In a virtuous cycle
Senegal is engaged in its most robust growth cycle in almost forty years. From 2015, GDP growth accelerated to above +6% and should continue apace in 2017 and 2018 (+7% each). This performance was registered despite the heavy reliance on the volatile primary sector (17% of GDP and 70% of the labor force) and difficult times for many other African economies (Africa grew by only +1.4% in 2016).
This growth cycle is supported by a will to free up the economy by implementing market-friendly reforms. As a result, the country’s World Bank Doing Business ranking improved from 166th in 2013 to 147th in 2017.
This more favourable regulatory environment was accompanied by a rise in R&D spending. It doubled from about 0.35% of GDP between 2001 and 2007 (yearly average) to 0.7% in 2015. Moreover, Senegal developed some incubators, such as CTIC for example, to attract African Tech entrepreneurs.
Senegal’s political institutions are among the most developed in the continent. The country is one of the oldest African democracies, and political transition is generally peaceful.
A key soundness indicator, the level of government revenue as % of GDP stands at about 25% and is among the best in Africa. This alludes to the country’s ability to rely on itself for funding and not rely heavily on debt, an efficient buffer, given the significant level of public debt (56% of GDP in 2016).