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Africandevelopmentbank AFRICAN DEVELOPMENT BANK GROUP Public Disclosure Authorized BANK GROUP’S COUNTRY STRATEGY PAPER FOR SENEGAL, 2016-2020 Public Disclosure Authorized July 2016 Translated Document TABLE OF CONTENTS LIST OF ABBREVIATIONS ................................................................................................................. i EXECUTIVE SUMMMARY .............................................................................................................. iii I. INTRODUCTION .............................................................................................................................. 1 II. RECENT DEVELOPMENTS ...................................................................................................... 1 2.1 Political, Economic and Social Context ...................................................................................... 1 2.2 Strategic Options .......................................................................................................................... 6 2.3 Aid Coordination Developments and Bank Positioning ............................................................ 10 III. BANK GROUP STRATEGY FOR THE 2016-20210 PERIOD ............................................. 11 3.1 Rationale for Bank Intervention ................................................................................................. 12 3.2 Bank’s Pillars ............................................................................................................................ 13 3.3 Expected Outcomes and Targets ................................................................................................ 15 3.4 Monitoring and Evaluation ......................................................................................................... 17 3.5 Country Dialogue Issues ............................................................................................................ 17 3.6 Resource Mobilization and Instruments ..................................................................................... 18 IV. RISKS AND MITIGATION MEASURES .............................................................................. 18 V. CONCLUSIONS AND RECOMMENDATIONS ......................................................................... 19 CURRENCY EQUIVALENTS (Exchange Rates as at 30 April 2016) Currency Unit = CFA Franc (XOF) UA 1 = CFAF 815.315 UA 1 = EUR 1.243 UA 1 = USD 1.417 FISCAL YEAR 1 January – 31 December KEY DATES Submission of Report to Peer Reviewers : 21 March 2016 Receipt of Peer Reviewers’ Comments : 25 March 2016 Submission of Report to Country Team : 31 March 2016 Review of Report by Country Team : 08 April 2016 Submission to OPSCOM : 29 April 2016 Transmission to CLSD (translation) : 18 May 2016 Dialogue Mission : 23 June 2016 Distribution Deadline : 23August 2016 Board Consideration : 14 September 2016 LIST OF BOXES Box 1: Addressing the Challenge of Structural Transformation and Inclusive Growth in Senegal Box 2: Programme to Accelerate the Pace of Agriculture in Senegal Box 3: Impact of Decentralization on the Country LIST OF FIGURES Figure 1: Political Context LIST OF ANNEXES Annex 1: 2016-2020 CSP Results-Based Logical Framework Annex 2: 2016-2020 Indicative Lending Programme Annex 3: Portfolio of Active Projects in Senegal Annex 4: 2015 Country Portfolio Performance Improvement Plan Annex 5: Key Social, Economic and Financial Indicators Annex 6: Progress towards the MDG Annex 7: Fiduciary Risk Assessment Annex 8: Public Procurement System Annex 9: Note on Climate Change Annex 10 : Positioning of Technical and Financial Partners Annex 11 : Thematic Groups i LIST OF ABBREVIATIONS ACAB Budget Support Framework Arrangement AfDB African Development Bank ADF African Development Fund AIBD Blaise Diagne International Airport AMU Arab Maghreb Union NSDA National Statistics and Demography Agency APIX National Investment Promotion and Major Projects Agency ARMP Public Procurement Regulatory Agency BCEAO Central Bank of West African States CIF Climate Investment Fund CODE Committee on Operations and Development Effectiveness COP21 21st Conference of the Parties to the United Nations Framework Convention on Climate Change CPIP Country Portfolio Improvement Plan CPPR Country Portfolio Performance Review CSP Country Strategy Paper DGID General Directorate of Taxes and Government Property DHS Demographic and Health Survey DI Investment Department ESPP Economic and Social Policy Paper ECOWAS Economic Community of West African States EPSI Economic Policy Support Instrument ESP Emerging Senegal Plan ESW Economic and Sector Work EU European Union FAPA Fund for African Private Sector Assistance FDI Foreign Direct Investment GAINDE Automated Management of Customs and Trade-related