Situation and cooperation

Plane at the Leopold Sedar Senghor airport in Dakar, Senegal, with the African Renaissance monument in the background

In the spring of 2012, Senegal was able to cement its reputation as a stable democracy in an otherwise troubled region of Africa when the country elected Macky Sall as its new president in peaceful and transparent elections. The election campaign was blighted by fierce, and sometimes violent, protests against the incumbent president, 85-year-old Abdoulaye Wade. Wade was standing for a third term in office, which was deemed to contravene the constitution. Young voters, in particular, also protested against the corruption and mismanagement which had characterised the latter years of Wades' presidency. Nevertheless, the elections themselves were peaceful, as was the handover of power.

President Sall faces considerable domestic policy challenges. For example, almost half of Senegal's people live in poverty, and 17 per cent of children under the age of five are undernourished. Incomes are distributed very unequally, with poverty especially pronounced in rural areas. Health care is inadequate, with only 0.6 doctors per 1,000 inhabitants. And the illiteracy rate is around 55 per cent. The United Nations Human Development Index (HDI 2015) ranks the Republic of Senegal 162nd out of 188 countries.

Economic activity

Fishermen and their boats at the beach of Dakar, Senegal

Senegal's economy is heavily dependent on imports, and is hampered by a small domestic market and a narrow range of exportable goods. A large proportion of the population works in the agricultural or fisheries sector, with employment in the informal sector predominating. Industrial production in Senegal is almost negligible and tourist numbers have been shrinking in recent years.

Nevertheless, the Senegalese economy expanded by a respectable 6.5 per cent in 2015. This growth is due to an unusually long and abundant rainy season, which helped to produce an above-average increase in agricultural yields. A number of investments in logistical and infrastructural improvements in the agricultural sector are also helping to ensure that fewer crops become spoiled. Given the high population growth rate (3.1 per cent in 2014), sustained economic growth of six to seven per cent would be needed in order to reduce poverty effectively.

Constraints to development include power shortages, an antiquated transport infrastructure, a lack of transparent administration, a tax system that is not conducive to business, an outdated land tenure system and complex regulations imposed by the authorities.

President Sall has formulated comprehensive reform measures designed to reduce these constraints and improve people's lives in Senegal. In 2014, he presented his government's 'Plan Sénégal Emergent' (PSE), which sets out the development steps to be taken over the next ten years. They include, among others, large-scale infrastructure projects, such as the construction of a new airport and a new railway link between Dakar and Bamako, the capital of Mali.

Development potential

Senegal offers investors stable political conditions. The government is considered to be pro-reform and pro-development, and Senegal's economic order is based on the free market. The country's growth industries include building and construction, telecommunications, forestry, tourism, and fruit and vegetable growing for export.

An airport, which is now scheduled to start operating in 2017, is being built 50 kilometres east of Dakar. It offers great economic potential. It could help make Senegal a hub for West Africa and beyond.

The country's most important growth industry is the service sector. Transport, logistics and communications together account for almost 11.9 per cent of GNP.

Priority areas of German cooperation with Senegal

Federal Minister Gerd Müller and President Macky Sall of Senegal at the G7 Summit in Elmau in 2015

German-Senegalese government negotiations were last held in November 2012. During a visit to Dakar in October 2015, the Commissioner for Africa of the Federal Ministry for Economic Cooperation and Development, Günter Nooke, met for talks with Senegal's President Sall. At their meeting, Nooke announced that Germany would provide funding of 53.66 million euros for the period from 2015 to 2018. In August 2016, Development Minister Gerd Müller committed a further ten million euros for employment promotion, of which one million euros would come from the "Digital Africa" initiative.

The focus of development cooperation is on renewable energies and energy efficiency.

Germany is also providing support to Senegal through the African Risk Capacity Insurance Company (ARC). The scheme, which the BMZ is co-financing to the tune of 50 million euros, offers African countries climate risk insurance. In 2015, Senegal was the first country to receive a pay-out from this insurance, amounting to 16.5 million US dollars.

Renewable energy and energy efficiency

The joint German-Senegalese PERACOD project in Kayar, which uses solar technology to operate water pumps

A shortage of energy is one of the main hindrances to development in Senegal. Power generation has been unable to keep pace with the growing demand. As a result, businesses as well as education and health facilities cannot function normally. In particular the people living in rural areas lack adequate access to electricity and modern energy services. Price subsidies are also placing a major strain on the national budget.

In view of the dependence on fossil fuels, which need to be imported from abroad, the government is showing considerable interest in using more solar and wind energy. Senegal greatly values German knowledge and experience in this regard. The aim of cooperation in this field is to increase access to energy in rural areas and to make energy supply safer, more efficient and more environmentally friendly overall – which should also help to reduce poverty.

That is why Germany is supporting the Senegalese government with its reform policy, for instance by providing advice on developing feed-in regulations and involving the private sector. Germany is also encouraging investment in renewable energy and energy efficiency, in order to improve electricity production, transmission and distribution in Senegal. For example, Germany is providing support for the construction of a photovoltaic power plant, along with smaller stations, which are scheduled to go on stream in 2017.

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