From bond coupons to imports, strong dollar hurts Senegal: President
Senegal's President Macky Sall said on Monday that the strong US dollar posed risks to the west African country's economy, which has already been hit by a drop in tourism due to the Ebola virus. The dollar's recent strength is pushing up the prices locals pay for most of their consumer goods and has cancelled out the benefits of the drop in the oil price, he said.
Copyright Reuters, 2015
"The rise of the dollar is not very positive for our economy. We import (goods) more than we export and it's done in dollars," Sall told the Reuters Africa Investment Summit.
"We hope the dollar will be stable to enable us to be more in control of our trade balance," he added.
Sall said the trade imbalance highlighted the need for countries in West Africa to move up the value chain to produce higher quality goods and not just rely on exporting raw materials to fuel industries in China or the West.
"We should promote in Africa the transformation of our raw industrial, mineral or natural resources," he said. "Africans should put more added-value into their raw resources, it brings more (economic) gains."
Senegal had to pay an extra $127,440 on a coupon payment for its 2024 Eurobond earlier this month due to the dollar rising in value as Senegal cleared a technical error that delayed the payment.
Customs officials say anecdotal evidence suggests imports have slowed though there are no figures yet.
Never having suffered a coup, Senegal is one of West Africa's most stable democracies. It emerged as a key regional hub in the decade after Ivory Coast's conflict erupted in 2002, though some investors are now eyeing a return there to take advantage of Abidjan's post-conflict revival.
Sall is overseeing an ambitious $21 billion plan, called "Emerging Senegal", to double economic growth over the next decade from 4.5 percent last year and a forecast 5.4 percent this year.
"Not only have we mobilised resources but we have started our projects," he said, a year after donors pledged $7.8 billion in financing that will cover five years of the project. Sall said work underway included extending existing highways, building an industrial park outside Dakar and a wind farm.
The plan, nearly half of which is infrastructure-related, is due to kick-start the economy by boosting output from agriculture, fisheries, agro-industry and mining.
The president said his government was also looking at ways to revive tourism, a key part of "Emerging Senegal", after the sector's long-term slowdown was exacerbated by an Ebola outbreak that has killed nearly 10,000 people in the region. Senegal contained its one case but tourists and conference-goers have steered clear.
"We are assessing the consequences of the Ebola outbreak and (will) see how we can help the tourism sector," Sall told Reuters, while on a trip to Casamance, a southern region that was once popular amongst French tourists but has been plagued by years of underinvestment and a low-level rebellion.
Having promised a 10-year tax break for any new investments in the sector, Sall said he was also looking at ways to slash the price of air fares by cutting taxes on them.
Sall came to power after defeating former president Abdoulaye Wade in a tense 2012 vote. A trial against Wade's son, Karim, who served as a powerful minister in his father's government, has been the cornerstone of Sall's anti-corruption campaign.
However, interest in the trial has diminished as the prosecution's case has weakened and many in Senegal seek progress on more pressing issues such as jobs for the country's youth.
Sall said an example of his government's work on this was the promotion of turning Senegal's 660,000 tonne-per-year ground nut harvest into oil, one example of a local industry moving up the value chain.