Information GDP Gross Domestic Product GEF Global Environment Facility HDI Human Development Index IDB Islamic Development Bank IMF International Monetary Fund MDG Millennium Development Goal MEFP Ministry of Economy, Finance and Planning MTEF Medium-Term Expenditure Framework NGO Non-governmental organization NSEDS National Strategy for Economic and Social Development ODA Official Development Assistance OFNAC National Anti-Fraud and Corruption Office OMVG Gambia River Basin Development Organization OMVS Senegal River Basin Development Organization PADERCA Casamance Development Programme PAPEJF Project to support the Promotion of Employment for Youth and Women PAPIL Project to Support Local Small-Scale Irrigation PAPSP Private Sector Promotion Support Project PCRBF Fiscal and Financial Reform Coordination Programme PD Paris Declaration PDS Senegalese Democratic Party PEFA Public Expenditure and Financial Accountability PIU Project Implementation Unit PPC/PNDL Community Roads Project in support of the National Local Development Plan Programme ii PSEA Water and Sanitation Sector Project SDG Sustainable Development Goal SIGFIP Integrated Public Finance Management System SIGIF Financial Information Management System SNFO ADB’s Regional Office in Senegal TFP Technical and Financial Partners UA Unit of Account USAID United States Agency for International Development WAEMU West African Economic and Monetary Union iii EXECUTIVE SUMMARY 1. Context On the political front, Senegal has provided an exemplary lesson of democracy in Africa. The Presidential elections of March 2012 resulted in the accession of President Macky Sall to the country’s highest political office. The Constitutional referendum on 20 March 2016 resulted in 15 changes to the Constitution including: modernization of the role of political parties, recognition of the rights of the Opposition and its leader, restoration of the five-year Presidential term as well as promotion of local governance and territorial development. The next elections will be the legislative elections in 2017 and the Presidential elections in 2019. The threat to political stability represented by the Casamance separatist movements appears to have waned. Economic growth not only remains erratic due to its vulnerability to adverse weather conditions but is too weak to sustainably reduce poverty. The growth rate dropped to its lowest point in 2011, estimated at 1.8%, due to the negative impacts of drought and power outages. It rose to 3.5% in 2013 and 4.3% in 2014. It was estimated at 6.5% in 2015 and is projected at 6.6% in 2016, mainly driven by strong primary sector growth. Medium-term growth should be more robust with annual projections of 7% to 8%. Access to energy and transport represents the main bottleneck to inclusive and green growth in general, and to transformation of the agriculture sector, one of Senegal’s key sectors. The development of agribusiness and agricultural entrepreneurship provides opportunities for inclusive growth and a reduction in youth and women’s unemployment in Senegal. On the social front, according to national employment survey data published in November 2015, the combined rate of time-related underemployment and unemployment was estimated at 39% with 54.5% for women and 29.8% for men. 2. Country’s Strategic Options The Emerging Senegal Plan (ESP), adopted in 2014, is Senegal’s new development strategy and economic policy reference framework. It is based on three strategic pillars: (i) structural transformation of the economy and growth; ii) human capital, social protection and sustainable development; and iii) governance, institutions, peace and security. Growth acceleration will be driven by the implementation of flagship projects (27 projects and 17 reforms) and large-scale operations with strong economic and social impacts. Under the ESP, progress has been made in the following flagship projects: ‘high value- added agriculture with the establishment of the first four community agricultural domains and the completion of 126 Naatangue farms in 2015’, ‘the commissioning of the Tobene power plant in the 1st quarter of 2016’. The ESP will be implemented in 3 phases, the first of which (2014-2018) will constitute the economic start-up phase. Next, the ESP will begin the emergence process up to 2023 before propelling the country forwards towards economic expansion by 2035. The ESP aims to achieve a stronger and more sustainable growth rate of 7% to 8%, driven by exports and foreign direct investment (FDI) based on a structural change of the economy. 3. Bank Strategy for the 2016-2020 Period The overall objective of this CSP (2016-2020) is to contribute to the achievement of inclusive, green and sustainable growth whose spinoff effects will benefit all segments of Senegalese
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