Good manufacturing base but slow growth
Senegal has a relatively high manufacturing base, compared with the other ACET 15. The share of manufacturing in GDP was around 14% in 2010, but it has been trending downward—from an average of 16.7% in 1991–2000 and 15.3% in 2001–10. The country’s location as a gateway to several francophone countries in West Africa is an advantage for developing manufactures and also for serving as a transshipment point for exports. But this advantage is yet to be fully utilized. Growth has been very slow— average GDP per capita growth was 0.1% a year from 1971 to 2010.
Growth has picked up a bit in recent years, but unemployment has not changed much in the country, increasing slightly in recent years from 10.0% in 2005 to 10.2% in 2011. Unemployment affects women and youth much more. Youth unemployment was 12.7% in 2011, and was 13.3% for women, compared with 7.7% for men. The poverty rate has declined from 66% in 1991 to 29% in 2011 (share of population living on less than $1.25 a day), but income inequality remains high with a Gini index of 40.3 in 2011.
Senegal is one of the few African countries that has escaped coup d’états and all their political and economic costs. The country is considered an example of successful democratic transition. Senegalese authorities have undertaken initiatives to transform the national economy. But the country remains highly dependent on donor support for the implementing and effectively monitoring development programs and projects. Economic planning is weak and government policies are based mainly on shortterm projections.
Despite significant reforms in 2003 and 2007 (including reducing the corporate tax and facilitating the procedure for business creation), Senegal dropped from 152nd of 183 countries in 2007 to 154th in 2012 on the Doing Business Index. But the country is fairly well ranked in trading across the borders (65th) and resolving insolvency (86th). Senegal’s private sector suffers from a lack of competitiveness. Senegal ranked 111th of 142 counties on the 2011–12 Global Competitiveness Index. Infrastructure, primary education and health, and higher education and training constitute major constraints to Senegal’s competitiveness.
During the past decade Senegal has adopted a private sector strategy and implemented reforms to improve business environment. Under the leadership of the Presidential Council for Investment, reforms have focused on increasing private participation and improving the business environment and competitiveness. The country has adopted a legislative framework for public-private partnerships, and build–operate–transfer, especially for infrastructure and utilities.
Senegal’s traditional exports include groundnut products, fish products, and cotton—and its nontraditional exports, salt, horticultural products, cement, refined petroleum products, and phosphate and its derivatives. Horticultural products, cement, and cotton have the greatest potential to increase and diversify Senegal’s exports.
The country has a good climate for horticultural production throughout the year. About 70% of Senegal’s exports to the EU are green beans, cherry tomatoes, mangoes, and melons. The labor-intensive vegetable and fruit industry employs more than 17,000 families in rural Senegal. Cement could be a booming sector with exports to neighboring countries and the rest of Sub-Saharan Africa. Cotton holds perhaps the greatest prospect for value addition. But authorities must invest in infrastructure to facilitate storage and transportation to markets. They should also improve the production and distribution of electricity—and invest in the training of farmers and facilitate their access to agricultural inputs. Leveraging cotton, Senegal’s could build on its reputation in high fashion African designs to expand garments exports. The country also has good opportunities for raising its success in tourism to the next level by diversifying its tourism attractions and source markets.
Senegal’s growth with depth
- Transformation—4th of 21. Senegal was ranked 3rd on economic transformation in 2000 (1999–2001); it dropped to 4th in 2010 (2009–11), losing ground to Côte d’Ivoire.
- Growth. Senegal has grown slowly for four decades. Average GDP growth was 1.7% a year in the 1970s, 2.1% in the 1980s, 2.8% in the 1990s, and 3.5% from 2001 to 2010. And GDP per capita fell at –0.8% a year in the 1970s and –0.6% in the 1980s, before turning positive at 0.4% in the 1990s and 1.1% from 2001 to 2010. GDP per capita growth is projected at 2.6% in 2011 and about 3.7% in 2012.
- Diversification—5th. The manufacturing share in GDP was 14.2% in 2010, down from 15.7% in 2000. The share of manufacturing and services in total exports, 42.8% in 2000, rose to 45.4% in 2010, of which more than half was from services. In 2000 the top five exports made up 65% of Senegal’s total merchandise exports, but the share dropped to 59% in 2010, indicating a positive trend in commodity diversification. But overall on diversification, Senegal did not make much progress compared with the other countries, so its rank of 5th in 2010 was a slight deterioration from 4th in 2000.
- Export competitiveness—9th. Senegal’s rank of 9th in 2010 is deterioration from 7th in 2000. The relative export intensity of production (the share of exports in GDP relative to the share of the world) fell from 0.77 in the early 2000s to 0.66 at the end of the decade.
- Productivity—7th. Productivity in manufacturing, measured by manufacturing value added per worker, rose from $42,396 (in 2005 US$) in 2000 to $22,260 in 2010. Similarly, cereal yields have been on an upward trend—from and 865 kilograms per hectare in 2000 to 1,099 in 2010. But the improvements did not match those in the other countries, so Senegal dropped from 6th in 2000 to 7th in 2010.
- Technology—2nd. In 2000 the share of medium and high technology in production in manufacturing was 38%, dropping to 36% in 2010. The share of medium and high technology in exports was 11.2% in 2000, dropping to 10.1% in 2010. But Senegal’s 2nd position went unchanged between the two periods.
- Human well-being—9th. Senegal’s average GDP per capita (PPP 2005 international $) rose from $1,500 in 2000 to $1,732 in 2010. The country fell from 8th in 2000 to 9th in 2010.