Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
As a stable democracy with relatively advanced infrastructure and ambitious plans for expanding private investment, Senegal offers growing trade and investment opportunities for U.S. firms and an attractive location for companies looking to serve the West African regional market. Since gaining independence from France in 1960, Senegal has developed strong democratic institutions, celebrating 60 years of U.S.-Senegal diplomatic relations in 2020.
Under its “Emerging Senegal Plan” (known by its French acronym PSE), the Government of Senegal (GOS) aims to boost sustained and inclusive growth through economic reforms and private-sector driven investment projects. With this private sector-based investment plan, Senegal hopes to structurally transform its economy, improve Senegal’s already strong macroeconomic performance, and achieve emerging market status by 2035. Senegal has enjoyed one of the highest GDP growth rates in the 15-member Economic Community of West African States (ECOWAS) over the last five years, with sustained economic growth rates averaging 6.5 percent from 2014 through 2019. With a severe COVID-19 downturn halting its run of strong growth, Senegal now seeks to breathe life into its economy with a $1.7 billion stimulus package focused on the health sector, vulnerable households, and the private sector. The Ministry of Economy recently estimated the COVID crisis would reduce GDP growth to 1.1 percent for 2020, although it may fall further. Major oil and gas projects — previously expected to add three to four percent GDP growth and create significant government revenue by 2022 — are delayed at least a year. The IMF rates Senegal’s risk of debt distress as “moderate” as the country undertakes new debt obligations to fuel development and stimulate the economny in the wake of COVID-19.
With its capital city of Dakar located on the westernmost point of Africa, Senegal is well positioned to expand its role as a regional business hub. Dakar has become an aviation hub for West Africa, with bi-weekly direct eight hour Delta Airlines flights to New York City, and connections with multiple locations in Africa, Europe, and the Middle East. Senegal has a relatively advanced telecommunications infrastructure with approximately 16.5 million cell phone accounts and 361,000 landlines for roughly 17 million inhabitants. Mobile phone penetration reached 104% in 2019, while internet access is approximately 75 percent. As new transportation and energy infrastructure comes online and the petroleum industry develops, Senegal is on track to become an engine of economic growth for the region.
The Port of Dakar is the first major port-of-call from Europe and is well served by major shipping lines. The Port serves as a transshipment center for landlocked nations in West Africa, featuring deep draft at 11 meters and a wide access channel allowing round-the-clock access. The GOS and various private sector partners are pursuing new state-of-the-art port projects, including a new bulk and mineral port in Bargny and a new container terminal in Ndiane, located south of Dakar.
Senegal’s major export industries include fish, gold, phosphates, horticulture products, cement, peanuts, and nut oil. Prior to the COVID-19 slowdown, tourism was another important source of foreign exchange, although the outlook for the tourism sector is currently uncertain. Senegal receives substantial remittances from nationals living abroad representing around nine percent of GDP.
The point of entry for business registration is Senegal’s Investment Promotion Agency (APIX), www.investinsenegal.com, which provides a range of services to foreign investors. Since 2007, APIX has significantly reduced the average number of days it takes to start a business to six days. The government continues to expand its “single window” system offering one-stop government services for businesses, opening new service centers in various locations and projecting to have at least one service center in each of the country’s 45 regional departments by 2021. Property owners can apply for construction permits online. In 2019, the GOS made tax information and some payment options available online. With the support of UNCTAD and the government of Luxembourg, APIX recently launched an online portal, https://senegal.eregulations.org/, containing extensive information regarding regulations applicable to businesses and investments in Senegal.
Senegal is actively seeking to increase U.S. trade and investment. While its commercial ties to France and its relatively small domestic market have previously limited U.S. commercial relationships, this is changing. U.S. exports to Senegal increased by 40 percent from $208 million in 2017 to $299 million in 2018. Other important trading and investment partners include China, France, India, Morocco, and Turkey. Although the IMF reports U.S. FDI stock in Senegal was approximately $91 million in 2018 (up from $25 million reported in 2017), anecdotal information suggests the amount is significantly more. In September 2020, the government of Senegal noted that U.S. investments in the country tripled from 2017 to 2020.
The African Growth and Opportunity Act (AGOA), renewed for a 10-year period in 2016, provides duty-free access to the U.S. market for most Sub-Saharan African countries, including Senegal. Senegal is eligible for AGOA preferences. In 2019, Senegalese exports to the United States totalled $132 million according to the United Nations COMTRADE database on intenational trade.