SENEGAL 10/01/02 15:12 Page 253 Senegal Dakar key figures • Land area, thousands of km2: 193 • Population, thousands (2000): 9 421 • GDP per capita, $ (2000): 464 • Life expectancy (1995-2000): 52.3 • Illiteracy rate (2001): 61.7 SENEGAL 10/01/02 15:12 Page 254 SENEGAL 10/01/02 15:12 Page 255 SENEGAL’S ECONOMY HAS FORGED ahead since reforms needed for growth and fighting poverty. In devaluation of the CFA franc in 1994. In this context the short term, sturdy export performances and very of sustained growth, 2000 was a transition year, when good investment inflow, helped by the successful a peaceful transfer of power boosted confidence in the political transition and a good relationship with future even as the changeover and electoral uncertainties international funding agencies, suggests GDP The peaceful affected economic decision-makers in the short term. growth of 5.0 per cent in 2001. A return to transfer of political But the landslide victory of the Democratic Party (PDS) normal in groundnut production in 2002 power boosted at the April 2001 parliamentary elections, along with will probably mean slower growth of 3.5 per confidence the lifting of some financial restrictions thanks to efforts cent. A more energetic growth policy would in the future in recent years to restore public finances, should give destabilise public finances. of Senegal the government the necessary leeway to carry out major Figure 1 - Real GDP Growth 10 8 6 255 4 2 0 1995 1996 1997 1998 1999 2000 2001(e) 2002(p) -2 -4 -6 -8 -10 Source: Authors’ estimates and predictions based on IMF and domestic authorities’ data. Recent Economic Developments the farm sector (from 11 per cent in 1990 to 8 in 2000). Agriculture, mostly subsistence crops and groundnuts, Senegal has displayed great economic vigour since was hit by bad weather in 1997 and 1998 which good the 1994 devaluation, with annual GDP growth of results in the livestock and fishing sectors did not make around 5 per cent — a per capita growth of 2.5 per up for. However, well-distributed rainfall and more cent taking into account population increase of about intensive use of fertiliser in 1999 and 2000 again turned 2.5 per cent over the period. farming into a motor of the economy and it contributed an estimated 1.8 percentage points of the 5.5 per cent Since the early 1990s, the primary sector’s share of volume GDP growth in 2000. But the sector still has GDP has shrunk significantly while remaining the problems that make for very erratic performances. Apart source of income for three-quarters of the working from dependence on the weather, these include population. It fell from 21 per cent at that time to groundnut marketing problems and policies that harm 18 per cent in 2000, broadly reflecting the decline of potentially profitable crops such as rice. © OECD/AfBD 2002 African Economic Outlook SENEGAL 10/01/02 15:12 Page 256 Senegal Figure 2 - GDP Per Capita in Senegal and in Africa ($ current) ■ Africa ■ Senegal 900 800 700 600 500 400 300 200 100 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: Authors’ estimates based on IMF data. The secondary sector has grown strongly in recent 60 per cent of GDP. It was fuelled by steady migration years and is now the second biggest GDP contributor from the countryside and growth of small businesses at 20 per cent. Senegal’s industrial base is more diverse arising from urbanisation. So the sector has an than other sub-Saharan countries but is still mainly based extensive informal side to it, though a relatively 256 on the processing of food and minerals, such as chemical visible one because of being mostly organised into an phosphate plants, and is structurally outdated. From association (Unacois) and paying a certain amount 1995 to 2000, the construction sub-sector provided a of taxes. Telecommunications, commerce and tourism boost, driven by remittances by Senegalese abroad and grew strongly because of devaluation and the expanding public investment. In 2000, government government’s liberalisation measures. But the sector, projects slowed down because of uncertainty about the along with industrial activity, slowed down sharply PDS’s chances of electoral victory and turnover in the in 1999 and 2000 because of breaks in electricity sector’s businesses fell by a third. supply, with some firms having to use private generators. Senegal stands out in sub-Saharan Africa because of its dominant tertiary sector, which grew rapidly Public consumption fell from 15 per cent of