Located in the westernmost part of the continent, Senegal is bordered by Mauritania, Mali, Guinea, Gambia, and Guinea-Bissau. It has a dry, tropical climate and a population of 16.7 million, a quarter of whom live in the Dakar region (0.3% of the territory).
Political situation
Senegal remains one of the most stable countries in Africa. The three political alternations since independence in 1960 have been peaceful. In 2024, the country elected its fifth president in an election initially scheduled for February 25, but postponed to March 24. Bassirou Diomaye Faye, the opposition candidate, won the first round with a majority of votes. The new government must now navigate without a majority in parliament, which by law cannot be dissolved before August 2024, two years after the current legislature was established.
Economic situation
Political tensions, persistent inflation and delays in hydrocarbon production affected growth in 2023. The latter would have slowed significantly to 3.7% in 2023 (1.1% in terms of GDP per capita), slightly below the 3.8% growth rate recorded in 2022. On the demand side, private consumption growth slowed, reflecting the decline in purchasing power associated with high inflation, while investment was affected by uncertainties linked to the socio-political climate. On the supply side, activity in the tertiary sector, impacted by social unrest and political tensions, slowed. Inflation remains high despite moderating to 6.1% in 2023, after peaking in 2022 at around 9.7%, following the fall in international commodity prices and the return to normal of supply chains.
Structural vulnerabilities such as low productivity, limited human capital, high levels of informality and youth emigration persist and are exacerbated by external shocks, such as the COVID-19 pandemic and Russia's invasion of Ukraine. The transition to a more diversified economy with a broader industrial base remains limited, with the economy still heavily based on agriculture, the main engine of growth, and services. Hydrocarbon production, postponed due to the health crisis and now scheduled for mid-2024, offers an opportunity to accelerate equitable investment in human capital and the energy transition, but is not expected to contribute to revenues and exports until 2035.
Development Challenges
Post-pandemic economic recovery should be gradual. The reforms set out in the Plan Sénégal Emergent (PSE) must continue to be reinforced to enable growth to return to its pre-pandemic trajectory. The main development challenge will be to boost economic activity to promote sustainable, inclusive growth and strengthen the resilience of populations vulnerable to shocks. It will require to i) improve resilience to macro-fiscal, environmental, climate change, and social risks to safeguard investments in human capital and household livelihoods; ii) boost and protect human capital for productivity growth; iii) enhance competitiveness and job creation by improving digital and physical connectivity at the national and regional levels and increase the efficiency of labor markets; iv) lower energy costs, reduce the carbon footprint, and optimize the energy; v) promote the services economy and boost the productivity and competitiveness of agriculture and related value chains.
Last Updated: Apr 03, 2024
