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- GDP (PPP):
- $25.2 billion
- 2.6% growth
- 3.5% 5-year compound annual growth
- $1,871 per capita
- Inflation (CPI):
- FDI Inflow:
Senegal’s economic freedom score is 55.5, making its economy the 116th freest in the 2013 Index. Its score is essentially the same as last year, with a notable improvement in investment freedom largely offset by declines in half of the 10 economic freedoms including the management of government spending and labor freedom. Senegal is ranked 19th out of 46 countries in the Sub-Saharan Africa region, and its score is below the world average.
Potential entrepreneurs continue to face a number of institutional challenges to economic freedom in Senegal. The overall regulatory and legal framework remains weak, undermining the emergence of a more vibrant private sector. The presence of the state in the economy is still considerable, despite public-sector reforms initiated over a decade ago.
Hindering dynamic engagement in global commerce, the absence of strong commitment to open-market policies continues to undermine the prospects for long-term economic development. The financial sector remains underdeveloped, and the role of microfinance in providing access to credit is growing. The inefficient judicial system lacks independence and is vulnerable to corruption.
President Abdoulaye Wade, re-elected in 2007, amended Senegal’s constitution over a dozen times to increase executive power and weaken the opposition. His attempt to change the constitution again in June 2011 led to protests, and his decision to run for a third term ended in his defeat by Macky Sall in a March 2012 runoff. Sporadic fighting between the government and rebels continues in the southern Casamance region. Economic reforms that began in 1994 have proceeded slowly. Agriculture and fishing occupy about three-quarters of the population. Informal employment is common in both urban and rural areas. Foreign assistance comprised over 20 percent of government spending in 2007 (the most recent year for which data are available). In 2010, the Senegalese people protested frequent power cuts, and plans were announced in 2012 for construction of a new 250-megawatt power plant by a Korean firm.
The legal system does not provide secure protection for property rights, and the rule of law remains weak. The government has streamlined procedures for registering property and has reduced associated costs, but the administration of property titles and land registration procedures is uneven outside of urban areas. Commercial courts are inefficient, and rulings can be arbitrary and inconsistent. Corruption remains a cause for concern.
The top 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. The overall tax burden equals 18.8 percent of total domestic income. Government spending has increased to 28.5 percent of total domestic output. The budget is in deficit, and public debt has risen to about 40 percent of GDP. Borrowing has increased due to investments in road and electrical infrastructure projects.
The process for establishing a business is now more streamlined, but starting a business takes over twice the level of average annual income. Completing licensing requirements is time-consuming and costs over four times the level of average annual income. The large agricultural sector employs about 70 percent of the working population, and a formal urban labor market has been slow to emerge. Inflation is low.
The trade-weighted average tariff rate is high at 8.9 percent, and non-tariff barriers add to the cost of trade. Despite a desire to attract dynamic foreign investment, the bureaucratic approval process and poor investment infrastructure remain considerable impediments. Outmoded regulation, high credit costs, and scarce access to financing continue to constrain the small private sector.