Country Report Senegal April 2011

Highlights

Outlook for 2011-12

  • The president, Abdoulaye Wade, remains committed to running for a third term in 2012 as the candidate of the ruling Parti démocratique sénégalais (PDS), but internal support appears to be fraying.
  • With the rebels gaining access to increasingly sophisticated weaponry, violence is intensifying in the breakaway Casamance region, undoing tentative progress a year ago towards resolution of the 30-year insurgency.
  • The Economist Intelligence Unit forecasts that the fiscal deficit will widen to 6% of GDP in 2011, because of aggressive investment plans, before narrowing to 4.9% of GDP in 2012 as economic growth improves.
  • As foreign direct investment inflows, industrial and agricultural output and public works accelerate, we forecast real GDP growth of 4.3% and 4.5% in 2011 and 2012, respectively. Unreliable power supply will remain a key risk.
  • In view of recent inflation data and the expectation of higher global commodity prices, we forecast that inflation will rise from an average of 1.2% in 2010 to 3.4% in 2011, before easing slightly to 3% in 2012.
  • The current-account deficit is forecast to widen to 11.2% of GDP in 2011, mainly on higher global commodity prices, before falling back to 9.7% in 2012.

Monthly review

  • Dakar, and a number of other towns, witnessed several parallel pro- and anti-government demonstrations marking the 11th anniversary of the "alternance" on March 19th.
  • A supposed coup attempt was revealed by the minister of justice the day before, but those arrested were relased days later without charge.
  • Mr Wade is losing support within the PDS with the public distancing from his goal of a third term of Aminata Tall, a PDS heavyweight. Mrs Tall's party future is in doubt.
  • At a donor conference, the government raised CFAfr1.6trn (US$3.3bn) over five years for its infrastructure programme, double the sum originally sought.
  • The cost of the chronic power shortages in 2010 has been put at a loss of 1.4% of potential economic growth according to the research division of the Ministry of Finance. Real GDP still managed to grow by an estimated 4.2%.
  • Notwithstanding doubts as to the accuracy of government data, 2010 has seen another record year for agricultural output
  • Construction of a new cement factory that will allow Senegal to meet all its domestic cement needs is nearing completion.

Outlook for 2011-12: Political stability

Senegal has, since independence, enjoyed one of the most democratically developed and stable polities in Sub-Saharan Africa. However, this is coming under increasing threat from the controversial intention of the president, Abdoulaye Wade, to run for a third term in the 2012 election. Having stated his intention last September, Mr Wade secured the backing of the steering committee of the Parti démocratique sénégalais (PDS), which dominates the ruling Sopi coalition and the National Assembly, buttressed by the reshuffle and expansion of the cabinet last June. Nevertheless, in addition to the multiplicity of overlapping portfolios arousing public ire for its wastefulness and reduced effectiveness of policymaking and implementation, Mr Wade's internal support is showing signs of fraying. Talk of Mr Wade's son and key minister, Karim Wade, running instead remains subdued, but questions are emerging amongst the party leadership about whether, constitutionality notwithstanding, Mr Wade remains best-placed to secure the party's dominance. Karim Wade's presidential ambitions should not be ruled out for the future, but should Mr Wade decide not to run-whether for age and health reasons or because of waning party support-it remains unclear who would succeed him, given his personality-driven ruling style. The party could face a destabilising power struggle.

Legality is the bigger objection; the 2001 constitution limits presidents to two terms, but Mr Wade's allies assert his eligibility for a third, as it would be his second under the revised constitution. Appointing a new president of the Constitutional Council is an attempt to head off such legal challenges, while the return of Mr Wade's trusted ally, Ousmane Ngom, to the Ministry of the Interior will help to overcome constitutional and electoral hurdles.

Opposition parties will seek to capitalise on deep popular discontent over long-standing problems such as worsening power shortages, high unemployment and poor social welfare provision, with protests having broken out over recent electricity outages, high telephone charges, poor governance and Mr Wade's electoral intentions. The government will continue to strive to improve energy security, but the state's limited capacity to implement policy and the government's mixed signals regarding fiscal discipline may hinder progress.

The insurgency in the Casamance region, led by the separatist Mouvement des forces démocratiques de la Casamance (MFDC), has flared up sporadically for nearly three decades, with little progress since talks failed in 2005. Although some military success in early 2010 prompted calls from some MFDC leaders for a ceasefire and negotiation, violence has since intensified, with Iran blamed for supplying the rebels' more sophisticated weaponry. That the MFDC remains splintered into rival factions is also an obstacle to the negotiation of a comprehensive peace deal. Furthermore, as rebel groups vie for dominance amid an increasingly unsupportive local population, they are resorting more to banditry to fund their operations. The drug-trafficking that has affected Guinea, Guinea-Bissau and Mauritania is becoming increasingly problematic in Senegal as narcotics seizures increase in size and frequency, despite the US-funded African Maritime Law Enforcement Partnership programme.

