In this series, we take a look at Africa, country-by-country, and offer a (very) brief glance at the historical events, key industries, and current political situation shaping individual states.
Photo: Looking towards Medina and Point E areas of Dakar. (Jeff Attaway/ Flickr)
Quick facts
Head of state: President Mackey Sall (2012–present)
Capital/ largest city: Dakar
National population: 16.9 million (2021)
GDP: USD 27.6 billion (2021)
A (very) brief history
Located on the western coast of Africa, Senegal is a country rich in history and culture. From colonization to independence, it has experienced a variety of political and economic changes that have helped shape the multilingual, multiethnic, and dynamic nation we know today.
Originally inhabited by a number of ethnic groups, including the Wolof, Serer, and Fula people, European powers arrived in the 15th century, with the Portuguese being the first to establish a trading post in the region. Over the following centuries, Senegal was colonized by a rotating cast of European powers, from the Dutch and the British, and eventually the French, whose imprint would be felt into modern-day Senegalese culture.
In 1960, Senegal gained independence from France, and Léopold Sédar Senghor became the country's first president. It was one of the few African countries to achieve independence peacefully, and it has maintained a relatively stable political climate since then. The country has since become a leading economy in West Africa, with a diverse economy whose growth has been driven by agriculture, fishing, tourism, and services.
Since independence, Senegal has been known for its political stability, with peaceful transitions of power and a well-functioning democratic system. This stability has contributed to the country's economic growth and development. Recent years have seen a degradation in its relationship with France, but not nearly on the scale of other Western Africa Francophone countries like Mali and Burkina Faso.
Photo: Mosque of the Divinity, from above (Jeff Attaway/ Flickr)
Key industries
Agriculture
As mentioned above, agriculture is a key industry in Senegal, employing well over half of the population and accounting for 16% of GDP. The sector is dominated by small-scale farmers and includes crops such as peanuts, millet, and rice. However, the country lies in the Sahel region, on the edge of the Sahara desert and is prone to drought, irregular rainfall, and poor soil conditions. In recent years, the government has been working to modernize the sector to improve efficiency and combat these limiting factors.
Fishing
Fishing is another important industry in Senegal, with the country having one of the largest and most productive fishing fleets in West Africa. The sector produced over 450,000 metric tonnes in 2021 and generated an estimated USD 400 million in value. However, this level of production has led to marine depletion, and in recent years, the government has worked to promote sustainable fishing practices, including better tracking of fleets. As recently as 2021, though, the UN Food and Agriculture Organization continued to express “concern” about the country's practices and the effects on the environment.
Tourism
Senegal country is known for its beautiful beaches, historical sites, and vibrant cultural scene, and this has helped bolster its growing tourism industry which by some estimates captures up to 10% of travelers to West Africa. The government has been investing in tourism infrastructure and promoting the industry as a way to generate foreign exchange and create jobs.
Services
Services – namely, finance and telecommunications, but also transportation – have proved critically important to the Senegalese economy. Whereas other African nations have relied heavily or solely on natural resources and export-led growth, the Senegalese government has been promoting investment in these sectors. It has implemented policies to support their growth including a special economic zone near Dakar to promote foreign direct investment and job creation.
Mining
Also notable is the country’s mining sector: With generous reserves of minerals like phosphate, gold, and iron ore, the mining sector has a significant impact on the government’s revenues and by some estimates, accounts for 40% of the value of exports.
How politics affects the business environment
While Senegal is known for its stable political climate (with regular elections and a democratic government), corruption remains a concern for foreign investors, and bureaucratic procedures can be slow and cumbersome. However, this level appears to have held stable over recent years, and Transparency International ranks Senegal between Ghana and South Africa on its Corruption Perception Index.
From a foreign investment perspective, Senegal has shown promising growth potential, and the government has been working to attract investors by offering tax incentives and other benefits. In the last ten years, the country’s foreign direct investment as a percent of GDP has increased five-fold (from 1.6% in 2012, to 8.1% in 2021). However, doing business in Senegal can still present challenges, such as navigating complex regulations and dealing with corruption.
Current political and economic situation
In recent years, the government has been working to address some of the challenges facing the country, including poverty, unemployment, and a lack of access to basic services such as electricity and clean water. It has implemented a number of initiatives to address these challenges, including investment in infrastructure, education, and healthcare. While studies from the early 2000s showed numbers for poverty reduction trending in the right direction, the current picture is less clear.
The government has also taken steps to improve the business climate: For example, it has launched initiatives to improve infrastructure, attract foreign investment, and promote entrepreneurship. The country has also established several free trade zones (see Dakar, above) to attract foreign businesses.
Domestically, the government has been working to improve access to finance for small and medium-sized enterprises and to promote economic growth in rural areas. While the link to government policy is inconclusive, data shows that quality of life in these areas is generally considered quite good. The country has also launched initiatives to promote renewable energy (and is proving itself to be a leader in the region) and improve access to healthcare and education.
Final note
With an economy driven by an array of sectors including agriculture, fishing, tourism, and services and a stable political system, Senegal has experienced a promising level of economic growth and development in recent decades.
The government appears to be taking responsible steps to promote foreign investment and implement effective policies to address the challenges facing the country, including poverty, unemployment, and a lack of access to basic services.
While we’ve noted some challenges to doing business in the country, the government has been working to improve the business climate, with an emphasis on attracting foreign investment. As many countries in Africa struggle with governance and implementing sustainable long term economic development plans, Senegal will remain a country to watch in the coming years.
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