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Senegal following blueprint towards emerging economy status

Senegalese President Macky Sall made headlines this month with the announcement that public officials will no longer enjoy unlimited use of their work phones beyond September. Restrictions on outgoing calls are already in place, while incoming ones will remain unlimited until the end of the month, at which point a fixed allowance is scheduled to come into effect.

It’s not surprising that Dakar is cracking down on the perk, which was costing the Senegalese government some 11 billion CFA francs (roughly $18.5 million) a year—especially given that some officials were reportedly taking advantage of the benefit and frequently using the work lines for personal use. Ending this particular gravy train is only the first step in the Sall administration’s broader efforts to trim unnecessary government expenditure. The president is planning further measures aimed at curbing Senegalese officials’ consumption of fuel, electricity, landline, internet, water and vehicles.

Getting a better handle on government spending should simultaneously bolster the Senegalese economy and clamp down on corruption: two areas which international observers have identified as priorities if Senegal is to meet Sall’s target of acquiring emerging economy status by 2035.

Lagarde lays down the gauntlet

Speaking in front of the Senegalese parliament in 2015, IMF Director Christine Lagarde suggested that Senegal had three tasks to take on if it wanted to achieve its economic potential. The first: shoring up public financial management and tackling corruption head-on. Since first being elected in 2012, Sall has introduced a number of anti-graft laws and institutions which have helped to boost the country’s rating in the Corruption Perceptions Index by nine points. It now stands two points above the global average, making Senegal one of the best-performing countries in West Africa in terms of combatting corruption.

The second and third points Lagarde raised concern boosting the economy through commerce. Strengthening the business climate by opening it up to foreign direct investment (FDI) is a key facet of building an economy with stable growth—Senegal is currently one of the top ten fastest growing economies in the world. Meanwhile, Lagarde insisted on the need to increase the inclusivity of national growth by creating new opportunities for women and young people. Without investing in human capital and ensuring that growth is inclusive, Lagarde argued, income imbalances would lead to social strain, thereby undermining reform efforts.

Pathway to prosperity

Having already made significant progress on Lagarde’s first point, Sall has not been shy on tackling the other two, either. He has introduced several measures designed to make doing business in the country easier for foreign investors, including the creation of the Dakar Commercial Court, which promises to settle business disputes within a maximum of 90 days. Since its inception just over a year ago, the Court has already successfully handled over 4,500 cases. The Sall administration has also implemented trade agreements with neighboring nations and improved infrastructure connecting them in a bid to improve exports and encourage FDI into the country.

His efforts have not been without their reward. FDI in Senegal rose from $587 million in 2017 to $629 million last year. Meanwhile, Sall was recently able to raise $14 billion from countries such as France and Canada, as well as international organisations such as the World Bank and the Islamic Development Bank (IDB), in order to fund infrastructural improvements and social services in the country. While there is still plenty of room for improvement – Senegal ranks at a lowly 141 out of 192 countries according to the World Bank’s Doing Business report – Dakar has made impressive inroads into addressing the problem.

As for opening up this ongoing economic growth to groups who have traditionally struggled to gain a foothold in industry, such as women and young people, Sall has paid heed to Lagarde’s advice on this topic as well. Senegal is currently in the process of setting up a system that would expedite the process of launching a business, allowing would-be entrepreneurs to create SMEs within just 48 hours. The scheme is particularly aimed at women and those between the age of 18 and 40, targeting the creation of one million jobs over a period of five years. What’s more, this year saw Dakar host Digital Women’s Day for the first time, while the abundance of women-only initiatives in the country showcase Sall’s attempts to promote equality and inclusivity among the next generation of Senegalese workers.

A winning formula?

So far, these strategies seem to be paying off. During her speech, Lagarde highlighted the fact that at that point Senegalese growth had stagnated at around 3.5% per year for the last three decades, calling on Sall and his government to achieve the higher rates of which the country was so clearly capable. Since then, growth has surpassed 6% every year, reaching 7.2% in 2017 and 7% last year.

Increasingly attractive as a destination for overseas investment, Senegal is clamping down on corrupt practices, making its practices more transparent and facilitating the stimulation of business activity at an international level. But the grassroots aren’t being ignored, either; Sall has also shown that he is putting faith in Senegal’s women and young people and providing the resources, education and opportunities for them to take the reins in a bright new future for the national economy.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.

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