senegal - world banksiteresources.worldbank.org/.../eiu_country_profile_senegal.pdf · country...

Country Profile 2005

SenegalThis Country Profile is a reference work, analysing thecountry’s history, politics, infrastructure and economy. It isrevised and updated annually. The Economist IntelligenceUnit’s Country Reports analyse current trends and provide atwo-year forecast.

The full publishing schedule for Country Profiles is nowavailable on our website at http://www.eiu.com/schedule

The Economist Intelligence Unit15 Regent St, London SW1Y 4LRUnited Kingdom

The Economist Intelligence Unit

The Economist Intelligence Unit is a specialist publisher serving companies establishing and managingoperations across national borders. For over 50 years it has been a source of information on businessdevelopments, economic and political trends, government regulations and corporate practice worldwide.

The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where itslatest analysis is updated daily; through printed subscription products ranging from newsletters to annualreference works; through research reports; and by organising seminars and presentations. The firm is amember of The Economist Group.

LondonThe Economist Intelligence Unit15 Regent StLondonSW1Y 4LRUnited KingdomTel: (44.20) 7830 1007Fax: (44.20) 7830 1023E-mail: [email protected]

New YorkThe Economist Intelligence UnitThe Economist Building111 West 57th StreetNew YorkNY 10019, USTel: (1.212) 554 0600Fax: (1.212) 586 0248E-mail: [email protected]

Hong KongThe Economist Intelligence Unit60/F, Central Plaza18 Harbour RoadWanchaiHong KongTel: (852) 2585 3888Fax: (852) 2802 7638E-mail: [email protected]

Website: www.eiu.com

Electronic deliveryThis publication can be viewed by subscribing online at www.store.eiu.com

Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, on-line databasesand as direct feeds to corporate intranets. For further information, please contact your nearest EconomistIntelligence Unit office

Copyright© 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication norany part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means,electronic, mechanical, photocopying, recording or otherwise, without the prior permissionof The Economist Intelligence Unit Limited.

All information in this report is verified to the best of the author's and the publisher's ability. However, theEconomist Intelligence Unit does not accept responsibility for any loss arising from reliance on it.

ISSN 1352-092X

Symbols for tables“n/a” means not available; “–” means not applicable

Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK.

Country Profile 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005

Senegal 1

© The Economist Intelligence Unit Limited 2005 www.eiu.com Country Profile 2005

Contents

Senegal

3 Basic data

4 Politics4 Political background5 Recent political developments8 Constitution, institutions and administration9 Political forces12 International relations and defence

14 Resources and infrastructure14 Population15 Education16 Health16 Natural resources and the environment17 Transport, communications and the Internet20 Telecommunications indicators20 Internet service subscribers21 Energy provision

23 The economy23 Economic structure24 Economic policy28 Economic performance30 Inflation30 Regional trends

30 Economic sectors30 Agriculture34 Mining and semi-processing36 Manufacturing37 Financial services38 Other services

39 The external sector39 Trade in goods40 Invisibles and the current account40 Capital flows and foreign debt41 Foreign reserves and the exchange rate

42 Regional overview42 Membership of organisations

49 Appendices49 Sources of information50 Reference tables50 Population50 Gross domestic product

2 Senegal


50 Gross domestic product by origin51 Gross domestic product by expenditure51 Gross domestic product by expenditure52 Government finances52 Consumer prices52 Money supply, credit and interest rates53 Mineral production53 Selected tourism statistics53 Agricultural production and prices53 Fishing54 Exports54 Imports54 Key imports and exports55 Trading partners55 Balance of payments, IMF series56 Balance of payments, national series56 External debt57 Official development assistance (net)a57 Foreign reserves57 Exchange rates

Senegal 3


SenegalBasic data

197,161 sq km

11.66m (mid-2005; UN Population Division estimate)

Population in ‘000 (World Gazetteer estimates)

Dakar (capital) 2,352Thiès 252Kaolack 177St Louis 160

Tropical

Hottest months, September-October, 24-32°C; coldest month, January, 18-26°C;driest months, April-May, 1 mm average rainfall; wettest month, August,254 mm average rainfall

French, Wolof, other local languages

Metric system

CFA franc (CFAfr), fixed to the euro, backed by a guarantee from the Banque deFrance. It was devalued from CFAfr50:FFr1 to CFAfr100:FFr1 in 1994, thenconverted at par when France adopted the euro in 1999 to trade atCFAfr655.96:€1. Average exchange rate in 2004: CFAfr528:US$1; exchange rate onAugust 9th 2005: CFAfr532:US$1

GMT

January 1st; April 4th (Independence Day); May 1st; Christian holidays ofChristmas, All Saints, Assumption and variable dates for Easter Monday andAscension; Muslim holidays with variable dates for Maulid, Eid el Fitr (Korité),Eid el Adha (Tabaski)

Total area

Population

Main towns

Climate

Weather in Dakar(altitude 40 metres)

Languages

Measures

Currency

Time

Public holidays

4 Senegal


Politics

The Parti socialiste (PS) governed Senegal from independence in 1960, at firstunder the presidency of Léopold Sédar Senghor and then under Abdou Diouf,until 2000, when the veteran opposition politician, Abdoulaye Wade, won thepresidential election. A new constitution was passed in January 2001, allowingMr Wade to dissolve the PS-dominated National Assembly (parliament). Anearly legislative election was held in April 2001, and the electoral alliance (laternamed the Convergence des actions autour du Président en perspective du21ème siècle—CAP21) led by Mr Wade’s Parti démocratique sénégalais (PDS)obtained a large majority. The nature of the change in power enhancedSenegal’s reputation as a relatively stable African democracy. The signature of apeace accord between the government and the leaders of the rebellion inCasamance, in the south, at the end of 2004, have also helped in this regard.The government has a sufficiently solid political base to enable it to carry outfurther political and economic reforms and attempt to address Senegal’spersistent social tensions. The next legislative election is scheduled to take placein 2006 and a presidential election is due to be held in 2007.

Political background

Senegal’s recorded history dates from the 8th century, when it was part of theempire of Ghana. The settlements south of the Senegal River were regularlyinvaded by Sahelian Muslim armies until the 15th century. Portuguese tradersestablished a trading post on the island of Gorée (which later became infamousas the last staging post for the slave trade to the Americas) in the early 1500s. In1588 the Dutch ousted the Portuguese and occupied Gorée; meanwhile, theBritish and French were fighting over trading posts on the mainland. By 1641France had established a permanent presence in what is now Senegal. In 1895the country became the centre of French West Africa.

In January 1959 Senegal joined French Soudan (now Mali) to form the Federationof Mali. The federation achieved full independence from France in April 1960 butbroke up in August of that year, and Senegal became a republic with LéopoldSédar Senghor as its first president. In the mid-1960s Senegal became a de factoone-party state under the ruling Union progressiste sénégalaise (UPS). In 1974multiparty politics was restored with the recognition of two opposition parties,including the Parti démocratique sénégalais (PDS). In 1978 four officiallyrecognised political parties were permitted to compete in the legislative election,which went smoothly despite allegations of fraud from the opposition. The UPS,renamed the Parti socialiste (PS), won 82 of the 100 seats in the NationalAssembly, and the PDS won the 18 remaining seats.

In 1981 Mr Senghor retired and moved to France (where he lived until his deathin December 2001). He was replaced by his prime minister, Abdou Diouf. In thelegislative and presidential elections of 1983, the PS and Mr Diouf won aresounding victory. The 1988 elections returned Mr Diouf to the presidency andthe PS retained its large majority in the expanded National Assembly, with 103

Early history

The Senghor presidency

The Diouf presidency

Senegal 5


seats out of 120. This time, however, the results sparked off rioting in the capital,Dakar, amid allegations of flagrant electoral fraud. Mr Wade, the PDS’spresidential candidate, was arrested and briefly imprisoned. Political tensionseased the following year, when attention focused on a border conflict withMauritania which escalated into communal violence in both countries (seeInternational relations and defence).

Under pressure from the international community, Mr Diouf formed agovernment of national unity in 1991. Several opposition leaders, includingMr Wade, accepted ministerial posts. In 1993 Mr Diouf was re-elected under anew electoral code. The PS’s majority in the National Assembly was reduced,and the PDS increased its representation from eight to 27 seats. The oppositionagain accused the government of electoral fraud, and, when the vice-presidentof the Constitutional Court was assassinated before the announcement of theresults, Mr Wade and other opposition leaders were arrested briefly. Politicaltension continued, and in January 1994 rioting broke out in Dakar after thedevaluation of the CFA franc led to sharp price increases for many goods.

A new unity government was formed in 1995, when Mr Wade and several otheropposition politicians were given ministerial posts. Within the PS a powerstruggle arose, with Ousmane Tanor Dieng being chosen in 1996 as secretary-general of the party instead of the former minister of the interior, Djibo Kâ.Mr Kâ and other disgruntled PS leaders left the party before the May 1998legislative election to form the Union pour le renouveau démocratique (URD).Mr Wade and his colleagues resigned their ministerial posts at the same time.

Although the PS polled only 50% of the vote in the legislative election in May1998, it retained 93 of the now 140 assembly seats. The PS again chose Mr Dioufas its candidate in the February 2000 presidential election. Although severalminor opposition parties backed his candidacy, the PS itself fractured further.Most notably, Moustapha Niasse, a former PS leader, split from the party toform the Alliance des forces de progrès (AFP), and stood against Mr Diouf inthe first round.

Recent political developments

The first round of voting in the 2000 presidential election took place onFebruary 27th. Turnout was high, at 62%, and the poll was deemed to be largelyfree and fair. Mr Diouf won 41% of the vote (less than the 50% necessary toprevent a run-off), and Mr Wade—who promised social and economic sopi(“change” in Wolof) from the PS era and had stood (and lost) in everypresidential poll since 1978—was close behind, with 31%. Therefore, for the firsttime in Senegal’s post-independence history, a second round of voting washeld. Although tensions were high, the second round passed peacefully.Mr Niasse threw his support behind Mr Wade, allowing the latter to win 58.5%of the vote, compared with 41.5% for Mr Diouf. By conceding defeat well beforethe final result was announced, Mr Diouf won national and internationalpraise. Mr Wade soon formed a coalition government, including representativesof several of the parties that had supported him in the presidential race, with

Unity governments

Mr Wade wins the presidency

Power of the Parti socialistediminishes

6 Senegal


Mr Niasse as prime minister. However, political tensions rose between thevarious parties in the coalition government over the wording of the newconstitution that was to be approved in a referendum in January 2001. Themost notable dissension came from the Parti de l’indépendance et du travail(PIT), which preferred a dilution of the powers of the presidency, and this led tothe sacking of its secretary-general, Amath Dansokho, as minister of urbanplanning and housing. Tensions continued after the referendum in the run-upto the legislative election in April, leading to the departure of several partiesfrom the coalition, including Mr Niasse’s AFP.

Presidential election, 2000First round Second round

No. of votes % of total No. of votes % of totalAbdou Diouf 690,886 41.33 687,969 41.51Abdoulaye Wade 517,642 30.97 969,332 58.49

Moustapha Niasse 280,885 16.76 – –Djibo Kâ 118,487 7.09 – –Iba der Thiam 20,163 1.20 – –

Ousseynou Fall 18,676 1.12 – –Cheikh Abdoulaye Dièye 16,216 0.97 – –

Mademba Sock 9,318 0.58 – –

Source: Constitutional Court.

As was widely expected, the PS lost its ruling majority by a landslide in theApril 2001 legislative election, retaining only ten seats in the new NationalAssembly. This in effect put an end to the uneasy period of “cohabitation” thathad persisted since Mr Wade was elected to the presidency. The PDS-dominatedcoalition obtained a larger than expected majority of 89 seats in the 120-seatparliament. Whereas the PS—badly affected by its loss of the presidency, thesubsequent wave of defections to other parties, and recent evidence ofcorruption—was poised to perform poorly, the AFP seemed well positioned toundermine the gains of the PDS coalition. However, the AFP obtained only 11seats. This, together with a high turnout of 67.4%, represented a strong vote ofconfidence in Mr Wade and his party. This was further confirmed by the May2002 local government elections, although the opposition coalition, led by thePS and AFP, managed to retain control of two regions (out of ten) and aboutone-third of the municipal and rural councils.

Legislative election results1998 2001

% of votes No. of seats % of votes No. of seatsParti démocratique sénégalais (PDS) & sopi coalition 19.1 23 49.6 89Alliance des forces de progrès (AFP) – – 16.1 11

Parti socialiste (PS) 50.1 93 17.4 10Union pour le renouveau et la démocratie (URD) 13.2 11 3.7 3And-jëf/Parti africain pour la démocratie et le socialisme (AJ/PADS) 5.0 4 4.0 2

Total incl others 100.0 140 100.0 120

Source: Government press release.

Legislative election in 2001

Senegal 7


Important recent events

March 2000Abdoulaye Wade wins 58.5% in the second round of the presidential election, withpromises of social and economic sopi (change). After a smooth transfer of powerMr Wade appoints a multiparty government, lead by his Parti démocratiquesénégalais (PDS).

April 2001

A legislative election gives the parties allied with Mr Wade a large majority inparliament.

May 2002

Local elections give Mr Wade’s coalition control of eight out of ten regions and two-thirds of municipal and rural councils.

October 2003

The vicious beating of an opposition figure, Talla Sylla, possibly by supporters of thepresident, provokes large street rallies and heightened tension between theopposition and the government.

April 2004

After months of trying, Mr Wade manages to broaden the governing coalition withthe inclusion of the opposition Union du renouveau démocratique (URD). Aconcurrent cabinet reshuffle see the replacement of Idrissa Seck as prime minister.

December 2004

The government and the separatist movement, Mouvement des forcesdémocratiques de Casamance (MFDC), sign a peace accord, 22 years after the start ofthe conflict in Senegal’s southern region, Casamance.

July 2005

Mr Seck is detained in Dakar’s central prison over corruption allegations concerningpublic-works contracts. Two weeks later the National Assembly votes to sendMr Seck before a special court for trial, and the PDS decides to expel him from theparty.

Between April 2000, at Mr Wade’s assumption of the presidency, and August2005, Senegal has had nine cabinet reshuffles and four different primeministers. In part, this has reflected changing political alignments, most notablythe departure of the AFP and the PIT to the opposition during the first year ofMr Wade’s presidency, the departure of the Ligue démocratique/Mouvementpour le travail (LD/MPT) from government in March 2005 and the URD’s shiftfrom the opposition to the government in April 2004. In addition, as somedegree of public disillusionment set in with the government’s failure to fulfil allof its ambitious campaign promises and as the opposition became more vocal,the office of the prime minister has taken on a higher political profile, shiftingfrom a non-party technocrat, Mame Madior Boye, in 2001-02, to two successivePDS heavyweights, Idrissa Seck in November 2002 and Macky Sall in April2004. This has coincided with the ruling party’s decision to go on an early

Continued instability in thegoverning coalition

8 Senegal


campaign footing in advance of the next legislative election in 2006 andMr Wade’s re-election bid in 2007.

Several other factors also have contributed to the rapid rotation of cabinetministers. Although Mr Wade carries considerable charismatic influence withsections of the public, his style of interaction with other government and partyleaders has been arbitrary and abrupt, contributing to tensions at the top. Inaddition, there are numerous frictions between the different parties comprisingthe governing coalition, Convergence des actions autour du Président enperspective du 21ème siècle (CAP21), sometimes with leaders of non-PDSparties—including cabinet ministers—taking public positions that are critical ofcertain aspects of the government’s conduct or policies.

Some of the most intense conflicts have erupted within the PDS itself, not overideological or political disagreements, but as competing factions vie with eachother for cabinet posts, parliamentary nominations or other state offices. Thereplacement in April 2004 of the prime minister, Mr Seck—the second-highestranking PDS leader—with Mr Sall, another influential party figure, was one signof the turbulence that afflicts the ruling party, highlighting the feud betweenpro-Seck and pro-Wade factions of the PDS. The 12 rebel PDS deputies who leftthe majority parliamentary group—Libéral et démocratique (LD)—in April 2005and established an alternative group, Forces des alternances (FAL), decided torejoin the LD in June, preventing a politically damaging schism within the PDS.However, the charges brought against Mr Seck in July (of violating public tenderprocedures on public works and of breaching national security) have beenwidely perceived as politically motivated. It is likely that the case will furtherdamage the PDS, and Mr Wade’s government.

Constitution, institutions and administration

The Senegalese constitution of 1963 was progressively revised to develop asystem in which the president, as head of state, appoints the prime minister whoin turn appoints the Council of Ministers. No legislation can be passed withoutthe president’s signature. The president, elected by universal suffrage, may actindependently in particular areas, including foreign policy, defence and justice.The amended constitution, approved by referendum in January 2001, essentiallyretained these strong presidential powers. It did, however, reintroduce a two-term limit on the presidency (which had been eliminated in 1998) and reduce thelength of the terms from seven years to five. A special “transitional” provisionclarified, however, that Mr Wade could serve out his seven-year mandate.

The new revised constitution provides for a unicameral legislature, the NationalAssembly, of 120 seats. This is a reversal of the changes introduced by theprevious PS-dominated parliament, which in 1998 increased the number ofseats to 140 and set up the Senate as an advisory body. Both moves werepolitically unpopular, and were widely seen as a means to secure morepositions for disgruntled PS leaders. The amended constitution gave theNational Assembly greater authority to question the policies of the governmentand to force the cabinet’s resignation through a motion of no confidence or

A presidential system

A strengthened legislature

Intense disagreements withinruling party

Senegal 9


censure. It also increased the president’s power to dissolve parliament before itsmandate expires. Contrary to previous regulations, any deputy who switches toanother party now loses his or her seat, a measure intended to ensure greaterpolitical stability by making political “nomadism” more difficult. A strictlyadvisory second body, the Council of the Republic, was established in 2003.

