In its latest report on Senegal, the International Monetary Fund (IMF) notes the following:
"Senegal’s economy has remained resilient to the global economic turmoil. Growth is expected to dip slightly to 4 percent in 2011 because of power outages in the first half of 2011. In 2012, the restoration of sufficient electricity provision, together with large energy and road infrastructure spending, should boost growth to 4.4 percent and help make up for a less favorable international environment. Inflation rose in early 2011 reflecting increasing international food and petroleum prices, but this trend reversed in the second half of the year. Year-on-year inflation is now back below 3 percent, and is expected to remain so next year. The prudent approach to expenditure management has fostered macroeconomic stability and helped keep the authorities’ program on track, with all quantitative targets for end-June and end-September 2011 met. Good progress was made too with structural reforms aimed at strengthening public financial management, tax policy and administration, and debt management."
Monday, December 19, 2011
Friday, October 21, 2011
Government law would set state's telcom cut
According to Reuters Senegal's government has proposed a law that will ensure that the state has at least a 35 percent share in all telecommunications companies operating in Senegal, the president said on state television on Thursday.
Senegal's APS news agency said that the law had been passed by the cabinet at a meeting on Thursday and might be extended to other sectors, beyond telecommunications.
Senegal's APS news agency said that the law had been passed by the cabinet at a meeting on Thursday and might be extended to other sectors, beyond telecommunications.
IMF upgrades economic prospects
An International Monetary Fund (IMF) mission, led by Mr. Hervé Joly, visited Senegal from October 5-19, 2011 to conduct the second review under the three-year Policy Support Instrument (PSI) arrangement approved in December 2010. The members of the mission met with the ministers of economy and finance, budget, international cooperation, infrastructure, and energy; representatives of the BCEAO; other senior government officials; and representatives of the private sector, civil society and development partners.
At the conclusion of the visit, the mission issued the following statement:
“After recovering in 2010, the Senegalese economy experienced a modest slowdown in early 2011 due to persistent power cuts. Assuming that recent improvements in the electricity sector continue, however, Senegal should post GDP growth of 4 percent in 2011. Inflation rose in early 2011, reflecting increasing international food and petroleum prices, but this trend reversed in the second half of the year and inflation is now expected to average 3.6 percent in 2011.
“Growth in 2012 is expected to be sustained by the significant increase in public investment in 2012, in particular with continued construction work on the toll road and implementation of the Plan Takkal. The restoration of a more reliable supply of electricity should also have a positive impact on other sectors of the economy. These domestic drivers of growth are expected to largely offset the anticipated weakening of external demand and a generally less promising external environment than expected. Overall GDP growth is expected to reach 4.4 percent in 2012 compared to 4 percent in 2011. Inflation should continue to decline, and remain well below 3 percent.
At the conclusion of the visit, the mission issued the following statement:
“After recovering in 2010, the Senegalese economy experienced a modest slowdown in early 2011 due to persistent power cuts. Assuming that recent improvements in the electricity sector continue, however, Senegal should post GDP growth of 4 percent in 2011. Inflation rose in early 2011, reflecting increasing international food and petroleum prices, but this trend reversed in the second half of the year and inflation is now expected to average 3.6 percent in 2011.
“Growth in 2012 is expected to be sustained by the significant increase in public investment in 2012, in particular with continued construction work on the toll road and implementation of the Plan Takkal. The restoration of a more reliable supply of electricity should also have a positive impact on other sectors of the economy. These domestic drivers of growth are expected to largely offset the anticipated weakening of external demand and a generally less promising external environment than expected. Overall GDP growth is expected to reach 4.4 percent in 2012 compared to 4 percent in 2011. Inflation should continue to decline, and remain well below 3 percent.
Friday, July 1, 2011
Lukens confirmed as US ambassador
Lewis Lukens was confirmed yesterday by the U.S. Senate as ambassador to Senegal. Son of a diplomat who was also ambassador to Africa, Lukens had this to say in his confirmation hearing earlier this month:
"The United States and Senegal share a strong bilateral relationship. As a critical partner in Francophone Africa, Senegal is a key ally in the fight against terrorism and narcotics, and has been an important player on regional and international issues.
"Senegal is one of a few African countries to have never experienced a coup, and prides itself as a religiously tolerant nation. However, Senegal does face economic, governance, and press freedom challenges that threaten its democratic and development future. Senegal suffers from a crippling energy crisis that causes frequent power outages and has weakened economic growth. Senegal would like to emerge as a major regional economic hub, and if confirmed, I will work with the government to encourage enactment of economic reforms necessary to attract investment and expand access to markets.
