Senegal

Economic Overview

The Republic of Senegal has established itself as one of West Africa's most stable democracies and one of its most dynamic economies. Guided by a long-term strategic vision, the "Plan Sénégal Émergent" (PSE), the country has made significant strides in structural reform, infrastructure development, and attracting foreign investment. The recent commencement of oil and gas production marks a new, transformative phase for the economy. The 2025-2026 outlook is exceptionally strong, projected to be one of the fastest-growing economies in Sub-Saharan Africa as hydrocarbon exports ramp up and private investment continues to flow into key sectors.

GDP Size & Growth Trajectory

Senegal's economy has demonstrated robust growth, driven by public investment and a vibrant services sector. Following a slight moderation, growth is poised for a dramatic acceleration. After growing by an estimated 4.3% in 2023, the IMF projects a massive leap in real GDP growth to 8.3% in 2024 and a staggering 10.6% in 2025.

This surge is almost entirely attributable to the start of production from the Sangomar oil field and the Greater Tortue Ahmeyim (GTA) natural gas field. While the non-hydrocarbon economy is expected to grow at a healthy rate of around 6%, the addition of hydrocarbon exports will be the primary driver of double-digit headline growth, fundamentally reshaping the country's economic structure.

Sector Composition

Senegal's economy is increasingly diversified, with services playing the leading role.

• Services: This is the largest sector, contributing approximately 50% of GDP. It is driven by telecommunications, financial services, transport, and trade. Dakar's role as a regional hub for international organizations and businesses supports a strong services ecosystem.
• Industry: Accounting for about 23% of GDP, the industrial sector is set for a major expansion with the onset of oil and gas production. Outside of hydrocarbons, the sector includes phosphate mining, fertilizer production, construction materials (cement), and fish processing.
• Agriculture: This sector contributes around 16% of GDP but employs a large portion of the workforce. Key products include groundnuts, rice, horticultural products, and fishing, which is a major source of export earnings.

Inflation Trends

Inflation has been a challenge, peaking in 2022 due to global commodity price shocks. However, thanks to the monetary policy of the regional central bank (BCEAO) and an improving domestic food supply, inflation has moderated significantly. The AfDB forecasts inflation to fall to 2.5% in 2025, well within the BCEAO's target range.

Fiscal & Monetary Policy Stance

• Monetary Policy: As a member of the West African Economic and Monetary Union (WAEMU), Senegal's monetary policy is managed by the Central Bank of West African States (BCEAO). The currency, the West African CFA franc (XOF), is pegged to the Euro, providing a strong anchor for price stability. The BCEAO has maintained a tight policy stance to combat regional inflation.
• Fiscal Policy: The government is pursuing fiscal consolidation to reduce the budget deficit after a period of high spending on infrastructure and social support. A key priority is ensuring that future hydrocarbon revenues are managed transparently and used to support long-term development goals and debt reduction.

Debt Sustainability Indicators

Public debt has risen due to large-scale infrastructure investments under the PSE, with the debt-to-GDP ratio standing at approximately 73% of GDP. While the risk of debt distress is considered moderate, the high debt service costs are a concern. The expected surge in government revenue from oil and gas exports is projected to significantly improve the country's debt-carrying capacity and place the debt ratio on a firm downward trajectory.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

Senegal's market is attractive due to its stable growth, strategic location, and its role as a commercial gateway to Francophone West Africa.

Population Size and Demographics

With a population of over 18 million, Senegal has a significant domestic market. The population is young and rapidly urbanizing, with a median age of around 19 years.

Urbanization and Consumer Hubs

Over 48% of the population lives in urban areas. The capital city, Dakar, is a major regional hub for finance, logistics, and culture, concentrating a significant portion of the country's economic activity and consumer purchasing power. New urban developments, such as the new city of Diamniadio, are being built to decongest Dakar and create modern economic zones.

Consumer Spending & Market Access

A growing middle class is driving demand for consumer goods and services. The formal retail sector is developing, particularly in Dakar, with modern shopping centers and international franchises. The high mobile penetration rate is also fostering growth in e-commerce and digital financial services.

