges, which may affect Senegal’s export perspectives. Continued uncertainty linked to regional security issues may delay the recovery of tourism and constrain private investment. On the other hand, nascent activity around new oil and gas reserves may boost FDI, allowing production and exports to be ahead of schedule.
Poverty remains high in Senegal, affecting 46.7% of the population. GDP growth is well below the rates necessary for significant poverty reduction, and a growing reliance on capital-intensive exports rather than labor-intensive sectors limits the creation of new jobs. Repeated shocks in recent years have further hampered progress, with poverty incidence decreasing only by 1.8 percentage points between 2006 and 2011, and the number of poor actually increasing to reach 6.3 million in 2011.
Inequality in Senegal is moderate, and slightly lower than the Sub-Saharan African average. However, geographic disparities are very pronounced, with almost 2 out of 3 residents poor in rural areas, especially in the south, versus one in four in Dakar. Progress has been made on access to education, but a significant number of youth only go to Koranic schools that are not aligned with the public school curriculum. Child begging related to some of these schools remains a problem, notably in Dakar.
To promote the welfare and human capital of the poorest, President Sall has committed to accelerating the roll out of the National Family Security Transfer Program (Programme National de Bourses de Sécurité Familial).
Last Updated: Oct 24, 2016