Senegal is a Western African country its total population is estimated to be almost 16.8 million. Although, it passed through various political crises between 1960 to 2000. The first head of state was Leopold Sedar Senghor, who leads the country from 6 September 1960 to 31 December 1980. And also, Mamadou Dia Abdou Diouf serves as state Prime minister during that period.
Then, after two decades of political catastrophe and going through pre-elections violence on February 15, 2000, and later Abdoulaye Wade was elected President with 58 percent votes in the second round presidential election process on March 19, 2000. Despite the fact that, such mess and turmoil of the political crises the country is relatively going through stable democracy and advanced infrastructure by focusing on widening investment in attractive and participative ways to private sectors nowadays for the last two decades. On the other hand, Senegal celebrated 60 years of independence collaborating with the U.S.-Senegal diplomatic relations in 2020 since gaining independence from France in 1960.
Since 2000, its economy is also growing on average with a GDP of 5% annually. The contemporary status of economic growth between 2014 to 2019 shows that it produces the highest GDP growth rate of 6.5% out of 15 members of the Economic Community of the West African States (ECOWAS) for the past five years continuously. Despite the Covid 19, Senegal's economy shows progress. Therefore, based on the economic strategy of the Government of Senegals’ few calls “Senegal as the new Qatar of West Africa”. The reason behind this is that due to leading sectors and major investment projects such as oil and gas, renewable energy, agricultural sector, construction (Port of Dakar, and new bulk mineral port), telecommunications, the health sector (medical equipment, pharmaceuticals, and health technology), and automobiles and automotive parts getting focus in general.
So far in contemporary status, Senegal is the fourth largest economy in Western Africa with a nominal GDP growth rate of 7.15 percent which is estimated to be 21 billion US dollars, and the real GDP growth rate amount’s risen to almost 23 billion US dollars in 2021.
Senegal's Relationship with Turkey and among others
Senegal has a strong relationship with various countries and international organizations in the diplomacy arena as well. Macky Sall is the current Government of Senegal President as well as he also Chairperson of the Africa Union (AU) at the time. The relationship between Turkey and Senegal is very strong nowadays both political and economic are increasing over time due to bilateral relations. For instance, the trade volume was estimated to be 292 million USD in 2019. In addition, Senegal is a member of various international institutions as well as organizations such as AfDB, AGOA, ECOWAS, FAO, IBRD, ICC, IDB, IFAD, IFC, ILO, IMF, IMO, IOM, ISO, ITU, OIC, OIF, UN, UNESCO, WHO, WTO, and among others.
Senegal Economic Driven Policy
The utmost economic reforms and policies were undertaken in 1994 after the devaluation of the CFA franc. The reform was delayed in some sectors due to political issues and a peaceful transfer of power in the country. So far Government of Senegal commence various reforms and policies such as the “Emerging Senegal Plan, PSE” focusing on enhancing sustainable and inclusive economic growth both in public and private sector-based has driven investment strategy. Therefore, Senegal Government aims to transform its socio-economic-political and macroeconomic monumental work plans to attain the utmost emerging market categories by 2035.
The government of Senegal implements different economic-driven policy documents in the investment environment by reducing the average number of days it takes to commence new business in the country. To catch up with the economic growth faster it started to implement a “single window” service centers system to provide quality service in entire regions. So far the “Senegal Accelerated Growth Strategy (AGS) Document Policy” is one of them. After the long and steady vertical economic growth, Senegal's economy recorded more than 5 percent or 6 percent annually due to peaceful power transactions following the democratic election in 2000. However, still, Senegal remains one of the least developed countries in Sub-Sahara Africa and worldwide in 2015.
As aforementioned above, this reality encouraged the country to plan as well as implement new reforms called “Accelerated Growth Strategy (AGS) to alleviate the Poverty Reduction Strategy Paper (PRSP)”, which is a key document for Senegal's economic policies and reforms in contemporary times. The policy document has been implemented under the observation and assistance of international financial institutions like the World Bank and IMF to approve the enabling environment and to analyze the improvement accordingly.
The economic policies and reform are consists of five clusters. There are (1) agro-industries and food processing, (2) fish industries, (3) tourism, crafts, and cultural industries, (4) cotton, textiles, and clothing; and (5) information and communication technology (ICT) and teleservices at large. The government forms a committee at the national level and undertakes great conversation as well as dialogue focusing on the economic reform clusters to clarify the questions raised associated with policies and reforms by public and private sectors (civil society) as well. Such preparation creates a strong environment and commitment to economic reform. The report shows that Senegalese annual economic growth from 2003 to 2007 in GDP growth rate was an average of 6%.