In 1991 the Supreme Court was dissolved and its functions divided among threehigh courts, along the lines of the French judicial model. In the January 2001constitutional amendments, the number of high courts was increased to five.The Constitutional Court is empowered to adjudicate on the electoral process. Inaddition, an electoral monitoring body, the Observatoire national des élections(Onel), was created in August 1997 to observe all phases of the electoral process,from voter registration through to the announcement of results. It has beencredited with responsibility for the dramatic reduction in electoral fraud.Nonetheless, Onel was seen as insufficiently autonomous of the state and,therefore, the ruling party. The law creating the Commission électoral nationalautonome (CENA), was unanimously passed by the National Assembly in May2005. After a month’s delay, the 12 members of the CENA were appointed bypresidential decree.

Senegal’s sub-national administrative and government structures are in a stateof transition owing to efforts to decentralise central government functions tothe regions, with the help of the World Bank. In 1984 Senegal was divided intoten regions: Dakar (formerly Cap Vert), Saint-Louis (formerly Fleuve), Diourbel,Thiès, Tambacounda (formerly Sénégal oriental), Louga, Kaolack and Fatick(which previously comprised a single region, Sine-Saloum), and Kolda andZiguinchor (which previously comprised the troubled region of Casamance). InJanuary 2002 Matam, formerly a department in Saint-Louis, became a newregion. Each region is divided into three departments, with the exception ofSaint-Louis, which has four, and each of these departments is divided intoseveral arrondissements. An initial “pre-draft” of a government plan to abolishthe ten regions in favour of 35 provinces provoked such widespread oppositionthat it was quickly withdrawn.

Political forces

Although formally a multiparty democracy, with over 40 political parties and ahistory of entrenched civil liberties, Senegal was in practice a one-party statefrom independence until the March 2000 presidential election. The victory ofMr Wade changed the political scene dramatically. Although many members ofthe former ruling PS—which espoused socialism and state-control—subsequentlydefected to Mr Wade’s PDS (which describes itself as a liberal party), the latterhas not simply replaced the PS as the dominant political force, but operates in amore pluralist environment. A number of parties secured cabinet positions inthe new coalition government—this first coalition included not only partiesallied with the PDS, but also Mr Niasse’s AFP, which in March 2001 joined theopposition—and several parties formed an alliance with the PDS in the April2001 legislative election. The other party that currently forms part of the cabinetis the And jëf/Parti africain pour la démocratie et le socialisme (AJ/PADS); it

The Constitutional Court

A dramatic shift towardspolitical pluralism

The regions

10 Senegal


originally espoused Marxist views, although over the past decade party officialshave generally referred to themselves simply as being on the left. This has notprevented AJ/PADS from forging a close political alliance with the PDS.

Nor is the opposition a coherent bloc, since the remainder of the PS mustoperate alongside several other parties, which sometimes manage to unite (asduring the May 2002 local elections) but can take quite divergent positions. Thegoverning coalition, CAP21, formed in August 2001, is not synonymous withthe government, as it includes far more parties than are actually represented inthe cabinet. The increased level of pluralism may bring greater politicaluncertainty and shifting alliances in the short term, but overall it represents asignificant deepening of Senegal’s democratic system.

Main political figures

Abdoulaye Wade

The 79-year-old leader of the Parti démocratique sénégalais (PDS) and its candidatein every presidential election since 1978, Mr Wade was elected president in March2000. He has pledged to tackle corruption, to involve the young in reconstructionefforts, and to promote the country’s economic and social development vigorously.His presidential style has drawn considerably on his personal charisma, sometimesstamping his government with an image of ad hoc decision-making.

Macky Sall

Named prime minister in April 2004, he has been active in the PDS since 1987.A geological engineer by training, he is well regarded as an able and methodicaladministrator, qualities he demonstrated when he was minister of energy, mines andwaterworks and as minister of the interior. At the same time, he carries significantpolitical clout within the PDS, and heads the party’s influential think-tank, theCellule initiative et stratégie (CIS).

Idrissa Seck

The PDS’s second-in-command since mid-1998 and prime minister from November2002 to April 2004, Mr Seck has been a source of controversy within the party andwith several of the PDS’s allies within the governing coalition, the Convergence desactions autour du Président en perspective du 21ème siècle (CAP21). The decision tohave Mr Seck tried on corruption charges by a special tribunal and to expel himfrom the PDS, suggest that Mr Wade increasingly saw his former protégé as a seriouspolitical rival.

Djibo Kâ

Mr Kâ was one of the most powerful barons in the Parti socialiste (PS) until 1996. Heleft the PS two years later to form his own party, the Union du renouveaudémocratique (URD), but secured only 7.1% of the vote in the presidential election. InApril 2004 he broke with the opposition and brought his party into the government.

Landing Savané

One of Senegal’s most articulate and radical political figures, Mr Savané leads theleft-wing And-jëf/Parti africain pour la démocratie et le socialisme (AJ/PADS). He wasappointed minister of mines in April 2000 before being moved to the Ministry ofIndustry and Crafts.

Senegal 11


Moustapha Niasse

Mr Niasse has long been a leading political figure, serving in cabinet during thepresidency of Léopold Sédar Senghor. In June 1999 he broke with the PS andsubsequently launched his own party, the Alliance des forces de progrès (AFP). Hestood against the PS incumbent, Abdou Diouf, in the first round of the 2000presidential election, but supported Mr Wade in the second round. He was rewardedwith the prime ministership in April 2000, but was dismissed in March 2001 as hisparty prepared to stand against Mr Wade’s PDS in the legislative election. He hasemerged as a particularly acerbic critic of the government.

Ousmane Tanor Dieng

Following Mr Diouf’s failure to retain the presidency, Mr Dieng gained theleadership of the weakened PS. Intelligent but abrasive, he has managed to facedown his rivals within the PS and has sought to project the image of a “responsible”opposition leader.

Augustin Diamacoune Senghor

The central leader of the rebel Mouvement des forces démocratiques de laCasamance (MFDC), Father Diamacoune, who is in his 70s, has been pushing hisgroup towards peace, despite some challenges to his authority within themovement.

The government and opposition parties have always had to take into accountthe marabouts (spiritual leaders) of the Islamic brotherhoods (turuq), especiallywhen dealing with rural issues. The Mouride brotherhood is the mostinfluential. Other brotherhoods include the Tijaniyya (or Tidianes), theNiassiyya, the Qadiriyya and the Layenne brotherhoods. Reformist Muslimorganisations, which have a more explicitly Arabist orientation and a moreclearly defined political agenda than the traditional Islamic brotherhoods, havebeen gaining ground in Dakar and other urban areas. Until the mid-1990s the PScould count on support from the leaders of the most powerful Islamicbrotherhoods. However, the decline of the groundnut industry led to growingrural hardship and contributed to the erosion of the PS’s power. Mr Wade, adevout Muslim, has cultivated his own political ties with the marabouts (inparticular he has strong links with the Mouride brotherhood and its head,Serigne Saliou Mbacké), although he has strongly defended the secular natureof the state and the courts against those that promote sharia law.

Labour discontent was a factor in undermining electoral support for the PS,but the trade unions have also been a constant source of pressure onMr Wade’s government. Trade union membership is widespread in the urbanformal sector, although the trade union movement is weakened by the gulfbetween leaders and workers, and by corruption among union officials.Nonetheless, strike activity is commonplace, and the country’s large civilservice articulates its demands confidently, especially now that thegovernment has started to press ahead with the privatisation of major stateenterprises. The PDS failed in its effort in late 2001 to displace the pro-PSleadership of the Confédération national des travailleurs sénégalais, one of thelargest labour federations.

The Islamic brotherhoods

Trade unions

12 Senegal


The Casamance separatists

The southern Casamance region has been a problem since colonial times. In contrast to other regions of Senegal, thedominant ethnic group, the Diola, had no social hierarchy that the French could use to administer the region. As aresult, the French used northern Senegalese to serve as local administrators. After independence, regional leaderswere absorbed into the government but, because of their lack of political influence, state investment in infrastructureand development projects in the region was neglected. In the late 1970s a land reform programme that resulted inthe transfer of land in the region to northern Senegalese sparked demonstrations and ultimately the formation of anarmed resistance movement, Mouvement des forces démocratiques de la Casamance (MFDC). In 1991 a peace accordwas signed, but the more radical southern front of the MFDC refused to lay down its arms. A new ceasefireagreement was signed in 1993. However, when the government refused to discuss the MFDC’s demand forindependence, violence resumed, increasing in intensity until late 1995. In December of that year the MFDC’spolitical leader, Father Augustin Diamacoune Senghor, issued a call to lay down all weapons, but in August 1997 theceasefire again broke down.

In 1997-98 an army offensive destroyed most of the MFDC’s bases on the Guinea-Bissau border, and Senegal’sintervention in Guinea-Bissau in June 1998 cut further supply-lines to the MFDC. In January 1999 the then president,Abdou Diouf, and Father Diamacoune met for the first time, and in December 1999 formal negotiations openedbetween the government and the MFDC. After some hesitation, the government of Abdoulaye Wade resumed thepeace process in December 2000, following Mr Wade’s election to the presidency in March 2000. By early 2004 theceasefire was holding well, some MFDC fighters had begun to demobilise and rehabilitation projects started to getunder way. The government and the MFDC signed a peace accord on December 30th 2004, 22 years after the start ofthe conflict. Hopes for the success of this agreement—compared with previous ones—are greater because of the high-level political commitment: it was signed by the MFDC’s central leader and Mr Wade himself, and has beenfollowed by detailed talks on concrete issues such as disarmament and the reintegration of ex-combatants. However,the attainment of peace will continue to be obstructed by sporadic fighting and banditry, and by serious divisionswithin the political and military leaderships of the MFDC.

International relations and defence

In exchange for helping to stop an attempted coup in The Gambia in 1981,Senegal entered into a confederation (Senegambia) with its small anglophoneneighbour. However, The Gambia dissolved the confederation in 1989, and itwas not entirely surprising that Senegal allowed a second Gambian coupattempt, in 1994, to succeed. Senegal has since normalised relations with TheGambia.

Relations with Mauritania are difficult, reflecting the tension between theArabic-speaking and black populations of that country. In 1989 a minor incidenton the border led to serious riots in both countries, in which hundreds ofpeople died. Diplomatic relations resumed in 1992, but tension flared up againin 1998, as a result of border clashes, and in 2000, when differences over acontroversial water project on the Senegal River almost led to the expulsion ofall Senegalese from Mauritania.

Relations with Guinea-Bissau have been complicated by the presence there ofmany refugees from Senegal’s Casamance region, and by the separatists’ use ofGuinea-Bissau as a base from which to conduct their operations. After civil warbroke out in Guinea-Bissau, Senegal sent 2,200 soldiers to support the

Relations with neighboursare tense

Senegal 13


beleaguered Bissau government in July 1998, withdrawing in March 1999 after apeace agreement was signed. The subsequent death of General AnsumaneMané, the most influential ally of the Casamance rebels in Guinea-Bissau,improved relations between the two countries. When the elected president ofGuinea-Bissau, Kumba Yala, was overthrown by a coup in September 2003,Mr Wade and several other West African leaders mediated the new junta’shandover to a civilian transitional government. Likewise, Mr Wade wasinstrumental as a mediator in the presidential election of 2005, when hepersuaded a reluctant Mr Yala to accept defeat.

Since his election Mr Wade has adopted a more active regional andinternational profile for Senegal. In December 2001 he became president ofboth the Economic Community of West African States (ECOWAS; a one-yearrotating position) and the Union économique et monétaire ouest-africaine(UEMOA). He was an initiator of the Omega Plan, which was subsequentlymerged with the Millennium Partnership for the African Recovery Programme(MAP) of the South African president, Thabo Mbeki, to become the NewPartnership for Africa’s Development (Nepad). This seeks to combine Africaneconomic development through political and economic reform with financialsupport from industrialised countries. Along with Mr Mbeki and the Nigerianpresident, Olusegun Obasanjo, Mr Wade officially launched the Nepadinitiative at the June 2002 G8 summit in Canada and has participated in allsubsequent discussions.

The International Institute for Strategic Studies estimates that Senegal’s armedforces totalled around 13,620 members in mid-2004, in addition to a paramilitarygendarmerie numbering about 5,000. The army is by far the largest element ofthe armed forces, although Senegal also has a small navy and air force. TheSenegalese army has always been loyal to the government, maintaining order—in the capital, Dakar, in particular—during turbulent elections. A special brigadeof the army has also been involved in counter-insurgency activities inCasamance since 1991.

In addition, Senegalese troops have been particularly active in regionalpeacekeeping operations, firstly under the auspices of the Organisation ofAfrican Unity, which has now been superseded by the African Union (AU), andthe UN, or by virtue of Senegal’s membership in ECOWAS (see Regionaloverview: Membership of organisations). Senegal has sent contingents toRwanda, the Central African Republic, the Democratic Republic of Congo(DRC), Côte d’Ivoire and Liberia as part of UN-led peacekeeping operations.Senegal has also sent police personnel to Sierra Leone as part of thepeacekeeping force controlled by the UN Mission in Sierra Leone. The army hasalso benefited from the presence of French army bases in Senegal, which hada contingent of around 1,130 soldiers in 2005. France gives technical assistanceto the army and conducts joint military exercises. The US has also givenfinancial and technical support to the Senegalese armed forces.

An active army

Mr Wade's proactive regionaland international stance

14 Senegal


Military forces, mid-2004Army 11,900Navy 950Air force 770

Total armed forces 13,620Gendarmerie 5,000

Source: International Institute for Strategic Studies, The Military Balance, 2004/05.

Security risk in Senegal

Senegal is widely perceived as one of the safer West African countries in terms ofcrime. This view is enhanced by the fact that there has been far less politicalinstability than in larger economies in the region such as Côte d’Ivoire or Nigeria. Amore appropriate comparison would be with Ghana. Although petty crime is aproblem, as in most developing countries, it is not a major issue. As in many Africancountries, foreigners are always a target for criminals. Although travel in most ofSenegal is safe, visits to Casamance are less so, given the long-running war betweenthe government and the separatist rebel force, the Mouvement des forcesdémocratiques de la Casamance (MFDC). Much of the fighting in recent years hasbeen at a low level of intensity, often little more than periodic skirmishes. Despitethe signing of a peace accord in December 2004, crime remains a problem and travelto Casamance is probably not advisable unless there is a pressing reason. Armedbanditry can also be a problem in rural areas and along the borders with TheGambia and Guinea-Bissau.

Resources and infrastructure

Population

Population indicatorsPopulation (mid-year; m)a 11.7Population growth rate (%)b 2.4

Fertility rate (live births per woman)b 5.1Life expectancy at birth (years)a 55.6

Population aged below 15 years (% of total)a 43.0Urban population (% of total)c 50.0

a 2005. b 2000-05 annual average. c 2004.

Source: UN Population Division.

The UN Population Division estimates for mid-2005 give a total population of11.7m, growing at a rate of 2.4% per year. The urban population is expandingmuch more rapidly, at an average of 3.9% per year. About 50% of the populationis estimated to live in urban areas, well above the regional average. The Dakarmetropolitan area contains an estimated 2m people and accounts for nearlyone-sixth of the country’s population. Despite the pace of urbanisation, formalemployment is fairly limited compared with rural employment and informal-sector activity. The total labour force was estimated at 4.6m in 2003, of whom43% were female. It is estimated that in 1990, the latest date for which figuresare available, 77% worked in agriculture, 16% in services and 8% in industry.

A swelling urban population

Senegal 15


Around 25% of all children aged between 10 and 14 years were part of thatlabour force, employed mainly in agriculture and in informal trading and otherservices. The urban formal-sector unemployment rate has exceeded 20%.

Comparative human development indicators, 2002(% unless otherwise indicated)

Senegal Côte d’Ivoire Mali South Africa FranceHDI scorea 0.437 0.399 0.326 0.666 0.932Real GDP per head (US$; in PPPb terms) 1,580 1,520 930 10,070 26,920Life expectancy at birth (years) 52.7 41.2 48.5 48.8 78.9

Adult literacy rate 39.3 49.7 19.0 86.0 99.0Population without access to: Safe water 22 19 35 14 n/a Essential drugs 21-50 6-20 21-50 6-20 0-5 Sanitation 30 48 31 13 n/a

Population not expected to survive to age 40 27.7 51.7 35.3 44.9 n/aInfant mortality rate (per 1,000 live births) 79 102 122 52 4

Population below poverty line (1990-2001)c 26.3 15.5 72.8 7.1 n/a

a The UN Development Programme’s human development index. b Purchasing power parity. c US$1 per day.

Source: UN Development Programme, Human Development Report, 2004.

There are about 20 different ethnic groups in Senegal, the largest being the Wolof,who account for around 43% of the population. Others include Peuhl (24% of thepopulation), Serere (15%), Diola (5%) and Mandingo (or Malinké, 4%). Lessergroups are the Soninké, Toucouleur, Bassari and Dialonké. Since the countrybecame independent, Wolof language and culture have spread. Wolof is nowspoken by about 70% of the population, although French remains the officiallanguage and is used throughout the country. More than 90% of the populationare Muslim; the remainder practise Catholicism and traditional beliefs.

Education

The primary school enrolment rate stood at 85.1% in 2003, which is below theaverage for Sub-Saharan Africa of 95%, according to estimates from the UNEducational, Scientific and Cultural Organization (UNESCO) and the WorldBank. In one of Senegal’s regions it is below 50%, highlighting the noticeableinequalities in terms of access between regions and between urban and ruralareas. The literacy rate is therefore low, at only 40.2% of the adult population in2003, placing a considerable strain on the development of the country. Onlyaround 4% of those of the appropriate age are in tertiary education, but this isclose to the average for Sub-Saharan Africa. There are two universities inSenegal, Université Cheikh Anta Diop in Dakar and Université Gaston Berger inSt Louis. Despite recent increases in the budget for education—it exceeded 35% ofthe total expenditure in 2004 but is largely used for teachers’ salaries—improvements have been slow, and there have been a number of strikes bystudents and teachers.

