Located in the westernmost part of the African continent, Senegal is bordered by Mauritania, Mali, Guinea and Guinea-Bissau. It surrounds The Gambia, a small Anglophone country. Senegal enjoys a tropical dry climate and has a population of 16.7 million inhabitants, a quarter of whom live in the Dakar region (0.3% of the territory).
Political Context
Senegal is one of the most stable countries in Africa, with three peaceful political transitions since independence in 1960. In power since 2012, President Macky Sall was elected to a second five-year term in office in February 2019. The five-year term has been in effect since the referendum of March 2016.
In 2017, the ruling coalition, Benno Bokk Yakaar (United in Hope) won 125 of the 165 seats in the National Assembly. Owing to the COVID-19 pandemic, local and legislative elections could be twinned in 2022.
Senegal has so far been spared the violence convulsing the region, but activism by terrorist groups in neighboring countries and cross-border trafficking are factors that risk fueling instability.
Economic Overview
Senegal’s economy grew by more than 6% per year between 2014 and 2018. Real GDP growth stood at 4.4% in 2019, down from 6.2% in 2017. The services sector is the main engine of GDP growth, while on the demand side, investment and exports are the main drivers of growth.
The pandemic has significantly changed the country’s economic outlook. It is estimated that growth fell by -0.7% in 2020, setting back services (tourism and transport) and exports. Senegal has responded with a number of containment measures and has implemented an Economic and Social Resilience Program (Programme de Résilience Économique et Sociale, PRES). Nevertheless, limited fiscal buffers and safety nets, a vulnerable health care system, and a large informal sector pose challenges.
Economic recovery will likely be gradual, driven by a return of private consumption and investment. Reforms envisaged under the Emerging Senegal Plan (Plan Sénégal Émergent, PSE) need to be deepened for growth to resume its pre-pandemic trajectory. The significant crowding in of private investment is central to increasing Senegal’s productive capacity and supporting export growth. Services remain the main contributor to GDP, and the primary sector (agriculture, in particular) the most dynamic engine of growth. Oil and gas developments have been delayed due to the health crisis and are not expected to contribute to revenues and exports before 2035.
Development Challenges
Senegal’s key development challenge is to mitigate the socioeconomic impact of the pandemic, while enabling sustainable and inclusive growth. This will require:
- Improving resilience to macro-fiscal, environmental, and social risks in order to safeguard investments in human capital and household livelihoods;
- Boosting and protecting human capital for productivity growth;
- Enhancing competitiveness and job creation by improving digital and physical connectivity at the national and regional levels, and increasing the efficiency of labor markets;
- Lowering energy costs, reducing the carbon footprint, and optimizing the energy mix;
- Promoting the services economy, and boosting the productivity and competitiveness of agriculture and related value chains.
Social Context
The COVID-19 pandemic risks jeopardizing the socioeconomic gains achieved through improved access to key services. This could generate severe losses for households through shortfalls in labor and non-labor income (particularly private money transfers), domestic price inflation, and disruptions in basic services.
Last Updated: May 03, 2021
