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- GDP (PPP):
- $26.6 billion
- 3.5% growth
- 3.3% 5-year compound annual growth
- $2,027 per capita
- Inflation (CPI):
- FDI Inflow:
Senegal’s economic freedom score is 55.4, making its economy the 125th freest in the 2014 Index. Its score is essentially the same as last year, with improvements in monetary freedom, trade freedom, and investment freedom offset by a considerable decline in business freedom. Senegal is ranked 23rd out of 46 countries in the Sub-Saharan Africa region, and its score is below the world average.
Senegal was first graded in the 1996 Index, and its economic freedom score has declined since then by over 2.5 points. Ratings have deteriorated in six of the 10 economic freedoms, including property rights, freedom from corruption, the control of government spending, and financial freedom. Most notably, property rights has declined by 30 points. Over its 19-year history in the Index, Senegal’s economy has been largely rated “mostly unfree.”
Corruption, endemic throughout the economy and exacerbated by the weak legal framework, remains a serious drag on long-term economic development. Hindering dynamic engagement in global commerce, the absence of strong commitment to open-market polices continues to undermine the emergence of a more vibrant private sector.
Former president Abdoulaye Wade amended Senegal’s constitution over a dozen times to augment executive power and weaken the opposition, but his run for a third term ended in his defeat by Macky Sall in a March 2012 runoff election. In September 2012, lawmakers voted to abolish the Senate and the vice presidency to save money for disaster management. Sporadic fighting between the government and separatists continues in the southern Casamance region. Economic reforms have proceeded slowly. Some 75 percent of the workforce is engaged in agriculture or fishing. In 2010, frequent power cuts sparked protests, and in 2012, the government announced plans for construction of a new 250-megawatt power plant. High formal-sector unemployment is a major factor in high rates of Senegalese emigration to Europe.
Corruption has long been a serious problem and has provoked growing public outrage. The judiciary is independent by law, but inadequate pay and lack of tenure expose judges to external influences and prevent the courts from providing a proper check on the other branches of government. Commercial courts are inefficient, and rulings can be arbitrary and inconsistent. Property titling procedures are uneven across the country.
The top individual income tax rate is 50 percent, and the top corporate tax rate is 25 percent. Other taxes include a value-added tax (VAT) and an insurance tax. Overall tax revenue equals 19 percent of the domestic economy. Public expenditures equal 29 percent of gross domestic income. Government debt is equivalent to 47 percent of GDP. The new government has promised to rein in spending after a decade of high deficits.
Launching a business takes about twice the level of average annual income, and completing licensing requirements is time-consuming. A formal urban labor market has been slow to emerge. Senegal provides an example of the burden and inertia effects of energy subsidy outlays, which now soak up more funds than are allocated for new capital expenditures on health or education.
Senegal’s average tariff rate is 8.4 percent. Imports of some agricultural products face additional non-tariff barriers. Foreign ownership levels in some sectors of the economy are capped. The underdeveloped financial system is dominated by the banking sector, which is highly concentrated with three banks holding about two-thirds of deposits. In recent years, bank supervision has gradually been strengthened.