A low literacy rate

16 Senegal


Health

Until the 1990s the number of doctors relative to the size of the population washigh by Sub-Saharan standards—12,687 per doctor in 1981 according to the WorldBank. However, successive governments made healthcare a low spendingpriority, and the number of people per doctor rose significantly to an average of18,215 in 1990 according to the World Bank, before falling to 13,133 in 1991-2004.Only about 40% of the population has access to health services, and nearlythree-quarters of all healthcare personnel are concentrated in the two largestcities, Dakar and Thiès, leaving the majority rural population poorly covered.Health problems in Senegal are compounded by inadequate nutrition:according to a 2003 report by the UN Development Programme (UNDP), 25% ofSenegalese suffer from chronic malnutrition.

HIV/AIDS profile, 2003Senegal Côte d’Ivoire

People living with HIV/AIDS 44,000 570,000

Children who have lost their mother to HIV/AIDS 17,000 310,000Deaths from HIV/AIDS 3,500 47,000

HIV prevalence rate among adults 15-49 (av; %) 0.8 7.0

Source: UNAIDS.

Hampered by insufficient resources in the past, the government has increasedinvestment in the healthcare system in recent years, in line with itscommitment to reduce poverty. The absence of updated data on death fromdisease or access to medical facilities makes it difficult to accurately assessprogress in recent years. However, increased funding going to the health sectorand increased immunisation against malaria, yellow fever, tetanus, diphtheriaand whooping cough suggest that there should be an improvement in healthoutcomes. The government has had some success with its HIV/AIDSprogramme, which has kept the HIV infection rate significantly lower than inother African countries. According to the joint UN programme for HIV/AIDS(UNAIDS), an estimated 44,000 adults and children were living with HIV/AIDSat the end of 2003, 41,000 being adults (aged between 15 and 49). The adultinfection rate was 0.8%, the lowest of all Sub-Saharan African countries forwhich data are available, and markedly below the infection rate of countriessuch as Botswana (37.2%) and Swaziland (38.8%).

Natural resources and the environment

Most of Senegal lies within the Sahelian zone, an area of irregular and uncertainrainfall and generally poor soil. Rainfall is relatively high and dependable in thesouthern part of the country, but the north has suffered in the past 25 years fromwhat appears to be a considerable climatic shift, making crop and livestockproduction increasingly difficult, even marginal. As elsewhere in the Sahel, morethan 80% of annual rainfall occurs between the beginning of July and the end ofOctober. There are a number of large rivers, including the Senegal, Saloum,Gambia, Soungrougrou and Casamance.

Healthcare is deteriorating

A dry country

Senegal 17


Senegal has 32% forest cover and an additional 30% of other wooded land.There is a well-developed network of protected areas covering 12% of thecountry’s forested area. The vast majority of Senegal’s forests and woodlandsare open savannah, which extends through the Sudanian-Guinean, Sudanian-Sahelian and Sahelian vegetative zones. Small areas of closed forest occur inthe Casamance region. Mangrove forest blankets much of the southern coast ofthe country, particularly around the Casamance estuary. Desertification is amajor problem in northern Senegal. The country has established significantareas of plantation forest, mainly for non-industrial (fuelwood and fodder)purposes.

Senegal’s main exploited mineral deposits are calcium phosphates in Taïba andaluminium phosphates in Thiès; the opening of the Tobène deposit in 2003increased Taïba’s phosphate production capacity. Total national reserves areestimated at 100m tonnes of calcium phosphate and 60m tonnes ofaluminium phosphate. Other proven mineral reserves include iron, gold,copper, diamonds, titanium and peat, although most are not exploited. Thereare also gas and oil deposits, the extent of which has yet to be established.

Transport, communications and the Internet

Most road and rail links converge on Dakar. The city has the geographicaladvantage of being the westernmost port in Africa, and it is an importantregional and international transit hub. Owing to recent poor competitiveness, ithandled only about 9m tonnes of traffic in 2002, compared with 14.5m tonnesat the port of Abidjan in Côte d’Ivoire. However, following the rise of politicalinstability in Côte d’Ivoire, starting with the December 1999 coup and thefollowing eruption of conflict, some of the trade that had passed through Côted’Ivoire to Burkina Faso, Mali and Niger, switched to some neighbouringcountries. Senegal benefited by seeing a rise in its share of Mali-bound trade,which has been significant since September 2002. However, if peace takes holdin Côte d’Ivoire, most trade is expected to return to Abidjan, which is faster,easier and cheaper than most of the alternatives. The freight that the port canhandle will increase as the port authority, Port autonome de Dakar (PAD), isundertaking an ambitious programme to modernise and expand its facilities,with plans to build a new grain terminal, to increase capacity to handlecontainer ships and, eventually, to enlarge the port.

Senegal has one of the best road networks in West Africa, estimated to total14,500 km. It includes three primary routes: the central highway linking Dakarand Kidira (on the border with Mali); the southern route towards The Gambiaand the Casamance region; and the northern route towards Mauritania andalong the Senegal River valley. However, connections between most regions arepoor. Major road rehabilitation projects are under way, including on the mainroad link between Mali and The Gambia. Most traffic is found in the Dakarregion, or between Dakar and the groundnut-producing areas to the north andeast. Traffic in Dakar is heavily congested. The metropolitan Dakar publictransport company, Société des transports du Cap-Verde (Sotrac), was liquidatedin December 1999, following three abortive attempts to sell it to foreign buyers.

Mineral reserves

Dakar's port

Roads

Forestry

18 Senegal


The government subsequently created a new company, Dakar Dem Dikk(“Dakar round-trip”), with 100% Senegalese ownership. It has been upgradingthe ageing fleet of taxis and buses inherited from Sotrac.

Dakar and the Malian capital, Bamako, are linked by a 1,300-km railway line. In2001 the line carried about 262,600 tonnes of freight, a volume that hasincreased since civil war broke out in Côte d’Ivoire. The railway system alsoruns north to St Louis, the country’s former capital, near the border withMauritania. Problems with the ageing infrastructure have made the rail routesinefficient and slow. In 1998 the World Bank provided assistance withrenovating part of the track in eastern Senegal. Privatisation of Senegal’s portionof the Dakar-Bamako line, originally due to have been completed in 1999, wasdelayed until 2003. After studying offers from two prospective buyers, Senegaland Mali agreed in March 2003 to sell to a Canadian company, Canac-Getma, a25-year concession for CFAfr15.7bn (US$26.7m) to run the Dakar-Bamako line.Canac-Getma pledged to invest CFAfr40bn over five years to buy new rolling-stock and locomotives, upgrade facilities, and carry out other improvements. InAugust 2003 management of the railway was handed over to Transrail, the newcompany established by Canac-Getma. Merchandise traffic has increased by75% since the start of the concession in October 2003, passing from 20,000tonnes per month to 35,000 tonnes per month in 2004, according to Canac-Getma.

The Senegal River is navigable for 220 km throughout the year, and as far asKayes, 924 km inland in western Mali, for part of the year. The Saloum Riverprovides a number of major groundnut-producing centres with a transportroute for their produce. Owing to the re-establishment of a ferry servicebetween Dakar and Ziguinchor in the 1990s, the Casamance River nowprovides an alternative route to overland travel. However, the sinking of apassenger ferry, Le Joola, in September 2002, which claimed 1,860 lives, pointedto the lack of safety in such transport. The ferry was grossly overloaded, whichcontributed to its sinking. Around 1,000 bodies remain trapped in the hull ofthe vessel, which lies on the sea bed off The Gambia. In June 2005 thegovernment hired an Indonesian passenger ferry, MV Wilis, as a replacementfor Le Joola, to ply the Dakar-Ziguinchor route.

Dakar’s Léopold Sédar Senghor international airport (based at Yoff) nowhandles in excess of 1.2m passengers annually and over 30,000 tonnes offreight, an increase over the late 1990s and reaching the level of air traffic atAbidjan airport in Côte d’Ivoire prior to the outbreak of civil war in 2002. Anew airport planned at Ndiass, 50 km from Dakar, should have more thantwice the capacity of the current one. The airport will be a build-operate-transfer (BOT) project, in which the entire cost of construction will be borne bythe private sector, which will recoup its investment by operating the airport onconcession for a period of 22 years, before it is transferred to direct governmentownership. So far there has been limited interest on the part of privateinvestors. Since 1998 St Louis has been connected by charter flight to France. Inaddition, there are 12 secondary airports at major regional centres. Originally asmall domestic carrier, Air Senegal sold 51% of its capital to Royal Air Maroc in

Railways

Air

Rivers

Senegal 19


late 1999 and was transformed into Air Senegal International (ASI) in 2001. Thenew airline flies to Europe and to many West African cities. ASI formed apartnership with South African Airways to fly the Johannesburg-Dakar-NewYork route twice a week. ASI’s passenger traffic increased from 125,000 in 2001to 420,000 in 2004. Many international airlines fly to Dakar, including AirFrance, Iberia, TAP Air Portugal, and Alitalia.

Senegal has an advanced telecommunications sector, with a digital and fibre-optic network nationally and an optic marine and satellite network inter-nationally. As a result of the quality of the network, Dakar has succeeded inattracting a buoyant call-centre industry, which has made Senegal one of thechoice destinations for off-shoring activity for France and Belgium, putting it incompetition with Morocco, Tunisia and Mauritius. The telecoms sectorrepresents about 6% of GDP and 10% of the tertiary sector, and its growth in thelast five years has averaged 18%, according to the telecoms regulator, Agence derégulation des télécommunications (ART). Total investments in the telecomssector are estimated to have exceeded CFAfr50bn (US$94m) in 2004.

In July 1997 the government sold 33% of the state-owned telecoms company,Société nationale de télécommunications (Sonatel), to France Télécom, and sold10% to the enterprise’s employees. A further 18% was sold to the public throughthe regional stock exchange, based in Abidjan. In February 1999 a capitalrestructuring increased France Télécom’s stake to 42%, reducing thegovernment’s share to 30%. A major programme to increase the number offixed lines in Senegal is under way, with a particular emphasis on expandingtelephone coverage in rural areas. According to ART, there were 244,948 fixed-line connections in the country in 2004 (compared with 205,008 in 2000),generating CFAfr175bn (US$329m) in turnover. However, growth in fixed lineshas slowed since 2000—there were 16,100 new lines in 2004, equivalent to a 7%growth rate—the year in which mobile subscribers overtook fixed-lineconnections. About 64% of fixed-lines are in Dakar, and the penetration rate offixed lines is low, at 2.3% in 2004.

Mobile telephony, using the Global System for Mobile Communication (GSM),was launched in the third quarter of 1996. By the end of 2004 the number ofmobile phone users exceeded 1m, having grown by 47.7% in that year. Annualgrowth between 1999 and 2004 averaged 70%, making it one of the mostdynamic sectors of the economy. There are two mobile operators, SonatelMobile (a subsidiary of Sonatel), which was launched in 1996 and controls 70%of the market and Sénégalaise des télécommunications (Sentel), 75%-owned by aLuxembourg-based company, Millicom International Cellular, which obtained alicence in 1998 and was launched in 1999. The mobile telephone market isdominated by pre-paid cards, which account for 98% of the sector.

Telecommunications

20 Senegal


Telecommunications indicators(‘000)

2000 2001 2002 2003 2004Fixed lines 205 237 224 229 245Mobile sector 251 390 554 782 1,121 Pay-as-you-go 20 20 22 23 22 Pre-paid cards 231 370 532 759 1,099

Source: Agence de régulation des télécommunications (ART).

The main national daily newspaper, Le Soleil, is government-controlled, but ithad begun to broaden its coverage of political activity even before the changeof government. There is a thriving private press, including the dailies Sudquotidien and Wal Fadjri and a business newspaper, Le Journal de l’économie. Afew private FM radio stations now exist (such as Environnement FM 100.2), butmost radio and television services remain in the hands of the government’sSociété nationale de radiodiffusion-télévision sénégalaise (RTS), which servesan estimated 80,000 television receivers. A French network, Canal horizons,operates a subscription-based television service. According to Freedom House’sFreedom of the Press 2005, which looks at press freedom across the world,Senegal ranks 82nd out of 194 countries, with its press considered partly free.Freedom of expression is generally respected, and journalists are often criticalof the government and the ruling parties. Although the government does notcarry out formal censorship, some self-censorship is practised because of lawsagainst “discrediting the state”. Many analysts believe that press freedom hasbecome more restricted under the current president, Abdoulaye Wade.

According to the UN International Telecommunications Union, there were 672Internet hosts in Senegal in 2003. It also estimated there were 225,000 Internetusers in the same year with around 217,200 personal computers (PCs). Thereare only 20,000 Internet subscribers, but it is a fast growing market, with a 26%increase in 2004. The first Internet cafés were opened in 1986 and thesecomprise an important segment of the Internet market, as they provide lessexpensive access to the public. According to the telecoms regulator, ART,Internet subscribers represented 0.19% of the population in 2004. Sonatelintroduced broadband Internet access in March 2003 and by end-2004 40% ofInternet subscribers had opted for a broadband Internet connection, comparedwith 16% in 2003. Broadband growth was strong in 2004 and is likely tocontinue to be a dynamic sector in the coming years. There are six Internetservice providers (ISPs) registered with ART, although all of those providingInternet via telephone lines depend on Sonatel, which is the only companywith a fixed-line licence. Since October 2004 broadband speed has increasedfrom 310 mb/s to 465 mb/s.

Internet service subscribers(no., unless otherwise indicated)

2000 2001 2002 2003 2004Total 10,343 11,637 13,571 15,275 19,351 % change n/a 12.5 16.6 12.6 26.7

Source: Agence de régulation des télécommunications (ART).

The Internet

The media

Senegal 21


Energy provision

More than one-half of Senegal’s energy consumption comes from traditionalsources such as wood and charcoal, and this has led to serious deforestationover the years. Although the country’s industrial sector has to import most ofits energy requirements, natural gas is now being extracted from the Gadiagafield, south of the capital, Dakar.

Nearly all of the country’s electricity supply is generated thermally. Although 35%of Senegalese are connected to the national power grid, the proportion falls tojust 9% in rural areas. The national electricity company, Société nationalesénégalaise d’électricité (Senelec), has a production capacity of 415 mw andanother 90 mw is made available from the Manantali hydroelectric dam in Mali.Two diesel generators at the Cap des Biches, a private power station, wasbrought on stream in June 2003, producing 850 gwh. There is a small naturalgasfield at Diam-Niade Kabor (see below), which provides up to 20% of Senelec’sneeds. Senelec has embarked on a large investment programme, valued atCFAfr77bn (US$145m) to increase both its generation and distribution capacity.In April 2005 the government signed an agreement to buy electricity for 15years generated by Kounoune Power, a joint venture between Matelec, aLebanese company, and Mitsubishi (Japan), which will generate 67.5 mw.

In 1999 a consortium led by Hydro-Québec of Canada purchased a 34% shareof Senelec and took over its management. The agreement was abrogated inSeptember 2000, however, because the government was dissatisfied with thedelay in starting rehabilitation work and the failure to end frequent,economically damaging power cuts. Negotiations resumed in 2001 to sell amajor share of Senelec to either Vivendi of France or AES of the US. In acontext of market uncertainty and financing difficulties for the energy sectorglobally, the talks broke down, prompting the Senegalese government in July2002 to suspend Senelec’s privatisation for the time being. Since then it hasasked the World Bank to participate in a task force to examine alternative policyoptions for Senelec. The IMF, which had consistently advised that Senelec beliberalised, agreed that the government could delay privatisation for anunspecified time, provided that it carried out further reform in the electricitysector, including allowing private operators to establish new power stations.

Under a scheme administered by the Senegal River Development Organisation(Organisation pour la mise en valeur du fleuve Sénégal—OMVS), theManantali dam—on the Bafing River in Mali, a tributary of the Senegal River—provides electricity via a 1,300-km network of transmission lines to thecapitals of the OMVS member countries, Bamako (Mali), Nouakchott(Mauritania) and Dakar (Senegal), with about 90 mw supplied to Senegal. TheUS$600m project was to have begun generating electricity by 1998, buttechnical and political hitches delayed the installation of generators. Theconnection with Senegal’s grid was finally completed in July 2002, although itsinitial capacity was only 18 mw.

Thermal generation dominates

Traditional energy sources

Manantali hydroelectricstation is finally commissioned

22 Senegal


A state-owned enterprise, Société des pétroles du Sénégal (Petrosen), wasestablished in 1981 to search for oil and to participate in external oil firms’exploration efforts. Following a call for bids in early 1990, a number ofexploration blocks in offshore waters near the Guinea-Bissau border have beenawarded. Relatively large discoveries recently made in neighbouring Mauritaniahave raised some hope that oil deposits may be found in the north of Senegal.The country’s natural gas reserves, which are estimated to be 3bn cu metres, arelocated primarily onshore. In 1999 natural gas was produced by Tullow Oil ofIreland in association with Petrosen, from the Diam-Niade Kabor field. InOctober 2002 a US independent, Fortesa, began natural gas production fromthe Gadiaga development. The Gadiaga field is currently producing around 2mcu ft/day of gas. Fortesa is also planning to carry out additional seismic work inthe area. Fortesa has a 70% share in the Gadiaga Development Area, with theremaining 30% held by Petrosen.