Outlook for 2011-12: Election watch

Mr Wade's candidacy for the 2012 presidential election on February 26th remains in place for now, having seemingly neutralised internal PDS dissent from the mayor of Thiès, Idrissa Seck, although, with party support for Mr Wade fraying, Mr Seck may be a leading contender to replace him. Despite waning popularity in the cities, the president retains strong rural support, as well as among religious groups. Turning opposition to Mr Wade into electoral victory will not be easy, and he will exploit the opposition's disunity. Such rivalry could strain the informal opposition alliances that contributed to the rout of the PDS in local polls in March 2009. Unity may yet be preserved by the coalition around a popular singer and businessman, Youssou N'dour, and his political awareness movement, Fekke ma ci boole, or the Mouvement politique citoyen, led by a former justice minister, Cheikh Tidiane Gadio. Other leading opposition figures include a former prime minister, Macky Sall; the Parti socialiste (PS) leader, Ousmane Tanor Dieng; and Khalifa Sall, the popular PS mayor of the capital, Dakar. Another anti-Wade group, Terminus 2012, was launched in August by a former World Bank consultant, Amadou Guéye. Although the PDS's parliamentary majority grew in 2007 as a result of the opposition's electoral boycott, the party is still likely to remain in power come the 2012 National Assembly elections. Nonetheless, a victory for Mr Wade-currently the Economist Intelligence Unit's core scenario-could provoke widespread protests, although concrete improvements in the power-supply situation may be enough to save him.

Outlook for 2011-12: International relations

Having mediated negotiations that led to the presidential poll in Mauritania, Mr Wade will have a strong relationship with Senegal's northern neighbour. The fragile administration of Guinea-Bissau's president, Malam Bacai Sanhá, may not prove willing-or able-to assist Senegal's campaign against the Casamance separatists, who reportedly draw support from kinsmen over the border. Guinea's return to civilian rule will improve regional stability. Support from Senegal's main trading partners in the EU-notably France-will remain strong. Relations with China have flourished since the start of diplomatic ties in 2005. Burgeoning commercial ties with Iran have been severed following the discovery of an illegal arms shipment to The Gambia and the intensification of Casamance rebel violence using weapons originating from Iran, despite the promise of more investment.

Outlook for 2011-12: Policy trends

Senegal maintains IMF approval for its ongoing reform programme, despite continuing to miss some fiscal targets, with the Fund approving a new three-year policy support instrument in December 2010 to support economic reform through reducing the fiscal deficit, increasing transparency, encouraging the private sector and strengthening the financial sector. The government will continue to reduce private-sector arrears, at the expense of a wider deficit. The government's accelerated growth strategy targets real GDP growth of 7% a year-an overambitious medium-term target given the economy's structural constraints and global economic conditions. Nonetheless, higher investment in the key areas of energy, infrastructure, agriculture, fisheries, tourism, textiles and information technology will encourage growth. Despite ongoing business environment reform, Senegal continues to slip down the World Bank's Doing Business survey of global competitiveness, dropping one place in the 2011 rankings to 152nd out of 183 countries. A review of Senegal's customs and tax codes, which was revealed in December, should improve things.

Outlook for 2011-12: Fiscal policy

Despite the IMF's medium-term fiscal deficit target of 4% of GDP and Fund-approved stimulus, Senegal's 2011 budget envisages the deficit widening to 5.9% of GDP, notwithstanding earlier expectations that the government would seek to narrow the deficit. Nevertheless, the authorities remain committed to restraining current expenditure, which will grow only marginally; the bulk of this primarily foreign-financed spending will go on infrastructure investment and education, in order to underpin future growth. The immediate fiscal cost of reducing arrears to the private sector and settling remaining extra-budgetary spending and public institution and agency debt should be offset by the economic benefits of improving (slowly) the business environment and encouraging timely private-sector tax payments, supported by a clear tax code and lower taxes. In order to support its infrastructure investment plans, the government is seeking to refinance its 2009 US$200m Eurobond, issuing further project-linked debt of up to US$300m in 2011, having raised in March concessional commitments worth US$3.3bn over five years. We see the budget deficit widening from an estimated 5.5% of GDP in 2010 to 6% in 2011, before narrowing back to 4.9% in 2012 as revenue accelerates.

