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Quick Facts
- Population:
- GDP (PPP):
- $39.7 billion
- 6.5% growth
- 5.1% 5-year compound annual growth
- $2,577 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
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Senegal’s economic freedom score is 55.7, making its economy the 126th freest in the 2018 Index. Its overall score has decreased by 0.2 point, with lower scores for the trade freedom and property rights indicators outweighing improvements in fiscal health and labor freedom. Senegal is ranked 21st among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.
The government has pledged reforms to counter high energy costs, a challenging business environment, and a culture of overspending. Plans include yet more spending on investment projects, but the government promises to preserve macroeconomic stability. Senegal needs a streamlined regulatory framework, greater openness to trade and investment, more effective enforcement of anticorruption measures, and other institutional reforms to improve its entrepreneurial climate. Systemic weaknesses persist in the rule of law, and the judiciary remains vulnerable to political influence.
Background
A low-level separatist insurgency by the rebel Movement of Democratic Forces of Casamance in the South of this former French colony ended with a cease-fire in 2014. Macky Sall of the Alliance for the Republic–Yakaar party was elected president in 2012. His coalition won 75 percent of the National Assembly’s seats in July 2017 elections that were protested by the opposition. In 2016, the constitution was changed to shorten presidential terms from seven to five years, prohibit more than two terms, and reduce presidential power in favor of the legislature. Senegal’s economy is driven by phosphate mining, fertilizer production, construction, tourism, fisheries, and agriculture. Major offshore oil and gas fields are also being developed.
The Senegalese Civil Code provides a framework, based on French law, for enforcing private property rights. Application of property title procedures and a land registration system is uneven outside of urban areas. The judiciary is independent but inadequately resourced and subject to external influences. The public remains frustrated by the ability of officials to engage in corrupt practices with impunity.
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 25.5 percent of total domestic income. Over the past three years, government spending has amounted to 30.2 percent of total output (GDP), and budget deficits have averaged 4.7 percent of GDP. Public debt is equivalent to 57.4 percent of GDP.
In 2016, Senegal implemented some changes that increase business freedom, but implementation of these changes is subject to bureaucratic bottlenecks. The labor code is relatively inflexible, and a lack of suitable job opportunities in Senegal leads many to leave the country in seek of employment. The government continues to fund costly subsidies.
Trade is significant for Senegal’s economy; the combined value of exports and imports equals 74 percent of GDP. The average applied tariff rate is 11.6 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average. The underdeveloped financial system is dominated by a highly concentrated banking sector in which three banks hold about two-thirds of deposits. Bank supervision has gradually been strengthened.