How Sall’s re-election will impact the investment environment

01 April 2019

How Sall reelection will impact the investment environment President Macky Sall’s re-election for a second term is likely to reduce protest risks and ensure policy continuity. Senegal is expected to achieve robust growth in 2019, driven by consumer confidence and infrastructure development. Senegal offers a broadly supportive investment environment, although the risk of contract alterations or expropriation is elevated for oil juniors.

Security Environment

To date, Senegal has not been directly affected by the activities of al-Qaeda in the Islamic Maghreb (AQIM) and Jammat Nusrat al Islam wal Muslimin’s (JNIM).

Whilst West African states such as Côte D’Ivoire and Burkina Faso have experienced deadly terrorist attacks, no such incidents have occurred in Senegal.

However, the country is an aspirational target for terrorist actors. It has contributed over 1,000 troops to the United Nations’ peacekeeping mission in Mali, and maintains close links to France.

In July 2018, 13 Senegalese citizens were convicted of various crimes, including terrorism financing, after being accused of seeking to establish a jihadist network in Casamance.

As a result, the terrorism threat in Dakar and beach resorts, such as Saly and Mbour, will remain elevated in 2019. Any incidents are likely to involve firearms or small improvised explosive devices and will target French-owned assets or crowded public areas, such as restaurants, bars and beaches. In recognition of the threat, the government has deployed soldiers to strategic sites in Dakar.

How Salls reelection will impact the investment environment Security risks generated by the long-running separatist insurgency in the southern Casamance region have fallen in recent years.

The separatist Mouvement des Forces Démocratiques de Casamance (MFDC) now has fewer than 1,000 active fighters, and has been engaged in sporadic peace negotiations since 2012.

This should reduce the likelihood of property damage or business disruption for firms operating in Casamance. However, the likelihood of a lasting peace settlement has diminished since early 2018, when a MFDC-linked illegal logging group, killed 14 men in the Bofa Bayotte forest.

Trading Environment

The re-election of President Macky Sall in February 2019’s presidential election should ensure policy continuity in Senegal. Sall won in the first-round with 58% of the vote, ensuring a strong mandate to pursue pro-business policies under the Plan Sénégal Emergent (PSE).

Greater political stability and a reduction in protest activity in the wake of the election should buoy consumer confidence and commercial activity in coming quarters. This will support real GDP growth of 6.0% in 2019.

Investment in major infrastructure projects is also expected to continue in 2019, with capital spending expected to reach 9.8% of GDP in 2019. Projects include the USD 914 million Dakar Regional Express Train and the construction of a new city and business hub near the Blaise Diagne International Airport.

In the medium-term outlook, Senegal’s extractive sector will become an increasingly important driver of growth. A final investment decision at the SNE deep-water oil field is expected in 2019, which could lead to first oil production in 2022.

Senegal continues to take action to reduce its fiscal deficit, with the 2019 budget targeting a deficit of 3.0% of GDP. This will mark a decrease from 3.5% in 2018. Reductions will be achieved through strong tax revenue growth and a decline in overall spending.

Sovereign credit risks will remain moderate, with government debt expected to reach 49.5% of GDP in 2019. Debt levels are likely to decline in subsequent years, given robust growth and fiscal consolidation.

Investment Environment

Pricing outlook SenegalThe operating environment for foreign investors has generally improved since Sall took office in 2012. However, contractual and expropriation risks exist for smaller firms operating in the oil sector.

The government is keen to take advantage of a number of major offshore oil and gas discoveries, with production set to begin from 2021. As a result, there has been a clear preference for production-sharing agreements with major international oil companies who have the resources to meet tight development schedules. Small firms may lose their concessions as a result.

In 2018, African Petroleum (AP) requested arbitration proceedings against Senegal at the International Centre for the Settlement of Investment Disputes (ICSID). AP claims that the government did not validly terminate its exploration and development contract at the Rufisque Offshore Profond block before selling its ownership stake to Total.

The government claimed that the contract was cancelled in April 2016, after AP failed to meet a work schedule. The case is on-going, but highlights the risks facing companies in the oil sector.

The monthly Risk Outlook is supported by our proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.

Risk Review for SenegalWorld Risk Review Sign Up

5 Key Takeaways

  • The re-election of President Sall will ensure policy continuity and create numerous investment opportunities
  • The Senegalese government will prioritise major infrastructural investment in 2019
  • Government debt will decline over the coming years owing to robust economic growth
  • Contractual and expropriation risks exist for small firms operating in the oil sector
  • There is an elevated risk of terrorism at tourist beach resorts in Dakar, Saly and Mbour.

A number of the countries in this month’s Risk Outlook are the recipient of elevated Chinese investment, with some participating in the Belt and Road Initiative (BRI). Increasingly, our focus is on the implications of BRI for the risk environment within emerging markets.

In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for Myanmar, Peru, Guinea and Djibouti all of which have been the subject of recent enquiries from our client base.

For more articles like this, download our Risk Outlook Newsletter
Learn more ctaLearn more about credit, political and security risk management >>


If you would like to talk about any of the issues raised in this article, please contact Eleanor Smith, Senior Political Risk Analyst on +44 (0) 121 514 8307.