Senegal is one of the most stable countries in Africa, with three peaceful political transitions since independence in 1960, according to the World Bank.
President Macky Sall has been in power since 2012 and won a second five-year term in February 2019.
Gateway to Africa
Located at the westernmost point of the continent and served by multiple air and maritime travel routes, Senegal is known as the Gateway to Africa.
It is bordered by Mauritania, Mali, Guinea, and Guinea-Bissau, enjoys a dry tropical climate and has a population of nearly 17 million people.
It came under French control in the late 19th century and remained a colony of France until 1960, when it gained independence.
The most important city in Senegal is the capital Dakar, which is described as a lively and attractive metropolis, is a popular tourist destination and has one of Africa’s most important harbours.
Its natural resources include fish, peanuts, phosphate, iron ore, gold, and titanium, and its industries include agriculture and fish processing, phosphate mining, fertilizer production, petroleum refining, and construction materials.
Phosphate mining, fertilizer production, construction, tourism, fisheries, and agriculture are drivers of Senegal’s economy. Major offshore oil and gas fields are also being developed.
The pandemic hit Senegal hard, setting back services like tourism and transport, and exports.
Nevertheless Economic Intelligence, the sister company to The Economist newspaper predicts that Senegal’s economic growth will accelerate in 2022.
It says this will be driven by construction and gold mining, and helped by a more favourable global economic backdrop.
However, it adds that downside risks related to fiscal pressures and the pandemic will persist. “Real GDP growth will gain momentum in 2023-26, with oil production beginning in 2023.”
After a growth rate of 1.3% in 2020 due to the pandemic, the outlook for Senegal is “rather good,” says Mamadou Mbaye, legal adviser at Mame Adama Gueye & Partners in Dakar.
“Indeed, according to the IMF, the growth rate in 2021 has been revised upwards between 3.5% and 5%,” he says.
And the IMF has predicted a growth rate of more than 5.5% in 2022 for Senegal.
“Many sectors are among priorities in Senegal,” says Mbaye. So, the government has developed an action plan, the ‘Plan Senegal Emergent (PSE), which contains many sub-plans.
One of these sub-plans is PAP 2 2019-2023, which has identified certain priority and sovereignty sectors.
These include agriculture, livestock farming, aquaculture, industrial development, universal access to electricity, the digital economy, the construction ecosystem, hydraulics, taxation and land, and health and social protection.
“Senegal is therefore a country under construction,” says Mbaye. He says one of the challenges the country is facing is the training and employment of young people.
He says the PAP 2A plan provides for a rapid recovery, accompanied by reforms and massive investments, particularly in the social sectors, agriculture, fishery, livestock farming, housing, digital technology and industry.
And it will enable an average growth rate of 8.6% to be achieved over the period 2021-2023, says Mbaye.
He says many sectors remain to be developed in Senegal and there are many opportunities in different sectors.
This include the exploitation of oil and gas as well as the implementation of local content, which aims to regulate the use of material and human resources in order to promote local content.
Another opportunity area is the electricity sector, with the end of the exclusivity of the Société Nationale d’Electricité du Sénégal (Senelec), the national electricity company of Senegal.
Then there is digital activity and fintech, agriculture, real estate, and sanitation.
“The government has also put in place a policy to encourage the creation and promotion of start-ups,” says Mbaye.
He says Senegal’s currency issues include the risk of fluctuations with currencies such as the US dollar, which could impact the price of debt.
“However, the prospects for oil and gas development may lead to an increase in foreign exchange reserves,” he says.
Mame Adama Gueye & Partners was restructured last year into an advisory department and a litigation department.
The firm operates in various areas of general and business law across a wide range of disciplines.
“The firm has considerable international experience and regularly collaborates with major foreign firms,” says Mbaye.
Projects the firm has advised on include the acquisition of Shell Senegal, the acquisition of Club Méditerranée Sénégal, the construction of 18 flyovers, and the construction of hospitals in Touba in central Senegal and Kaffrine in the Peanut Basin of the country.
The firm has also advised on several solar power projects, including the Kael and Kahone solar power plants, the first electricity generation projects by private operators to be tendered in Senegal, and Ten Merina, one of the largest solar power plants in West Africa.
Among the many recent legislative developments in Senegal
The ‘Plan Senegal Emergent provides for the improvement of access, quality and efficiency of justice, says Mbaye.
“As a result, Senegal has undertaken a judicial reform that has resulted in the creation of special courts, such as the Commercial Court.”
These reforms also aim to secure the business environment, which has resulted in the adoption of many reforms in different areas.
Decrees have also been issued to complete the regulatory framework for oil and gas development to ensure that it benefits everyone.
Notable reforms have also occurred in the energy sector, says Mbaye.
“With these laws, we have witnessed the end of the exclusivity of the Société Nationale de l’électricité du Sénégal (Senelec) in the field of wholesale purchase of electricity, and the breakup of Senelec into three subsidiaries:
- A subsidiary dedicated to production activities
- A subsidiary dedicated to transport activities
- A subsidiary dedicated to distribution and sales activities
“Senegal has also reviewed the legal and regulatory framework for public-private partnerships (PPPs),” says Mbaye.”