Outlook for 2011-12: Monetary policy

Monetary policy is determined by the regional central bank, Banque centrale des Etats de l'Afrique de l'ouest (BCEAO), the priorities of which are targeting inflation and maintaining the CFA franc's peg to the euro. Policy is therefore heavily influenced by that of the European Central Bank (ECB). The BCEAO last cut its repurchase rate (taux de pension) by 50 basis points to 4.25% in June 2009. With a deteriorating inflationary outlook in the Franc Zone and the ECB tightening in April on similar concerns despite economic and fiscal weakness, the BCEAO may begin to tighten slightly its relatively loose monetary policy, raising its main policy rate, taux des appels d'offres, in 2011, earlier than originally expected. Liquidity injections will remain the prime policy tool, with the bank having recently introduced two new liquidity offerings as demand picked up.

Outlook for 2011-12: International assumptions

International assumptions summary
(% unless otherwise indicated)
 2009201020112012
Real GDP growth
World-0.74.94.34.2
OECD-3.52.92.52.3
EU27-4.21.81.91.7
Exchange rates
¥:US$93.787.981.881.0
US$:€1.3931.3261.3651.295
SDR:US$0.6460.6520.6370.648
Financial indicators
€ 3-month interbank rate1.230.841.331.88
US$ 3-month commercial paper rate0.260.260.320.70
Commodity prices
Oil (Brent; US$/b)61.979.6101.085.0
Rice (US$/tonne)566.3507.8523.8498.8
Food, feedstuffs & beverages (% change in US$ terms)-20.411.730.3-12.1
Industrial raw materials (% change in US$ terms)-25.644.528.0-10.7
Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

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Outlook for 2011-12: Economic growth

From an upwardly revised estimate of 4.2% in 2010-albeit restrained by chronic power shortages that the government has ascertained cost the country 1.4% in lost growth-real GDP growth should accelerate slightly in 2011, to 4.3%, driven by the government's ambitious infrastructure investment programme. After a record year in 2010, agricultural output will continue to improve, driven by increased government investment in the horticultural subsector, despite the withdrawal of some government marketing subsidies, reducing the impact of record global commodity prices as import demand moderates. Industrial production should rise in 2011-12 as power supply problems are gradually resolved, and phosphates output continues to recover. Services should grow well, led by banking and the mobile-phone subsector. Domestic demand, restrained by higher consumer prices in 2011 will accelerate in 2012; government spending will be sustained ahead of the 2012 elections, supporting real GDP growth of 4.5% in 2012. Deepening ties with China will also boost growth and investment.

Much depends on the government's strategy to resolve the power crisis, which would boost the commercial and industrial sectors. Progress on increasing power-generation and oil-refining capacity will be slow. Improving the perceptions of corruption and streamlining the bureaucratic business environment will be fundamental to encouraging foreign direct investment.

Outlook for 2011-12: Inflation

In June 2010 the consumer price index basket was rebased to 2008 and reweighted. Food's weighting has shrunk from 40.3% to 32.9%, but remains the primary driver of price growth, fuelled by rising global food prices, also felt through an enlarged weighting of the restaurants sub-index. Higher domestic food production, government subsidies, new price caps on several essential goods and a strengthening CFA franc will help to anchor local food prices, but could be undermined if global commodity prices continue to rocket. The government's withdrawal of some groundnut sector subsidies will put pressure on industrial-but not consumer-prices. Average inflation is set to accelerate from 1.2% in 2010 to an estimated 3.4% in 2011, easing to 3% in 2012.

Outlook for 2011-12: Exchange rates

The CFA franc-pegged to the euro at CFAfr655.96:EUR1-will fluctuate against the US dollar in line with the euro:dollar exchange rate. Despite improving growth in the US and ongoing fiscal and sovereign debt concerns in the euro zone, the euro will sustain its recovery in place since mid-2010 given the tightening of ECB rates. We now envisage a firming of the euro-pegged franc from an average of CFAfr495:US$1 in 2010 to CFAfr481:US$1 in 2011, before weakening to CFAfr507:US$1 in 2012.

Outlook for 2011-12: External sector

Stronger export volumes will be boosted by the franc's ongoing recovery. Nevertheless, led by firming output in key sectors, notably phosphates and agriculture, as well as the boosting effect of higher oil prices on Senegal's refined exports, total exports in US-dollar terms rose in 2010, to US$2.1bn, and are forecast to improve in 2011-12. Higher prices may restrain import demand, but increased global oil and food prices in 2011 and mounting capital imports to feed the government's investment programme should see the import bill reach US$5.1bn in 2011, easing to US$4.9bn in 2012 as prices fall slightly. Non-food imports may still increase in 2011-12, but improving agricultural output will help to reduce the food component. Tourism receipts are expected to increase modestly from a depressed base, but will remain vulnerable to economic weakness in Western Europe from where they primarily originate. Senegal receives little in donor transfers, but remittances should continue to hold up despite the moribund labour markets in the US and the eurozone. The current-account deficit is expected to widen in 2011 to 11.2% of GDP, from an estimated 9.9% in 2010, before narrowing to 9.7% in 2012, despite higher capital imports, because of energy prices easing slightly, food import requirements falling and transfer inflows receiving a boost from additional Millennium Challenge Corporation disbursements. The benefits of the stalled Faleme iron ore project will not be felt until after the forecast period.