Oil exploration activities conducted by Benton Oil and Gas of the US in theDome Flore field continued until October 1999. The field, which was locatedoffshore southern Senegal near the border with Guinea-Bissau, had been thesubject of a boundary dispute between the two countries since the 1950s. In1995 the dispute was settled, and joint exploitation was permitted by theratification of a treaty, in which 85% of the proceeds from the activities in thearea went to Senegal and 15% went to Guinea-Bissau and the Agence deGestion et de Coopération (AGC), which was an agency created for the jointdevelopment of maritime resources in the area, was established. The field’sheavy crude reserves have been estimated to be 700m barrels (according to theUS Energy Information Administration). Among the areas covered by the jointadministration are Cheval Marin and Croix du Sud. Cheval Marin—covering anarea of approximately 6,300 sq km and extending from water depths of lessthan 75 metres to over 3,500 metres—is operated by the Italian state oilcompany, Agip. Croix du Sud, which covers an area of about 3,550 sq km andextends from water depths of less than 50 metres to over 3,550 metres, isoperated by a UK company, Sterling Energy, and the AGC. The operators arecarrying out seismic surveys.

Other firms involved in offshore exploration were Roc Oil of Australia andVanco International of the US. In October 1999 Roc Oil signed a production-sharing agreement (PSA) with Petrosen for exclusive rights to exploreCasamance offshore blocks 1, 2, and 3. The blocks are located off southernSenegal and cover a total area of 8,187 sq km. Roc Oil held a 92.5% interest inthe project, and Petrosen held 7.5%. Roc Oil, in joint venture with WoodsideEnergy (also of Australia), studied several blocks onshore and offshore andsigned a memorandum of understanding with Petrosen that proposed a workprogramme to justify the granting of prospecting rights, which would also givethem the right of first refusal to negotiate PSAs. It is understood that theagreement has lapsed.

Also in October 1999, Vanco signed a PSA with the government for the DakarOffshore Profond Permit, a deepwater block that extended from Senegal’soffshore boundary with The Gambia to its border with Mauritania. Covering7.9m acres, the Profond block is the largest concession to date offshore Senegal.

Oil and natural gas prospects

Exploration activity continues

Senegal 23


Vanco was the operator of the concession, holding a 90% interest; theremaining 10% was held by Petrosen. In 2001 Vanco explored the south area ofthe block, identifying the Palmarin prospect. The 2D survey showed that thePalmarin prospect may be oil bearing and it was hoped that an exploratorywell could be drilled by the end of 2003. However, so far no well has been dug.

In December 2005 Al Thani Investments, which is owned by the first cousin ofthe president of the United Arab Emirates, was awarded a licence on the Cayarblock in Senegal’s shallow offshore area. Al Thani signed a contract withPetrosen, to invest CFAfr22bn (US$42m) over a period of eight years. The twoparties also agreed on an exploitation concession for a minimum of 25 years ifoil or gas is discovered. The Cayar block is considered a promising one given itsclose proximity to areas which abound in oil and gas. On December 17th,Kampac Oil, a Dubai-based oil group, signed a concession agreement forexploration and production sharing covering the Louga onshore bloc innorthern Senegal. The agreement stipulated minimum investments ofCFAfr20bn over a period of seven years. If oil is discovered, Kampac will havean exploitation concession for at least 25 years.

SENEGAL

MAURITANIA

MALI

THE GAMBIA

GUINEA-BISSAU

St-LOUISDEEP

St-LOUIS LOUGA

DIOURBELTHIES

MBOUR

SALOUM

SENEGAL SUDONSHORE

SENEGAL EAST

CAYARDEEP

RUFISQUEDEEP

SANGOMARDEEP

SENEGAL SUD SENEGAL SUD

OFFSHORE OFFSHORE

DEEP

AGC Area

SHALLOWDomeFlore

SANGOMAR

RUFISQUE

CAYAR

0 km 50 100 150 200

0 miles 50 100Source: Petrosen.

DAKAR

Senegal: oil and gas exploration blocks

24 Senegal


The economy

Economic structureMain economic indicators, 2004Real GDP growth (%) 6.1Consumer price inflation (av; %) 0.5Current-account balance (US$ m) -742

Total external debt (US$ m)a 4,418Exchange rate (av; CFAfr:US$) 528.3

Population (m) 11.4

a 2003.

Source: Economist Intelligence Unit.

Dakar’s position as the capital of former French West Africa made Senegal oneof the most developed states in the region at independence, with a well-developed physical and social infrastructure and a relatively well-diversifiedindustrial base. In addition to having a stronger tourist sector than otherfrancophone West African countries, Senegal has remained an important hubof economic activity in the region, and the services sector is the maincontributor to GDP, accounting for 64% in 2003. Although the primary sectoraccounts for less than 20% of GDP, it remains the bedrock of the economy,supporting more than 70% of the economically active population. Groundnuts,cotton and horticulture are the main cash crops, but agricultural output is proneto changes in weather patterns. Since the mid-1980s the fish sector has emergedas Senegal’s main export earner. The industrial sector, which accounts for about20% of GDP, encompasses a variety of economic activities, but is heavilydependent on agro-industries and mining, notably phosphates and theproduction of derived chemicals (the second-largest source of export earnings).

For a long time Senegal was in the World Bank’s lower-middle income bracket,although this changed with the devaluation of the CFA franc in 1994. In 2001Senegal was formally classified by the UN as one of the world’s 49 “leastdeveloped countries” (LDCs), based on its low GDP per head, weak humanresource base and low level of economic diversification.

Comparative economic indicators, 2004a

Senegal MaliCôte

d’IvoireSouthAfrica Franceb

GDP (US$ bn) 13.1 5.1 14.7 213.2 2,047GDP growth (%) 6.1 2.2 -1.0 3.7 2.1

GDP per head (US$) 1,252 381 871 4,990 33,890Consumer price inflation (av; %)b 0.5b -3.1b 1.4b 4.3b 2.1Population (m) 11.4 13.4 16.9 42.7 60.4

Exports of goods fob (US$ bn) 1.3 1.1 6.5 48.4 425.0Imports of goods fob (US$ bn) 2.3 1.1 4.7 48.5 443.0

Current-account balance (US$ bn) -0.7 -0.2 -0.2 -7.0 -5.0

a Economist Intelligence Unit estimates. b Actual.


A sizeable economy

Senegal 25


Economic policy

In the first two decades after independence the government professedallegiance to “African socialism”, which in practice translated into heavy stateintervention and an inward-looking economic strategy. Whereas the number ofpublic enterprises expanded, and expansionary monetary and fiscal policieswere pursued, private-sector activity was strongly regulated, and price andtrade controls spread first to agriculture and then gradually to all sectors of theeconomy. By the mid-1980s the continued deterioration of the terms of trade,induced by the overvaluation of the CFA franc and a series of droughts led tomounting fiscal deficits, highlighting the extent to which the public sector hadexpanded and the uneconomic nature of much past public-sector investment.

In 1979 the government embarked on a series of adjustment programmessupported by the IMF and the World Bank (Senegal was one of the first Africancountries to do so), but the results were mixed. Economic growth recovered,and the adjustment programmes saw the closure or privatisation of somepublic enterprises, markedly less state intervention in agriculture and cuts inthe civil service. However, the government failed to tackle deep-seatedproblems, which inhibited the diversification of the economy and the rise of adynamic private sector. Failure to trim expenditure, combined with theappreciation of the CFA franc, led to the accumulation by the government oflarge levels of debt. In the early 1990s the rate of economic growth becameerratic and low, and Senegal, in line with other members of the Franc Zone,agreed reluctantly to a 50% devaluation of the CFA franc in January 1994.

As part of the government’s efforts to reform economic policy and theeconomy, a three-year SDR130.8m (US$187.3m) enhanced structural adjustmentfacility (ESAF) was agreed with the IMF in 1994. The main challenge facing thegovernment was keeping firm control over public-sector pay. The policyconditions attached to the ESAF focused on: liberalising labour legislation,prices and external trade; agricultural reform and the stimulation of marketmechanisms; and the restructuring of the public sector, including a round ofprivatisations. A new ESAF (later renamed the poverty reduction and growthfacility, PRGF) worth US$144m, was signed with the IMF in April 1998, and itsinitial three-year duration was subsequently extended for another year, untilmid-April 2002. Under the PRGF, the government agreed with the IMF to aseries of economic targets. These included real GDP growth of 5-6% a year,inflation below 3%, and a current-account deficit (excluding official transfers)equivalent to less than 7% of GDP—all linked to implementing a programme ofagreed economic and financial reforms.

Monetary and exchange-rate policy

The central feature of Senegal’s economic policy is the pegged exchange-rate regimewhereby the CFA franc is pegged to the euro at CFAfr656:€1. This supports monetarypolicy, as determined by the regional central bank, Banque centrale des Etats del’Afrique de l’ouest (BCEAO). Accordingly, the BCEAO pursues a tight monetarypolicy similar to that of the European Central Bank (ECB). Owing to this lack ofmonetary independence, government and donors rely on fiscal policy as the main

Initial allegiance to socialism

Reforms fail to tackle problems

Renewed commitmentto reform

26 Senegal


instrument to achieve financial stabilisation. The BCEAO, based in Dakar, alsodictates the monetary policy in the rest of the Union économique et monétaireouest-africaine (UEMOA; see Regional overview: Membership of organisations). TheBCEAO’s main objective is to maintain the parity between the CFA franc and theeuro by using a mix of indirect and direct monetary instruments. An importantchange in regional monetary policy took place in 2002, when governmentborrowing from the BCEAO was banned and replaced by the use of Treasury bills.Advances by the BCEAO to governments have been frozen since 1998.

The president, Abdoulaye Wade, and his party, the Parti démocratiquesénégalais (PDS), generally refer to themselves as “liberal” in economic matters,although there was little change in policy following Mr Wade’s victory in the2000 presidential election, as the outgoing government had already abandonedits orientation towards state intervention. Economic reforms have concentratedon four main areas: fiscal policy, structural reforms, poverty alleviation andpromotion of the private sector.

• Fiscal consolidation and transparency: Fiscal policy remains a pivotalinstrument because Senegal’s monetary and exchange-rate policy is dictated bythe regional central bank, the Banque centrale des États de l’Afrique de l’ouest(BCEAO). The government remains committed to containing budgetaryexpenditure, strengthening revenue from domestic sources and improving taxefficiency, as well as to meeting the convergence criteria set by the regionalgrouping, the Union économique et monétaire ouest-africaine (UEMOA).

• Privatisation: The new government adopted a distinctly nationalist stanceon privatisation policy, actively seeking more openings for Senegalese investorsand taking a tougher line with foreign buyers who did not appear to be livingup to their commitments. Although the sale of the electricity parastatal, Senelec,has been delayed because of a lack of interested buyers, the IMF has advisedthat the firm should become more commercially focused, to ready itself forsome form of sale when the time is right. The sale of a majority stake in theSociété nationale de commercialisation des oléagineux du Sénégal (Sonacos),the groundnut parastatal, finally took place in December 2004.

• Poverty reduction: The poverty reduction strategy paper (PRSP; publishedon November 20th 2002) sets out the policies and strategies to tackle poverty inthe government’s anti-poverty framework. Although it is probably morecommitted than its predecessor to the promotion of the private sector, the Wadegovernment has repeatedly emphasised the importance of addressing socialconcerns such as health, education and unemployment. Mr Wade himself hasadvocated a decidedly Keynesian approach, the state having been assigned amajor role in developing Senegal’s infrastructure and in educating and trainingits workforce to compete better in global markets.

• Investment: The government has launched a series of initiatives tofacilitate and encourage private investment, both domestic and foreign. AStandard & Poor’s credit rating was commissioned, and the country wasawarded an encouraging “B+/B” in December 2000. In March 2003 Standard &Poor’s reaffirmed its B+/B issuer credit ratings. A national agency, Agencenationale pour la promotion des investissements (Apix), was established to act

Mr Wade's approachis cautious

Senegal 27


as a strategic advocate for foreign investors and, in particular, to facilitateadministrative procedures. The government expects some of the bigger worksprojects, such as a new international airport, expansion of the road network andport development, to be financed privately. This is especially important giventhe IMF’s warning, in its 2003 PRGF review, that the government should notundertake any “showcase projects” that could drain public finances. The IMFhas also raised doubts that the tax concessions and other investor inducementsoffered by Apix might be counter-productive.

After its first year in office, a key reform to which Mr Wade’s governmentagreed was that the state should reduce its direct involvement in productionand marketing, and therefore approved the liquidation of Société nationale degraines (Sonagraines), the main marketing arm of the groundnut company,Sonacos, and other measures negotiated by the previous government. The PRSPsets out the government’s agricultural policy, which aims to reduce thevulnerability of agricultural activities by promoting irrigated agriculture;diversify income sources by facilitating access to credit; and opening up ruralzones by providing infrastructure to make urban markets more accessible.These government continues the pursuit of market liberalisation andpromotion of the private sector, but with a heavier emphasis on stateinvestment in rural infrastructure and public programmes to safeguard farmersfrom the vagaries of the market and the weather.

Poverty reduction strategy paper

The poverty reduction strategy paper (PRSP; a mixture of home-grown views and IMF-World Bank policy advice) waspublished on November 20th 2002. In its interim PRSP, released in May 2000, the government renewed its commitment totackling poverty, with particular emphasis on improving education and healthcare. The final version of the PRSP assumesthat debt relief under the IMF-World Bank’s heavily indebted poor countries (HIPC) initiative will continue and that thefunds saved from debt servicing will be directed towards poverty reduction programmes, for example, health andeducation projects. The PRSP provides guidance for the spending of funds, lent by the IMF under its poverty reduction andgrowth facility (PRGF). The poverty reduction plan seeks to halve poverty by 2015 and recognises a close connectionbetween poverty reduction, economic progress and capacity building.It is intended that poverty will be reduced by doubling income per head by 2015 through strong, balanced and better-distributed real GDP growth (averaging 7-8% per year in 2003-05); increasing access to essential social services byaccelerating the development of basic infrastructure facilities; and eradicating all forms of exclusion and ensuring equalityof the sexes, especially in primary and secondary education, by 2015. The plans for achieving this are loose and includepromoting an efficient and effective agricultural marketing and distribution system; developing fisheries resources; andintroducing new mining legislation and adopting mining policy conducive to sustainable development. The World Bankand IMF gave their assessment of the PRSP in early December 2002. They found that the PRSP provided an adequateframework for guiding the implementation of a credible poverty reducing strategy. However, the government would needto address a number of shortcomings in the paper, largely because the government’s plans to implement the povertyreduction strategy are not spelled out in sufficient detail and the document favours a high-spending macroeconomicscenario (over two more moderate scenarios). In their latest review of the PRSP, dated December 2004, the IMF and theWorld Bank highlighted the adequate implementation of policies to combat poverty, while noting a series of deficiencies,including spending irregularities, poor fiscal transparency, the weak link between policy implementation and poverty-reduction objectives and the need to align public expenditure with the priorities set out in the PRSP.

Mr Wade promises a newagricultural orientation

28 Senegal


On April 29th 2003 the IMF approved a new three-year PRGF for SDR24.3m(US$33m), to support the government’s economic reform programme for2003-05. The announcement enabled Senegal to draw US$5m (SDR3.47m)immediately and came seven months since the last PRGF disbursement. (Thereduced level of funding attached to the new PRGF reflects IMF thinking thatpolicy advice and not funding per se is the main issue to address; other donorsare expected to fill the funding gap.) Concurrently, the IMF agreed to give Senegaladditional interim debt relief under the heavily indebted poor countries (HIPC)initiative. The PRGF supports the government’s three-year programme tomaintain macroeconomic and debt sustainability and tackle the main obstaclesto rapid economic growth and poverty reduction. The programme is groundedin the development priorities identified in the PRSP. The IMF’s decision, albeitdelayed, to agree to the new PRGF was in recognition of the government’sefforts to implement reforms. The delay was partly owing to the government’sdragging its feet over the privatisation of the groundnut parastatal. In early 2004the IMF completed its first review of the PRGF.

In March 2005 the IMF disbursed SDR3.47m (US$5.3m), following thecompletion of its second annual review of the PRGF. The IMF’s deputymanaging director, Agustín Carstens, praised the Senegalese authorities for agood economic performance in both 2003 and 2004, characterised by higheconomic growth and low inflation. He also noted progress on structuralreforms, although he said these needed to be accelerated, particularly reformsin the electricity and groundnut sectors. Mr Carstens noted that Senegal hadadopted a fiscal programme for 2005 that allowed for modest increases incurrent expenditure, but urged the authorities to tighten expenditure controls toensure that more is allocated for capital expenditure and pro-poor spendingand that the government should likewise monitor and control borrowing bypublic enterprises and other liabilities associated with investment projects.

In November 2004 the government presented its budget for 2005 to theNational Assembly, and it was passed on December 13th. The main objectivesof the budget are to consolidate economic growth, boost employment andreduce poverty. The budget assumes sustained high real GDP growth of 6.1% in2005. This target assumes strong growth of the primary sector. Industrialgrowth is expected to attain 7.9%, underpinned by recent restructuring whichshould increase productivity. The tertiary sector is expected to grow by 5.5%,thanks to the impact of telecommunications liberalisation and investments inthe transport sector. The budget projects a significant rise in public investment,which is expected to increase from CFAfr461bn (US$873m) in 2004 toCFAfr576bn, a rise of 25%. Capital expenditure financed from domesticresources is forecast to increase by 52% in relation to 2004, to CFAfr309bn,while externally financed capital expenditure is set to rise by a more modest2.9%. The 2005 budget is thus highly ambitious in terms of public investment,and it does raise questions as to whether actual investment will match thegovernment’s projections.

