With a growth rate of 4% in 2010 and 4.4% in 2011, according to IMF figures, Senegal hopes to continue on the path to a stable recovery from the 2008-09 economic slowdown. However positive the results may be, they are still far from the double-digit growth promised by the government in 2000 and from the 7% growth that economists say is necessary in order to create real change for the majority of Senegalese citizens. IMF experts who were in Dakar at the end of the year warned that Senegal would have to adopt a series of reforms to maintain the current growth rate due to several internal and external threats.
The global economic slowdown had an impact on major sectors of the Senegalese economy, but the fundamentals remained sound. The international environment hurt tourism receipts, foreign direct investment and remittances. Favourable weather has helped the agriculture sector, but performance is still lagging and hunger remains a problem.
In late 2010, the NGO Actionaid reported that, in spite of increased government spending on agriculture, 51% of people in rural areas suffered from serious food insecurity. High on the list of priorities for government reform is the increased transparency and good governance that are necessary to create a stronger investment climate. The 2010 IMF mission delivered a measured criticism of the recent grands projets undertaken by the government of President Abdoulaye Wade, saying that new investments must have “a high rate of return … in line with the country’s overall development strategy.
Plans for new infrastructure investment need to be transparently integrated in the budget framework and should also be conducive to the development of additional private-sector investment.” The government has spent hundreds of billions of CFA francs on big infrastructure projects, but they have not transformed the Senegalese economy. Mining developments have been slowed by a series of contracting wrangles.
In August, the government settled its dispute with South Africa’s Kumba Iron Ore after it had awarded the rights to the Falémé iron-ore project to ArcelorMittal although it had previously promised the deposit to Kumba. In October, President Wade announced the government’s intention to cancel ArcelorMittal’s licence, meaning that it will be several years before a new investor can begin work. The government said in June that it would launch a $300m bond to finance road projects in 2011 following a successful $200m Eurobond for road construction in December 2009.
Standard & Poors gives Senegal a B+ rating but has warned that the economic outlook is negative because government debt is set to soar into 2012. The new bond would be used to link Dakar and Thiès to a new international airport outside the capital. Elsewhere, the government is looking at a new five-year plan to expand the road network and is considering new financing means, including toll roads and special taxes.
Big infrastructure deals have led to several financial scandals, including those linked to projects in Thiès, the hosting of the Organisation of the Islamic Conference in 2008 and road construction programmes in the interior of the country. The contracting process has been marked by opaque bidding procedures, overinflated costs, poor workmanship and severe delays in completion. In late 2010, the government was also investigating a series of scandals related to telecom licences and contracts, involving Sudatel and Global Voice.
Good governance was also on the agenda of Senegal’s international partners. In May, US ambassador Marcia Bernicat told the Dakar government that the $540m that it received in 2010 from the Millennium Challenge Account was dependent on the government’s corruption credentials. The electricity crisis (see below) and other problems of a social and economic nature will take on a new light in 2011 because national elections are due in early 2012.
Tensions are high around the 2012 poll because Wade has already announced his intention to run for a third term. Civil society groups and the opposition have challenged Wade’s decision to stand, saying that a third term would not respect laws on term limits or Wade’s earlier promise not to be a candidate. Relations between the government and the opposition are already at a roadblock because several of the major parties still refuse to recognise Wade’s election victory in 2007.
Battlelines are already being drawn around the management of the electoral bodies and issues related to poll transparency. The government’s appointment of a Wade ally, Ousmane Ngom, as interior minister in September has not reassured the opposition. The opposition has also criticised the appointment of Cheikh Tidiane Sy as justice minister and Cheik Tidiane Diakhaté as president of the Conseil Constitutionnel.
Opposition parties say Diakhaté is too close to the party in power and have called for him to be replaced so that someone more impartial can be charged with hearing electoral disputes. In the pre-election period, several different groups are struggling to get their voices heard: peanut farmers who have been unable to sell all of their production and who feel abandoned by the liberal regime; residents of the suburbs, many of whom have spent three years on and off with their feet in water due to recurrent flooding; teachers and their students, who complain that there is not enough investment in education; and even beggars, whom the government has banned from the streets. Battles within the ruling Parti Démocratique Sénégalais (PDS) have led to several government reshuffles, which in turn have interrupted progress on several projects.
A group of PDS politicians have come to oppose the grooming for the succession of the president’s son, Karim, who many oppositionists assume will try to take over from his father. President Wade has made it clear that he is going to give Karim all the chances he needs to prove himself. In October, Wade sacked Energy Minister Samuel Sarr and replaced him with Karim, who is already in charge of air transport, international cooperation and infrastructure.
Idrissa Seck, the former prime minister who had joined the opposition only to rejoin the PDS, said in October that he was going to use his networks within the ruling party in order to shore up his candidacy for the 2012 polls. Seck had said that he had reconciled with President Wade, but competition for the party nomination is likely to cause casualties in 2011. Polling data from late 2010 showed that the most likely outcome would bring Wade and former Prime Minister Macky Sall into a second round because Wade does not have enough support to win outright in the first round. Senegal will also begin 2011 with a much-reduced French military presence. In early 2010, President Wade announced that the French-operated base would be closed; France confirmed the decision in June.
Problems of the powerless
Daily power outages were a regular occurrence in 2010. Management of the energy sector has proved particularly problematic due to the age and deterioration of several power plants. Investment in infrastructure is needed, as well as improvements to the administration of the Société Nationale d’Electricité (Senelec).
The organisers of popular protests have been encouraging people not to pay their bills, further undermining the financial sustainability of the utility company. Senegal currently has an energy deficit of 30MW-50MW, which goes up to 130MW at peak times. In August, the government was in talks with Jacobsen Elektro to build a new gas-fired power plant that the company said could provide 80MW as soon as February 2011.
The government has a few long-term hopes, and foremost among them is China. China Exim Bank is financing the Boucle de Dakar project that will install 474 substations and several hundred kilometres of transmission cables. In 2010, the government signed a deal with China Electrics to build a 50MW plant to boost production in the Mbour-Kaolack region. The energy ministry announced in 2010 that it would remove taxes on renewable energy sources to attract new investment. China Sof Industry plans to produce 300MW from a solar power project at Ranérou.