par Aboubakr BarryManaging Director of Results Associates, a company specializing in financial management and administration, in Bethesda, Maryland, United States.
Dear Mr President,
I heartily congratulate you on winning the trust and mandate of the Senegalese population. Your success is a matter of pride not only for Senegal, but for the entire African continent. In light of this important achievement, I would like to share some strategic ideas to support your development agenda.
According to the World Bank’s Global Development Indicators, Senegal recorded GDP growth of $11.5 billion between 2010 and 2022, while its debt increased by $27.4 billion during the same period. Worryingly, gross capital formation increased by only $8.7 billion, accounting for only 32% of the increase in debt.
Figure 1: A visual representation comparing total GDP (in US$), total debt (in US$) and gross capital formation (in US$) for 2010 and 2022, as well as the differences observed between these two years.
Figure 2: A graphical illustration representing the relationship between changes in total debt (in US dollars) and gross capital formation.
This data indicates that for every dollar added to GDP, an incredible $2.38 of debt was accumulated, with only a third of this amount allocated to real estate investment. The IMF Country Report No. 23/250 of July 2023 reports that “between 2013 and 2019, public debt increased by 26.7 percentage points, while additional revenues generated by economic growth were insufficient to cover the increasing commitment to public investment. Additionally, the Economic Intelligence Unit estimates that the debt will reach $40 billion by 2028.
To enable your administration to achieve its development objectives, I propose the following five strategies:
1. Undertake administrative reforms to focus government on its essential functions: As the late Nicholas van de Walle explained in his influential book, African Economies and the Politics of Permanent Crisis, “Africa’s weak administrative capacities are widely recognised. Although senior technocrats may have high skill levels, they often work within under-resourced government structures lacking capacity for data collection, planning and policy analysis.
Given the scarcity of resources and abundance of needs, the government should focus on: i) protective functions, which include maintaining security, order, and enforcing laws against theft, fraud, and violence (e.g. defense, rule of law, property rights, fairness, justice), and ii) productive functions by stimulating long-term growth potential (e.g. education, health, energy, infrastructure, regulations).
It may be beneficial to establish a high-level independent commission to recommend effective strategies for: i) resizing government operations by reallocating responsibilities to the private sector and NGOs, where appropriate, while providing assistance to those affected by these changes, and (ii) strengthening the capacity of the civil service to carry out its essential functions, including through the implementation of codes of conduct, alignment of salaries with market standards, and the establishment of merit-based promotion and retention practices.
Although difficult choices may present themselves, this path is vital to maintaining the credibility of the government. Given the political capital and support you have, now is the opportune time to act. The late Lee Kuan Yew, the architect of Singapore’s rise as a first-class economy, wrote in his book From Third World to First: The Singapore Story 1965-2000, “No country is as strong as its public service. Without a capable and dedicated civil service, policies cannot be implemented effectively, and the government will lack people’s trust and respect.”
2. Professionalise asset management: The IMF report identifies 41 state-owned enterprises, revealing that “the effectiveness of public investment in Senegal remains low,” hampered by poor governance and a lack of financial controls. To reduce revenue losses, a professional approach to asset management is essential. Inspired by the Singapore model, the government could create a holding company
Professionally administered, free from political interference, managing its assets – including state-owned enterprises and real estate – on a commercial basis. Singapore’s Temasek, founded in 1974, currently manages non-financial assets worth $288 billion and contributes to the national budget. This strategy can raise revenue through the following:
a) Sale of unprofitable businesses,
b) Liquidation of non-essential assets for immediate cash flow and future tax revenue,
c) maximising revenue from retained assets, and
d) Prevention of losses caused by disposal of low-value assets.
To accelerate this process, the government could seek technical expertise from Singapore or appoint Temasek as a consultant to adapt their market-oriented practices to the Senegalese context.
3. Revalue the CFA franc: A significant valuation of the CFA franc – currently pegged to the euro – could help mitigate economic vulnerabilities. Disparities in economic productivity between the euro zone and Senegal could lead to an overvaluation of the currency, particularly if inflation in Senegal is higher than in the euro zone or if the euro appreciates against the currencies of Senegal’s trading partners. An overvalued currency could make exports more expensive and imports cheaper, worsening debt levels and risking economic crises. Historical precedents, such as those in Chile (1982), Argentina (1991) and Thailand (1997), show that hard currency pegs can lead to severe economic recessions and banking crises when the stable currency is stronger than others. In Chile’s case, real GDP fell by 15% and unemployment rose to over 25%, writes Sebastian Edwards in the book The Chile Project. Senegal should consider adopting a flexible exchange rate regime in line with its trading partners in the medium term.
4. Leadership in Key Priorities: Senegal’s long-term prosperity depends largely on the attraction of foreign direct investment, which is based on two key factors: i) Human capital development to equip citizens with skills
skills needed for global economic engagement, and ii) creating a pro-investor and profitable business environment that generates competitive returns on investment. The IMF report identifies governance issues that have hindered the successful deployment of Senegal’s Multi-Year Development Plan (PSE), launched in 2014.
To avoid similar obstacles, it would be wise to create two special implementation teams: one focused on improving human capital and the other dedicated to improving the business climate. Each team, led by a minister with private sector partners, should undergo biennial self-led reviews to assess progress and address bureaucratic challenges. The Tony Blair Institute can provide valuable assistance in setting up this framework, as is the strategy adopted by British Prime Minister Sir Keir Starmer, as reported by The Independent on 07/06/2024: “Sue Gray, Sir Keir’s chief of staff, is responsible for overseeing implementation within Number 10.”
5. Create an independent tax supervisory authority: Ensuring transparency in public finances is essential. As the late Supreme Court judge Louis Brandis said, “Sunlight is the best disinfectant.” » Establishing an independent tax supervisory authority, similar to the UK’s Office for Budget Responsibility, can provide an objective assessment of government budgets, tax strategies and related risks. This body should consist of reputable independent experts serving five-year terms, with sufficient funding to provide non-binding recommendations to the government and the public on a semi-annual basis. This initiative will not only improve transparency but also stimulate constructive pressure to improve public financial management.
Finally, I firmly believe that with a willingness to make difficult choices, a pragmatic vision, and a public service dedicated to its unique responsibilities – rooted in competence and accountability for results – you will pave the way to a more radiant and sustainable Senegal, one that will be prosperous for your successors.