A PRGF is agreed after oneyear of limbo

The IMF's second PRGF reviewis completed

2005 budget

Senegal 29


Government finances, 2005(CFAfr bn)

General budgetRevenue 1,229.5 Tax revenue 802.2 Non-tax revenue 38.9 Other domestic revenue 8.1 External revenuea 380.3

Expenditure 1,246.6 Public debt 111.6 Salaries 249.3 Capital expenditure 575.9 Domestically financed 309.0 Externally financed 266.9Balance -17.1Special treasury accountsRevenue 40.9Expenditure 46.4Balance -5.5

Overall balance -22.6

a Includes obligatory and programme loans and emissions.

Source: Le Journal de l’Économie.

Economic performance

Since independence real GDP growth has fluctuated considerably, mainlyreflecting the volatility of crop production (which is weather-dependent), thegovernment’s economic policy and export market instability. These factors,combined with the appreciation of the CFA franc from 1991 onwards, severelyrestricted real GDP growth. However, from 1994 onwards, increased aid inflows,better economic management and the devaluation of the CFA franc have putthe economy on a better footing. Real GDP growth has hovered between 5%and 6.5% since 1995, with the exception of 2001, when growth fell to 1.1%because of a poor harvest. This has led to small increases in GDP per head inCFA franc terms.

Gross domestic product(% real change; market prices)

Annual average2004 2000-04

GDP 6.1 5.0


Real GDP growth in 2004 reached 6.1%, down from the 6.5% achieved the yearbefore. The slowdown was attributed mainly to poor results in the primarysector, whose growth reached only 2.3%, compared with a robust 19.8% in 2003.This reflected the impact of the locust invasion on cereal production and thefact that the sharp rebound of 2003 was not likely to be sustained. On the otherhand, cash-crop production was strong in 2004, boosted by the strongperformance of groundnuts. Also in the primary sector, livestock productionincreased by 5%, but fish production declined by the same amount, because of

Modest recovery in growth

Real GDP growth in 2004reached 6.1%

30 Senegal


a moratorium on fishing during the third quarter of the year to allow fishstocks to replenish.

The secondary sector grew by 6.7% in 2004. A decline in mining and groundnutoil processing (by 5.2% and 16%, respectively), was more than offset by stronggrowth in construction and public works (13%) and other industrial production(7.4%), although the energy sub-sector expanded by only 3.4%. The strongestgrowth was in the tertiary sector, at 7.4%, spurred largely by the performance oftransport and telecoms. The 10.6% growth rate in the telecoms sector wasstimulated by the boom in mobile phones—the number of subscribersincreased by over 30% in 2004—as well as by rising call-centre activities. Thegovernment expects real GDP to expand by 6.5% in 2005, but the EconomistIntelligence Unit is forecasting a slightly lower 6%, despite increased publicspending financed by the heavily indebted poor countries (HIPC) initiative.

Average annual consumer price inflation in Senegal has traditionally been 3%or less, and in some years it has even been negative. This is a clear benefit ofmembership of the Franc Zone, with its fixed exchange rate against the Frenchfranc and now the euro. However, the devaluation of the currency in 1994 hada substantial inflationary impact, in a country where even staple foods have tobe imported. Immediately after the devaluation, the government, with theapproval of the IMF, reintroduced many of the price controls it had abolished aspart of the economic liberalisation programme. As a result, the government’sattempt to limit inflation in 1994 was a relative success compared with otherFranc Zone countries. Average consumer prices rose that year by a little over32%, but inflation fell back to 7.9% in 1995 and to an annual average of 1.6% in1998-2002. Average inflation in 2004 was 0.5%, mainly owing to an abundanceof foodstuffs and the tight monetary policy conducted by the Banque centraledes États de l’Afrique de l’ouest (BCEAO).

Inflation(%; period averages)

Annual average2004 2000-04

Consumer prices 0.5 1.3

Source: Economist intelligence Unit .

Regional trends

Most non-agricultural development effort is focused on and around Dakar. Thearea inland from the capital, stretching up to St Louis, is the traditionalgroundnut area and contains around 40% of the country’s cultivated land.Phosphates are quarried around Thiès, east of Dakar. Further north is thedesertified area of the Sahelian zone, which relies primarily on fluvialagriculture, although the Manantali (in Mali) and Diama dams are expectedeventually to irrigate an additional 240,000 ha of land in the Senegal Rivervalley. The two Casamance regions (Kolda and Ziguinchor) have considerablepotential for economic development, with climate and soils which wouldenable them to produce enough food crops to meet national requirements, buthave been held back because of a long-standing conflict. However, the signing

Non-agricultural developmentis centred around Dakar

A one-off inflationary blip

Senegal 31


of a peace accord in December 2004 suggests that the outlook for reconstructionands development in the region is positive. The government has pledged tointegrate former fighters who want to pursue military or police careers, and toprovide assistance to other demobilised rebels to engage in income-generatingactivities, through the new Agence nationale pour la relance des activitéséconomiques et sociales en Casamance (ANRAC), which will be mandated toco-ordinate a wide variety of reconstruction and development projects in theregion, at an estimated cost of CFAfr80bn (US$166m). Reconstruction funds,financed in large part by international donors, should help to revive the lushbut ravaged southern region, which was once the country’s top touristdestination.

Economic sectors

Agriculture

The main sources of farmers’ incomes are groundnuts, produced primarily incentral Senegal; sorghum and millet from the central and northern regions; andrice grown in the Senegal River valley and in the southern region ofCasamance. Cowpeas are also grown for subsistence, as is maize, a recentaddition to food crop output; cotton is a relatively new cash crop. Cultivationmethods are generally basic and landholdings small. Most farmers combinecash-cropping with production of grain for domestic use, tending to emphasiseone or the other according to need and the weather. Large-scale agriculture islimited, with the exception of industrial sugar production by the Compagniesucrière sénégalaise (CSS) near the Senegal River delta, and some large-scalerice production in the same region. Low-interest credit facilities, introduced in1997, have encouraged greater fertiliser use.

In 1995 the government implemented a new agricultural policy to liberalise thesector, in the belief that previous interventionist agricultural policies had failedto provide sufficient incentives to producers. Restrictions on private trade inagricultural products have been reduced, and the state’s role in stabilising priceshas been dramatically curtailed. Other measures have included an end togovernment credit for seed, fertiliser and equipment purchases. A mixed public-private agricultural advisory agency, the Agence nationale de conseil agricole etrural (ANCAR), was established in 1998 to bridge the gap in agriculturalextension services following the closure of rural development agencies. Afteradhering to the previous government’s agricultural policies, the president,Abdoulaye Wade, announced new agricultural initiatives following thedisastrous 2001/02 groundnut season (November-October; Economic policy).

After four consecutive years of progressively declining cereal harvests,agricultural output experienced a turnaround in 2003/04—owing to favourableweather conditions—although in 2004/05 some crops were affected by locustinfestations. Rice production is estimated to have increased in 2004/05, owingto an increase in the cultivated area, expanded irrigation infrastructure andincreased yields. This increase occurred despite the locust infestation. Aerial

Agricultural policy

Staple food production

Subsistence farming

32 Senegal


spraying minimised crop loss by locusts in the Saint-Louis region along theSenegal River in the north, which accounts for 67% of the country’s total riceproduction (the remaining production, mostly for subsistence, is concentrated inthe Casamance region in the south). Although rice yields are also estimated tohave increased during the 2004/05 season, probably the main cause of theincrease was the substantial investment made by the government in dams andrelated infrastructure in the Saint-Louis region. The area under cultivationincreased, while production rose from 128,000 tonnes in 2003/04 to 154,000tonnes in 2004/05. Despite the locust problems, other food crops such as milletand sorghum did not see production declines, although maize production fellfrom 401,000 tonnes in 2003/04 to 350,000 tonnes in 2004/05, despite a smallincrease in the cultivated area.

Food crop production(‘000 tonnes)

2002/03 2003/04 2004/05Ricea 172 128 154

Millet 415 628 630Sorghum 117 190 190Corn 80 401 350

a Covers the Saint-Louis region, excluding Casamance.

Sources: Ministère de l’agriculture, October 2003 projections; Ministère de l’économie et des finances; US Department of

Agriculture, Foreign Agricultural Service, Senegal Oilseeds and Products Annual 2005, GAIN Report, March 2005.

Senegal’s groundnut production has fluctuated during the past decade, fallingfrom 837,000 tonnes in 1995/96 to 545,000 tonnes in 1997/98, recovering to around1m tonnes in 2001/02 but plummeting to 265,300 tonnes in 2002/03. Sharpfluctuations caused by the vagaries of Sahelian weather have been exacerbatedby even sharper variation in the volume sold by farmers through officialchannels, via the processing company, Société nationale de commercialisationdes oléagineux du Sénégal (Sonacos), which depends on the price offered tofarmers. According to the latest data available from the regional central bank,Banque centrale des Etats de l’Afrique de l’ouest (BCEAO), groundnutproduction is estimated to have reached 573,000 tonnes in 2004/05,considerably higher than the harvests in the preceding two years. The upturn inproduction reflected increased input subsidies, higher producer prices and anexpansion in the area under cultivation. In particular, production was boostedby the Ministry of Agriculture’s provision of 30,000 tonnes of groundnut seedsfrom Sonacos to farmers through a loan programme.

Since the drought in 2002 there has been a deficit in the supply of groundnutseeds, to which the government has responded with a five-year seedprogramme financed in part by the World Bank. However, the groundnutharvest in 2004/05 was moderated by the poor quality of seeds provided anddrought in some areas, although losses owing to locust infestations wereminimal. Because of the larger than expected harvest and successful groundnutcollection operations, Sonacos decided to extend the collection period to theend of March 2005, by which time it had bought 251,400 tonnes of the harvest.Of the remaining nuts not collected by Sonacos, about 250,000 tonnes will

Groundnuts

Senegal 33


probably be consumed domestically and the remainder will be bought byindependent groundnut merchants.

Groundnut production(‘000 tonnes, unless otherwise stated)

2001/02 2002/03 2003/04 2004/05Production 944 265 441 573

Producer prices (CFAfr/kg) 120 120 150 175

Sources: BCEAO, Conjoncture économique dans les pays de l’UEMOA; US Department of Agriculture, Foreign Agricultural Service,

Senegal Oilseeds and Products Annual 2005, GAIN Report, March 2005.

Under IMF pressure, the government decided in November 2001 to dissolve theSociété nationale de graines (Sonagraines), a Sonacos subsidiary that hadcollected and transported groundnuts from farmers’ fields to Sonacos’sprocessing plants. The transfer of those activities to the private sectorintroduced another element of market-based pricing into the system.

After some delay, Sonacos was finally put up for sale at the end of July 2003.(Sonacos was initially placed on the privatisation list in 1995.) The governmentmade an initial call for expressions of interest by an experienced professionaloperator to buy a 51% stake in Sonacos (the government currently holds 81.9%).The privatisation of Sonacos has long been a prominent condition under thepoverty reduction and growth facility (PRGF) and heavily indebted poorcountries (HIPC) agreements. However, the government has moved cautiouslyin order to avoid a domestic political backlash, like that which followed theprecipitous liquidation of Sonacos’s groundnut-marketing affiliate, Sonagraines,in November 2001. This disrupted the entire marketing system the followingyear, contributing to groundnut farmers’ concerns that privatisation would notbe in their interests.

Technical problems delayed completion of the actual tender document, butthese have now been sorted out in conjunction with the World Bank. Threepotential investors were pre-qualified in December 2003, and on January 13th2004 were given the final tender document. In December 2004 the governmentselected a consortium headed by Advens, a Lebanese-owned transportcompany, in alliance with several Senegalese enterprises and a firm establishedby Sonacos employees, which acquired 66.9% of the shares. In addition to thepurchase of the shares, the consortium promised to invest CFAfr16.9bn inupgrading the company’s equipment and facilities over the next five years andto retain all current employees, thereby assuring labour stability. Thegovernment also expects to receive CFAfr4bn (US$7.4m) from the sale of severalSonacos properties that are deemed unnecessary.

Cotton is cultivated mostly in the south of the country. Production andmarketing is handled by the Société de développement des fibres textiles(Sodefitex), which until 2003 was 60% owned by the state, with a further 20%owned by the Fédération nationale de producteurs de coton (held in trust bythe government) and the remaining 20% by a private French company,Développement des agro-industries du sud (Dagris, formerly Compagniefrançaise de développement des fibres textiles). The low price of cotton on the

Cotton

Sonacos is privatised

34 Senegal


world market, combined with Sodefitex’s policy of trying to maintain theproducer price at CFAfr185/kg (32 US cents/kg), has caused financial difficultiesfor the enterprise. Despite the high farmgate price, many farmers abandonedthe crop in the late 1990s, and production dipped to a low of 12,000 tonnes in1998/99, from 41,000 tonnes the year before. Production revived to 40,000tonnes in 2002/03, owing to improved inputs and adequate rains. Inpreparation for the privatisation of Sodefitex, the Fédération nationale deproducteurs de coton took over responsibility for managing farmers’ credits andinput supply during the 2001/02 season. In November 2003, after severalmonths of hesitation, the government approved the decision of a generalstockholders’ meeting to allow Dagris to acquire a 51% share through a capitalstock increase. This brought the share held by the government (either in its ownname or in trust for the cotton farmers and enterprise employees) to 46.5%.Another 2.5% is owned by the Compagnie bancaire de l’Afrique de l’ouest.Cotton farmers saw a 35% fall in their revenue from the 2004/05 harvest, whichis expected to be the worst performance in this decade, which can be attributedto the fall in international cotton prices and the reduction in cotton yieldscaused by inadequate rainfall and poor seed quality.

According to estimates from the UN Food and Agriculture Organization, thelivestock population in 2004 included 3.1m cattle and 8.7m sheep and goats.The total number of beasts was 13.1m, a figure that had changed little over theprevious three years. Cattle rearing is extensive and is carried out principally ona small-scale basis. Large-scale losses are suffered in drought years, althoughsheep and goat rearing escape the worst effects of low rainfall and poultryproduction has shown a long-term increase. Senegal remains a net importer ofmeat. In 2003 livestock contributed about 4.7% to GDP.

The fishing industry is Senegal’s largest source of foreign exchange, constituting21.6% of total merchandise exports in 2003, as well as the second-largest source ofemployment, accounting for 15% of the economically active population.Industrial fishing, which accounted for 13% (57,200 tonnes) of total fishproduction in 2003, provides most of the export earnings, with the majority ofcanned fish exports going to the EU. Although the industrial catch has beendeclining in recent years, small-scale artisanal fishing has been growing steadilyin importance, from 282,000 tonnes in 1994 to 385,800 tonnes in 2003. Small-scale fishing supplies the domestic market and neighbouring countries withdried and smoked fish. Tuna fishing, however, has become stagnant: Senegal’sshare of the world canned tuna market has fallen from more than 10% in theearly 1980s to around 0.7% in 2000.

Senegal’s marine resources have, for many years, been subjected to overfishing,illegal catches and the destruction of spawning grounds. A four-year fishingaccord was signed with the EU in June 2002, to specify the maximum catchesallowed by EU vessels and to target investment in the fishing industry. Morerecently, the government has established an integrated marine resourcesmanagement plan, the Gestion intégrée des ressources marine et côtières(Girmac). Three priority zones have been chosen—the Senegal River delta, theCap Vert area and Saloum. Girmac has received generous donor funding, but it

Livestock

Fishing

Senegal 35


remains unclear whether the government will be able to effectively patrol itsterritorial waters.

Mining and semi-processing

Although mining accounts for less than 2% of GDP, phosphates and derivedproducts accounted for an estimated 13% of merchandise exports in 2003. Todate the government has issued more than 40 prospecting permits, reflectinggrowing foreign interest in the potentially significant deposits of gold, copperand other minerals in Senegal’s eastern regions. Prospecting permits carryautomatic eligibility for a 25-year exploitation licence if a deposit is found.

Calcium phosphates are produced by Industries chimiques du Sénégal (ICS)and aluminium phosphates by Société sénégalaise des phosphates de Thiès(SSPT). The state’s majority shareholding in SSPT was acquired in March 1998by a Spanish mining firm, Tolsa, for CFAfr1.25bn (US$2.1m). Phosphates outputpeaked in 1988 at 2.3m tonnes, then fell in line with reduced European demandresulting from the high cadmium content of Senegalese phosphates. Productionrose from 1.86m tonnes in 2003 to an estimated 1.91m tonnes in 2004. Reservesof calcium phosphates are estimated at 100m tonnes, while those ofaluminium phosphate are estimated at between 50m and 70m tonnes.

Mineral production(‘000 tonnes)

Average production2004 2000-04

Phosphate production 1,905 1,774

Source: Banque centrale des États de l’Afrique de l’ouest (BCEAO), Conjoncture économique dans les pays de l’UEMOA.

There are large-scale, good-quality iron ore deposits at Falémé (estimated to be391m tonnes), in the east, close to the border with Mali, and around250m tonnes in the Farangalia and the Goto deposits, which also are located ineastern Senegal. Société des mines de fer du Sénégal oriental (Miferso), inwhich the government has a 29% share, has been seeking internationalfinancial backing for a mine project at Falémé. Development would entail anew rail link to the coast, the construction of improved port facilities nearDakar and the development of new electricity supplies, for which theManantali dam in Mali is the most likely source. In July 2004 the governmentsigned an exploitation agreement with Kumba Resources, a South Africanmining firm that is 60% owned by Anglo American, to exploit iron ore depositsin Koudékourou, in eastern Senegal. The company will work with Miferso.Kumba hopes that the concession might eventually extract 12m tonnes of ironore annually. This concession is just one part of a much broader programme,estimated at a total cost of US$1bn, designed to bring the deposits of iron oreand several other minerals into commercial production.

