Country Risk Rating

A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average. - Source: Coface

Business Climate Rating

The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Intercompany transactions run appreciable risks in the unstable, largely inefficient environments rated B.


  • Strong economic momentum linked to implementation of major investment projects
  • Donor support under the Emerging Senegal Plan
  • Headway in business climate and governance
  • Strong track record of political stability
  • Significant oil and natural gas reserves off the Senegalese coast


  • Growth and exports at the mercy of weather events and commodity price developments
  • Inadequate energy and transport infrastructure
  • Significant external deficit
  • Low per capita wealth, unemployment and regional disparities

Current Trends

Strong growth prospects

Growth cooled in 2019, reflecting political uncertainty and a slight slowdown in public investment and consumption. However, by 2020, it is expected to increase as these drivers recover. They will be mainly supported by the implementation of the second phase of the Emerging Senegal Plan (PSE), which should create a spillover effect for private sector investment. In particular, the prospects for oil and gas development, with commercial production set to begin in 2022, will draw these investments, which will likewise be directed towards the construction and improvements of the energy and transport infrastructure network, as well as the development of the ICT, textile and agricultural sectors. Although exposed to climate risks, agriculture will benefit from efforts to modernize the sector. With more than 50% of households still relying on income from agriculture, private consumption is also expected to support growth. Domestic consumption dynamics and tourism growth will drive trade activities. Efforts to improve the reliability of energy supply and develop special economic zones (Diamniadio, Diass and Sandiara) could help to boost industrial activity. The contribution of the trade balance to growth will be constrained by the country's relatively small export base and, above all, by the likely increase in imports.

Mounting fiscal challenges

In 2020, the budget deficit is expected to be back in line with the WAEMU requirement of 3% of GDP, after increasing in 2019 owing to settlement of arrears of the National Electricity Company (Senelec), representing about 0.7% of GDP. Fiscal policy should be influenced by efforts to improve the tax burden, as revenues represent around 16% of GDP, i.e. short of WAEMU’s 20% target. In particular, the government intends to pursue efforts to overhaul the customs administration. On the expenditure side, the State's wage bill and, above all, debt service payments will continue to absorb a large proportion of budgetary resources. Accordingly, the government will probably undertake a rationalization of government-operating expenditures to reduce the share of current expenditures and thus free up resources for capital investment. Although the risk of debt distress remains limited, the deterioration of debt indicators, particularly those relating to debt service, should warrant a more prudent borrowing strategy.

In 2020, the current account deficit is expected to worsen, following the widening trade deficit. Although exports are likely to continue rising (particularly fish products and gold), the increase in the import bill for capital goods, particularly in connection with hydrocarbon projects, will weigh on the balance. The same reasons are also likely to be at the root of a deterioration in the small services deficit, despite the contribution of tourism revenues. Repatriation of foreign investment income and interest payments on public debt will further pressure the income balance. Remittances from expatriate workers abroad will contribute to the surplus in the transfer account, despite a decline due to weaker global economic conditions. The deficit should continue to be financed by debt, despite an increase in FDI.

A second term and high expectations for the President

In February 2019, President Macky Sall was comfortably re-elected, winning 58.3% of the vote in the first round of the election and building on the victory of his Benno Bokk Yakaar (United in Hope) coalition in the parliamentary elections held in 2017. His re-election will enable him to move ahead with the second phase of the PSE, which includes a component on improving the business climate, which remains challenging (123rd out of 190 countries). Despite the victory, widespread frustration persists over the perception that living standards are not improving fast enough. The social climate has grown particularly tense following accusations against the President's brother, Aliou Sall, who is suspected of receiving payment for the award of gas and oil licenses in 2012. This case has added to a sense of corruption and has been the source of several demonstrations. On the other hand, at the end of 2019, the rapprochement between Macky Sall and Abdoulaye Wade - his predecessor as President - followed by the presidential pardon granted to Khalifa Sall - former mayor of Dakar, who was sentenced in March 2018 to five years' imprisonment on charges of embezzlement of public funds - seem to reflect an effort to defuse social tensions arising from concerns over the perceived consolidation of presidential power. Insecurity at the borders with Mali and Mauritania, and in the Casamance region, remain a concern.


Coface (02/2020)