Previous Quarterly Editions
Expropriation Risk: 52 48 49 49 ►Political Violence Risk:48 48 48 48 ►Terrorism Risk:40 40 37 35 ▼Exchange Transfer and Trade Sanction Risk: 35 45 25 35 ▲Sovereign Default Risk:75 66 66 74 ▲
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Geopolitical alignmentEast 1 2 3 4 5 West
Alignment five years agoEast 1 2 3 4 5 West
Degree of contestationSettled 1 2 3 Contested
President Macky Sall’s June meeting with his Russian counterpart, Vladimir Putin, to discuss how to restore the flow of grain supplies to African countries garnered international media attention, as did Senegal’s decision to abstain in a key UN vote condemning the Russian invasion of Ukraine in February 2022. The invasion and associated sanctions have disrupted international supply chains, as have responses to the COVID-19 pandemic.
However, this meeting is not a sign Senegal is tilting away from its traditionally strong partnerships with France, the U.S., and other Western countries. Similarly, Senegal’s hosting of the December 2021 China-Africa Cooperation ministers’ meeting in Dakar is not a sign Sall now looks towards Beijing rather than Western capitals. Although Senegal is only a small-to-medium size country, with strong institutions and cultural self-confidence, it has always seen itself as among Africa’s leaders in strategic thinking, diplomacy, and international partnerships.
It was therefore natural Sall, current holder of the African Union’s rotating chair, felt he should fly to Russia to present the need for measures to restore the grain flow from Ukraine and Russia to Africa. Moreover, it was in Senegal’s traditions Dakar should host the China-Africa summit, as Senegal has hosted many other international gatherings.
Nonetheless, there is an underlying message for Senegal’s traditional Western partners: the country is self-confident in developing relationships and seeking support beyond the West. In particular, Senegal has sought funding and technological support from China. Recent projects include a data centre for the business hub at Diamniadio, outside Dakar, motorways to the cities of Kaolack and Touba, and the 1.6-kilometre-long Foundiougne bridge.
Even so, major Western contractors are involved in key projects such as the motorway to St Louis and the TER urban railway. Senegal has therefore diversified from its traditional heavy reliance on France yet maintained close relationship. Even on Ukraine, Senegal did vote to condemn the Russian invasion in a second UN vote.
Senegal is therefore best described at present as being steadily aligned to the West, but also comfortable with developing other partnerships. This stance is unlikely to change, even if an opposition candidate wins the 2024 presidential election.
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The drive to attract foreign direct investment is a key part of the Senegal government’s strategy to diversify the economy and create a wider range of employment opportunities, notably for educated younger people. This is likely to be further reinforced during the remaining months of Sall’s current presidential term, with Oulimata Sarr, appointed minister for economics, planning and development cooperation in September 2022, having worked for ten years at the World Bank Group’s private sector financing arm.
The leading opposition group, Yewwi Askan Wi, and Ousmane Sonko, its likely main candidate in the 2024 presidential election, adopt a vocal and radical tone in criticising the current administration. However, this critique is focussed mainly on governance issues such as corruption. Should Sonko win office, he is likely to maintain Senegal’s longstanding adherence to a mixed economy model and he would be unlikely to pursue policies that might deter the investors who would create jobs.
The risk of expropriation is therefore low, unless in the unlikely case strategic foreign-owned enterprise proves unable to fulfil its core contractual and legal obligations.
The July 31 legislative polls saw the ruling Benno Bokk Yaakaar coalition retain a slender one-seat majority in the national assembly, after it gained the post-election support of one deputy from a small group to establish an 83-seat governing bloc. The main opposition Yewwi Askan Wi bloc has 56 seats while its ally Wallu Senegal has 24 seats, with two more held by smaller parties.
Although the results were tight, the opposition decided not to appeal against the outcome; the partnership between Yewwi and Wallu is fairly new, and they might have struggled to govern effectively together at this early stage. Remaining in opposition, they have time to develop a more coherent governing offer and prepare for the February-March 2024 presidential elections, for which Yewwi’s Sonko has already started campaigning.
The all-round acceptance of the legislative election results has slightly eased political tension for now. But the mood could soon become more confrontational as the 2024 election approaches. This could trigger renewed street protests and clashes with police, especially if opponents claim the government, or public authorities, are resorting to unfair tactics to derail Sonko’s presidential run.
Therefore, although the mood has calmed for now, street protests will become more likely as 2024 approaches, bringing with it the risk of lives being lost in clashes between demonstrators or rioters and state security forces. Speculation Sall will seek to stand for a third term exacerbates tensions, particularly as he has now lost the backing of his hitherto loyal former prime minister, Aminata Toure, angry at being side-lined for the post of parliamentary speaker and warning against his rumoured third term ambitions.
As he had promised, Sall has restored the post of prime minister, appointing the former finance and then foreign minister Amadou Ba to the post. Many senior ministers remain in position but there are new ministers for finance and economics, and for planning and development cooperation.
Meanwhile, in the southern region of Casasmance, the risk of violent conflict between the Senegalese army and residual rebels fighting for independence has reduced but persists. In August, Guinea-Bissau hosted the signing of a first-stage peace accord between the government and the southern rebel faction. Low-level conflict between the army and the rebels’ northern faction persists, but Gambia, which neighbours northern Casamance, is trying to nudge the northern rebel leader to negotiate.
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Senegal remains exposed to the risk of armed jihadist infiltration westwards from Mali and the army has therefore strengthened its deployment along the border. Dakar, a regional hub with a large international expatriate community, and coastal tourist resorts with a large European clientele, are potential targets for urban terrorist attacks of the kind seen in some other West African and European cities and resorts. Senegal has capable security services and a well-trained military. However, a few individuals have been convicted of involvement in militant plots and the risk cannot be totally eliminated.
Senegal is a stable democracy with close ties to Western countries including France and the U.S. and is unlikely to be the target of sanctions.
The CFA franc currency used by Senegal and seven fellow members of the West African Monetary and Economic Union (UEMOA) is pegged to the euro at a rate guaranteed by France, which underpins its free convertibility.
The UEMOA states and the seven other members of the Economic Community of West African States are planning to adopt an independent free-floating single currency, to be called the eco, covering the whole region in 2027. They have set up arrangements for the monitoring of each state’s performance under convergence criteria but are yet to agree on key institutional and strategic features of the planned new monetary union.
Senegal was among the select clutch of countries that managed to navigate the pandemic without sliding into recession. The economy has rebounded strongly, with real GDP growth for 2022 projected at 5%, despite the surge in global grain and energy prices.
The government has introduced targeted support to help the poor and middle-income households cope with the high cost of living. In the short term, this has weakened the fiscal position, with the deficit for 2022 now projected at 6.2% of GDP, rather than the 4.8% originally forecast.
Senegal appears on course for a gradual strengthening in its economic performance, balance of payments, and financial position, in part thanks to the start of production at the Grand Tortue Ahmeyim offshore liquefied natural gas project –being developed by BP in partnership with Kosmos Energy, as well as Woodside’s Sangomar oil project.
Senegal has a Sahelian climate and remains vulnerable to drought and climate change risk, with potential impacts on domestic food production and rural incomes, and thus the balance of payments. However, the country has a strong track record of careful management of its debt and fiscal position.
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