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Senegal seeks trade, investment through NEPAD
The Washington Diplomat / October 2003

By Larry Luxner

Senegal, a West African nation of 10.3 million people, is one of the chief sponsors of a broad-based initiative for lifting the African continent out of poverty and into the 21st century.

Known as the New Partnership for Africa's Development (NEPAD), the initiative is backed by both the World Bank and the United Nations Development Program, which both view NEPAD as the "main reference for technical assistance to Africa in the future."

The need for such a Marshall Plan-type initiative is fairly obvious. During the "lost decade" of the 1990s, foreign aid allocated for African development programs fell from $24 billion a year to $14 billion, while foreign investment in Africa tumbled by 40% and poverty increased especially in countries where AIDS has taken the greatest toll.

"This is important for Africa, and specifically for Senegal," says Amadou Fall, economic attache at the Senegalese Embassy in Washington. "NEPAD focuses on building infrastructure and bridging gaps between Africa and the developed world so that Africa can take part in the globalization process. NEPAD also has priorities, such as good governance and education, and it's a way for the Senegalese people to become more competitive."

Senegal, a former French colony that won independence in 1960, sits along West Africa's Atlantic coast between Guinea-Bissau and Mauritania. In 1982, it joined with Gambia to form the confederation of Senegambia, but the hoped-for integration between the two countries never came to fruition, and the union was dissolved in 1989.

Senegal is divided into 10 administrative regions, and is a major producer of fish, peanuts, phosphates and cotton. Its Gross Domestic Product of $5.2 billion translates into per-capita GDP income of only $530 a year.

In January 1994, Senegal undertook a bold and ambitious economic reform program with the support of the international donor community. This reform began with a 50% devaluation of Senegal's currency, the CFA franc, which is linked at a fixed rate to the French franc. Government price controls and subsidies were steadily dismantled.

After seeing its economy contract by 2.1% in 1993, Senegal made an important turnaround thanks to its reform program, with real growth in GDP averaging 5% annually between 1995 and 2001.

As a member of the West African Economic and Monetary Union, Senegal is working toward greater regional integration with a unified external tariff. Senegal also realized full Internet connectivity in 1996, creating a miniboom in information technology-based services. Private activity now accounts for 82% of GDP.

On the other hand, Senegal faces serious urban problems of chronic unemployment, trade union militancy, juvenile delinquency and drug addiction.

Few observers doubt that the country can benefit greatly from NEPAD, which has been described as the "love child" of Senegalese President Abdoulaye Wade, along with President Olusegun Obasanjo of Nigeria (Africa's most populous country) and South Africa's Thebo Mbeki (the continent's richest nation).

According to a recent article posted by AllAfrica.com, a Washington-based news service, "NEPAD emerged from ideas by Mbeki, Obasanjo and Wade and were a well-received initiative throughout the world as it presented a truly African initiative to end misery on the continent. It also emphasized presenting a Western-friendly face, recognizing African responsibilities of good governance, curbing conflicts, creating a climate for investment and respecting human rights and democracy."

In fact, a conference on NEPAD financing held in April 2002 in the Senegalese capital of Dakar attracted 1,200 participants 921 of whom represented 600 private-sector companies. The biggest non-African contingent was from the United States, with 105 participants, followed by France with 84 and Great Britain with 20. Forty African governments were present, half of which were represented by heads of state.

While NEPAD's image has been tarnished somewhat by the South African and Nigerian government's support for the recent rigged elections in Zimbabwe a stance that led British Prime Minister Tony Blair to distance himself from the initiative Senegal's foreign minister, Cheikh Tidiane Gadio, has urged the West not to hold NEPAD "hostage over Zimbabwe."

Meanwhile, in conjunction with NEPAD, three initiatives have already been announced by the UNDP to attract investment and boost the new African development plan.

The first involves helping developing countries obtain credit ratings from well-known agencies like Standard & Poor's, FitchRatings or Moody's a critical factor in convincing private investors to move into a particular country. A UNDP-established trust fund is assisting countries that have achieved strong macroeconomic performance obtain these ratings.

Under the second program, UNDP is fostering the emergence of African stock exchanges. Last year, the agency organized a forum in partnership with the New York Stock Exchange to promote investment in Africa. This event showcased African stock markets to institutional investors from the NYSE and gave them a chance to highlight their solid financial and legal structures.

The third initiative builds on UNDP's ongoing series of roundtables in Africa and seeks to organize investment dialogues in selected countries throughout the region.

Cheikh Sakho, director-general of the African Bureau of the United Nations Industrial Development Organization (UNIDO), says Senegal currently chairs a NEPAD steering committee on environment, energy, new technology and infrastructure.

"We are working closely with Senegal in very specific aspects related to energy for rurual areas and productive sectors," Sakho told The Washington Diplomat in a telephone interview from UNIDO's headquarters in Vienna.

Sakho, a Senegalese national, is convinced that his South Dakota-sized nation has every reason to prosper, along with NEPAD.

"Politically, Senegal is a very stable and open country that has established strong institutions which try to promote not only foreign but also local investment," he said. "Senegal has privatized both its telecommunications and electricity sectors, and the telecom privatization was one of the first successful ones of its kind in sub-Saharan Africa."

Also gung-ho on Senegal is Stephen Hayes, president of the Washington-based Corporate Council on Africa.

"I think Senegal is one of the seven to 10 best African countries to invest in," said Hayes. "They're doing everything right, in terms of increased transparency and the rule of law. Senegal has a stable political environment and a good system of government, in part because of NEPAD and the leadership of President Wade, who has been absolutely vital in promoting NEPAD as the main goal of Africa."

Hayes who also thinks Botswana, Kenya, Mauritius, Mozambique, Namibia, South Africa and Tanzania offer strong investment potential says the Corporate Council on Africa was the first organization in the United States whose board of directors formally endorsed NEPAD in an official resolution. Early next year, CCA will sponsor several job fairs and other programs aimed at encouraging Africans living in the United States to invest in Africa, in addition to sending home remittances.

"It'll be our first venture into the African diaspora," said Hayes, noting that the Washington metropolitan area is home to several hundred thousand Senegalese and other African immigrants.

"NEPAD gives people a lot more hope, accountability and transparency," he said. "Because of its leadership in NEPAD, countries and businesses will be more readily willing to invest in Senegal."

So far, the largest U.S. investors in the country are electronics giant Motorola, power producer GTI and Senelec, an appliance manufacturer comprised of U.S. and Senegalese partners. Yet France, Cote d'Ivoire and even India have more trade with Senegal than does the United States.

In 1999 the most current year for which statistics are available the United States exported only $63.4 million worth of goods to Senegal and bought a minuscule $9.2 million in goods from the African country.

"We're in 8th or 9th place, and we'd like to see that increase," said Hayes, who belongs to the NEPAD business group's steering commitee. The committee links half a dozen key business organizations worldwide with NEPAD's headquarters in Johannesburg.

"I think NEPAD is one of the best things to come out of Africa," he told The Diplomat. "But it's going to be tough to implement because it means fundamental change political change, greater democratic societies and moving away from a centralized financial system. In this, I think Senegal has a big advantage."

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