Country Overview
Positioned on the Atlantic Ocean at the westernmost point of the Sahel, Senegal surrounds its much smaller neighbor, Gambia, and borders Guinea, Mali, and Mauritania. It has a population of at least 15.4 million (2016), about a quarter of it concentrated around the capital of Dakar, and up to half in other urban areas. Senegal is one of West Africa's key economic hubs.
Political Context
Senegal is also one of the most stable countries in Africa; it has had just three major political transitions, each of them peaceful, since its independence from France in 1960. Its serving president, Macky Sall, was elected in March 2012, and in 2016, a constitutional referendum cut presidential mandates from seven to five years. Parliamentary elections were held in July 2017, when the ruling coalition Benno Bokk Yakaar party (“United in Hope" in the widely-spoken Wolof language) won 125 of 165 seats but fell short of winning the popular vote. Twelve other parties hold seats in the national assembly, including the Coalition
Although Senegal has largely been sheltered from regional security shocks, activism by terrorist groups in neighboring countries and the higher number of radicals entering the country are both factors that risk fueling instability.
Economic Overview
After decades of very modest growth, the Government of Senegal adopted the Plan Senegal Emergent (PSE) in 2014. The development plan is designed to get Senegal out of a cycle of low-growth and weak poverty reduction. Preliminary figures put Senegal’s economic growth at 6.8 percent by 2017—the third year in a row of a growth rate of over 6 percent. Implementation of the plan, which boosted public investment and promoted private sector activity, helps explain this, plus a growth-conducive macroeconomic framework and favorable exogenous conditions (good weather, relatively low oil prices). Despite high growth, inflation remains low and under control.
The primary sector of the economy is the most dynamic, growing at over 7% (due particularly to agriculture), but the secondary sector is picking up and expected to take the lead in a few years’ time. On the demand side, exports and total investment have been the fastest growing components. Senegal’s macroeconomic framework remains solid, though, small cracks are emerging, underscored by rising debt levels and liquidity constraints. So, although the fiscal deficit has fallen—from 4.2 percent of GDP in 2016 to 3.7 percent in 2017—a large investment program, rising energy prices (that increase energy subsidies while reducing revenues from frozen gasoline prices), and Treasury operations that have financed deficits in other public entities are all placing pressure on the fiscal balance. In consequence, the government delayed some payments to suppliers in 2017. Public debt has also continued to increase, though at a slower pace, to 60.8 percent of GDP in 2017, while debt servicing increased from 24 to 30 percent of government revenues between 2014 and 2017. Nonetheless, according to the latest IMF–WB Debt Sustainability Analysis, public debt remains at low risk of distress; however, this may be revised if debt indicators worsen.
On the external front,
Meanwhile, the government continues to implement the PSE, or national development plan, and its related reforms. To maintain high growth, these include investment projects in energy, transport infrastructure, and agriculture, and other in-depth reforms to attract further private investment. But, despite the adoption of reforms for sectors like energy, agriculture, and ICT, progress has been significantly slower in implementing them, something that could undermine the sustainability of economic growth.
Medium-Term Outlook
Senegal's medium-term economic prospects will remain positive for as long as its new structural reforms are sustained and deepened, and the external environment remains benign. Economic growth is projected to stay at 6.8 percent for 2018. Senegal’s blueprint for becoming a middle-income country sets targets of over 7 percent growth in following years, though rising energy prices and other fiscal and external pressures may prevent this. To accelerate growth, Senegal will need all its economic drivers pointing in the same direction at the same time. This means more reforms to resolve bottlenecks in productivity and competitiveness; sustaining a credible fiscal policy and avoiding currency overvaluation
Social Context
Although still high, poverty appears to have fallen in recent years. A 2011 survey (the most recent) calculated the poverty rate at 47 percent, but poverty appears to have fallen by 4 to 7 percent since due to good economic growth. Senegal ranked 162 of 188 countries in the global 2017 Human Development Index (based on 2015 data), but has one of the largest safety net programs in Africa, covering 30 percent of its poorest households. It has made progress on child health, mostly by addressing malaria and chronic malnutrition (stunting), which at 17 percent is now the lowest in continental sub-Saharan Africa. Not as much progress has been made in maternal, neonatal, reproductive, and adolescent health, where key indicators are lagging behind. A barrier to improvement, especially among the poorest Senegalese, is the relatively high cost of healthcare. In 2013, Senegal launched its Universal Health Insurance program to improve equity in access to health services, especially among households in the informal and rural sectors. The coverage rate is slowly increasing but remains far from the government’s target of 75 percent of the population by the end of 2017.
Last Updated: Apr 19, 2018