Outlook for 2011-12: Forecast summary

Forecast summary
(% unless otherwise indicated)
 2009a2010b2011c2012c
Real GDP growth2.24.24.34.5
Industrial production growth4.63.14.34.9
Gross agricultural production growth7.25.04.54.3
Consumer price inflation (av)-1.11.2a3.43.0
Lending rate14.514.515.015.5
Government balance (% of GDP)-5.6-5.5-6.0-4.9
Exports of goods fob (US$ m)1,8912,062a2,3492,311
Imports of goods fob (US$ m)-4,542-4,444a-5,050-4,892
Current-account balance (US$ m)-1,421b-1,209-1,484-1,307
Current-account balance (% of GDP)-11.9b-9.9-11.2-9.7
External debt (year-end; US$ m)3,5033,5753,9324,126
Exchange rate CFAfr:US$ (av)470.9494.8a480.6506.5
Exchange rate CFAfr:¥100 (av)502.5563.0a587.9625.3
Exchange rate CFAfr:€ (end-period)656.0656.0656.0656.0
Exchange rate CFAfr:SDR (end-period)721.7757.9a770.9792.0
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

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The political scene: Dakar sees a day of demonstrations

On March 19th Dakar, together with a number of other towns, witnessed several parallel pro- and anti-government demonstrations marking the 11th anniversary of the alternance, the change of government that brought the president, Abdoulaye Wade, and the Parti démocratique sénégalais (PDS) to power. Generally demonstrations went peacefully, despite some isolated episodes of violence. Some local pro-government commentators hailed the absence of significant clashes as an expression of the maturity of Senegalese democracy and the government's tolerance of popular mobilisation, having permitted the demonstrations to appease protestors, while the president urged his supporters to avoid celebrations (ostensibly for reasons of austerity, but in reality to avert possible clashes between the two camps). A few thousand pro-Wade supporters showed up (the government claimed 100,000), bussed in from outside the city to the presidential palace near where the anti-Wade protests had taken place in the central square amid a substantial police presence, which had also been felt around the city days before the demonstrations. Perhaps by chance, the demonstrations coincided with a significant improvement in power supply in many areas of Dakar hitherto affected by frequent power cuts, presumably as a result of the government's effort to minimise public anger ahead of the mobilisations.

After months of mounting social tension (March 2011, The political scene) against the background of events in North Africa, there were some fears that the government could lose control of the situation. This remains unlikely, however, and the protests' relative peacefulness demonstrates the political stability that Senegal still enjoys despite the power cuts and the high price of basic necessities. Mr Wade nevertheless faces a difficult year as the presidential elections near in February 2012, given his waning urban popularity and increasing fragmentation within the PDS. However, all is not lost; the local press has revealed manoeuvres to secure votes through tactical changes in the organisation and distribution of electoral lists and the appointment of key allies in the strategic Direction de l'automatisation du fichier. Moreover, the fact that the opposition coalition, Benno Siggil Senegal, has still not decided whether to field one single or several competing candidates for the presidential elections also plays in Mr Wade's favour. If a consensus is reached on a popular single candidate its chances of success would increase substantially, possibly enough to compensate-through avoiding fragmentation of the vote-for the president's electoral manoeuvres.

The political scene: An alleged coup is supposedly thwarted

Hours before the demonstrations the minister of justice, Cheikh Tidiane Sy, announced the foiling of a coup attempt. He claimed that a number of young opposition activists, especially within the Mouvement Tekki and the Mouvement national des étudiants socialistes, had planned subversive and destabilising actions on the day of the demonstrations. However, the four individuals arrested were freed two days later, and Mr Sy received no backing from the president or the prime minister, making his sudden intervention rather embarrassing.

The political scene: Fissures are reappearing within the PDS

Mr Wade is facing internal party challenges. On March 27th Aminata Tall, a PDS heavyweight nicknamed "the Iron Lady", officially distanced herself from the president and his proposed candidacy in 2012. Although tension has simmered between the two for some time, this is the most public instance and it may constitute a significant blow to Mr Wade if Mrs Tall encourages others in the party similarly to reject his electoral ambitions and even to leave the party itself. The possibility of an internal party challenge has therefore increased.

