- GDP (PPP):
- $64.1 billion
- 5.3% growth
- 6.4% 5-year compound annual growth
- $3,536 per capita
- Inflation (CPI):
- FDI Inflow:
Senegal’s economic freedom score is 58.0, making its economy the 111th freest in the 2021 Index. Its overall score is unchanged, with gains in business freedom and government integrity offset by declines in fiscal health and other scores. Senegal is ranked 16th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.
The Senegalese economy has been mostly unfree for more than two decades. Economic freedom continues to be obstructed by weak rule of law, including deficient protection of property rights, a defective judicial system, and widespread government corruption. The government also intervenes too heavily in the labor market. Rectifying these problems would improve the business and investment climates.
IMPACT OF COVID-19: As of December 1, 2020, 333 deaths had been attributed to the pandemic in Senegal, and the economy was forecast to contract by 0.7 percent for the year.
Senegal is a former French colony that achieved its current form only in 1989 after several decades of failed confederations with neighboring countries. President Macky Sall was reelected to a five-year term in 2019 in accordance with a 2016 constitutional referendum that shortened presidential terms from seven to five years, prohibited the president from serving more than two terms, and reduced presidential power in favor of the legislature. Sall’s two primary competitors were excluded from the election based on what the opposition claims were trumped-up charges of corruption. Phosphate mining, fertilizer production, construction, tourism, fisheries, and agriculture propel Senegal’s economy. Major offshore oil and gas fields are also being developed.
Senegal maintains a property title and land registration system, but application is uneven outside of urban areas. Establishing ownership rights to real estate can be difficult. Settling contractual disputes is often cumbersome and slow. The judiciary is independent but inadequately resourced and subject to external influences. Although the government has prioritized efforts to fight it, corruption remains a serious problem.
The top individual income tax rate is 40 percent, and the top corporate tax rate is 30 percent. Other taxes include value-added and insurance taxes. The overall tax burden equals 16.2 percent of total domestic income. Government spending has amounted to 23.0 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.5 percent of GDP. Public debt is equivalent to 64.2 percent of GDP.
The paid-in minimum capital requirement to start a business has been reduced. Business entry costs and the costs of dealing with construction permits are also down. Getting electricity is cheaper. Most workers are informally employed and not covered by labor rules. The government has been working with the IMF to reduce subsidies for fuel, electricity, and agriculture, which have contributed to budget deficits.
Senegal has two preferential trade agreements in force. The trade-weighted average tariff rate is 9.3 percent, and three nontariff measures are in effect. Further streamlining of the regulatory framework is needed to ensure greater openness to trade and investment. Most sectors of the economy are open to foreign investment, but bureaucratic barriers impede investment activity. About 45 percent of adult Senegalese have access to an account with a formal banking institution.