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Sall re-election points to strong economic growth

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Sall re-election points to strong economic growth

Macky Sall was returned to the Presidential office following an overwhelming victory over second-placed Idrissa Seck, winning with a margin of 37%. Although some contenders were barred from the election on various grounds, Sall’s victory is believed to reflect general confidence in his first administration. What are his priorities now? Analysis by Rafiq Raji.

Sall won a second term in office on the back of an excellent economic record. Senegal’s GDP growth rate rose from about 5% in 2012, when he first took office, to 7% in 2017, the most recent year for which data is available.

Economic projections by the International Monetary Fund (IMF) suggest the economy will likely maintain this momentum for another half a decade to 2023, with oil and gas production in 2022 expected to lift real GDP growth to the double digits in the last two years.

However, Mark Bohlund of Bloomberg Economics worries about Senegal’s rising debt. “The sharp rise in Senegal’s debt in recent years has been described as an example of the ‘pre-resource’ curse in which governments borrow heavily now to reap the benefits of revenue streams coming online in the future. Reducing Senegal’s indebtedness will be a key focus in coming years.”

That said, Bohlund adds that “the Senegalese government has pledged to close the budget deficit by raising its tax revenue towards the WAEMU [West African Economic and Monetary Union] criteria of 20% of GDP.

“If successful, this would support Senegal’s status as one of the few African countries being upgraded by credit rating agencies – Standard & Poor’s retained its positive outlook on Senegal’s B+ rating in December.”

Policy continuity

With Sall now re-elected, New African asked Adeline Van Houtte, Africa Analyst at The Economist Intelligence Unit in London, about the country’s outlook under his leadership for another five years.

“Macky Sall, the President, has been re-elected for a second term, and is now well placed to implement the second phase of his economic development strategy.

“Like many other African heads of state, Mr Sall was able to benefit from incumbency advantages but also his strong track record on economic and development issues, which laid the foundations for his decisive first-round victory. However, the trial of the popular Khalifa Sall and his exclusion from the election race have left many voters disillusioned. 

“We expect the President to face a tough challenge to restore trust in governance, especially in the eyes of Senegal’s influential urban youth and the media, as well as restore a workable relationship with opposition politicians.”

He added that encouraged by a strong economic performance (with real GDP growth averaging more than 6% in 2014-18), and with new hydrocarbon developments set to bolster government revenues from 2021-22 onwards, “the temptation will be to focus on the economy and allow governance reforms to slip down the agenda.

“Mr Sall will preside with a strong majority in parliament, which will facilitate policy making. The government has drawn up a list of priority actions required for the next phase of its Plan Sénégal Emergent (PSE) development strategy, which was adopted in 2014.”

Adeline Van Houtte says that the large foreign-funded infrastructure projects played a major role in phase one of the PSE, and phase two will also include rural infrastructure projects including the construction of 3,050 km of rural roads, and the electrification of 675 villages.

“But the second phase will also lay much greater stress on improving productivity, enhancing basic social services and reducing poverty. A donor meeting in December mobilised aid pledges of €13bn ($14.4bn) – double the level of external assistance for the first phase of the PSE. France was particularly supportive, pledging €1.5bn,” Van Houtte concludes.

The re-election of Macky Sall will provide much-needed policy continuity in Senegal and as long as he and his policy makers can avoid the ‘resource curse’, this West African country should look forward to strong economic
growth.
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