There has been increased foreign mining interest in the potentially significantdeposits of gold, copper and other minerals in Senegal’s eastern regions sincethe late 1990s. One of the most promising sites is Sabodala, in the Kédougou

Phosphates

Iron ore

Gold

36 Senegal


department, where proven gold reserves are estimated at around 30 tonnes.The Sabodala deposit was mined in the early 1980s by the French government’sBureau de recherches géologiques et minières (BRGM). Afterwards, anAustralian company, Paget Mining, conducted a limited drilling programme.Following a dispute with BRGM, the option expired in 1994 with drillingincomplete. No work was done on the project until a Senegalese companymined a small quantity of soft, shallow oxide ore in 1999. In February 2005 theSenegalese government signed a mining convention with a Canadian company,Oromin Explorations, regarding Sabodala.

The M’bao oil refinery, south of Dakar, is owned by Société africaine deraffinage (SAR), which is in turn owned by a consortium of foreign distributors(France’s Total, the UK’s BP, and the US’s ChevronTexaco and ExxonMobil) andBanque nationale de développement du Sénégal (BNDS). The refinery has acapacity of 1.4m tonnes/year, mainly for domestic consumption. According tothe BCEAO, oil re-exports, two-thirds of which are destined for Mali, rose toCFAfr28bn (US$53m) in 2003. In May 1998 a law liberalising the petroleumsector was adopted, resulting in a reduction in duties on petroleum imports andan end to the monopoly held by SAR on importing, storing and marketingpetroleum products. Crude and refined oil imports amounted to 1.6m tonnes in2002, costing Senegal CFAfr230bn, although high international oil prices meanthat this has climbed significantly in 2004.

Manufacturing

Senegal is one of the most industrialised countries in the region, andmanufacturing accounted for an estimated 13% of GDP in 2003. However, thecompetitiveness of the manufacturing sector is generally low (except bycomparison with neighbouring states), largely because of high production costs,a cumbersome regulatory environment and a small domestic market. Since thelate 1980s, successive governments have launched a series of industrial reforms:quantitative trade barriers have been removed and custom tariffs harmonised;private participation and foreign investment have been encouraged; and thelabour code has been amended to provide greater flexibility to employers. Toencourage greater foreign investment, the Conseil supérieur de l’industrie wasestablished in 1998 to draw up an industrial strategy to enable Senegal tobecome an “emerging country” by 2020. Priority is given to industries with ahigh “value added” and export potential, such as chemicals, textiles, agro-processing, leather goods, metalworking and mechanical industries. InSeptember 2003 Senegal’s first vehicle assembly plant opened in Thiès, toproduce buses for the domestic and regional markets. It is a joint venturebetween Senegalese investors and Tata International of India.

Food-processing is the chief manufacturing activity in Senegal, accounting for36.4% of Senegal’s index of industrial production, according to the IMF. Amongthe most important is groundnut processing, undertaken by the publicly-ownedSonacos in Dakar, Kaolack, Ziguinchor and Diourbel (see Agriculture). Becauseof a decline in groundnut production, the four crushing mills, with a processing

An underperformingmanufacturing sector

Oil refining

Food products

Senegal 37


capacity of 920,000 tonnes/year (t/y), have experienced sharp fluctuations inoutput from year to year, frequently operating at a fraction of capacity. The mis-management of groundnut marketing in 2001/02 caused a fall in processing bySonacos, but this may be reversed in the future as a result of managementchanges arising from the recent privatisation of the company at the end of2004. Fish canning is also an important food processing activity, particularly oftuna fish, with two canneries: Société nouvelle des conserveries du Sénégal(SNDCS) and Pêcheries frigorifiques du Sénégal (PFS).

As with food-processing, the textiles industry is based to a large degree onprocessing a domestically produced agricultural crop. The main company,Société de développement des fibres textiles (Sodefitex), undertakes cottonginning at four plants. Until recently the government subsidised Sodefitex tomaintain a high producer price and thereby encourage cotton production, but itis now moving gradually away from this pricing policy. Most textile productionis for domestic consumption, but the sector has traditionally suffered fromextensive import penetration by cheaper and better-quality supplies from Asia.

The fertilisers and chemicals complex of Industries chimiques du Sénégal (ICS),Senegal’s largest industrial firm, uses imported sulphur and Senegalesephosphates to produce sulphuric and phosphoric acid at Darou Khodous andfertilisers at M’bao. In 1996 ICS merged with Compagnie sénégalaise desphosphates de Taïba (CSPT) to create a new vertically integrated enterprise, alsoknown as ICS. The Senegalese government owns 47% of the enterprise, and therest is owned by an international consortium including the Indian Farmers’Fertiliser Co-operative. According to ICS, phosphoric acid production increasedfrom 511,000 tonnes in 2003 to 569,000 tonnes in 2004. ICS has built a newfacility that has increased its capacity for phosphoric acid production to660,000 t/y. In contrast, fertiliser production fell, from 251,000 tonnes in 2003 to210,000 tonnes in 2004.

Financial services

As a member of the Union économique et monétaire ouest-africaine (UEMOA),Senegal does not have its own central bank. The monetary reserves of memberstates are held by the regional central bank, the Banque centrale des États del’Afrique de l’ouest (BCEAO), which is obliged to maintain 65% of its foreignreserves at the French Treasury. France, in turn, guarantees the convertibility ofthe CFA franc (see Regional overview: Membership of organisations).

A regional stock exchange, the Bourse régionale des valeurs mobilières (BRVM)in the capital of Côte d’Ivoire, Abidjan, began trading in September 1998 aftermany delays, replacing the old Abidjan stock exchange, the Bourse des valeursd’Abidjan (BVA). The BRVM, with an initial capitalisation of US$1.5bn, servesthe eight countries of the Franc Zone’s West African subregion, UEMOA. Theprivatised Senegalese telecoms company Sonatel is now one of the largest of thecompanies listed (most are Ivorian) and accounts for a substantial share of day-to-day trading. In July 2002 ICS was also admitted to the exchange. The poorperformance of the BRVM since it opened is largely the result of the relative lack

Chemicals

The BCEAO

The regional stock exchange

Textiles

38 Senegal


of liquidity of most stocks, and of the bureaucratic culture of the stockmarket. Itsperformance should improve with new listings, but much hinges on furtherprivatisations in the eight member countries of the UEMOA.

In the mid-1980s the banking system faced a major crisis because of non-performing loans (NPLs) and severe liquidity problems. In 1988 a successfulreform programme was launched, including measures for the restructuring andrehabilitation of the banking sector, the reduction of the government’s equityshare in banks to a maximum of 25%, the recovery of NPLs and thereinforcement of banking supervision. The number of financial institutions wasreduced from 16 to nine in just three years. According to the BCEAO, there are12 banks in Senegal. Three banks, Banque internationale pour le commerce etl’industrie du Sénégal (BICIS), Compagnie bancaire de l’Afrique occidentale(CBAO) and Société générale de banques au Sénégal (SGBS), hold around two-thirds of the deposits. The government continues to hold a share of more than25% in seven banks, including a majority share in the agricultural bank, Caissenationale de crédit agricole du Sénégal (CNCAS).

The absence of investment opportunities has translated into a lending policythat has heightened competition between the major banks to provide loans forlarge corporations. In turn, interbank competition for a few large corporatecustomers has inhibited recourse to capital markets for finance. A by-product ofthis is that credit concentration, as measured by banks’ total exposure to thefive largest borrowers, remains high. Services are aimed primarily at thecommercial sector, with traders, service providers and manufacturers the keyborrowers. Private local borrowing by parastatals has been discouraged bydonors, to help reduce the state’s liability. Rural bank branches are few innumber, with most banking activity centred in the capital, Dakar. Peopleemployed in the formal sector are those most likely to hold bank accounts.

Other services

Tourism is one of Senegal’s largest sources of foreign exchange. Receipts in localcurrency stood at CFAfr101bn (US$190m) in 2003, down from CFAfr108m a yearearlier. Tourist arrivals reached 300,000 in 1989, but declined in the early 1990sbecause of the conflict in Casamance. Increased tourism in other regions, aswell as the devaluation of the CFA franc, led to a recovery, but internationalarrivals then stagnated, falling to 418,300 in 2003 (compared with 442,700 in2000). Tourists are primarily from France, Belgium, Switzerland and Germany.Most tourists base themselves at beach hotels (mainly in the south around CapSkirring), although there is a wildlife reserve at Niokolo-Koba in eastern Senegal,and ample opportunity for bird-watching in the Senegal River delta. Othertourist interests revolve around the town of St Louis in the north (with itscolonial architecture) and Gorée island, just off Dakar (the infamous site of slavedepartures to North America and the Caribbean). The high season is December-February, when the Senegalese climate is at its most pleasant. Most hotelcapacity is in the Dakar region, but in recent years investment has beenconcentrated in other areas, notably the Petite Côte, south of Dakar.

The banking system

Tourism

Senegal 39


The tourism sector faces several problems that, if not addressed will see thesector’s earning ability fall. A lack of investment has been evident for sometime and this can be seen in many of the hotels in Dakar. Outside of thegovernment’s control are events such as the terrorist attacks on the US inSeptember 2001 and the US-led war on Iraq, both of which have affectedtourism around the world. Competition from The Gambia and Morocco willremain an issue, although better marketing could help to improve Senegal’sposition. In order to attain its goal of increasing the annual number of touristsvisiting Senegal per year to 1,500,000 by 2010, the government has embarkedon a new strategy for the development of tourism. This includes thedevelopment of new tourist zones, the establishment of a tourism promotionagency, the creation of incentives for private-sector investment and thedevelopment of infrastructure, including improving the road network andupgrading airports.

As a step in boosting tourism, the government decided in May 2005 to partiallyprivatise the coastal zoning company, Société d’aménagement de la petite côte(Sapco), which was created in 1975 to develop tourist resorts, but suffereddeficits from its inception until 2002. The company has recently experienced aturnaround, posting a net profit of CFAfr750m (US$1.4m) in 2004. According tothe president of Sapco, Ndiouga Sakho, the aim of the partial privatisation is toreduce the state’s share in the company from 98% to 45%. The enhanced remitof Sapco will include the resolution of upstream financial problems in thetourism development zones, the promotion of investment in infrastructure, thedevelopment of zonal planning and the strategic rebranding of Senegal as atourist destination, among other things. In this context, Sapco has stated that itwill mobilise CFAfr30bn to develop three new tourism zones at Mbodiène, Joaland Pointe Sarène.

The external sector

Trade in goodsForeign trade, 2003a

(CFAfr bn)

Exports fob 763 Imports fob 1,178 Fish 164 Capital goods 235 Groundnuts & products 36 Petroleum products 231 Phosphate products 5.3 Food 305

a Estimates.

Source: Banque de France, La Zone franc, Rapport annuel.

Before the devaluation of the CFA franc in 1994, Senegal’s external tradebalance remained persistently in deficit, as the overvaluation of the CFA francfacilitated high levels of imports and constrained export performance. Thedevaluation enhanced the profitability of exporting firms and helped toincrease exports, while protecting domestic producers from external com-petition. Senegal’s trade deficit resumed soon after the devaluation and stillremains ten years after the devaluation. Trade data are complicated by

A persistent trade deficit

40 Senegal


substantial unrecorded trade with The Gambia and, to a lesser extent, withother neighbouring countries. In 2003, according to data from the Banquecentrale des États de l’Afrique de l’ouest (BCEAO), Senegal’s trade deficit wasCFAfr415.7bn (US$785m), compared with the CFAfr374.5bn registered in 2002.The deficit is attributable to the relatively high import dependency of Senegal,the costs of which can not be offset by export earnings.

Main trading partners, 2003a

(% of total)

Exports to: Imports from:India 13.0 France 24.9

France 12.2 Nigeria 12.2Mali 9.5 Germany 6.7Italy 8.5 Italy 4.3

Côte d’Ivoire 5.4 Japan 4.3

a Derived from partners’ trade returns.

Source: IMF, Direction of Trade Statistics.

Fish products replaced groundnuts as the country’s main export in the late1980s. Other major export items include phosphates, petroleum products—refined in Senegal from imported crude and re-exported to the region—and,more recently, chemical products and fertilisers from the Industries chimiquesdu Sénégal (ICS) chemicals plant. Other important markets for Senegalesegoods are India and, closer to home, Mali. France remains the main source ofimports for Senegal, accounting for around one-third of all purchases fromabroad (the 24.9% figure given in the table above is based on data derived fromcustoms’ returns and is not totally reliable). Other important sources for importsare Asia (rice), China (consumer goods) and other European countries (second-hand clothes and cars, and capital goods).

Invisibles and the current account

Senegal suffers from persistent current-account deficits. Owing to the high levelof imports, there is a structural services account deficit, although it is not large.The services deficit has remained relatively static since 1998, when it wasCFAfr10.5bn (US$19.8m); by 2003 it had widened slightly to CFAfr15.5bn.Tourism provides the largest services inflow, followed by re-export tradeservices. Debt-servicing costs are a large drain on the income account, areflection of Senegal’s large borrowings. However, IMF-World Bank debt reliefunder the heavily indebted poor countries (HIPC) initiative has contributed to areduction in outflows since 2003, helping to narrow the deficit. (Senegalreached the HIPC completion point in March 2004—see Capital flows andforeign debt). Owing to larger outflows than inflows, the income account wasalso structurally in deficit in 1998-2003. Conversely, the transfers account was insurplus over this period, reflecting the ongoing commitment of donors to helpto fund reforms. According to the IMF, the current-account deficit is estimated tohave widened to 6.5% of GDP in 2003, from 5.9% of GDP in 2002. This waslargely a result of the higher trade deficit.

A current-account deficit

France remains the maintrade partner

Senegal 41


Current account, 2003(CFAfr bn)

Goods: exports fob 731Goods: imports fob 1,201

Trade balance -470Net services & income -87Net private transfers 241

Net public transfers 72Current-account balance -244

Source: IMF, Senegal: Selected Issues and Statistical Appendix, June 2005.

Capital flows and foreign debt

Historically, the current-account deficit has been financed by a net inflow ofcapital. The flow of long-term debt funds to the government has generally beenthe most significant item in the capital account. According to the World Bank’smost recent issue of Global Development Finance, total external debt rose toUS$4.42bn at end-2003, from US$4.14bn at end-2002. In December 1996Senegal’s entire commercial debt was eliminated in a debt buy-back schemeunderwritten partly by the World Bank and several bilateral donors. In June1998 the Paris Club of official bilateral creditors agreed to reschedule thecountry’s external debt under so-called Naples terms. This involved thecancellation of 67% of the official debt owed. In the same year, Senegal’s debtburden was deemed “sustainable” by the World Bank and the IMF, and wastherefore ineligible for debt relief under their HIPC initiative. Followingrevisions in the HIPC criteria, however, relief for Senegal was approved in June2000 at the HIPC decision point, and the country reached completion point inMarch 2004. This should eventually cut its debt stock by US$800m, and theIMF estimates that Senegal’s debt service/export ratios could decline fromaround 15% (paid) in 1999 to 5% (due) by 2005.

External debt, 2003(US$ m unless otherwise indicated)

Medium- & long-term debt 4,023 Public & publicly guaranteed 3,983Use of IMF credit 240

Short-term debt 156Total external debt 4,418Debt-service ratio, paid (%) 10.4

Source: World Bank, Global Development Finance.

Foreign aid plays a crucial role in balancing Senegal’s external and internalfinances. Net inflows of official development assistance (including other officialflows and private flows), reached US$566.1m in 1997, but slipped to US$449.6min 2003, according to OECD data. France is easily the most important providerof bilateral aid (followed by the US), accounting for 26.6% of net officialdevelopment assistance in 2003, down from 43.4% in 1999. The French Ministryfor Foreign Affairs is an important voice in determining Senegalesedevelopment policy. Senegal was France’s second-largest bilateral aid recipientin Sub-Saharan Africa in 1999-2000, after Côte d’Ivoire. Since then aid to Côte

Aid inflows help to balancethe books

High debt levels

42 Senegal


d’Ivoire has fallen sharply owing to the political problems in the country. TheWorld Bank’s soft-loan arm, the International Development Agency (IDA), hashistorically been Senegal’s largest multilateral donor; it lent US$98.8m in 2003,up from US$77.2m in 2000.

Foreign reserves and the exchange rate

Until 1994 Senegal’s foreign-exchange reserves had stood at an alarmingly lowlevel, rarely amounting to more than one week of import cover. This was aworrying situation, not only for exporters to the country but also for the FrenchTreasury in its role as guarantor of the Franc Zone currency, and added weightto the argument for the devaluation of the CFA franc (which took place inJanuary 1994). The devaluation in 1994 helped to facilitate a build-up inreserves; by end-2004 they stood at US$999m, representing over four monthsof import cover. Under the agreement whereby the French Treasury acts asguarantor of the CFA Franc Zone currency (which exists in the two economicand monetary blocks, Union économique et monétaire ouest-africaine(UEMOA), and Communauté économique et monétaire d’Afrique centrale), allforeign-exchange reserves are pooled together in their respective regional group.

From 1948 until January 1994 the CFA franc was pegged to the French franc at arate of CFAfr50:FFr1. After several years of pressure, notably from the IMF andthe World Bank, the currency was devalued in January 1994, to CFAfr100:FFr1.There were rumours of a second devaluation with the advent of the EU’scommon currency in January 1999, but the CFA franc was pegged unchanged ata rate of CFAfr655.957:€1. The French Treasury guarantees the full convertibilityof the CFA franc against the euro, whatever the general level of foreign reservesat the Banque centrale des États de l’Afrique de l’ouest (BCEAO). In 2002 theCFA franc appreciated to an average of CFAfr697:US$1 from CFAfr733:US$1 theyear before. This reflected the weakening of the US dollar against the euro, inpart owing to investors’ concerns about the size of the widening US current-account deficit. This trend carried over into 2003 and 2004, with the averageexchange rate strengthening to CFAfr581:US$1 and CFAfr528, respectively, owingto the same investor concerns about the US economy.