"Senegal will hold presidential and legislative elections in February 2012. These elections are important to the country’s democratic future. Concerns about democratic backsliding and corruption have tarnished Senegal’s longstanding democratic reputation. If confirmed, I will work with President Wade and the Government of Senegal in their efforts to prepare for transparent, fair, and credible elections.
"Senegal is a recipient of many foreign assistance programs, most notably a $540 million Millennium Challenge Corporation (MCC) Compact. I understand that the United States Government must be accountable to American taxpayers and, especially in this difficult economic climate, every dollar must be effectively used. If confirmed, I will work closely with our strong partners in Senegalese civil and religious society and with the government to ensure that Senegal continues to improve on all of its indicators." Check out the Café Touba at Cassicafe.com.
"The United States and Senegal share a strong bilateral relationship. As a critical partner in Francophone Africa, Senegal is a key ally in the fight against terrorism and narcotics, and has been an important player on regional and international issues.
"Senegal is one of a few African countries to have never experienced a coup, and prides itself as a religiously tolerant nation. However, Senegal does face economic, governance, and press freedom challenges that threaten its democratic and development future. Senegal suffers from a crippling energy crisis that causes frequent power outages and has weakened economic growth. Senegal would like to emerge as a major regional economic hub, and if confirmed, I will work with the government to encourage enactment of economic reforms necessary to attract investment and expand access to markets.
"Senegal will hold presidential and legislative elections in February 2012. These elections are important to the country’s democratic future. Concerns about democratic backsliding and corruption have tarnished Senegal’s longstanding democratic reputation. If confirmed, I will work with President Wade and the Government of Senegal in their efforts to prepare for transparent, fair, and credible elections.
"Senegal is a recipient of many foreign assistance programs, most notably a $540 million Millennium Challenge Corporation (MCC) Compact. I understand that the United States Government must be accountable to American taxpayers and, especially in this difficult economic climate, every dollar must be effectively used. If confirmed, I will work closely with our strong partners in Senegalese civil and religious society and with the government to ensure that Senegal continues to improve on all of its indicators." Check out the Café Touba at Cassicafe.com.
Wednesday, June 29, 2011
Power and politics threaten Senegal financing
Senegal nurtures its role as a financial hub for West Africa. A smart move, leveraging its stability. Over the past year of so Islamic financial players are also focusing on Senegal, and vice versa. Indicative of the trend was a forum convened last year SYM International Finance Corporation, in partnership with the Government of Senegal, to assist the Government of Senegal to promote the a Financial Services Center and attract more private investments.
But recent unrest--and actual violence--in Senegal over the legislative power play by President Abdoulaye Wade undermine the county's reputation of stablity, and raise investment concerns. Many have wondered whether the civil disturbances will undermine Senegal's reputation of consistent democratic traditions.
Those concerns are also reflected in the $500 million Eurobond placed this year by Senegal's government. Senegal is rated B+ by Standard & Poors and B1 by Moody’s. When the riots earlier this month were occuring, Senegal’s Eurobond yield was up 4 basis points at 8.215 percent and the price was down 1/4 point at 104.5.
The riots reveal two challenges to Senegal's newfound international finance role. The first is the energy crisis. Power outages are at the root of the civil discontent. But politics plays a companion role. The presidential elections next year are roiling right along with the power woes. Both are concerns that will not go away soon.
But recent unrest--and actual violence--in Senegal over the legislative power play by President Abdoulaye Wade undermine the county's reputation of stablity, and raise investment concerns. Many have wondered whether the civil disturbances will undermine Senegal's reputation of consistent democratic traditions.
Those concerns are also reflected in the $500 million Eurobond placed this year by Senegal's government. Senegal is rated B+ by Standard & Poors and B1 by Moody’s. When the riots earlier this month were occuring, Senegal’s Eurobond yield was up 4 basis points at 8.215 percent and the price was down 1/4 point at 104.5.
The riots reveal two challenges to Senegal's newfound international finance role. The first is the energy crisis. Power outages are at the root of the civil discontent. But politics plays a companion role. The presidential elections next year are roiling right along with the power woes. Both are concerns that will not go away soon.