Internal PDS divisions seem to be increasing at a difficult time for the president. Mrs Tall has also hinted at the possibility of forming an alliance with a former prime minister, Idrissa Seck, who, despite recently returning to the PDS after time in the opposition, also opposes Mr Wade's candidacy. The two, together with another former prime minister, Macky Sall, who left the PDS in 2008 to establish his own opposition party, Alliance pour la république, still command substantial support in liberal ranks of the PDS. Mrs Tall and Mr Sall could both be viable candidates for Benno Siggil Senegal should they leave the party and the coalition pick a single consensus candidate (Mr Seck less so, as it has been suggested that he is a plausible contender for the PDS itself if he and the president resolve their current differences and the latter decides-or is forced-to step aside).

Economic policy: The governemt exceeds its road fund-raising target

A donor conference was held in Dakar on March 21st-22nd, organised by the Ministry of International Co-operation, Air Transport, Infrastructure and Energy to finance an ambitious programme of road construction, rehabilitation and maintenance, amounting to over CFAfr1.6trn (US$3.3bn) over a five-year period. The minister, Karim Wade, painted a bleak picture of the state of Senegal's roads, saying that 83% of roads were considered to be in a bad state, blaming previous Parti Socialiste (PS) administrations for chronic underinvestment, which has made the current plan particularly challenging. He claimed that between 1993 and 2000 the PS invested only CFAfr131bn (around US$272m at current exchange rates), compared with the CFAfr1.2trn spent during his father's regime, although he neglected to mention that the 1993-2000 period was characterised by a significant structural adjustment-led fiscal squeeze, which thwarted public investment in general.

The government initially sought CFAfr700bn for the programme but raised CFAfr1.6trn, with a further CFAfr450bn to be mobilised domestically. The conference included a wide range of donor agencies and investors, including from Arab countries, China, India and other non-OECD and international financial institution partners. Overall, the response was positive, and most donor agencies committed to contributing to the ambitious programme. Moctar Thiam, the interim country director of the World Bank, while supporting the plan, stressed the need to prioritise road maintenance, which should receive at least 50% of the committed funding to ensure the investments' sustainability. Both KarimWade and Mr Thiam suggested that, should this programme be successfully implemented, Senegal would finally meet the average indicators of road infrastructure for Sub-Saharan Africa. This would require stronger implementation capacity and a significant fiscal effort, amounting to around 4% of GDP in road infrastructure expenditure, an effort that will necessitate disciplined fiscal management in order to avoid the slippages experienced in 2008, which were characterised mainly by arrears to construction companies.

Economic performance: Power cuts cost the economy 1.4% of growth in 2010

The cost of the chronic power shortages has been put at a loss of 1.4% of potential economic growth, according to the Ministry of Economy and Finance's research division, with the amount of load-shedded electricity doubling in 2010 compared with the previous year. The measurable impact was most marked in the secondary sector, which saw a 2% fall in value-added activity. Nevertheless, real GDP still managed to grow by 4.2%, according to these latest estimates, given that 76.6% of the "modern" economic sector has supposedly acquired generators. The impact on the larger informal sector, where only 30% of businesses have generator access, will have been much more severe. The government forecasts growth of 4.5% in 2011, driven by infrastructure investment.

Economic performance: Agriculture improves again but data are questionable

According to latest official agricultural production figures for the 2010/11 season, improved rainfall supported harvests even better than 2009's impressive output. Groundnut production, at 1,063,652 tonnes, was up by 3% on the 2009 record harvest. Other key crops like cotton (up by 26.1%) and rice (up by 19.1%) also recorded substantial increases. Rice output has continued its impressive growth since the Grande offensive agricole pour la nourriture et l'abondance (GOANA) was launched in 2008. From output of around 200,000 tonnes of paddy rice in the 2006/07 season, paddy rice production reached a record 598,093 tonnes in 2010/11, equivalent to around 376,000 tonnes of white rice. This has coincided with a reduction in rice imports from a record 1,012,000 tonnes in 2008 to 650,000 tonnes in 2010, with domestic production now covering almost 37% of national needs, up from 31% in 2009 and only 13% in 2006.

Cereal production
(tonnes)
 2009/102010/11% change
Groundnut1,032,6511,063,6523.0
Cotton22,09027,85126.1
Sorghum1,035,0771,065,4942.9
Maize328,644306,184-6.8
Rice502,104598,09319.1
Source: Direction de l'analyse et de la prévision statistique.

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Although domestic demand is increasingly being met by domestic production, GOANA's objective of self-sufficiency is still far from being achieved. Moreover, the data's accuracy and validity are often questioned by local experts. In the case of rice, the Comité interprofessionnel du riz suggests that Senegal is more likely to be producing a maximum of 350,000 tonnes of paddy, equivalent to around 230,000 tonnes of white rice, and this is view is echoed by a local rice expert, Saliou Sarr. Indeed, official production and import numbers imply that rice consumption per head has fluctuated implausibly, from 79.7 kg in 2007 to 107.3 kg in 2008, dropping again, to 82.1 kg, in 2010. Similar reports have been given on past harvests of maize and on groundnut production in the last two seasons. In fact, there are inconsistencies between official production figures of over 1m tonnes of groundnuts, the usual assumptions about consumption and local demand, and recorded "official circuit" groundnut purchases, which are unlikely to exceed the 300,000 tonnes in 2010/11. Nevertheless, the trend is one of improving output.

