Senegal is located in the western most part of Africa’s Sahel region and has a national territory that spans 196,722 km². Its population is estimated at 14.3 million, 40.3% of which live in urban zones according the latest 2013 population census.
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.
The next presidential election is expected in 2019. However, President Sall has planned to propose a referendum in 2016 to shorten his term from seven to five years. If the change is adopted, a presidential election will be organized in 2017.
Senegal aspires to become an emerging country by 2035. However, it has been stuck in a low-growth equilibrium since 2006. Over the last decade Senegal has been outperformed by Sub-Saharan Africa which grew at an average rate of 6% whereas growth in Senegal averaged only 3.3% since 2006. Senegal also performed poorly as compared with non-resource rich Sub-Saharan countries. Moreover, while output per capita grew slowly, the volatility of growth was greater than that of other West African Economic and Monetary Union (WAEMU) countries. Within Senegal, poverty remains high at 46.7% according to the 2011 Poverty household survey, and the number of poor has risen during the 2006-2011 period. Given an estimated annual population growth of 2.5%, gross domestic product (GDP) growth remains well below the rate necessary for significant poverty reduction.
In 2014, growth began to trend upward, however expansion remained sluggish. GDP growth rose in 2014 to an estimated 4.7%, its highest pace since 2008. Services continued to be the most dynamic sector (+5.6%), but the secondary sector, led by construction, has improved significantly, increasing by 4.9% after declining in 2013. Erratic rainfall once again led to a disappointing harvest, with rain fed cereals production down 20%, although production in irrigated rice improved by 28%. As a result, 30% of rural households are estimated to face food insecurity and more than 55% of those households are poor.
The Senegalese economy should continue to accelerate in 2015 and 2016. The rebound in agriculture coupled with the end of the Ebola epidemic will benefit the national economy. Economic activity will be further strengthened by lower oil prices, reduced production costs, and electricity subsidies. Overall, real GDP is expected to grow at 5% in 2015 and projected at around 5.3% for the 2016-17 period, with the economy driven mainly by the services sector, particularly telecommunications and financial services.
Favorable weather conditions are expected to positively impact the harvest, boosting agriculture production by a projected 5.5%. The rising production of horticulture goods will continue to bolster growth and diversification of the agricultural sector.
The uncertainty created by slower implementation of reforms to curb unproductive public consumption, and delays in raising expenditure efficiency could hamper implementation of the Government’s strategy for an emerging Senegal, known as the “Plan Senegal Emergent” (PSE). Sluggish policy implementation in the energy and agriculture sectors could also depress growth and the limited absorption capacity regarding the precautionary reserve of investment projects might slow down growth in 2016 and beyond. The risk of possible elections in 2017 could also test the Government’s resolve to maintain fiscal discipline in the medium term.
An unfavorable investment climate, costly energy, and weak governance systems have prevented the private sector from stimulating the economy. External shocks and natural disasters have also slowed growth and increased the vulnerability of the entire economy.
In addition, poor management of exports such as peanuts, seafood, and phosphates have slowed growth. The tourism sector, which has substantial potential, has been neglected. In order to strengthen the Senegalese economy and increase its resilience to internal and external shocks, more efforts are needed to diversify the economy in the areas of horticulture, mining, telecommunications, and manufacturing.
The new government has developed an ambitious program that prioritizes diversification and exports. The Emerging Senegal Plan or “Plan Senegal Emergent” (PSE) aims to increase the productivity of Senegal’s economy in the public and private sectors. However, current plans to accelerate public investment will test the authorities’ ability to improve the quality of projects, and could lead to higher debt without commensurate positive impact on GDP.
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. More broadly, a majority of the Millennium Development Goals will not be achieved.
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) to include 150,000 households before the end of 2015.
Last Updated: Nov 16, 2015