Thursday, June 16, 2011
IMF: Energy crisis saps one percent of GDP
According to a just-released "county report" by the International Monetary Fund (IMF), Senegal's energy crisis is seriously shorting its economy. According to the report:
"Capacity constraints, frequent electricity outages, high production costs and electricity tariffs, and poor governance of the energy sector have increasingly constrained economic development. The authorities’ analysis suggests that energy supply problems have reduced real GDP growth by more than 1 percent per year during the past two years."
Senegal's government has an active plan to reform the energy sector, according to the report:
"The authorities’ reform plan (TAKKAL), includes (i) short-term emergency measures that complement medium-term investments (including recapitalization of the national electricity company SENELEC and renting of additional generating capacity (partly used to allow for the upgrading of existing power plants)); (ii) increasing the electricity supply by changing the production mix, acquiring mobile power units, and accelerating the construction of a coal power plant; (iii) demand management policies; (iv)structuring of SENELEC to achieve its financial viability; and (v) creating a communication strategy to ensure transparency and good governance of the reform process.
Financing needs: The total cost of energy sector reform for 2011–15 is estimated at some US$ 1.5 billion (more than 10 percent of 2011 GDP). Financing needs in 2011 alone amount to more than 3 percent of GDP. The analysis of a reputable private sector consultancy shows that the investment package is highly profitable."
An American company, APR Energy Ltd., is one of the key players in this program. After significant investment by former Secretary of State Madeleine Albright and capitalist George Soros, the company was purchased this week by U.K. financier Hugh Osmond's listed cash shell Horizon Acquisition Co. PLC. The company supplies "rental power."
"Capacity constraints, frequent electricity outages, high production costs and electricity tariffs, and poor governance of the energy sector have increasingly constrained economic development. The authorities’ analysis suggests that energy supply problems have reduced real GDP growth by more than 1 percent per year during the past two years."
Senegal's government has an active plan to reform the energy sector, according to the report:
"The authorities’ reform plan (TAKKAL), includes (i) short-term emergency measures that complement medium-term investments (including recapitalization of the national electricity company SENELEC and renting of additional generating capacity (partly used to allow for the upgrading of existing power plants)); (ii) increasing the electricity supply by changing the production mix, acquiring mobile power units, and accelerating the construction of a coal power plant; (iii) demand management policies; (iv)structuring of SENELEC to achieve its financial viability; and (v) creating a communication strategy to ensure transparency and good governance of the reform process.
Financing needs: The total cost of energy sector reform for 2011–15 is estimated at some US$ 1.5 billion (more than 10 percent of 2011 GDP). Financing needs in 2011 alone amount to more than 3 percent of GDP. The analysis of a reputable private sector consultancy shows that the investment package is highly profitable."
An American company, APR Energy Ltd., is one of the key players in this program. After significant investment by former Secretary of State Madeleine Albright and capitalist George Soros, the company was purchased this week by U.K. financier Hugh Osmond's listed cash shell Horizon Acquisition Co. PLC. The company supplies "rental power."
Monday, June 6, 2011
IMF cites energy and debt, but generally good health of Senegal's economy
The International Monetary Fund's recent review of Senegal's economy has some interesting observations. Following the Executive Board’s discussion on Senegal, Ms. Nemat Shafik, Deputy Managing Director and Acting Chair, stated:
“Senegal’s economic recovery continues, and performance under its PSI-supported program is satisfactory. There are however downside risks stemming mainly from continued electricity supply problems and increasing food and fuel prices, which pose some inflationary risks.
“With the emergence of critical investment needs in the energy sector, fiscal policy faces the challenge of accommodating additional priority expenditure while maintaining debt sustainability. Although there is some space for temporarily higher fiscal deficits, a substantial contribution will need to come from additional revenue measures and reprioritizing expenditure. In the medium term, fiscal consolidation, supported by a prudent approach to borrowing, will be critical to bring down the deficit to levels consistent with preserving debt sustainability. The recent issuance of the Eurobond to finance infrastructure projects should be accompanied by strengthening investment planning and debt management.
“To sustain the growth momentum and increase Senegal’s growth potential, the pace of structural reforms should be accelerated. This includes tax policy reforms aimed at broadening the tax base and increasing the revenue effort, energy sector reforms, financial sector reforms, and other reforms geared towards removing bottlenecks to growth and promoting an improved business climate and governance,” she added.
“Senegal’s economic recovery continues, and performance under its PSI-supported program is satisfactory. There are however downside risks stemming mainly from continued electricity supply problems and increasing food and fuel prices, which pose some inflationary risks.
