Senegal is a medium-sized country located in the westernmost part of Africa. The country covers a total land area of 197,000 square kilometers and has a population of about 13 million. In this newsletter report, the author focuses on the economic and resource development issues that the country is facing in light of the current issues that the world economy faces as well.
The fact of the matter is that Senegal is one of the poorest countries in the West African region. With a GDP of only $15.65 million, it is the 120th biggest economy in the planet, according to a recent report published by the Central Intelligence Agency in 2016. In terms of resource development, the main natural resources that the economy relies on for expert include but may not be limited to mining, construction raw materials, and fish and agricultural goods . These are among the largest industries in the country’s rural areas. Collectively, however, its most profitable industries include phosphate mining, commercial fishing, farming, oil exploration, and fertilizer production. With a population of more than 13 million, the country faces the consequences of having insufficient budget to finance its growth and development plans. In the past years, the country has relied, heavily, on foreign aid, donor assistance and remittances, and foreign direct investment to propel its lagging economy.
It shall be remembered that in the early 90s, the country’s economy contracted by at least two percent. This led to a high level of inflation which, as a consequence, made adjustment difficult for its citizens. With consumer and industrial groups being overpriced, it became even harder for the country to finance its resource development programs which so far was the only hope it was seeing in its decade-long struggle against poverty. In an effort to stimulate the country’s economy’s growth once again, the then current administration devalued the currency. The devaluation effort was rationalized by the notion that the cheaper a country’s currency is, the more attractive its resource and export commodities can become in the international market.
The administration at that time also instituted a systematized effort to seek assistance from partner countries who acted as international donors. Price controls on key commodities and subsidy programs were also dismantled in a failed attempt to control the level of inflation. This was, in a way, the government’s effort to let the market and economy naturally correct itself. Fortunately, things got better; the country’s inflation levels went down, the foreign direct investment levels shot up thanks to its cheaper currency, and the gross domestic product rose at an average annual pace of five percent per year over the next years up to the year 2001 when the dot com bubble burst in the western markets and hit other markets.
The country’s largest trading partner is India. It is estimated that more than a quarter of the country’s total export volume go to India. Other key trading partners include the United States, the United Kingdom, and Italy. One of the country’s biggest assets, as far as the issue of resource development is concerned, is its exclusive fishing zone, which spans a total of 12 nautical miles. Unfortunately, the country is not financially and socially equipped enough to fully utilize this natural resource. One of the biggest issues that the country faces is the continuous breach of its sovereignty by illegal fishermen from other countries. It is estimated that the country loses several hundreds of tons of fish each year due to illegal fishing alone.
Around 40% of the country’s population lives in rural areas. Considering this, it only makes sense that the country relies on agricultural exports to prop up its economy as well. Some of its agricultural resources available for export include cigars, cotton, milk, peas, rice, and tomatoes.
The country also has a thriving mining and oil drilling and exploration industry. 24% of the country’s export revenues are derived from its oil industry. It ships oils, petroleum, bituminous, and distillates. Its mining industry is supported by the following sectors: gold powder mining, phosphorus, iron, and copper. It is also worth mentioning that some 8.2% of the country’s export revenues can be attributed to its cement production industry .
Senegal can be considered as one of the richest countries in Africa in terms of availability of natural resources. Unfortunately, the country’s lagging economy and other internal issues such as corruption and regional instability hinder it from realizing its full economic potential. Its overreliance on foreign aid may have also turned into a negative form of dependence. With proper support and guidance from modern economies such as the United States (one of its key trading partners) however, the country can slowly but surely turn its economic situation around and manage to grow into a large economy.
The biggest challenge for the country’s current administration would be to mobilize its forces so that it can take full advantage of its abundance in natural resources and make sure that the export revenues (derived from the sustainable commercialization of those resources) would be able to benefit everyone in the country and not just the businesses that extract and sell them.
References
CIA. (2016). Wolrd Factbook - Senegal. Central Intelligence Agency, http://data.worldbank.org/data-catalog/GDP-ranking-table.
Haussmann, R., & Hidalgo, C. (n.d.). A Proportional Representation of Senegal's Exports. Creative Commons.
International Monetary Fund. (2016). Report for selected countries and subjects. IMF.
