Senegal is a stable democracy that is rapidly advancing and modernizing its infrastructure with ambitious plans for expanding private investment. Senegal offers growing trade and investment opportunities for U.S. firms across sectors and is 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 over 60 years of U.S.-Senegal diplomatic relations in 2023.
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 among the 15 countries member to the Economic Community of West African States (ECOWAS) over the last five years, with sustained economic growth rates averaging 7.88 percent from 2014 through 2022. In 2022, Senegal’s real GDP fell to 4.7 from 6.1 the previous year according to the IMF.[1] A leading cause of Senegal’s extremely low economic growth in 2021 is attributed to the COVID-19 pandemic. The World Bank also attributes the slump to a mix of rising food and energy prices, trade disruptions as well as to uncertainty which slowed private investment[2]. The economic deceleration in 2022 altered the country’s gains obtained with the 2020 – 2021 Social Economic Recovery Program (Programme de Résilience Economique et Sociale Sénégal PRES), the 2020-2021 Adjusted and Accelerated Priority Action Program (Plan d’Action Prioritaire Ajusté et Accéléré PAP2A) and investment in the secondary and tertiary sectors. Major oil and gas projects — previously expected to add three to four percent GDP growth and create significant government revenue by 2022 were also delayed due to COVID-19 but are now back on track for Q4 2023. The real GDP growth rate is projected at 5.3 percent in 2023. This growth would be driven by the emerging oil and gas industry.
The IMF rates Senegal’s risk of debt distress as “moderate” because the country has undertaken new debt obligations to fuel development and stimulate the economy 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 especially for cargo and transportation. Dakar has become an aviation hub for West Africa, with bi-weekly direct - Delta Airlines flights to New York City, and connections with multiple locations in Africa, Europe, and the Middle East. Air Senegal is the local flag carrier. Air Senegal introduced direct flights to New York in September 2, 2021. Senegal has a relatively advanced telecommunications infrastructure for the region with approximately 17.5 million cell phone accounts and 338,000 landlines for roughly 17.2 million inhabitants. Mobile phone penetration reached 114 percent in 2020, while individual using internet as a percent of population was 43 in 2020.
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 Government of Senegal 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 840-meter-long container shipping terminal in Ndayane, located south of Dakar.
Senegal’s major export industries include fish, gold, phosphates, horticulture products, cement, peanuts, and nut oil. After a progressive recovery in 2021, rising food and energy prices severely affected the Senegalese economy. The Government of Senegal has taken measures to address the increased cost of living. These measures included revenue forfeiture, subsidies, and transfers to the most affected households. The government of Senegal also suspended VAT on wheat flour and customs duties, on unscented broken rice of all origins, and reduced duties on refined palm oil packaged for retail sale, as well as duties on refined palm oil packaged for retail sale and of community origin[3].
Senegal receives substantial remittances from nationals living abroad representing 9.8 percent of GDP in 2022, retuning to its pre-COVID pandemic level.[4] This underscores the importance of the Senegalese diaspora to the economy.
The point of entry for business registration is Senegal’s Investment Promotion Agency (APIX), https://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. Property owners can apply for construction permits online. In 2019, the Government of Senegal made tax information and some payment options available online. With the support of UNCTAD and the government of Luxembourg, APIX 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. Embassy Dakar continues to receive a steady stream of market inquiries from U.S. based exporters looking to grow their exposure to Senegal and Francophone West Africa. Senegal’s desire to diversify its trade partners due to rapidly changing geo-political dynamics that are impacting the region is a welcome prospect for U.S. products and services market entry.
U.S. investment in Senegal has expanded since 2014, including investments in power generation, renewable energy, industry, and offshore oil and gas. A U.S.-Senegal Bilateral Investment Treaty has been in place since 1990.
Although France is historically Senegal’s largest source of FDI, China overtook France as Senegal’s largest bilateral trade partner in 2019. Turkish economic influence is also rising, particularly in construction. Other important investment partners include Turkey, Morocco, Saudi Arabia, and other Gulf States, as well as the EU. Sectors attracting substantial investment include petroleum and natural gas, agribusiness, mining, tourism, manufacturing, and fisheries.
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. According to Post’s compilation, exports under AGOA increased gradually over the period 2011-2020, on average by 43 percent.
Political Environment
Senegal has developed strong democratic institutions since gaining independence in 1960. Free and fair elections in 2012 brought President Macky Sall to power and consolidated Senegal’s role as an example of democracy following the 12-year tenure of Abdoulaye Wade. International observers assessed the February 2019 presidential election, in which President Sall easily won a second term, as free and fair, despite some isolated systemic issues and a few instances of campaign violence. Results of the July 2022 legislative elections were split between the ruling and opposition parties and conducted under transparent and peaceful conditions, according to international observers. Senegal will hold its next presidential elections in February 2024. For more information on Senegal’s political situation, please refer to the CIA factbook and to the following site https://theodora.com/wfbcurrent/senegal/index.html and the U.S. Department of State Countries & Areas website.
[2] Senegal Overview: Development news, research, data | World Bank
[3] Senegal Economic and Financial Situation 2022 and outlook on 2023, Senegal Ministry of Economy, Planning and International Cooperation
2. Personal remittances, received (% of GDP) - Senegal | Data (worldbank.org)