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- GDP (PPP):
- $27.7 billion
- 4.0% growth
- 3.2% 5-year compound annual growth
- $1,958 per capita
- Inflation (CPI):
- FDI Inflow:
Senegal’s economic freedom score is 57.8, making its economy the 106th freest in the 2015 Index. Its score has increased by 2.4 points since last year, driven by improvements in half of the 10 economic freedoms, including freedom from corruption, business freedom, and fiscal freedom, that outweigh declines in labor freedom and the management of government spending. Senegal is ranked 16th out of 46 countries in the Sub-Saharan Africa region, and its score is below the world average.
After four years of little progress, economic freedom in Senegal has advanced by 2.1 points since 2011, and the country has recorded the fourth highest score improvement of any country graded in the 2015 Index.
However, the Senegalese economy remains “mostly unfree.” Senegal’s economic freedom remains suppressed by weak rule of law and a poor regulatory environment. The judiciary lacks the resources to prevent corruption and move cases efficiently. Registering a business is expensive, and the rigid labor code confines many to informal employment.
Former President Abdoulaye Wade amended Senegal’s constitution over a dozen times to augment executive power and weaken the opposition, but his run for a third term ended in his defeat by Macky Sall in March 2012. In September 2012, lawmakers voted to abolish the Senate and the vice presidency to save money for disaster management. Sall appointed Aminata Touré prime minister in 2013. After more than 30 years of conflict between the government and southern separatists, the rebel leader of the Movement of Democratic Forces of Casamance declared a unilateral cease-fire in May 2014. Economic reforms have proceeded slowly. Some 75 percent of the workforce is engaged in agriculture or fishing. High formal-sector unemployment is a major factor in high rates of emigration to Europe. Senegal remains heavily dependent on foreign aid and has suffered from the 2014 Ebola virus outbreak in West Africa.
Despite steps to fight corruption, there still are few checks and balances. Several large-scale scandals have involved government construction contracts, but high-ranking officials remain largely unaccountable, and there have been few bribery or corruption convictions. The judiciary is independent but under-resourced and subject to external influences. Property titling procedures are uneven across the country.
Senegal’s top individual income tax rate has been lowered to 40 percent, but its top corporate tax rate has increased to 30 percent. Other taxes include a value-added tax and an insurance tax. Tax revenue equals 19.2 percent of domestic income, and government spending is equal to 29.1 percent of domestic output. Public debt equals 46 percent of GDP.
Administrative procedures have been streamlined, and the minimum capital required has been reduced, but the overall cost of launching a business remains high. The underdeveloped labor market still traps much of the labor force in informal economic activity. Electricity subsidies exceed 2.5 percent of GDP, reflecting prices that are about 40 percent below production costs.
Senegal’s average tariff rate is 8.0 percent. Non-tariff barriers restrict some agricultural imports. The government does not typically discriminate against foreign investment but may screen new investment. With 19 banks and two financial institutions, the financial sector is underdeveloped and dominated by foreign banks. The capital market remains rudimentary, and few firms have access to credit.