Regional overview

Membership of organisations

The African Union (AU) is the successor to the Organisation of African Unity(OAU) and is based in the Ethiopian capital, Addis Ababa. The AU was formallylaunched in July 2002 at a meeting of African heads of state in the SouthAfrican city of Durban. This came two years after the AU’s formation was firstagreed in Togo in July 2000 and followed a one-year transitional period thatbegan after the ratification of the constitutive act of the AU by two-thirds of themember states in May 2001. The AU is modelled on the EU and has ambitiousplans for a parliament, a central bank, a single currency, a court of justice andan investment bank. The most advanced of these is for a Pan-African

Reserves have been rebuilt

African Union (AU)

The 1994 devaluation

Senegal 43


Parliament, which held its first session in South Africa in October, although itwill not play a legislative role for five years. The president is currently GertrudeMongella from Tanzania. The AU also aims to have common defence, foreignand communications policies, based loosely on those of the EU. Even if thesegoals are not fulfilled, the organisation fills the need for a forum for discussingthe continent’s problems and the idea of pan-African unity exerts a strong holdover member countries. In practical terms, the most high-profile AU event is theannual conference of heads of state, which is hosted by the member state thatis due to hold the chairmanship of the organisation for the following year. Theday-to-day affairs of the AU are managed by the AU commission, which ismodelled on the EU commission and was endorsed by the AU heads of statesummit in July 2003. The commission is headed by the former Malianpresident, Alpha Konaré, aided by a deputy, Patrick Mazimhaka of Rwanda,both of whom were elected at the summit. There are also seven appointedAU commissioners.

One of the main problems facing the AU is that many of the proposed newinstitutions and policy co-ordination mechanisms are costly and cannot befunded within the AU’s current resource allocations. To help to counter this, atthe July 2004 Annual Summit Mr Konaré presented a 2004-07 StrategicFramework aimed at launching Africa into the 21st century. Under this, memberstates are supposed to pledge 0.5% of GDP to fund the AU, which will allow itto double the staff at its headquarters and to push ahead with theimplementation of the New Partnership for Africa’s Development (Nepad). Thisis a potential bone of contention with the South African government, which iskeen for Nepad to remain in its South African headquarters. However, to date,many members still fail to pay their membership dues so further commitments,other than from external donors, are unlikely. In December 2003 donors andexternal lenders expressed their full support for the AU’s initiatives and thecreation of new institutions.

The main criticism levelled at the OAU in the last decade was that little realaction resulted from its policy announcements. There are concerns that the AU,like its predecessor, will be undermined by a lack of real commitment to itsinitiatives amongst the 53 member states, many of which suffer from very weakgovernance. This problem is further compounded by the fact that manymember states are unlikely to give up the sovereignty required to make severalof the proposed initiatives—such as a single currency or a court of justice—operate effectively.

The AU will also battle to overcome opposition to the principle of non-interference, which has been a major hindrance to the resolution of conflicts onthe continent and is a contentious issue among member governments.Although non-interference was enshrined in the old OAU, this is not the casewith the AU, which has set up a Peace and Security Council (PSC; to replace theOAU’s Mechanism for Conflict Prevention, Management and Resolution)modelled on the UN Security Council. It is envisaged that the PSC will sanctionmilitary intervention in member states in cases of genocide, unconstitutionalchanges of government and gross human rights abuse. The proposed militaryintervention by the AU is to be through a standing armed force, which is

Senegal 44


projected to comprise five battalions by 2010 and has already received somefunding from both the EU and the US. Even without the establishment of thePSC, since May 2003 the AU has had an observer mission in Burundi, led bySouth Africa and including troops from Mozambique and Ethiopia, to helpenforce a peace agreement in Burundi’s civil war. An AU observer mission wasalso sent to the Darfur region of Sudan in July 2004, and a protection force isbeing deployed. If this is increased, to become a real peacekeeping force, itcould prove to be the first real test of the AU’s commitment to intervening inmember countries’ domestic affairs.

A new, 20-year, convention was signed in June 2000 in Cotonou, Benin,offering a group of 77 African, Caribbean and Pacific (ACP) countriespreferential trade and aid links with the EU. The Cotonou Convention replacedLomé IV, a convention that was signed in 1989 and replaced previousagreements signed in 1975, 1979 and 1984. Although similar to the Loméconventions, the new convention has a stronger political dimension. Respect forhuman rights, democratic principles and the rule of law were essentialcomponents of Lomé IV. Under the Cotonou agreement, the ACP countrieshave also agreed to promote good governance, combat corruption and try toprevent illegal immigration into the EU. A revision of the Cotonou Conventionis made possible every five years by a special clause. Negotiations between theACP countries and the EU for the review and adaptation of the accord shouldstart in autumn 2004 and be completed in February 2005.

Under previous conventions, ACP products, whether agricultural or industrial,entered the EU duty-free, although four agricultural products—beef, sugar,bananas and rum—were subject to a more restrictive system of tariff quotas.Because the type of trade agreement established by the Cotonou Conventiondoes not comply with the rules of the World Trade Organisation (WTO), thenew agreement offers a negotiating framework for tailor-made regional free-trade agreements known as Economic Partnership Agreements (EPAs), underwhich ACP countries, preferably within existing economic groupings, willgradually open their domestic markets to European products. Given theadjustment costs involved, a preparatory period of eight years (2000-2008) hasbeen agreed, during which the old system of preferences will continue to apply.However, under existing global trading rules, the 33 African countries classifiedas least developed countries will still have the option of entering the EU’sgeneralised system of preferences (GSP). Unlike the Lomé Convention, the GSP,which benefits all developing countries, complies with the rules of the WTObecause it is based on the twin principles of non-reciprocity and non-discrimination. In September 2003 the ACP countries and the WTO signed anagreement at the Cancun trade round, whereby the WTO will provide trainingand technical assistance to ACP countries as a form of mutual co-operation.

The European Development Fund (EDF) will remain the main source ofmultilateral European aid to the ACP countries. Under the new convention,EDF instruments have been regrouped and rationalised into two programmes:one to provide grants for long-term development schemes being carried outeither at the national or the regional level, with additional support available inthe event of a fall in export earnings, and the other to finance risk capital and

Cotonou Convention

Senegal 45


loans to the private sector. The ninth EDF will total €13.5bn (US$12.9bn). Inaddition, about €10bn left undisbursed from previous programmes will remainavailable until 2007, and the European Investment Bank will provide €1.7bn.The financial protocols are concluded for a period of five years, with the ninthEDF running from 2000 to 2005. The Cotonou Convention finally entered intoforce in April 2003 with all 15 EU members and 76 ACP nations (not Somalia)ratifying the treaty. A month later the ACP representatives signed the BrusselsDeclaration, which calls for the timely and effective implementation of EDFfunds. This represents a commitment towards the efficient disbursement of EDFresources for the benefit of ACP countries. In June 2004, at the 4th Summit ofACP Heads of State, the ACP Council of Ministers was mandated to ensure theeffective co-ordination and coherence of EPA negotiations within the ACP andbetween various ACP regions, as well as with the WTO negotiations, so as toensure unity.

The Economic Community of West African States (ECOWAS) was establishedin 1975 by 15 West African countries: Benin, Burkina Faso, Côte d’Ivoire, TheGambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger,Nigeria, Senegal, Sierra Leone and Togo. Cape Verde joined ECOWAS in 1977,and Mauritania withdrew in early 2000. The community’s principal objective isto establish a customs union and a common market to promote the freemovement of goods and people within West Africa. ECOWAS has an executivesecretariat headed by a Ghanaian former minister, Mohamed Ibn Chambas, a120-member parliament and a court of justice, all based in the Nigerian capital,Abuja. Decision-making powers are vested in a council of ministers and achairman (who is elected annually and is currently John Agyekum Kufuor ofGhana); supreme authority rests with the annual conference of heads of stateand government.

In 1994 eight members of ECOWAS—mainly francophone countries—set up theUnion économique et monétaire ouest-africaine (UEMOA) to work towards acustoms union and other aspects of economic convergence. The UEMOAmembers—Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger,Senegal and Togo—already share the same currency, the CFA franc, and similarlegal codes.

Six other ECOWAS members—The Gambia, Ghana, Guinea, Liberia, Nigeriaand Sierra Leone—signed an agreement in December 2000 to create a secondmonetary union in the region and defined a set of convergence criteria: abudget deficit of less than 4% of GDP; central bank financing of budget deficitslimited to 10% of the previous year’s tax revenue; an inflation rate of no morethan 5%; and foreign reserves equivalent to at least six months of imports. Afirst step towards monetary integration was the creation of the West AfricanMonetary Institute, an interim organisation that was to pave the way for thecreation of a West African central bank and the introduction of a commonmonetary unit in January 2003. The West African Monetary Zone (WAMZ)Stabilisation and Co-operation Fund was created in 2001 with planned capitalof US$100m to assist member countries with temporary balance-of-paymentsproblems. The two monetary zones were expected to merge in 2004. However,progress has been slow and the WAMZ countries agreed in November 2002 to

Economic Community of WestAfrican States (ECOWAS)

Senegal 46


postpone the creation of their new currency until July 2005, since none of thecountries had met most of the convergence criteria. (This date is also unlikely tobe met.) Moreover, the IMF has expressed its opposition to such a monetaryunion, since it would be dominated by Nigeria, whose economic imbalancescould lead to monetary instability in the whole region.

Progress towards economic integration in ECOWAS has been limited by severalfactors, including antagonism towards the core member, Nigeria; mistrustbetween anglophone and francophone members; lack of financial resources;and regional political instability. Inadequate infrastructure and the lack ofdiversification of the ECOWAS economies have also undermined economic co-operation.

Although ECOWAS was created for economic reasons, it has been most activeon regional security issues. The ECOWAS Ceasefire Monitoring Group(Ecomog) was established to enforce an agreement for ending the civil war inLiberia in 1990. Dominated largely by Nigeria, Ecomog intervened to restorepeace in Sierra Leone in 1997 and in Guinea-Bissau in 1998. Its forces weredeployed in Côte d’Ivoire at end-2002 under the leadership of Senegal to helpto secure a ceasefire. In August 2003 Liberia’s interim government and rebelgroups signed a peace deal in Accra, Ghana, permitting the establishment of anECOWAS “interposition” force, the ECOWAS Mission in Liberia (ECOMIL),which maintained the ceasefire until October 2003, when the UN Mission inLiberia took over, mandated by the UN Security Council. ECOWAS plans toturn its peacekeeping force into a permanent stand-by force for deployment inthe subregion. Four observation centres—in Benin, Burkina Faso, The Gambiaand Liberia—to prevent and control civil tension and upheaval in the regionare planned.

The African members of the Franc Zone share a common currency, theCFA franc, which is fixed to—and convertible with—the euro through specialmonetary arrangements with France. Although the CFA franc was created in1945, the Franc Zone was shaped by post-colonial treaties made in theearly 1970s.

The 14 African members are divided historically and geographically into tworegional groupings, the Communauté économique et monétaire de l’Afriquecentrale (CEMAC) and the Union économique et monétaire ouest-africaine(UEMOA). Equatorial Guinea, which joined CEMAC in 1984, and Guinea-Bissau, which joined the UEMOA in March 1997, are the only two African FrancZone members that are not former French colonies.

The Franc Zone guarantees full convertibility of the CFA franc and maintains afixed exchange rate between the CFA franc and the euro. Monetary integrationis both horizontal—in the form of two regional central banks, the Banque desEtats de l’Afrique centrale (BEAC; based in Yaoundé, Cameroon) and theBanque centrale des États de l’Afrique de l’ouest (BCEAO; based in Dakar,Senegal)—and vertical, through operations accounts (comptes d’opération) heldwith the French Treasury. The operations account is the principal paymentmechanism in the zone. The French Treasury guarantees the convertibility andstability of the currency issued by the regional central banks, which in return

Franc Zone

Senegal 47


are required to maintain a minimum of 65% of their reserves in euros with theFrench Treasury. The stability of the CFA franc is founded on tight monetaryand credit discipline, underpinned by two specific safeguard measures: centralbanks are required to maintain at least a 20% foreign-exchange cover of theirsight liabilities, and governments are not allowed to draw from their regionalbank’s central funds more than 20% of the previous year’s budget receipts.

In January 1994 the CFA franc was devalued for the first time in 46 years, fromCFAfr50:FFr1 to CFAfr100:FFr1. With the advent of European economic andmonetary union, the CFA franc’s peg was switched automatically from theFrench franc to the euro in January 1999, at a fixed rate of CFAfr655.96:€1, andhas remained firm since then. Although there have been ongoing rumours of afurther devaluation, especially at the time of the introduction of the euro, thesehave come to nothing and none is expected in the immediate future,particularly as there has been no significant capital flight from the Franc Zonecountries despite the crisis in Côte d’Ivoire, the largest economy in the zone,since September 2002. However, the decision in September 2004 by theBCEAO to rush the introduction of new CFA franc bank notes in the eightUEMOA member countries without undertaking sufficient public awarenesscampaigns could introduce problems, notably a reduction in confidence in theCFA franc.

Comoros has a similar arrangement, having signed a convention with France.The issuing and central bank is the Banque centrale des Comores, and thecurrency is the Comorian franc (Cfr), with a fixed rate of Cfr491.97:€1.

The treaty establishing the Union économique et monétaire ouest-africaine(UEMOA) was signed in January 1994, two days before the devaluation of theCFA franc, and replaced the Union monétaire ouest-africaine, which wasfounded in 1962. The treaty aims to extend the process of integration betweeneight West African countries—Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau,Mali, Niger, Senegal and Togo—which are already tied to a common currency,the CFA franc, and a single monetary policy under the aegis of the Banquecentrale des Etats de l’Afrique de l’ouest (BCEAO). At present all countries in theunion produce a medium-term integration programme for the start of eachyear. These have the following longer-term goals.

• The creation of a customs union. Customs duties on produce andmanufactured goods traded between member countries have been lifted and acommon external tariff adopted since January 2000. The rate of the commonexternal tariff ranges from zero to 20%, depending on the goods. For the first fouryears of the new regime a special tax may be imposed to protect goods insensitive sectors.

• The strengthening of members’ fiscal policy. The convergence criteria foreconomic union are a public-sector wage bill equal to less than 50% of taxrevenue; a primary fiscal surplus equivalent to at least 15% of tax revenue; adeclining or unchanged level of domestic and external arrears; and the financingof at least 20% of the government’s share of public investment from fiscalreceipts.

Union économique etmonétaire ouest-africaine

(UEMOA)

Senegal 48


• The harmonisation of business law (through the Franc Zone’s Organisationpour l’harmonisation en Afrique du droit des affaires) and taxation law. The aimis to harmonise the presentation of data on government budgets, external anddomestic debt, national accounts and the balance of payments (through theSystème comptable ouest-africain), and to develop regional mining andinvestment codes.

A specific problem working against efforts towards economic convergence isthe instability in Côte d’Ivoire, the largest economy of the UEMOA. Economicunion is likely to remain low on the Ivorian government’s agenda until thepolitical crisis is fully resolved. In February 2004 the World Bank approved aUS$408m financing package for the Banque ouest-africaine de développement(BOAD), in support of capital markets and infrastructure integration effortswithin the region.

The Comité permanent inter-Etats de lutte contre la sécheresse dans le Sahel(CILSS) was set up in 1973 by six Sahelian countries—Burkina Faso (then UpperVolta), Chad, Mali, Mauritania, Niger and Senegal—to co-ordinate the region’sresponse to the drought from which it was suffering at that time. The Gambiajoined almost immediately afterwards, Cape Verde in 1975 and Guinea-Bissauin 1986, bringing the organisation’s membership to the present nine. There aretwo CILSS research and training institutes, in Niger and Mali, and theorganisation produces statistics on member countries’ food production inassociation with the UN Food and Agriculture Organisation. After several yearsof financial and organisational difficulties in the late 1980s and early 1990s, theCILSS was reorganised in 1993-95. The CILSS’s mission is now to help itsmember countries to improve food security, manage natural resources and fightthe effects of drought and desertification. A number of programmes have beenestablished to develop solar energy; provide training and information on theenvironment; promote local food products; increase trade flows; andharmonise policies in the agro-food sector. The organisation’s headquarters arein Ouagadougou, Burkina Faso.

Comité permanent inter-Etatsde lutte contre la sécheresse

dans le Sahel (CILSS)

Senegal 49


Appendices

Sources of information

All statistical data relating to Senegal are subject to substantial retrospectiveamendment, and should be treated with caution.

The Senegalese Ministry of Economy and Finance collects and processes mosteconomic data, but they are published only infrequently. Strictly speaking,therefore, there are no regular national statistical sources, because data arepassed straight to the regional central bank, the Banque centrale des États del’Afrique de l’ouest (BCEAO, based in Dakar), the primary source for allinternational institutions publishing economic data on Senegal, including theIMF and the World Bank. Nonetheless, Senegal participates in the IMF’sGeneral Data Dissemination System Site, which aims to improve theavailability, timeliness and access to a range of macroeconomic data.

For this reason, international statistical sources frequently contain more up-to-date economic data, albeit information originally gleaned from the Banquecentrale des États de l’Afrique de l’ouest (BCEAO). The most importantinternational sources for Senegal include the IMF’s International FinancialStatistics (published monthly), Article IV Consultations (published approximatelyevery two years) and the World Bank’s annual World Development Indicators,Global Development Finance and World Development Report. Anotherindispensable source, also drawn from BCEAO data, is the annual report on theFranc Zone, published by the Banque de France in Paris. This provides a usefulsummary of activity in each sector of the economy.