Economic Reform Support Programs
Senegal’s economic reform has been assisted by an international financial institution like IMF even though it has been in turmoil finishing structural reforms, particularly privatizing electricity and groundnut marketing at large. Like emerging countries, the agriculture sectors are the leading sector for GDP of growth and development for the Government of Senegal. Nevertheless, its performance is up and down due to agriculture being highly influenced and impacted depending on climate change. Thus, Senegal is known for producing and exporting crops like groundnuts, rice, fishing, phosphates, and chemical products. In 2001 agriculture contribute to GDP 20 % which was a great improvement after the bad weather from 1997 to 1999. The fishing industry production contributed to economic growth in 2002 with more than 600,000 employees as well.
Senegal offers interested investors to invest in its attractive location, promising, and potential investment opportunities for growing trade business both to U.S firms and others. For instance: following the USA trade policy towards Africa, Senegal was also declared to participate and sign in, to the Africa Growth and Opportunity Act (AGOA) to obtain from the trade agreement on 24 April 2002. This trade agreement encourages numerous Africa Countries to enhance the export bulk to benefit from the lower tariffs forms-based opportunities in the US market. Depending on the AGOA eligibility the country starts to create a strong bond with Mauritius to export more products and build various industries, particularly textile factories and printer cartridges.
On the other hand, Senegal's imports cover over 80% of food products and semi-processed goods and oils from Europe. The import-export activities are mainly estimated as unbalanced based on the current account percentage of GDP reports. So far, in 2001, the external debt of the country was estimated to be 78.3 percent of the GNP at nominal value whereas, the external debt was reduced to 71.69 percent of GNI in 2020.
Gradually, the process of economic growth strategy extends to design a kind of project support to reduce the gap in government financing towards low-income societies via SME sectors by utilizing the “Economic Reform Support Program (PARE)” between 2011- 2013. The goal of the PARE project systems aimed to enhance financial governance, and public finance management as well as promote wealth creation through SME financing. And also, the PARE program works in collaboration with the financial industry to benefit the entire Senegalese society under the supervision of the Ministry of Economy and Finance and other ministries accordingly. For instance: the studies of “7 Industry policy in Senegal: Then and Now” in 2016 based on the AEO 2014 report, illustrate that Senegal was the largest economy in Western African countries with a nominal GDP growth rate of 7.15 percent estimated to be 21 billion dollars growth by next to Nigeria, Ivory Coast, and Ghana. The real GDP growth rate increase to 23 billion in 2021.
Senegal's Current Economic Challenges and Prospect
The Senegal economy shows promise of growth due to the Adjusted and Accelerated Priority Action Plan from 2020 to 2021 growing by 1.3 percent to 6.1 percent respectively. The agriculture sector's impact on economic growth gets declined, from 23.4% in 2020 to 4.6% in 2021, whereas the economy led by the construction sector, transport services, and commercial activity provides strong economic growth.
Even though numerous socio-economic progress is conducted in the country, still there are a lot of challenges like corruption, heavy tax burden, delay and uncertainty risk around the project development, and high cost of a real state, as well as energy issues that undermine Senegal’s business market competitiveness. In this context, Government bureaucracy is yet not eliminated, especially in approving necessary documents regards to project development on time.
According to the GCRI report outlook, Senegal is one of the most highly vulnerable countries to climate change, which is ranked 70 in 2021. The risk of drought and hydrocarbon emissions (CO2) is expected to sharply increase over time. Despite that, the newly proposed “Senegal Emerging Plan between 2014 to 2035 focuses on and gives priorities to promote green economy financing and growth at large. To realize this plan by 2020, a 153.4 million Dollar fund is mobilized to improve flood prevention, promote renewable energy (RE), sustainable management of land, and resilient ecosystem. The government's target focuses on to rise RE by 30% of the total energy capacity and creating an enabling environment for governance frameworks. Finally, the progress and the process of realizing SDG 13 are still behind the plan which is expected to reach about 13.6% in 2023.
Conclusion and Remarks
While Senegal's overall economic activity is emerging depends on the major leading sectors with great potential like oil and gas, energy (power generation and equipment, construction sectors equipment, modern agricultural equipment, technology-based sectors (automotive, software, data management systems, computers) and others are promising investment opportunities for U.S companies as well as others also to invest in those sectors.
It is also expected that GOS plans to operate its first gas in 2023 from the offshore gas field near the border with Mauritania estimated to be 25 trillion metric cubic feet of natural gas that is operated by BP around the Grand Tornue Anaheim (GTA) and great renewable energy with a capacity of 1,300 MW project to support the entire economy.
So far Senegal's business market is a crucial and great destination for firms running commercial activities associated with oil and gas, energy as well as construction equipment particularly.
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