Economic performance: The groundnut sector experiences payment delays

After a delayed start to the official groundnut marketing season that prompted protests by farmers' organisations, the dominant groundnut oil company, Suneor, has incurred opprobrium for delays in paying operators, subsequently delaying payment for thousands of farmers. The government even threatened to seize the company's groundnut stocks if arrears were not paid before the official end of the marketing campaign in April. Suneor's director, Tiendanté Bouyo Ndao, responded that the company had already paid CFAfr24bn of a total of CFAfr34bn owed to farmers for the purchase of around 180,000 tonnes of groundnuts. The way the marketing system works, however, means that Suneor does not pay farmers directly, instead paying private traders who liaise with producers. The agriculture minister confirmed that a substantial proportion of farmers' payments had been paid by late March, with the balance to be cleared by end-April. This does not, however, guarantee that farmers will be paid in full, a not-uncommon situation since the dismantling of Sonagraines, a parastatal groundnut-marketing board, in 2001. In recent years criticism of the system and discontent over Suneor's relationship with its providers and with local markets for vegetable oil have worsened. An investigation in March by a local newspaper, La Gazette, shed light on the opacity of Suneor's privatisation, the undervaluation of its previous iteration, Sonacos, and the close links between Suneor's chief executive officer, Abbas Jaber, and the president. The feature concluded that not only did Suneor enjoy preferential treatment from the government but also the current system favoured the use of more expensive and less healthy imported vegetable oils despite the abundance of cheaper and healthier locally produced groundnut oil.

Economic performance: A new cement plant nears completion

Begun in April 2010, the construction of a new cement factory by a Nigerian conglomorate, Dangote Group, is nearing completion, with most of the construction work finalised and much of the equipment awaiting installation. Operations are scheduled to commence by the end of the year, with initial annual production of 1m tonnes. This is a significant addition to the 2.5m tonnes/year currently produced by the two existing cement-manufacturing companies, Soccosim and Sehem; not only will the new factory help to meet domestic demand but it will also allow for an exportable surplus to neighbouring countries, where demand for cement is also increasing.

The Senegalese government has provided a range of incentives to attract Dangote's US$1bn investment, which also includes a sugar refinery. These incentives include a 100% tax waiver for all imported project materials and 8,000 ha of free land. The government's main objectives are the achievement of self-sufficiency in cement production and the creation of much-needed jobs: 1,500 direct jobs and 7,000 indirect jobs are expected to be created. Furthermore, by helping to meet the national demand for cement, Dangote's plant should boost construction and the expansion of public infrastructure, one of the government's medium-term priorities. The main challenge for the company is posed by the serious power shortages, which are a major deterrent to foreign direct investment. The factory will build a 30-mw coal-powered station, supposedly for back-up purposes. The minister for mines and industry, Abdoulaye Baldé, has called on industry to disconnect from the grid entirely and generate power independently.

Data and charts: Annual data and forecast

 2006a2007a2008a2009a2010b2011c2012c
GDP       
Nominal GDP (US$ m)9,378.411,319.612,604.611,912.212,155.613,272.413,490.6
Nominal GDP (CFAfr bn)4,8995,4255,6255,6096,0146,3796,833
Real GDP growth (%)2.54.93.32.24.24.34.5
Expenditure on GDP (% real change)       
Private consumption5.17.09.7-5.35.24.24.3
Government consumption-21.37.80.0-11.74.34.54.0
Gross fixed investment29.219.45.3-7.55.35.04.5
Exports of goods & services4.18.112.1-8.87.03.54.3
Imports of goods & services9.620.419.1-17.14.17.44.4
Origin of GDP (% real change)       
Agriculture-7.9-6.019.67.25.04.54.3
Industry1.45.6-3.24.63.14.34.9
Services8.88.56.0-0.24.44.34.4
Population and income       
Population (m)11.611.912.212.512.913.213.6
GDP per head (US$ at PPP)1,6651,7501,7991,8091,8531,9101,999
Fiscal indicators (% of GDP)       
Central government revenue21.123.423.023.323.423.924.1
Central government expenditure27.527.228.128.828.929.929.0
Central government balance-6.4-3.8-5.1-5.6-5.5-6.0-4.9
Net public debt24.223.624.931.7b31.231.031.5
Prices and financial indicators       
Exchange rate CFAfr:US$ (av)522.40479.27446.23470.90494.78a480.64506.53
Exchange rate CFAfr:€ (av)655.96655.96655.96655.96656.96656.96656.96
Consumer prices (end-period; %)4.06.14.3-2.84.3a2.23.5
Stock of money M1 (% change)14.115.3-1.19.15.38.09.5
Stock of money M2 (% change)12.513.01.811.45.48.69.9
Lending interest rate (av; %)15.015.015.014.514.515.015.5
Current account (US$ m)       
Trade balance-1,600-2,490-3,400-2,651-2,382a-2,701-2,581
 Goods: exports fob1,5941,6742,2061,8912,062a2,3492,311
 Goods: imports fob-3,194-4,164-5,606-4,542-4,444a-5,050-4,892
Services balance-35-38-120-29b-31-28-30
Income balance-63-74-48-66b-71-70-81
Current transfers balance8371,2901,6851,325b1,2751,3151,385
Current-account balance-861-1,312-1,884-1,421b-1,209-1,484-1,307
External debt (US$ m)       
Debt stock1,9052,5532,8263,5033,5753,9324,126
Debt service paid329179181200199238248
 Principal repayments258126126148138151153
 Interest71535552618695
International reserves (US$ m)       
Total international reserves1,3341,6601,6022,1232,2002,3452,490
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Source: IMF, International Financial Statistics.