Business Environment

Senegal has actively worked to improve its business climate under the PSE, positioning itself as a prime destination for investment in West Africa.

Ease of Doing Business & Regulatory Reforms

The country has made significant progress in simplifying business regulations. APIX-S.A. is the national investment promotion agency, acting as a one-stop-shop for investors to facilitate company creation, and the granting of permits and licenses.

Company Registration Process

The process for starting a business has been streamlined. It involves registering with APIX, which centralizes the procedures for company name registration, legal status creation, and registration with tax and social security authorities.

Tax Regime

• Corporate Income Tax (CIT): The standard rate is 30%.
• Value Added Tax (VAT): The standard rate is 18%.

Senegal offers attractive incentives for investors, particularly for projects operating within its Special Economic Zones (SEZs). These incentives can include long-term tax holidays on corporate income tax, customs duties, and VAT.

Political Stability & Governance

Senegal's most valuable asset is its long and proven track record as one of Africa's most stable democracies.

Political Environment

The country is a presidential republic with a vibrant multi-party system. Senegal has a history of peaceful political transitions and respect for democratic norms, which sets it apart in a often-turbulent region. The successful and peaceful presidential election in 2024, which saw an opposition candidate win and a smooth transfer of power, further solidified its democratic credentials and was widely praised internationally.

Rule of Law & Investor Protection

The legal system is based on French civil law. The judiciary is independent, and the country has a strong framework for contract enforcement and investor protection. Senegal is a member of the Organization for the Harmonization of Business Law in Africa (OHADA), providing a common and reliable legal framework for business.

Infrastructure Readiness

Infrastructure development has been the centerpiece of the Plan Sénégal Émergent.

Transport and Logistics

• Ports: The Port of Dakar is a major deep-water seaport and a key logistics hub for the region. A major new deep-water port is under construction at Ndayane, which will be one of the largest in Africa, further cementing Senegal's role as a gateway.
• Airport: Blaise Diagne International Airport (DSS) is a large, modern airport that has replaced the older airport in Dakar, significantly boosting passenger and cargo capacity.
• Road and Rail: The country has invested heavily in new highways, including a toll road connecting Dakar to the new airport and the industrial zone of Diamniadio. A new regional express train (TER) also connects Dakar with Diamniadio.

Energy Sector: Oil & Gas and Renewables

The energy sector is undergoing a profound transformation.

• Oil and Gas: The start of production from the Sangomar oil field (operated by Woodside Energy) and the Greater Tortue Ahmeyim (GTA) gas field (operated by bp) in 2024 will make Senegal a significant hydrocarbon exporter.
• Renewables: Senegal is also a regional leader in renewable energy. The country has successfully integrated large-scale solar and wind projects into its grid, aiming to increase the share of renewables in its energy mix. The Taiba N'Diaye wind farm is one of the largest in West Africa.

Sector-Specific Opportunities

1. Oil and Gas Services

With the new hydrocarbon fields coming online, there are extensive opportunities for companies providing services to the oil and gas industry. This includes logistics, maintenance, engineering, and technical support. The government has a strong focus on local content, encouraging joint ventures between international and local firms.

2. Renewable Energy

The government's commitment to clean energy continues to create opportunities for investment in solar, wind, and biomass projects, both for grid-scale power and for off-grid solutions.

3. Logistics and Transport

The development of the new port at Ndayane and the expansion of the existing transport corridors create significant opportunities in logistics, including warehousing, freight forwarding, and specialized transport services to serve the wider region.

4. Agribusiness and Fishing

The agricultural sector remains a priority. Opportunities exist in modernizing farming practices, developing irrigation, and, most importantly, in the value-added processing of agricultural and fishery products (such as groundnuts and tuna) for export.

5. Tourism

Senegal has a well-established tourism sector, attracting visitors with its vibrant culture, music, history (e.g., Gorée Island), and beach resorts. There are opportunities for developing new hotels and eco-tourism offerings.