“With the emergence of critical investment needs in the energy sector, fiscal policy faces the challenge of accommodating additional priority expenditure while maintaining debt sustainability. Although there is some space for temporarily higher fiscal deficits, a substantial contribution will need to come from additional revenue measures and reprioritizing expenditure. In the medium term, fiscal consolidation, supported by a prudent approach to borrowing, will be critical to bring down the deficit to levels consistent with preserving debt sustainability. The recent issuance of the Eurobond to finance infrastructure projects should be accompanied by strengthening investment planning and debt management.
“To sustain the growth momentum and increase Senegal’s growth potential, the pace of structural reforms should be accelerated. This includes tax policy reforms aimed at broadening the tax base and increasing the revenue effort, energy sector reforms, financial sector reforms, and other reforms geared towards removing bottlenecks to growth and promoting an improved business climate and governance,” she added.
Monday, April 18, 2011
Peanuts crop best in decades
Senegal’s peanut production is expected to top last year’s total of 1.07 million metric tons as more land is cultivated amid good weather conditions, according to the agricultural ministry. The country has reaped 246,419 tons since the start of the season in December, 18 percent more than the same period of last year. Senegal may have the biggest crop since it produced 1.2 million tons of peanuts in 1975.
Peanuts account for 60 percent of Senegal’s agricultural exports, according to the U.S. Department of Agriculture. Shipments by Suneor, the country’s biggest peanut-oil processing company, account for as much as 50 percent of the world market, according to a 2007 USDA country report. Also expected to benefit is the Café Touba at Cassicafe.com.
Peanuts account for 60 percent of Senegal’s agricultural exports, according to the U.S. Department of Agriculture. Shipments by Suneor, the country’s biggest peanut-oil processing company, account for as much as 50 percent of the world market, according to a 2007 USDA country report. Also expected to benefit is the Café Touba at Cassicafe.com.
Saturday, January 22, 2011
Energy crisis may get worse with higher oil prices
World Bank economists predict Senegal’s economic growth may be cut by as many as 1.5 percentage points this year and next because of rising crude prices as Senegal remains reliant on oil-fired power stations. The World Bank earlier forecast that Senegal’s gross domestic product would expand 4.2 percent this year and 4.4 percent in 2012.
Oil-powered plants supply 78 percent of Senegal’s generating capacity of 635 megawatts, according to World Bank statistics.
Oil-powered plants supply 78 percent of Senegal’s generating capacity of 635 megawatts, according to World Bank statistics.
Iran emissary sent to meet on weapons discord
It's hard to be friends when your friend is selling guns to those who would hurt you. And sore feelings apparently persist between Iran and Senegal over the arms shipment on its way to Gambia, where it might logically be feared they might wind up in the hands of anti-Dakar Casamance insurgents.
Senegal and Iran enjoyed strong diplomatic ties until the 13 containers loaded with arms and munitions were found in October aboard a ship in Nigeria.
Iran's foreign minister arrived in Senegal this last week to try to smooth things over with Senegal, once close diplomatically. Acting Foreign Minister Ali Akbar Salehi was to meet Senegal President Abdoulaye Wade during the two-day trip. Salehi took over as Iran's caretaker foreign minister after President Mahmoud Ahmadinejad fired his predecessor Manouchehr Mottaki on December 13 as he was on an official visit to Senegal, after the weapons were found.
Senegal recalled its ambassador to Tehran mid-December after Iran failed to provide a "satisfactory" explanation for the weapons.
Among the Senegal-Iran co-ventures we have been following are the Theis "SenIran" Khodros auto manufacturing facility. Other economic cooperation has started or been discussed between the two countries. We will wait to see if any fallout results from the arms controversy.
Senegal and Iran enjoyed strong diplomatic ties until the 13 containers loaded with arms and munitions were found in October aboard a ship in Nigeria.
Iran's foreign minister arrived in Senegal this last week to try to smooth things over with Senegal, once close diplomatically. Acting Foreign Minister Ali Akbar Salehi was to meet Senegal President Abdoulaye Wade during the two-day trip. Salehi took over as Iran's caretaker foreign minister after President Mahmoud Ahmadinejad fired his predecessor Manouchehr Mottaki on December 13 as he was on an official visit to Senegal, after the weapons were found.
Senegal recalled its ambassador to Tehran mid-December after Iran failed to provide a "satisfactory" explanation for the weapons.
Among the Senegal-Iran co-ventures we have been following are the Theis "SenIran" Khodros auto manufacturing facility. Other economic cooperation has started or been discussed between the two countries. We will wait to see if any fallout results from the arms controversy.
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