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Data and charts: Quarterly data

 2009   2010   
 1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr
Prices        
Consumer prices (2005=100)113.9112.1112.8113.6113.2112.1115.7117.2
Consumer prices (% change, year on year)2.3-0.2-3.1-2.9-0.70.02.53.1
Financial indicators        
Exchange rate CFAfr:US$ (av)503.9482.2458.6444.0473.9516.3508.0482.9
Exchange rate CFAfr:US$ (end-period)492.9464.1448.0455.3486.7534.6480.6490.9
Deposit rate (av; %)3.53.53.53.53.53.53.53.5
Bank rate (end-period; %)4.84.34.34.34.34.34.34.3
Money market rate (av; %)3.83.63.33.33.33.33.33.4
M1 (end-period; CFAfr bn)1,2671,2961,3001,3671,3811,4251,429n/a
M1 (% change, year on year)5.26.610.39.18.910.09.9n/a
M2 (end-period; CFAfr bn)2,0192,1102,1272,2342,2912,3372,399n/a
M2 (% change, year on year)6.110.410.711.413.410.812.8n/a
Foreign trade (CFAfr bn)        
Exports fob2162142282382445107621,020
Imports cif-528-533-558-523-547-1,084-1,681-2,202
Trade balance-312-319-329-286-302-574-920-1,182
Foreign reserves (US$ m)        
Reserves excl gold (end-period)1,3921,8601,9072,1232,0311,9212,016n/a
Sources: IMF, International Financial Statistics; Ministry of Economy and Finance.

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Data and charts: Monthly data

 JanFebMarAprMayJunJulAugSepOctNovDec
Exchange rate CFAfr:US$ (av)
2008445.7444.8422.6416.5421.7421.8416.0438.2456.6493.0515.3481.5
2009495.4513.1503.1497.4481.3468.0465.7459.8450.5442.8439.8449.3
2010459.7479.4482.6489.2522.3537.4513.3508.9501.9472.0480.4496.2
Exchange rate CFAfr:US$ (end-period)
2008441.1432.5414.9422.1423.0416.1420.2445.2458.6514.2515.4471.3
2009511.8518.8492.9494.1465.3464.1464.0459.6448.0443.2436.6455.3
2010469.7483.4486.7492.7533.0534.6503.5517.3480.6473.4504.7490.9
M1 (% change, year on year)
200815.010.08.09.44.00.52.14.32.5-2.20.5-1.1
20091.78.55.24.13.46.68.46.810.38.710.69.1
20109.57.58.910.715.810.09.17.29.915.213.9n/a
M2 (% change, year on year)
200811.07.76.67.83.92.85.45.85.72.02.21.8
20094.38.26.15.010.010.47.27.410.713.012.111.4
201012.813.913.414.713.110.813.912.312.813.314.0n/a
Deposit rate (av; %)
20083.53.53.53.53.53.53.53.53.53.53.53.5
20093.53.53.53.53.53.53.53.53.53.53.53.5
20103.53.53.53.53.53.53.53.53.53.53.53.5
Money market rate (av; %)
20083.02.84.04.23.54.04.23.84.54.73.94.7
20093.83.83.83.83.83.33.33.33.33.33.33.3
20103.33.33.33.33.33.33.33.43.33.43.53.3
Discount rate (end-period; %)
20084.34.34.34.34.34.34.34.84.84.84.84.8
20094.84.84.84.84.84.34.34.34.34.34.34.3
20104.34.34.34.34.34.34.34.34.34.34.34.3
Consumer prices (av; % change, year on year)
20086.15.54.35.26.15.94.87.47.97.54.14.3
20092.72.21.90.9-0.1-1.3-1.8-3.0-4.6-3.8-2.2-2.8
2010-0.7-0.6-0.7-1.1-0.41.32.42.23.02.32.84.3
Foreign-exchange reserves excl gold (US$ m)
20081,5821,4831,6181,5851,5621,8451,6261,4591,4151,1631,3451,602
20091,3431,4361,3921,4541,5931,8601,5951,8871,9071,8751,9142,123
20102,1542,0352,0312,0831,9251,9212,0471,8942,0161,9111,945n/a
Sources: Agence nationale de la statistique et de la démographie; IMF, International Financial Statistics; Haver Analytics.

