Country Brief

Senegal is located on the west coast of Africa and is part of the West African Economic and Monetary Union (WAEMU). With a population estimated at about 11 million, its economy is dominated by a few strategic sectors, including groundnuts, chemical industry, tourism, fisheries, and services.

After independence in 1960, the country has been highly visible in the international arena and has maintained a relatively stable political and social environment.

The Senegalese political system continues to show a degree of democratic maturity with the March 22 2009 local elections that were widely viewed as fair and transparent, and saw the victory of opposition parties in several key urban centers, including Dakar.

A presidential election is scheduled for 2012 after the five-year term of President Abdoulaye Wade ends.

However, since the 1980s, the country has faced conflict in the South (Casamance) aimed at independence from Senegal. The government signed a peace agreement with the MFDC (Mouvement des forces démocratiques de Casamance) in December 2004. I mplementation of this agreement has not been totally effective, however, and sporadic attacks continue due to the fragmentation of the MFDC . Since the death of the priest Augustin Diamacoune Senghor, the MFDC's charismatic leader, in 2007, the rebels have been torn between different factions and cannot agree on a successor.

Economic/political/social context

From the mid-1990s until 2005, Senegal had one of the best economic performances in s ub-Saharan Africa.  Though there were brief episodes of low growth, real gross domestic product ( GDP) grew on average by about 5 % annually, marking the first sustained increase in average per capita growth since independence in 1960.  The regional monetary arrangement provided a framework of monetary and price stability.  Graduation from the Heavily Indebted Poor Countries (HIPC) Initiative in 2004; involvement in the Multilateral Debt Relief Initiative (MDRI) , and prudent concessional external borrowing allowed a sharp reduction in the stock of debt.

However, in 2006-07, a series of shocks buffeted the Senegalese economy.  The run- up in oil prices and, starting in 2007, the surge in food prices weighed down on the economy and drove end-of-period inflation to 4 % in 2006 and 6 % in 2007 from an average of ½ % over the previous three years.  Escalating oil and food prices also contributed to a widening of the external current account deficit.; Senegal imports all its oil, and respectively 80 and 100 % of its rice and wheat consumption. 

Other shocks were internal.  Poor rains in both 2006 and 2007 led to a fall of agricultural output of about 15 % in each year.  Despite the sector’s small share in GDP—about 7 % in 2006— falling agricultural output contributed to trim at least one in overall GDP growth in both years and exacerbated the impact of escalating food prices.  Deep financial difficulties in the largest exporting firm, the phosphate mining and phosphoric acid production firm Industries Chimiques du Sénégal (ICS) which is majority foreign private-owned, led to a sharp slowdown in its activity, and another loss of one percent of GDP growth in 2006 (the company was recapitalized in early 2008).

Real GDP growth is now estimated at 2½  %, while inflation remained above trend (about 6 % year-on-year at end-2008), as the prices of imported fuel and food surged through the mid- year.  Favorable rains helped agriculture output return to its trend level, but industrial production registered a small decline.

Senegal remains a poor country, with a gross national income (GNI) per capita of US$840 in 2006. Notwithstanding a decline in the incidence of poverty from 68 % in 1994 (61.4 % of households) to 51 % in 2005, poverty remains high, particularly in rural areas.

Donor coordination

In addition to the World Bank and the International Monetary Fund ( IMF), Senegal’s development partners include France, the European Union (EU), the African Development Bank, U.S. Agency for International Development (USAID), Japan, Germany, Canada, and many United Nations agencies. Donor coordination has been strengthened around the government’s new Poverty Reduction Strategy Paper (PRSP II) and the new Accelerated Growth Strategy, which aim at sustaining high pro-poor growth in Senegal. A Consultative Group meeting took place in Paris in October 2007.

World bank assistance

As of August 2009, the World Bank had approved 122 projects for Senegal totaling about US$3.0 billion.

The commitment value of 20 ongoing International Development Association ( IDA)-financed operations is about US$700 million equivalent, with an undisbursed balance of about US$460 million. The 20 operations are in agriculture, rural development, infrastructure, environment, transportation, population/health/nutrition, social protection, energy/water, public and private sector development, and natural disaster management. Portfolio performance is discussed quarterly with the government.

International Finance Corporation

As of February 2008, the International Finance Corporation’s (IFC) committed portfolio amounted to US$86 million, of which US$44 million was outstanding.

IFC’s activities in Senegal are focused on pro active project development in financial markets, small and medium enterprise development, tourism, agribusiness, information and technology , mining, infrastructure, housing and technical assistance. Within the World Bank’s Priority Public Investment Program , Private Enterprise Partnership for Africa and Foreign Investment Advisory Service , the Bank will work with Senegal’s Investment Promotion and Major Projects Agency to implement reforms in order to improve Senegal’s ranking in the Doing Business Report. Upcoming IFC projects/programs relate to the following sectors: financial (IDA IFC Risk-Sharing Facility being considered with two banks and its Global Trade Finance Program with three banks); energy (assistance in resolving the financial difficulties of Senelec, the national power company), including discussions with government and Senelec for financing an Independent Power Producer and transport (financial support to the Dakar-Diamniadio Project and development of a public-private sector scheme to expand the minibus replacement program).

Multilateral Investment Guarantee Agency

The Mulitlateral Investment Guarantee Agency’s (MIGA) exposure in Senegal consists of one project with a gross exposure of 9.8 million for guarantees issued to a Swiss investor for the expansion of an import verification project.  During FY 2010, MIGA is working with investors from the United Kingdom to provide coverage of their investment in a port project in Senegal. 

 MIGA has insured Sonatel of Senegal in support of three telecommunications projects in Guinea, Guinea-Bissau and Mali. The combined gross exposure from these investments is US$102.0 million.

World Bank Institute (WBI)

In FY 2010, the World Bank Institute (WBI) is implementing its s trategic r enewal with a focus on seven cross-cutting themes that are responsive both to corporate priorities and to strong country demand, including: f ragile and c onflict-affected s tates, the g lobal e conomic c risis, g overnance, c limate c hange, h ealth s ystems, u rban d evelopment, and p ublic-p rivate p artnerships (s ervice d elivery). Several new business lines will be used to support these themes: structured learning programs; just-in-time practitioner knowledge exchanges (South-South; MIC-OECD); and innovation platforms to identify and incubate innovative ideas, and nurture practitioner-generated, replicable solutions to development challenges. WBI will extend its reach and connect experts around the globe by partnering with country and regional organizations and practitioner networks and by applying new learning technologies more broadly. 

In Senegal, WBI has been active on local governance, project implementation, micro-enterprise to support crisis scenarios, and S outh-S outh learning on special economic zones. 

Senegal has been active in terms of participation in WBI programs, with an average of over 700 participating in WBI activities annually.  This is partly due to the existence of an active global development learning network in Dakar and the fact that Senegal is taking advantage of its role as a regional hub for Francophone Africa. Activities on a variety of themes such as climate change, education, social protection, trade, small and medium enterprise financing and water and rural development are taking place throughout FY 2009.

Contacts

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