At a time when Senegal is preparing to launch its gas and oil production, the reconfiguration of the political landscape is generating immense hope among the population. The opposition candidate, Bassirou Diomaye Faye, won the presidential elections in the first round on the back of a breakthrough project. But the challenges ahead are huge, especially on the employment front. Despite a decade of robust growth, the economy has undergone little transformation and suffers from low productivity gains, which it will be difficult for the sustained investment effort to continue to mask, given the now high level of debt.
Senegal is the second largest economy of the West African and Monetary Union (WAEMU). A long track record of political stability has helped the country to maintain good relations with international donors. Another characteristic is the relatively diversified economy by regional standards, with tertiary sectors accounting for almost 50% of GDP. However, agriculture and fishing remain the largest employers by far, and the economy suffers from infrastructure inadequacies, especially in energy, and a weak industrial base. Foreign investment also remains relatively low. As Senegal is a member of WAEMU, it enjoys a solid buffer against balance of payment shocks as the French treasury guarantees the full convertibility of the CFA Franc against the euro at a fixed rate. This also helps to anchor macro stability, with inflation rarely exceeding 3%. Reforms of the CFA Franc are ongoing but the fundamentals of the currency arrangement remain.
