Senegal ‘Must Accelerate Reforms’ to Achieve Emerging Status

Senegal’s president Macky Sall hopes the country’s development plan with double agricultural output, boost employment and increase trade. Agence France-Presse/Getty Images

Senegal is making progress on its ambitious economic reform agenda but much work remains to be done, says the International Monetary Fund.

Following a visit to Senegal the International Monetary Fund signaled support for the country’s development plan, the Plan Sénégal Emergent (PSE), which aims to remove bottlenecks to growth and help Senegal achieve emerging-country status by 2035.

Reaching that goal, though, “will require maintaining a sound macroeconomic environment and accelerating reforms aimed at improving productivity and the business climate,” the IMF warned.

Senegal’s economy has recently been plagued by sluggish growth and hampered by issues including spikes in food prices, a slowdown in industries such as telecommunications and financial services, and bottlenecks in energy and infrastructure development.

After meeting officials including Senegal’s President Macky Sall the IMF mission provisionally agreed to provide a three-year support program for the country and its development agenda. The IMF’s executive board will make a final decision on the agreement in June.

Senegal’s economy grew 4.7 % in 2014, the IMF said in a recent statement, and it noted that this year’s goal is to achieve growth of 5%. If the plan is “consistently and rapidly implemented” Senegal’s economy could reach 7% growth by 2019, the multilateral lender added.

Senegal’s growth strategy will be executed in several phases and calls for a broad set of structural changes to improve the business climate, attract foreign investment and rein in public expenditure in order to generate savings that can be invested in education, healthcare and infrastructure.

But it will not be easy. “Meeting these targets will require rigorous and robust efforts to implement the PSE initiatives and the government’s structural reforms,” IMF Assistant Director Ali Mansoor said in a statement.

Abdoul Aziz Tall, the Minister who is in charge of implementing the PSE, said the development agenda has received enthusiastic support from investors.

“Financial partners made offers that were even higher than what we expected,” said Tall in an interview with the Wall Street Journal.

Senegal originally sought about $3 billion but received over $6 billion in commitments from investors.

U.S. firm Contour Global’s 53MW power plant site in Senegal. Contour Global
Last year the government began four major projects under the plan, including a 53MW oil- and natural gas-fired power station that U.S.-based Contour Global is building in Rufisque, just east of Senegal’s capital, Dakar. The project will be completed in 2016 and is backed by the International Finance Corporation and the Overseas Private Investment Corporation.

The U.S. firm is one of several private partners that are involved in infrastructure projects.

The government has also initiated a Zircon mining project in the southwestern Diogo region, as well as construction of public housing nationwide and the development of three cereal corridors meant to industrialize farms, double agricultural output and position Senegal as a major exporter of fruits and vegetables.

The government hopes the development plan will help create 150,000 jobs by 2017 for Senegal’s predominantly young and rapidly growing population, estimated at 13 million in 2014. Tall says the government has helped create 5,000 new jobs since May 2014 by focusing on construction and the agricultural sectors.

Tall also said Senegal is interested in boosting trade with the U.S.

U.S. goods imports from Senegal—primarily artificial flowers, seafood and agricultural products—totaled $17 million in 2013 according to the Office of the United States Trade Representative. Senegal imported $230 million worth of goods including mineral fuel and machinery from the U.S. over the same period.

Senegal is eligible for the African Growth and Opportunity Act or AGOA, a trade framework which gives 40 African countries tariff-free access to the U.S. market, but which is under review in Congress as it’s set to expire in September this year.

Tall said that the framework does not address the difficulties some African countries have in meeting U.S. sanitary and technical requirements for agricultural imports and called for the U.S. to relax its food import standards.

“If the U.S. wants to trade with Africa … they have to make it easier for countries to work with them,” he said.

Write to Neanda Salvaterra at neanda.salvaterra@wsj.com.

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Source: The Wall Street Journal

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