Ambassade de France au Sénégal, Mission économique, Les Echos del’harmattan, (monthly), Dakar

Banque de France, La Zone franc, Rapport annuel, Paris

BCEAO, Rapport annuel, Dakar

IMF, International Financial Statistics (monthly), Washington, DC

World Bank, World Development Report; Global Development Finance; AfricanDevelopment Indicators (all annual), Washington, DC

Donal Cruise O’Brien, Momar-Coumba Diop and Mamadou Diouf, LaConstruction de l’état au Sénégal, Karthala, 2002

Seck, Assane, Sénégal: Émergence d’une démocratie moderne, 1945-2005, Karthala,June 2005

International Development Association and IMF, Senegal: Poverty ReductionStrategy Paper Joint Assessment, Washington DC, December 2002

IMF, Senegal: Selected Issues and Statistical Appendix, Washington DC, June 2005

National statistical sources

International statistical sources

Select bibliographyand websites

Senegal 50


Le Journal de l’économie (weekly), Le Soleil, Wal Fadjri and Sud (daily)newspapers, Dakar

www.izf.net—provides an extended range of economic information

www.bceao.int—regional central bank, Banque centrale des États de l’Afrique del’ouest

www.uemoa.int—economic and monetary union, Union économique etmonétaire ouest-africaine

www.finances.gouv.sn—the Ministry of Economy and Finance website

www.aps.sn—state-run Agence de presse Sénégalaise website

www.lesoleil.sn—website of the state-owned, Le Soleil, daily newspaper

Reference tables

These reference tables provide the most up-to-date statistics available at the time ofpublication.

Population(m)

2000 2001 2002 2003 2004Population 10.34 10.60 10.86 11.12 11.39 % change, year on year 2.42 2.45 2.39 2.33 2.37

Source: IMF, International Financial Statistics.

Gross domestic product1999 2000 2001 2002 2003

Total (CFAfr bn)At current prices 3,000.0 3,192.0 3,342.7 3,472.7 3,725.4At constant (1999) prices 2,999.8 3,089.7 3,234.7 3,271.6 3,485.6 % change, year on year 6.2 3.0 4.7 1.1 6.5


Gross domestic product by origin(CFAfr bn at constant 1999 prices; % change year on year in brackets)

1999 2000 2001 2002 2003Agriculture 297.9 320.0 329.6 223.6 304.8

(18.4) (7.4) (3.0) (-32.2) (36.3)Mining & industry 386.9 400.2 422.1 470.7 490.5

(0.6) (3.4) (5.5) (11.5) (4.2)Services 1,894.9 1,940.9 2,041.7 2,138.8 2,218.3

(5.0) (2.4) (5.2) (4.8) (3.7)

GDP 2,999.8 3,089.7 3,234.7 3,271.6 3,485.6


Senegal 51


Gross domestic product by expenditure(CFAfr bn at current prices; % of GDP in brackets)

1999 2000 2001 2002 2003Government consumption 245.9 272.8 307.6 199.4 344.0

(8.2) (8.5) (9.2) (5.7) (9.2)

Private consumption 2,409.2 2,518.9 2,717.2 3,079.5 3,093.2(80.3) (78.9) (81.3) (88.7) (83.0)

Gross capital investment 553.3 739.0 789.8 798.4 872.4(21.8) (23.2) (23.6) (23.0) (23.4)

Change in stocks -99.3 -72.0 -148.8 -217.4 -101.2(-3.3) (-2.3) (-4.5) (-6.3) (-2.7)

Exports of goods & services 901.1 973.4 1,027.1 1,061.3 1,061.2(30.0) (30.5) (30.7) (30.6) (28.5)

Imports of goods & services -1,110.3 -1,239.9 -1,350.2 -1,448.6 -1,544.3(-37.0) (-38.8) (-40.4) (-41.7) (-41.5)

GDP 3,000.0 3,192.0 3,342.7 3,472.7 3,725.4


Gross domestic product by expenditure(CFAfr bn at current prices; % change year on year in brackets)

1999 2000 2001 2002 2003Government consumption 308.6 436.0 486.3 438.4 484.9

(-4.8) (41.3) (11.5) (-9.8) (10.6)Private consumption 2,224.3 2,314.1 2,566.3 2,840.2 2,948.9

(9.6) (4.0) (10.9 (10.7) (3.8)

Gross capital formation 567.0 673.5 613.3 581.3 727.2(24.6) (18.8) (-8.9) (-5.2) (25.1)

Exports of goods & services 888.6 930.4 1,027.1 1,061.4 1,082.1(-3.9) (4.7) (10.4) (3.3) (2.0)

Imports of goods & services -1,110.3 -1,240.0 -1,350.3 -1,448.6 -1,513.4(9.2) (11.7) (8.9) (7.3) (4.5)

GDP 2,893.1 3,114.0 3,342.7 3,472.7 3,729.7

Sources: Banque centrale des États de l’Afrique de l’ouest (BCEAO), Rapport annuel; Direction de la prévision et de la statistique.

Senegal 52


Government finances(CFAfr bn)

1999 2000 2001 2002 2003Revenue & grants 568.4 615.6 664.4 726.7 797.7 Domestic receipts 506.8 562.3 602.7 664.6 720.0 Grants 61.6 53.3 61.7 62.1 77.7Expenditure & lending 609.9 623.1 733.0 730.3 850.0 Current expenditure 351.1 411.0 516.6 478.2 529.5 Salaries 166.6 175.8 177.3 199.4 203.7 Interest payments 42.5 45.3 30.3 39.8 44.6 Capital expenditure 242.3 193.2 217.2 275.9 311.4 Internally financed 111.3 106.6 118.5 147.9 163.2 Net lending 16.5 18.9 -0.8 -23.8 -17.9

Primary balancea 86.9 90.0 -2.1 78.3 71.9Balance (commitments basis) -41.5 -7.5 -68.6 -3.6 -52.3Interest arrears 0.0 0.0 0.0 0.0 0.0

Balance (cash basis) -41.5 -7.5 -68.6 -3.6 -52.3Financing 41.5 6.6 72.3 -2.3 52.2 External (net) 22.9 17.1 54.9 68.4 68.9 Gross loans 80.2 78.1 103.3 112.7 90.8 Debt repayments -57.3 -65.2 -64.2 -81.0 -73.9 Debt rescheduling 0.0 4.2 15.8 36.7 44.0 Exceptional financing 0.0 0.0 0.0 0.0 8.0 Internal (net) 18.6 -10.5 17.4 -70.7 -16.7

Errors and omissions 0.0 0.9 -3.7 5.9 0.1Financing gap 0.0 0.0 0.0 0.0 0.0

a Domestic receipts minus current expenditure (interest payments excluded) minus capital expenditure financed domestically.

Source: Banque de France, Rapport annuel.

Consumer prices(period averages)

2000 2001 2002 2003 2004Consumer price index (2000=100) 100.0 103.1 105.4 105.3 105.9 % change, year on year 0.7 3.1 2.2 -0.1 0.6


Money supply, credit and interest rates(CFAfr bn unless otherwise indicated; end-period)

2000 2001 2002 2003 2004Currency in circulation 171.5 211.7 191.9 173.2 155.7

Money (M1) 464.0 533.0 563.9 667.9 701.3 % change, year on year 5.5 14.5 5.8 18.4 5.0Quasi-money 325.3 363.8 406.4 444.1 544.4

Money (M2) 789.3 896.8 970.3 1,111.9 1,245.7 % change, year on year 10.7 13.5 8.2 14.6 12.0Domestic credit 781.9 835.3 792.2 848.8 879.7 % change, year on year 16.0 6.8 -5.2 7.1 3.6Bank rate (%) 6.0 6.0 6.0 4.5 4.0


Senegal 53


Mineral production(‘000 tonnes)

2000 2001 2002 2003 2004Phosphates (calcium) 1,845 1,708 1,547 1,863 1,905Salt 120 146 157 149 n/a

Sources: BCEAO; IMF, Senegal: Selected Issues and Statistical Appendix, June 2005.

Selected tourism statistics(‘000 unless otherwise indicated)

1999 2000 2001 2002 2003Number of arrivals 420.0 442.7 453.6 488.2 418.3

Number of beds 17.6 18.3 19.2 19.7 20.4Number of nights 1,560.0 1,507.0 1,615.5 1,01.7 1,607.0Annual rate of occupancy (%) 42.8 35.4 37.7 38.6 37.1

Gross receipts (CFAfr bn) 101.4 96.8 103.4 108.3 101.2


Agricultural production and pricesa

(‘000 tonnes unless otherwise indicated)

1999/2000 2000/01 2001/02 2002/03 2003/04 b

Export cropsGroundnutsc 1,014 1,062 944 265 441 Price (CFAfr/kg) 145 145 120 120 150Cotton (unginned) 15 20 36 40 55 Price (CFAfr/kg) 185 185 185 185 185Food cropsMillet & sorghum 822 744 610 532 818Paddy rice 364 202 244 172 232Maize 66 79 106 80 401

a Crop years ending October 30th. b Official estimates. c Unshelled.

Source: Banque de France, La Zone franc, Rapport annuel.

Fishing(‘000 tonnes)

1999 2000 2001 2002 2003Artisanal 313.6 338.2 332.4 311.5 385.8

Industrial 81.3 52.1 63.7 63.7 57.2 Sardine 4.4 1.3 1.7 1.7 1.5 Trawler fishing 56.3 37.9 43.7 43.0 38.7 Tuna 20.6 12.8 18.3 19.0 17.0Total catch 394.9 390.3 396.0 375.2 443.0


Senegal 54


Exports(CFAfr bn)

1999 2000 2001 2002 2003Exports foba 644.8 697.9 735.3 743.3 730.5 Fish 179.8 162.4 175.8 173.9 157.3 Chemicals (ICS)b 59.8 57.0 72.1 109.2 92.1 Groundnuts & products 38.7 59.6 73.2 48.2 25.3 Phosphates 21.0 14.7 13.7 12.2 5.3 Petroleum products 13.6 28.5 16.5 23.4 33.5

a Includes cotton, salt and others. b Industries chimiques du Sénégal (fertilisers and phosphoricacid).


Imports(CFAfr bn)

1999 2000 2001 2002 2003Imports cif 962.7 1,081.3 1,189.7 1,268.3 1,363.1 Capital goods 149.7 166.8 177.6 226.8 210.0 Intermediate goods 291.9 281.2 306.9 323.0 361.5 Food products 221.0 216.3 263.5 308.3 328.5 Other consumer goods 116.0 112.5 132.1 137.8 169.0 Petroleum products 128.4 242.5 232.8 197.9 230.7 Beverages & tobacco 7.8 20.0 23.2 27.0 32.9 Change in warehouse stocks 37.8 37.8 38.3 38.3 21.2


Key imports and exports(‘000 tonnes)

1999 2000 2001 2002 2003ExportsFresh fish 8.7 11.4 9.9 9.3 7.2Frozen fish 98.8 63.3 60.9 63.4 71.6Canned fish 11.8 8.8 10.6 9.1 9.5Groundnut oil 67.1 100.5 123.1 83.2 39.1Groundnut cake 76.4 132.7 155.8 108.8 38.6Groundnut seeds 2.9 2.5 3.7 3.1 0.1Phosphate 770.4 513.9 510.4 486.0 203.9Phosphoric acid 225.0 232.7 284.8 506.2 439.9Fertilisers 115.5 84.7 116.8 155.7 195.5Petroleum products 128.8 153.1 87.0 146.1 197.3ImportsRice 646.4 632.1 696.9 866.4 890.0Wheat 199.1 237.3 234.0 247.9 250.9Crude oil 890.5 890.7 960.1 863.4 1,179.2Refined oil 540.8 570.5 557.7 556.9 462.6


Senegal 55


Trading partners(% of total)

1999 2000 2001 2002 2003Exports to:France 17.9 18.4 16.8 13.0 12.2Mali 5.2 6.2 6.9 8.9 9.5Italy 13.0 11.0 6.0 4.4 8.5Spain 5.5 6.3 4.0 3.2 5.0Africa (incl Mali) 25.8 28.2 29.9 32.7 37.3Asia 18.0 14.5 13.8 22.1 15.9Imports from:France 30.2 29.0 27.8 25.6 24.9Nigeria 7.1 13.9 9.8 8.7 12.2Spain 4.0 3.6 4.3 4.0 4.3US 4.1 3.9 4.2 5.4 3.6Asia 16.0 14.5 14.6 14.5 14.3Africa (incl Nigeria) 13.8 20.8 17.4 16.3 20.5


Balance of payments, IMF series(CFAfr bn)

1999 2000 2001 2002 2003Goods: exports fob 645 698 735 743 731Goods: imports fob 845 952 1,047 1,118 1,201

Trade balance -200 -254 -312 -375 -470Net services and income -50 -74 -67 -91 -87

Net current transfers 98 164 223 260 313Current-account balance -152 -163 -155 -206 -244Capital account 61 52 64 66 67Financial accounta 146 154 153 249 227Overall balance 55 43 62 109 50

a Including errors and omissions.


Senegal 56


Balance of payments, national series(CFAfr bn)

1999 2000 2001 2002 2003a

Goods: exports fob 632.4 654.9 735.3 743.4 762.7Goods: imports fob 845.3 951.6 1,047.1 1,117.9 1,178.4

Trade balance -212.9 -296.7 -311.8 -374.5 -415.7Net services -8.8 -12.9 -11.4 -12.7 -15.5 Freight -117.4 -129.8 -115.1 -152.4 -160.7Net income -73.4 -79.3 -76.8 -90.6 -88.6 Public debt servicing -53.4 -57.9 -51.2 -47.5 -45.6

Net transfers 97.9 152.3 220.0 257.0 265.4 Private sector 50.7 100.1 172.8 192.2 196.8 Public sector 47.2 52.2 47.2 64.8 68.6Current-account balance -197.2 -236.6 -180.0 -220.8 -254.4Net capital transfers 60.7 59.4 107.2 88.5 87.0

Financial account balance 143.0 174.9 142.6 222.8 228.8 Net direct investment 87.5 44.3 28.6 30.7 63.6

Net portfolio investment -10.2 9.8 10.2 2.1 9.1 Other investments 65.7 120.8 103.8 190.0 156.1Errors & omissions 4.9 -6.3 6.1 21.2 0.0

Overall balance 44.8 -8.6 76.0 111.7 61.4

a Official estimates.

Source: Banque de France, Rapport annuel.

External debt(US$ m unless otherwise indicated)

1999 2000 2001 2002 2003Public & publicly guaranteed long-term debt 3,350 3,192 3,163 3,541 3,983 Official creditors 3,344 3,182 3,144 3,519 3,958 Multilateral 1,964 1,908 1,945 2,230 2,582 Bilateral 1,380 1,274 1,199 1,288 1,376 Private creditors 6 10 19 23 25

Private non-guaranteed long-term debt 14 13 51 33 40Total long-term debta 3,364 3,205 3,214 3,575 4,023Short-term debt 308 147 203 294 156 Interest arrears on long-term debt 2 2 2 2 2Use of IMF credit 272 255 248 253 240

Total external debt 3,944 3,606 3,665 4,121 4,418Principal repayments 162 148 147 145 164Interest repayments 77 77 66 75 80 Short-term debt 17 17 8 7 5Total debt service paid 240 224 213 219 244Ratios (%)Total external debt/GNI 84.7 84.2 81.0 84.9 69.0Debt service paid/exports of goods & services 14.5 14.3 12.3 11.6 10.4Short-term debt/total external debt 7.8 4.1 5.5 7.1 3.5Concessional long-term loans/total external debt 71.5 75.6 75.0 75.5 79.8Multilateral debt/total external debt 49.8 52.9 53.1 54.1 58.4

a With original maturity of over one year.

Source: World Bank, Global Development Finance.

Senegal 57


Official development assistance (net)a

(US$ m)

1999 2000 2001 2002 2003Bilateral 416.2 288.4 223.7 242.8 314.4 France 226.4 147.2 102.4 104.5 119.5 Spain 36.5 1.3 9.5 7.3 34.7 Japan 59.1 48.5 22.4 37.8 28.7 Germany 26.4 16.8 16.7 13.2 20.5 Canada 17.5 11.3 8.6 9.8 17.6Multilateral 95.7 139.7 189.4 191.8 134.6 International Development Association 37.2 77.2 117.0 109.3 98.8 EU 57.0 41.6 27.5 58.5 37.9 African Development Fund 5.6 3.1 20.1 20.9 11.7 IMF -7.9 -3.7 3.6 -15.3 -34.2 World Food Programme 3.9 3.0 2.1 3.7 3.5Total incl others 516.0 423.5 412.6 445.2 449.6 Grants 502.3 370.3 306.0 368.0 372.6

a Disbursements of official development assistance (ODA) minus principal repayments on any earlier lending; ODA is defined as grants and loanswith a grant element of at least 25%, provided by OECD and OPEC members with the aim of promoting development in the recipient country.

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Foreign reserves(US$ m; end-period)

2000 2001 2002 2003 2004Foreign-exchange holdings 381.2 438.0 626.3 781.8 989.1

SDRs 0.9 7.5 9.1 10.6 7.3Reserve position in the IMF 1.8 1.8 2.0 2.2 2.4

Total reserves 384.0 447.3 637.4 794.5 998.8


Exchange rates(CFAfr per unit of currency; period averages unless otherwise indicated)

2000 2001 2002 2003 2004US$ 712.0 733.0 697.0 581.2 528.3

SDRa 918.5 935.4 850.4 771.8 747.9

a End-period.


Editors: Carolina Monsalve (editor); Roger Boulanger (consulting editor)Editorial closing date: August 9th 2005

All queries: Tel: (44.20) 7830 1007 E-mail: [email protected]

senegal - world banksiteresources.worldbank.org/.../eiu_country_profile_senegal.pdf · country...

Documents