The International Monetary Fund projects Senegal’s economic growth to reach 7.1% in 2024 and 10.1% in 2025, making it the second-fastest growing economy in West Africa and the fourth-fastest growing economy worldwide. This growth is driven primarily by the development of the country’s hydrocarbon resources and a favorable economic climate, including declining inflation. Reforms aimed at transforming Senegal into an emerging economy within the next decade are also contributing to this positive outlook.
Burgeoning Energy Economy
Oil and gas production in Senegal, led by Woodside’s Sangomar and bp and Kosmos Energy’s Greater Tortue Ahmeyim (GTA) projects, is set to significantly boost the country’s economy. Sangomar is expected to contribute over $1 billion annually to the nation’s economy over the next 30 years. Meanwhile, the GTA project will produce 2.5 million tons of LNG per year, primarily for export, generating significant long-term financial gains for the country. With $5 billion invested in Sangomar, which targets 100,000 barrels per day, and first gas from Greater Tortue Ahmeyim expected in early 2025, these projects are poised to enhance state revenues, attract foreign investments and lower production costs. Additionally, the expansion of local refining, including Senegal’s Société Africaine de raffinage 2.0 refinery upgrade, is set to further boost Senegal’s economic growth by enhancing energy capacity and stimulating industrial development.
Senegal’s Reform Agenda
Senegal’s new government has unveiled a transformative reform agenda aimed at boosting economic development. Launched on October 14, the Senegal 2050 plan seeks to raise average incomes by 50% over five years while reducing debt and deficit. The 25-year initiative, spearheaded by President Bassirou Diomaye Faye, emphasizes local resources and human capital, moving away from foreign dependence. It targets economic growth, job creation and sustainable development, with investments in key sectors like energy and agriculture. The government also aims to improve governance, infrastructure and social services, including universal access to water, electricity and national health coverage.
Lowering Inflation and Public Sector Wages
Senegal’s recent economic growth has been supported by a significant drop in inflation, which reached a five-year low of 0.7% in July 2024. This decline was largely driven by reduced food prices, which fell by 2%, and lower housing-related costs, down 0.8%. Additionally, international cereal prices decreased by 3.3% due to increased agricultural production in the Northern Hemisphere. Another contributing factor has been the government’s efforts to reduce public sector wages, creating fiscal space for increased public investment.
Climate Action and Nationally Determined Contributions
Senegal’s new climate and energy strategy, with backing from international partners, will significantly impact the country’s GDP growth by advancing decarbonization and renewable energy. Through the Just Energy Transition Partnership, Senegal aims to increase the country’s share of renewable energy to 40% to its electricity mix by 2030. The initiative, aligned with the country’s Nationally Determined Contributions, will reduce emissions while supporting sustainable development. The strategy integrates both mitigation and adaptation measures, including carbon sequestration, renewable energy deployment and climate resilience. Additionally, Senegal struck a deal in June 2023 with the International Partners Group – comprising France, Germany, the UK and Canada – which will see the provision of €2 billion in financing to support infrastructure and technology, offering investment opportunities to accelerate the green transition.
Emerging Senegal Plan
The Emerging Senegal Plan (PSE) aims to position Senegal as an emerging economy by 2035, fueling growth through large-scale infrastructure projects. Launched in 2014 by President Macky Sall, it focuses on sustainable growth, human development and governance reforms. Key projects, including roads, ports and energy infrastructure, have attracted significant public and private investment, especially foreign direct investment. Additionally, the PSE aims to boost agricultural self-sufficiency and capitalize on the country’s mineral resources to accelerate economic expansion.