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Data and charts: Annual trends charts

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Data and charts: Monthly trends charts

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Data and charts: Comparative economic indicators

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Basic data

Total area

197,161 sq km

Population

12.9m (mid-2010 UN estimate)

Main towns

Population in '000 (World Gazetteer estimates, 2009)

Dakar (capital): 2,583

Thiès: 274

Mbour: 216

Kaolack: 180

Climate

Tropical

Weather in Dakar (altitude 40 metres)

Hottest months, September-October, 24-32°C; coldest month, January, 18-26°C; driest months, April-May, 1 mm average rainfall; wettest month, August, 254 mm average rainfall

Languages

French, Wolof, other local languages

Measures

Metric system

Currency

CFA franc (CFAfr), fixed to the euro, backed by a guarantee from the Banque de France; it was devalued from CFAfr50:FFr1 to CFAfr100:FFr1 in 1994 and has been pegged at CFAfr655.96:EUR1 since France adopted the euro in 1999

Time

GMT

Public holidays

January 1st; April 4th (Independence Day); May 1st; Christian holidays of Christmas, All Saints' Day, Assumption and variable dates for Easter Monday and Ascension Day; all Islamic holidays are observed in accordance with the lunar calendar, which may mean that the following dates are approximate: Mawlid al-Nabi (the birthday of the Prophet, February 15th 2011); Eid al-Fitr (end of Ramadan, August 30th); Eid al-Adha (Feast of the Sacrifice, November 6th); Islamic New Year (November 26th)

Political structure

Official name

République du Sénégal

Form of state

Unitary republic

Legal system

Based on the Napoleonic Code and the constitution of January 2001

National legislature

National Assembly, with 150 members elected for five years by universal suffrage in a mixed system of first-past-the-post and proportional representation

Head of state

President, elected by universal suffrage, currently serves a five-year term of office and may stand for re-election once

National elections

February 2007 (presidential); June 2007 (legislative); next elections due in 2012

National government

The president and his Council of Ministers

Main political parties

Parti démocratique sénégalais (PDS, the dominant party in the National Assembly); Alliance des forces de progrès (AFP); Parti socialiste (PS); Union pour le renouveau démocratique (URD); And-Jëf/Parti africain pour la démocratie et le socialisme (AJ/PADS); Parti de l'indépendance et du travail (PIT); Ligue démocratique (LD); Rewmi; Alliance pour la République-Yaakaar (Alliance for the Republic-Hope)

President: Abdoulaye Wade

Prime minister: Souleymane Ndéné Ndiaye

Ministers of state

Armed forces: Bécaye Diop

Civil service & employment: Habib Sy

Economy & finance: Abdoulaye Diop

Environment: Djibo Leïty Kâ

Family, women's organisations & early childhood: Ndèye Khady Diop

Foreign affairs: Madické Niang

Housing, construction & sanitation: Oumar Sarr

Interior: Ousmane Ngom

International co-operation, air transport, infrastructure & energy: Karim Wade

Justice: Cheikh Tidiane Sy

Labour & professional organisations: Innocence Ntap

Mines, industry, agribusiness & SMEs: Abdoulaye Baldé

Key ministers

Agriculture: Khadim Guèye

Crafts, tourism & the private & informal sectors: Thierno Lô

Communications & telecommunications: Moustapha Guirassy

Fishing & maritime economy: Khouraïssi Thiam

Health & prevention: Modou Diagne Fada

Land & rail transport & territorial development: Nafy Diouf Ngom

Livestock: Oumou Khairy Guèye Seck

Pre-school & primary education: Kalidou Diallo

Renewable energy: Louis Seck

Secondary education, universities & research: Amadou Tidiane Bâ

Technology, information & communication: Fatou Blondin Ndiaye Diop

Trade: Amadou Niang

Governor of the regional central bank (BCEAO)

Jean-Baptiste Compaoré (interim)

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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