Economy of Senegal
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Economy - overview: In January 1994, Senegal undertook a bold and ambitious economic reform program with the support of the international donor community. This reform began with a 50% devaluation of Senegal's currency, the CFA franc, which is linked at a fixed rate to the French franc. Government price controls and subsidies have been steadily dismantled. After seeing its economy contract by 2.1% in 1993, Senegal made an important turnaround, thanks to the reform program, with real growth in GDP averaging 5% annually in 1995-99. Annual inflation has been pushed down to 2%, and the fiscal deficit has been cut to less than 1.5% of GDP. Investment rose steadily from 13.8% of GDP in 1993 to 16.5% in 1997. As a member of the West African Economic and Monetary Union (UEMOA), Senegal is working toward greater regional integration with a unified external tariff. Senegal also realized full Internet connectivity in 1996, creating a miniboom in information technology-based services. Private activity now accounts for 82% of GDP. On the negative side, Senegal faces deep-seated urban problems of chronic unemployment, juvenile delinquency, and drug addiction. Real GDP growth is expected to rise above 6%, while inflation is likely to hold at 2% in 2000-2001.
Economy - in greater depth:
The former capital of French West Africa, Senegal is a semi-arid country located on the westernmost point of Africa. Predominantly rural and with limited natural resources, the country earns foreign exchange from fish, phosphates, peanuts, tourism, and services. Its economy is highly vulnerable to variations in rainfall and changes in world commodity prices. Senegal depends heavily on foreign assistance, which in 2000 represented about 32% of overall government spending--including both current expenditures and capital investments--or CFA 270.8 billion (U.S.$ 361.0 million).
Since the January 1994 CFA franc devaluation, the International Monetary Fund (IMF), the World Bank, and other multilateral and bilateral creditors have been supporting the Government of Senegal’s structural and sectoral adjustment programs. The broad objectives of the program have been to facilitate growth and development by reducing the role of government in the economy, improving public sector management, enhancing incentives for the private sector, and reducing poverty.
With an external debt of $ 2,495 million, and with its economic reform program on track, Senegal qualified for the multilateral debt relief initiative for Heavily Indebted Poor Countries (HIPC). Progress on structural reforms is on track, but the pace of reforms remains slow, as delays occur in implementing a number of measures on the privatization program, good governance issues, and the promotion of private sector activity. However, macroeconomic indicators show that Senegal turned in a respectable performance in meeting IMF targets in 2000: annual GDP growth increased to 5.7%, compared to 5.1% in 1999. Inflation was reported to be 0.7% compared to 0.8% in 1999, and the current account deficit (excluding transfers) was held at less than 6% of GDP.
The fishing sector has replaced the groundnut sector as Senegal's export leader. Its export earnings reached $239 million in 2000. The industrial fishing operations struggle with high costs, and Senegalese tuna is rapidly losing the French market to more efficient Asian competitors.
Phosphate production, the second major foreign exchange earner, has been steady at about $95 million. Exports of peanut products reached $79 million in 2000 and represented 11% of total export earnings. Receipts from tourism, the fourth major foreign exchange earner, have picked up since the January 1994 devaluation. In 2000, some 500,000 tourists visited Senegal, earning the country $120 million.
Senegal’s new Agency for the Promotion of Investment (APIX) plays a pivotal role in the government’s foreign investment program. Its objective is to increase the investment rate from its current level of 20.6% to 30%. Currently, there are no restrictions on the transfer or repatriation of capital and income earned, or investment financed with convertible foreign exchange. Direct U.S. investment in Senegal remains about $38 million, mainly in petroleum marketing, pharmaceuticals manufacturing, chemicals, and banking. Economic assistance, about $350 million a year, comes largely from France, the IMF, the World Bank, and the United States. Canada, Italy, Japan, and Germany also provide assistance.
Senegal has well-developed though costly port facilities, a major international airport serving 23 international airlines, and direct and expanding telecommunications links with major world centers.
GDP: purchasing power parity - $16.6 billion (1999 est.)
GDP - real growth rate: 5% (1999 est.)
GDP - per capita: purchasing power parity - $1,650 (1999 est.)
GDP - composition by sector:
agriculture:
19%
industry:
20%
services:
61% (1997 est.)
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%:
1.4%
highest 10%:
42.8% (1991)
Inflation rate (consumer prices): 2% (1999 est.)
Labor force: NA
Labor force - by occupation: agriculture 60%
Unemployment rate: NA%; urban youth 40%
Budget:
revenues:
$885 million
expenditures:
$885 million, including capital expenditures of $125 million (1996 est.)
Industries: agricultural and fish processing, phosphate mining, fertilizer production, petroleum refining, construction materials
Industrial production growth rate: 7% (1998 est.)
Electricity - production: 1.2 billion kWh (1998)
Electricity - production by source:
fossil fuel:
100%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption: 1.116 billion kWh (1998)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 0 kWh (1998)
Agriculture - products: peanuts, millet, maize, sorghum, rice, cotton, tomatoes, green vegetables; cattle, poultry, pigs; fish
Exports: $925 million (f.o.b., 1998)
Exports - commodities: fish, ground nuts (peanuts), petroleum products, phosphates, cotton
Exports - partners: France 22%, Italy, India, Cote d'Ivoire, Mali (1998)
Imports: $1.2 billion (f.o.b., 1998)
Imports - commodities: foods and beverages, consumer goods, capital goods, petroleum products
Imports - partners: France 36%, other EU countries, Nigeria, Cameroon, Cote d'Ivoire, Algeria, US, China, Japan (1998)
Debt - external: $3.4 billion (1998 est.)
Economic aid - recipient: $647.5 million (1995)
Currency: 1 Communaute Financiere Africaine franc (CFAF) = 100 centimes
Exchange rates:
Communaute Financiere Africaine francs (CFAF) per US$1 - 647.25 (January 2000), 615.70 (1999), 589.95 (1998), 583.67 (1997), 511.55 (1966), 499.15 (1995)
note:
since 1 January 1999, the CFAF is pegged to the euro at a rate of 655.957 CFA francs per euro
Fiscal year: calendar year