The economic context of Senegal

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After registering a decade of strong growth, the Senegalese economy was impacted by the Covid-19 pandemic. It remained resilient though, avoiding recession and continuing to expand at an estimated 1.5% (IMF). Recovery started mid-2020, driven by industrial production and the services sector, and GDP growth rebounded to 4.7% in 2021 (IMF). Economic growth is expected to accelerate in 2022 (5.5%) and 2023 (10.8%), boosted by construction, gold mining and oil and gas production (IMF). However, new Covid-19 outbreaks, regional security issues and fiscal pressures are downside risks.

The Senegalese economy started a robust recovery in 2021, supported by exceptional spending aiming to contain the negative impacts of the Covid-19 pandemic. Measures were also taken to strengthen social protection and the health sector including domestic vaccine production, and energy subsidies were increased. As a result, fiscal deficit soared from 3.8% GDP in 2019 to 6.3% GDP in 2020 and 2021. With the implementation of key structural reforms and fiscal consolidation, it is expected to reduce to 4% GDP in 2022 and to stabilize at around 3% GDP by 2024, in line with WAEMU commitments (IMF). Public debt continued its ascending trend, reaching an estimated 71.9% GDP in 2021. It is expected to gradually decline to 70.1% GDP in 2022 and 64.5% GDP in 2023 (IMF). As pointed out by the IMF, risks to debt sustainability will need to be carefully monitored. Inflation reached an estimated 2.4% in 2021, driven by an increase in food prices, and is expected to decline progressively to 2% in 2022 and 1.5% in 2023, well below the WAEMU’s standard of 3%. After focusing on the health response and immediate economic support, the authorities are now focused on implementing the revised Emerging Senegal Plan (PSE). The objective is to promote strong and inclusive private sector-led growth through structural transformation and diversification, with a new emphasis on accelerating the domestic production of critical supplies through sectorial policies (IMF). Increasing revenue mobilization, containing energy subsidies, improving business environment, enhancing the social safety net, broadening access to quality education, addressing youth unemployment and tackling financial system weaknesses are the key challenges identified by the IMF.

According to the World Bank, if PSE reforms continue, the poor layer of the Senegalese population would progressively be able to access high growth or value-added sectors, such as horticulture or agricultural processing. Senegal has been ranked 168th in the human development index. In 2020, the unemployment rate of the country was at 7.1% (ILO Estimate). The urban population working in the informal sector was particularly hit by the pandemic, with about 85% of households reporting declining incomes (IMF).

Main Sectors of Industry

Even though Senegal is relatively poor in natural resources, the country is rich in minerals, especially phosphates and iron ore. Senegal is one of the world’s leading phosphate producers, and has significant deposits of zirconium, titanium, marble, gold, and limestone, as well as several types of precious stones. Senegal is expected to become an oil and gas producer from 2023. Although only 16.62 % of the land is arable, agriculture employs 30% of the workforce and contributes to 17% of the GDP. Senegalese agriculture is highly vulnerable to climatic hazards and locust threats. Senegal's main crops are peanuts, black-eyed peas, cassava, watermelons, millet, rice and corn. Fishing is also an important source of revenue. To facilitate the processing of agricultural products, the government is setting up four agro-food processing hubs (“agropoles”) (IMF).

The industrial sector contributes to 23.2% of the GDP and employs 13% of the workforce. It is based essentially on the production of fertilizers and phosphoric acid - which is sent to India, as well as peanut processing (oil and cattle meal) and seafood processing (despite a growing depletion in resource). The most important industrial segment is food production, followed by textiles and chemical industries. Senegalese industries also produce construction materials, machinery, equipment, electricity, and water. The government is supporting the establishment of an integrated park for the pharmaceutical, biomedical and pharmacopoeia industry (“Pharmapolis”) (IMF).

The service sector contributes to 49.9% to the GDP and employs 57% of the workforce. It benefits from the country's excellent telecommunications infrastructure, which fosters investment in tele-services and the Internet. This sector has been expanding steadily. Tourism has also been growing, particularly among European travellers but the covid-19 crisis has severely impacted this dynamic. The pandemic’s impact was particularly severe on contact-intensive and mobility dependent sectors and the informal sector (IMF).

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	30.1	13.1	56.8
Value Added (in % of GDP)	15.3	24.7	49.6
Value Added (Annual % Change)	-1.0	10.9	5.7

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:

58/100

World Rank:

111

Regional Rank:

16

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

 

Sources of General Economic Information

Ministries

Ministry of Economy
Ministry of Finance

Statistical Office

National Agency of Statistics and Demography

Central Bank

Central Bank of the States of West Africa

Stock Exchange

Regional Securities Exchange (FR)

Economic Portals

Au Senegal (in French)
Senegal Directory