GDP during the 1990s and now accounts for more than in 1990 to 12.5 in 1999 as investment rose from 4 per Table 1 - Demand Composition (percentage of GDP) 1995 1998 1999 2000 2001 (e) 2002 (p) Gross capital formation 16.7 19.9 19.3 19.9 20.9 21.1 Public 4.4 8.1 8.3 7.4 8.4 8.5 Private 12.3 11.8 11.1 12.4 12.5 12.6 Consumption 91.3 87.2 87.5 88.2 88.2 89.2 Public 12.4 11.8 12.5 13.7 12.5 11.9 Private 79.0 75.4 74.9 74.5 75.7 77.4 External sector -8.0 -7.1 -6.8 -8.0 -9.1 -10.3 Exports 32.2 30.0 29.8 30.9 28.5 25.9 Imports -40.2 -37.1 -36.6 -38.9 -37.6 -36.1 Source: Authors’ estimates and predictions based on data from the ministère de l’Économie et des Finances. African Economic Outlook © OECD/AfDB 2002 SENEGAL 10/01/02 15:12 Page 257 Senegal Figure 3 - GDP by Sector in 2000 Agriculture, Other private Others livestock and fishing services 3% 14% 18% Government services 8% 14% Industry 5% 27% 11% Construction Commerce Transport Source: Authors’ estimates based on data from the Direction de la statistique. Figure 4 - Sectoral Contribution to GDP Growth in 2000 ■ Volume ■ Price ■ Value Agriculture, livestock and fishing Industry Construction 257 Transport Commerce Government services Other private services Others GDP 01234567 Source: Authors’ estimates based on data from the Direction de la statistique. cent (1990) to 7 per cent (1999). This was because the virtual absence of foreign direct investment. The wages and salaries were kept under control and public relative stagnation gave way in 1998 to recovery as investment revived after devaluation. The budget balance domestic savings conditions improved (the savings rate allowed the government to spend more on investment, rose from 12.3 per cent in 1997 to 14.3 in 1999). In but private investment was affected by constraints on 2000, public investment was overtaken by private production, the fairly low domestic savings rate and investment, which grew at 12 per cent that year. © OECD/AfBD 2002 African Economic Outlook SENEGAL 10/01/02 15:12 Page 258 Senegal Macroeconomic Policy structure of the budget, a common external tariff (TEC) was introduced at the behest of UEMOA and the oil Budgetary and Monetary Policy price stabilisation mechanism was replaced by indirect taxes. Thanks to a strong showing by the value-added In February 2001, the IMF approved the third year tax, loss of revenue from the lower customs duties was of a poverty reduction and growth facility launched in not as great as expected. But the oil bill continued to 1998, evidence of the international funding agencies’ be a burden on the budget in 2000 because of the new satisfaction with Senegal’s on-target macroeconomic government’s bigger subsidies to head off higher pump performances and well-controlled budgets since 1995. prices. However, the same budget showed a healthy After devaluation in 1994, the country began a period increase in tax revenue — which reached 17 per cent of budgetary restraint to restore balance to public of GDP for the first time — due to greater efficiency finances and since 1998, the government has had no by tax and customs officials. Expenditure also slowed, internal or external arrears. In 1998, to stabilise the tax but to the detriment of public investment. Table 2 - Public Finances (percentage of GDP) 1995 1998 1999 2000 2001 (e) 2002 (p) Total revenue and grantsa 19.7 19.8 19.4 19.8 19.7 19.7 Taxes 14.8 16.0 16.8 17.3 17.3 17.3 Grants 3.3 3.0 2.1 1.7 1.9 1.8 Total expenditure and net lendinga 19.9 20.1 20.8 20.0 258 Current expenditure 14.2 11.3 12.0 13.2 Excluding interest 11.3 10.0 10.5 11.7 11.0 10.4 Wages and salaries 7.1 5.8 5.7 5.6 5.4 5.1 Interest payments 2.9 1.3 1.5 1.5 Capital expenditure 5.3 7.2 8.3 6.2 7.0 7.0 Primary balance 2.7 1.0 0.1 1.2 -3.1 0.9 Overall balance -0.2 -0.3 -1.4 -0.2 a. Only major items are reported. Source: Authors’ estimates and predictions based on IMF data. The government plans to encourage these trends least). The renationalisation of the electricity company in 2001 and 2002 by continuing to reform the tax Senelec, whose privatisation had run into problems, cost administration. Efforts to fiscalise some of the informal 40 billion CFA francs ($56 million) in the first quarter. sector have included a new 5 per cent levelling tax on The government planned to absorb the reimbursement imported goods used mainly in the informal economy, during the year using revenue surpluses and leftover issuing a single identification number and opening proceeds of earlier privatisations.