Senegal's new president is seeking to shore up his mandate as opposition parties seek to slow implementation of the ambitious Sénégal Vision 2050 project.
Image credit: Shutterstock / Nick Fox
The African Development Bank’s latest macroeconomic outlook report notes that growth observed in Africa’s top-performing economies continues to benefit from diversification away from commodity dependence and increased public-private investment capable of accessing international markets.
Moreover, according to the African Union Commission the Africa of tomorrow must be one of economic integration to overcome limited local scale for industrial and commercial endeavor.
This, as we will see, is precisely the call made by Senegal’s new President, Bassirou Diomaye Faye, sworn in on April 2, 2024, as the pendulum has recently swung the other way.
A New Dynamic
According to the African Development Bank Group’s current Macroeconomic Performance and Outlook (MEO), eleven African countries will rank among the world’s fastest-growing performers in 2024.
Indeed, Africa, set to remain second only to Asia in the pace of growth, is forecast to average 3.8% and 4.2% GDP growth in 2024 and 2025, respectively. Among those eleven nations, the forecast star growth performer in 2024, Niger (11.2%) is followed by Senegal on 8.2%. The remaining constellation comprises Libya (7.9%), Rwanda (7.2%), Cote d’Ivoire (6.8%), Ethiopia (6.7%), Benin (6.4%), Djibouti (6.2%), Tanzania (6.1%), Togo (6%), and Uganda at 6%.
The Immediate Woes
Stubborn issues need to be addressed before too much celebration, however. The MEO puts 2023 youth unemployment at roughly 4.%. And given that over 80% of work is performed in the informal sector, much of the population suffers from a lack of education, formal employment, and hence a predictable future. A recent IMF visit noted weak revenue collection from personal income taxation (PIT) contrasting sharply with higher expenditure on energy subsidies and interest payments.
Another key study, the World Bank’s Senegal Economic Update 2024: Seizing the Opportunity, has proposed raising tax revenues to prop up national development. Among other criteria, the document also notes that while 2023 inflation fell to 5.9% from its 2022 peak of 9.7%, the poverty incidence by available data is flat at 37.5% for 2021/22 from 37.8% in 2018/19. Poverty still largely blights Senegal’s rural areas.
New President, New Promise?
Where Senegal’s economy is concerned, domestic politics may yet provide a foil for geopolitical noise. The nation’s current and fifth president has declared his tenure a transformative one.
Having won over the voter on a message of social justice, sovereignty, and pan-Africanism, Faye reiterated the African Union Commission’s stronger-together sentiment. Duly, he has called upon Niger, Mali, and Burkina Faso, which walked away from the Economic Community of West African States (ECOWAS) early in 2024, to return to the fold.
Faye also made his mark by pledging to renegotiate oil and gas contracts with foreign operators to the nation’s greater advantage while stressing investor-friendly credentials at equitable terms.
His election win proved auspicious; a day later, the price quoted on Senegal’s bonds due in 2048 climbed 1.4 cents to 75.88 cents on the dollar, marking the best that day among sovereign dollar-debt issuers in EMs.
Confidence Building Drive
Meanwhile, the opportunity international investors need to ponder is entry to a freshly reforming economy at ground level. The government aims now to establish a sustainable private sector that benefits from technical and financial cooperation.
And while harsh government practices in the mining industry have sparked some anti-western sentiment among impacted local communities, a more sensitive approach is in the making—one set to run in parallel with Senegal’s newly discovered oil and gas reserves.
Faye’s Long-term Vision
The IMF has, among other observations, recommended tackling public debt by, ‘…streamlining tax exemptions and phasing out untargeted and costly energy subsidies.’ And in October 2024 the government launched its roadmap for national prosperity that adopted a wide-ranging approach to future economic performance. A program that, upon its launch in October 2024, replaced Plan Sénégal Émergent (PSE), the national strategy running to 2035 rolled out by erstwhile President Macky Sall in 2014.
Enter ‘Vision Sénégal 2050’ (VS50), also known as the ‘Senegal 2050 – National Agenda for Transformation,’ which Faye and Prime Minister Ousmane Sonko introduced as an inclusive and sustainable economic transformation mechanism. The plan overall shoots for average growth of 6.5% over its duration. Notable is the pledge for economic decentralization to narrow the yawning gap between urban and rural communities. Perhaps most strikingly, though, VS50 situates Africa center stage in Senegal’s international relations.
A Near Digital Horizon…
The evidence of urbanization, a rising middle class, and technology rollout and adoption clearly points to great things for Sub-Saharan Africa over the coming years. Over 50% of the population is set to enjoy internet connection over the coming decade—the economic consequence is obvious.
UK consulting firm Public First notes that emerging technologies will galvanize the region’s economy, providing impressive numbers to back up the claim. Seemingly, by 2030, every USD1 invested in digital technology in sub-Saharan Africa can generate double that in broader economic value for the region. Meanwhile, a 1% rise in connectivity reflects in 5.7% climb in GDP.
The big name behind much of the activity is Google, which in 2021 earmarked a USD1 billion investment in Africa to champion digital transformation. The investment will deliver fast and affordable internet connection for citizen, entrepreneur, and SME alike.
Meanwhile, Google’s international Project Taara, which uses light beams to transmit data at 20 Gbps speeds, is having a catalytic effect on Africa’s digital infrastructure. Senegal is one of the beneficiary nations alongside the Democratic Republic of Congo, Kenya, Ghana, Malawi, Nigeria, Rwanda, South Africa, Tanzania, and Zimbabwe.
Senegal’s VS50 promises a fresh era of social integration and economic vibrancy for Senegal if implemented resolutely. To do so, state and private actors must play their part in an equitable drama.
