Infrastructure outlay equals economic boom

Senegal needs a massive investment in infrastructure, according to a World Bank official. Doubling the country's investment to improve power and transportation would allow private industry to untap an "enormous" economic potential, said Clemencia de Mastle, the bank’s coordinator for infrastructure diagnosis.

Poor infrastructure costs Senegal per capita GDP growth of 1.3 percentage points each year, with average transport speeds of less than 6 kilometers (3.7 miles) an hour, de Mastle said, citing an Africa-wide investigation of public services.

“This has an immense impact on Senegal’s competitiveness,” she said. “The energy situation is catastrophic.”

Senegal needs to add generating capacity of at least 258 megawatts, with consumers currently relying on private generators for 25 percent of their power needs, up from 7 percent at the beginning of the decade, the study found.

The country is currently investing $911 million in public works projects a year, including power plants and a system of highways around the capital, an amount that is just 55 percent of the World Bank’s suggested infrastructure spending, according to the report.

Meanwhile, the government banned a Dakar demonstration protesting the lack of power. The government recently said that state-controlled energy provider was facing technical and financial problems and that the more than usual power outages were due to the "accidental use" of contaminated fuel which had damaged engines that run power plants.

As Senegal's ageing power plants are unable to keep up with rising demand, a 125 megawatt coal-fired plant is scheduled to be built and will only be ready by the end of 2012.

"There is one God, not two"

I met the Khalif, Serigne Bara, two years ago in Touba and now he is gone to meet our maker. He gave me one of the most straightforward lessons in ecumenicism I have ever received. I was a Catholic in Touba, the holy city of the Mouride Islamic brotherhood. When I left California my children were terrified that I would be beheaded because I was going to an Islamic country. I didn't have quite that impression, but I was unprepared for just how opposite the reality is from that notion in Senegal, one of the safest, most tolerant places I have ever been (far more than America in some ways)... And it was the Khalif, at that time not long in his position as the leader of the large and powerful Mouride sect, who epitomized that tolerance. I will never forget his blessing to me: "May you find God in Touba; there is only one God and not two." His blessing was realized because I found myself that much closer to a God that is the same God for me and my Muslim brothers and sisters. My hopes go out to the Mourides that Serigne Bara's successor is as holy and astute as his predecessor, who I expect to meet in the one heaven that awaits us.

Zain cellular sell awaits "due diligence"

According to Dakar Times, Bharti Airtel, the largest Indian mobile phone company by subscribers, is in talks to buy the African assets of the Kuwaiti telecom company Zain for about $10.7 billion.

The two companies said in separate statements recently that they are in exclusive talks until March 25 about the transaction. The potential deal does not include Zain’s assets in Morocco and Sudan, and is subject to due diligence and regulatory approval, they said. (Editor's note: "Due diligence and regulatory approval" seem to be terms of art in Africa. See previous post.)

Meanwhile, Abdourahim Agne, Senegal's telecommunications minister, has confirmed that the Seventh Annual West & Central Africa Com Congress will take place in Dakar on June 16 and 17, 2010.

West & Central Africa Com offers operators (fixed, mobile, wireless), ISPs, regulators, investors and vendors from the region to debate the future of telecommunications in their markets and to meet their peers. After two years during which the congress was held in Abuja, Nigeria, it is coming back to Senegal.

Millicom: Good for the Wades or good for Senegal?

Senegal's infrastructure minister Karim Wade was reportedly shaking down the American cell phone company Millicom International Cellular, to the tune of $200 million--no small change anywhere and especially Senegal.

But that was according to the Business Insider website (www.businessinsider.com). Titled "The Joy Of Doing Business In Africa: How Senegalese Politicians Tried To Shake Down Millicom For $200 Million," the article seemed to rely largely upon the accounts of Millicom's executives, especialy CEO Mark Beuls, who met with Karim Wade and another time with Thierno Ousmane Sy, advisor to president Abdoulaye Wade, father of Karim Wade.

The Senegalese administration's response, which has some resonance with our Senegalese contacts, is that Senegal's officials were simply grinding for a better deal. The original Millicom license was given in 1998 at a cost of only $100,000. Even at that time, before the allure of the African market, licenses were fetching much more in Africa... The matter is now in arbitration brought by Millcom.

Would the Wades have pocketed some or all of the money? Who know: but $200 million is a lot to hide. If it was intended for the treasury it is a different matter. Government officials have a duty to get the best deal for their people.

The Business Insider story was heavy on the angle of corruption in Africa making business difficult. But if Americans can't dig in and work the deals there, well, somebody else certainly will...

Iran promises big petroleum storage project.

Iran's economic relations with Senegal will now include an announced 40 million cubic meter petroleum storage effort. The effort, projected to create 500 Senegalese jobs, was announced by Iran's ambassador to Senegal yesterday.

According to the announcement, the capacity of the storage will exceed Senegal's petroleum storage needs, allowing it to broker the surplus to surrounding countries.

The promised effort builds on the SenIran motor vehicle factory in Thiès. Actual results of that joint effort so far have been less than impressive, with few cars and public transit vehicles actually coming off line... Big announcements are the easy part. We will be watching for actual results.

Karim pledges Touba development plan

Senegal's infrastructure czar, Karim Wade, son of President Abdoulaye Wade, yesterday told Touba leaders that the government would assist in developing a master plan for the Holy City of the Mourides.

Infrastructure development in and around the fastest growing area of Senegal is already underway, largely done by Chinese construction firms.

The current development work includes developing and maintaining roads and the construction of several water towers and reservoirs.

M. Wade pledged further improvements pursuant to a general plan. "We will initiate a major development plan to Touba to think of tomorrow, the problems of urban development, sanitation and access," he said in Touba.

Update on road bonds

Earlier we posted reports of Senegal government bond sale on the international market. Here is the publicly released letter of Finance Minister Abdoulaye Diop to the IMF seeking an increased debt ceiling:

"To supplement resources from donors and the private sector, the government is mobilizing external funds for the Dakar-Diamniadio toll highway. To this end, the government requests to raise the ceiling for non-concessional borrowing for this project by CFAF 10 billion (less than 0.2 percent of GDP) to CFAF 90 billion. The higher ceiling would allow the government to accommodate possibly higher costs and issue a bond in international markets of $200 million, typically seen as a minimum size for this type of transaction. The small increase would have no negative impact on debt sustainability."