Senegal: Economic and Political Overview

Economic Indicators

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After registering a decade of strong growth, the Senegalese economy was impacted by the Covid-19 pandemic, but was amongst the minority of economies that managed to avoid recession. After rebounding in 2021, the economy was hit by the consequences of the war in Ukraine in 2022, the country being heavily dependent on external food and energy supplies. Amid weaker external demand, soaring food and energy prices, tightening financial conditions, and US dollar appreciation, GDP growth slowed to 4.7% in 2022, compared to 6.1% in 2021 (IMF). However, due to favorable oil and gas production prospects, GDP growth is expected to accelerate to 8.1% in 2023 and 10.4% in 2024 (IMF).

After a robust recovery from the crisis induced by the Covid-19 pandemic, in 2022 the Senegalese economy suffered from the negative spillovers on global growth and commodity prices from Russia’s war in Ukraine. Inflation soared to 7.5%, from 2.2% in 2021, and food insecurity increased (IMF). The authorities adopted support measures to tackle soaring cost of living, including untargeted energy subsidies. Initially planned at 1% in 2022 and then re-estimated at 3%, targeted cuts in levies (VAT, customs and fuel taxes) were implemented to mitigate the inflationary shock (Coface). Fiscal consolidation efforts were postponed, as fiscal deficit remained stable at -6.2% GDP (IMF). The authorities have committed to accelerate fiscal consolidation in 2023, raising selected electricity and fuel prices, in order to reduce budget deficit to -4.5% GDP (IMF). A further reduction of the budget deficit to -3% by 2025 is planned, in line with WAEMU commitments, through the phase out of energy subsidies and increased revenue mobilisation (IMF). Public debt increased from 73.2% GDP in 2021 to 77.3% GDP in 2022 ; and it is expected to reduce to 74.3% GDP in 2023 and 69.0% GDP in 2024 (IMF). As pointed out by the IMF, risks to debt sustainability will need to be carefully monitored. Inflation is forecast to decrease to 3.1% in 2023 and 2.0% in 2024 (IMF). After focusing on the response to external shocks, the authorities are now focused on implementing the revised Emerging Senegal Plan (PSE). The objective is to promote strong and inclusive private sector-led growth through structural transformation and diversification, with a new emphasis on accelerating the domestic production of critical supplies through sectorial policies (IMF). Increasing revenue mobilization, rebuilding fiscal buffers, putting public debt on a downward path, improving business environment, enhancing the social safety net, broadening access to quality education, addressing youth unemployment and tackling financial system weaknesses are the key challenges identified by the IMF.

According to the World Bank, if PSE reforms continue, the poor layer of the Senegalese population would progressively be able to access high growth or value-added sectors, such as horticulture or agricultural processing. Senegal is ranked 170th out of 191 countries in the human development index (UNDP). In 2021, the unemployment rate of the country was at 3.7% (World Bank, ILO estimate).

Main Sectors of Industry

Senegal is rich in minerals, especially phosphates and iron ore. The country is one of the world’s leading phosphate producers, and has significant deposits of zirconium, titanium, marble, gold, and limestone, as well as several types of precious stones. Senegal is expected to become an oil and gas producer in 2023. Although only 16.62 % of the land is arable, agriculture employs 30% of the workforce and contributes to 15.3% of the GDP (World Bank). Senegalese agriculture is highly vulnerable to climatic hazards and locust threats. Senegal's main crops are peanuts, black-eyed peas, cassava, watermelons, millet, rice and corn. Fishing is also an important source of revenue. To facilitate the processing of agricultural products, the government is setting up four agro-food processing hubs (“agropoles”) (IMF).

The industrial sector contributes to 24.7% of the GDP and employs 13% of the workforce (World Bank). It is based essentially on the production of fertilizers and phosphoric acid - which is sent to India, as well as peanut processing (oil and cattle meal) and seafood processing (despite a growing depletion in resource). The most important industrial segment is food production, followed by textiles and chemical industries. Senegalese industries also produce construction materials, machinery, equipment, electricity, and water. The government is supporting the establishment of an integrated park for the pharmaceutical, biomedical and pharmacopoeia industry (“Pharmapolis”) (IMF).

The service sector contributes to 49.6% to the GDP and employs 57% of the workforce (World Bank). It benefits from the country's excellent telecommunications infrastructure, which fosters investment in tele-services and the Internet. This sector has been expanding steadily. Tourism has also been growing, particularly among European travellers.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	30.1	13.1	56.8
Value Added (in % of GDP)	15.3	24.7	49.6
Value Added (Annual % Change)	-1.0	10.9	5.7

Source: World Bank - Latest available data.

 

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Monetary Indicators	2016	2017	2018	2019	2020
CFA Franc BCEAO (XOF) - Average Annual Exchange Rate For 1 MUR	16.68	16.88	16.38	16.50	14.63

Source: World Bank - Latest available data.

 

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:

58/100

World Rank:

111

Regional Rank:

16

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

 

Foreign Trade in Figures

Senegal is an open economy where foreign trade accounts for 63% of its GDP (World Bank's latest available data). According to Comtrade, in 2021, the country’s main exports were gold (18.7%), petroleum oils (14.9%), diphosphorus pentaoxide (9.2%), frozen fish (5.7%) and groundnuts (5.4%). Meanwhile, main imports include petroleum oils (22.3%), rice (4.9%) and medicaments (3.2%).

The country's main export destinations in 2021 were Mali, Switzerland, India, China, and Ivory Coast; while it imported mostly from France, China, India, Russia and Nigeria (Comtrade). Senegal is a member of the Economic Community of West African States, and the country has trade agreements with several countries, including the EU, the United States, Switzerland, South Korea, Japan, and Australia. Given its growing influence in the African continent, China has become an increasingly important partner of Senegal, illustrated by the China-Africa summits and the boom of Senegalese exports to China. Senegal's trade policies are designed to help reduce the trade deficit, ensure regular supplies to the domestic market, promote local value chains, strengthen the regional integration process and access to international markets and promote competition. Under the Emerging Senegal Plan, the government seeks to deepen regional integration by further developing the infrastructure network; eliminating barriers to the free movement of persons, goods, and services; and developing intra-community trade.

Senegalese foreign trade is characterized by a structural current account deficit, which historically represents more than 10% of GDP. However, future offshore oil production will help narrow the deficit in the medium term. The trade deficit (of goods) for 2021 amounted to USD 4.5 billion (WTO data). In 2021, imports of goods increased to USD 9.7 billion while exports of goods increased to USD 5.2 billion (WTO). The country imported services for the total value of USD 3 billion while its services exports amounted to USD 1.1 billion (WTO).

Sources of General Economic Information

Ministries

Ministry of Economy
Ministry of Finance

Statistical Office

National Agency of Statistics and Demography

Central Bank

Central Bank of the States of West Africa

Stock Exchange

Regional Securities Exchange (FR)

Search Engines

Seneweb.com
Google Senegal

Economic Portals

Au Senegal (in French)
Senegal Directory

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