IMF Extends Support for Senegal’s Plan to Be Emerging Economy

IMF Survey


IMF Survey : Senegal’s Middle-income Drive Taps Experience of Peers

By Alexei Kireyev 
IMF African Department

February 2, 2015

  • Low-income economy Senegal aims for emerging economy status
  • Reform challenges similar to other countries, not of same scale
  • Peer learning provides new form of hands-on assistance on key reforms

Low-income economies aspiring to make a decisive stride toward middle-income status may learn a lot from the experience of peer countries that have made the move, brainstorming participants concluded at IMF headquarters in Washington, D.C

Power lines in Saint Louis, Senegal: peers urged Senegal to ensure universal access to electricity as a priority (photo: Mattes Ren/Zumapress/Newscom)

Power lines in Saint Louis, Senegal: peers urged Senegal to ensure universal access to electricity as a priority (photo: Mattes Ren/Zumapress/Newscom)

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A three-day peer-to-peer exchange “Transforming Senegal into an Emerging Economy” was organized by the IMF and the Senegalese authorities. Senior officials from Cape Verde, Mauritius, and Seychelles came together, in person and via teleconference, with the delegation from Senegal on December 15–17, 2014.

The event built on the model of a peer learning seminar in Mauritius a month earlier that explored the path for middle-income economies toward high-income status. That seminar brought together 18 senior officials from seven small middle-income countries in Africa at the Africa Training Institute in Mauritius. The participants agreed that peer learning offers untapped potential to help move reforms forward in their countries.

Exit the trap

The brainstorming aimed at supporting the Senegalese authorities in reforms needed for the success of their new development strategy, the “Plan Sénégal Emergent”. The plan was discussed and supported by the IMF Executive Board in the context of Senegal’s 2014 Article IV consultations. It is designed to help Senegal exit the trap of low growth and high poverty of recent years and make it an emerging economy within the next two decades.

Structured around several pillars—growth through transformation and diversification; human development and social protection; and better governance, peace, and security—the plan envisages reforms to unlock inclusive growth. Scaling up of investment—public and private, domestic and foreign—in growth-enhancing projects, infrastructure, and human capital would allow Senegal to move to middle-income status within the lifespan of the current generation.

Priority will be given to making delivery of public services more efficient, improving the impact of government spending through public financial management reforms, containing public consumption to generate the fiscal space for investment, and strengthening social safety nets.

Others have done it

Experience of other countries suggests that Senegal’s ambition is achievable.

Between 1990 and 2013, about 40 countries across the world have achieved average growth in real per capita GDP of 5 percent or more (at purchasing power parity). International experience suggests that Senegal can be even more ambitious and lift its growth rate to 7 percent in the medium term, driven by domestic reforms and foreign investment–generated exports.

Although not all countries succeeded in all reforms, countries that Senegal could emulate include India, Guyana, and Sri Lanka. African “lion” emerging economies, such as Cape Verde, Mauritius, and Uganda, have also begun the journey already traveled by Asian “tiger” economies to move from low-income to middle-income emerging market status.

Khoudijah Boodoo, Board of Investment, Mauritius

The path to reforms is full of challenges at the implementation phase. Issues are the same, irrespective of the country and level of development, although not of the same dimension— capacity to implement projects, monitoring, evaluation, budgeting. Peer learning is a good platform to focus on ‘how-to’ experiences. Hearing from practitioners helps understand challenges, learn from failures, and get different perspectives on issues.”

Focus on ‘how to’

From the outset, the Senegalese delegation emphasized that rather than discussing what to do, the brainstorming should focus on how to do it, as all priority reforms needed for Senegal are already listed in the Plan Sénégal Emergent. With topics selected by the authorities, sharing of first-hand experience by peers and experts generated the following priorities:

• Revenue mobilization is key for creating solid fiscal space to finance reforms. The idea of setting a unit focused on the link between information collection, tax control, and tax recovery was the main takeaway.

• The quality of public expenditure needs fundamental improvement. Identification of specific zones of efficiency would be the starting point incorporating also an eight-step project selection procedure suggested by the World Bank and already used in some peer countries. Technical assistance and periodic external evaluation would help ensure integrity of the processes.

• In public financial management, reliable information systems are critical. The Système Intégré de Gestion des Finances Publiques and the system for customs information management used in Senegal have proved broadly reliable for efficient and transparent budget and customs management. Peers and international experts outlined the benefits of alternative public finance and customs management systems.

• Peer guidance on reform of Senegal’s energy sector was strategic: ensure universal access to electricity as a priority, even if the quality of services still can be improved; then take steps to raise their quality; and consider raising tariffs as a last resort, and only after the quality of services has been improved.

• On capacity building, the experience of Mauritius in attracting the diaspora with programs for young graduates, for example through public-private sector partnership projects, is particularly relevant for Senegal. Such an approach would reinforce the capacity of the civil service and raise the prestige of public service.

• Social protection is a critical companion for any successful reform. Good targeting and management would allow government transfers to become a reliable revenue flow for families in need. A register of the poor, properly established and maintained, would allow the authorities and donors to effectively channel help.

• Finally, strict monitoring of reforms is important.

Pierre Ndiaye, Ministry of Economy and Finance, Senegal

“Our delegation is definitely strongly encouraged by this meeting. We plan to respond favorably by strengthening the dialogue internally and developing South-South cooperation, especially with peer countries. We were delighted by the possibility offered by the Institute for Capacity Development to have training for Senegalese in areas key for our reforms. We particularly appreciate the possibility of integrating in these workshops peers from countries with experience of interest to Senegal.”

Mutual benefits

The brainstorming benefited Senegal and the peer countries, helping to sharpen their thinking on reforms. Practical issues where peers learned from each other included ways to improve expenditure efficiency, setting up monitoring mechanisms, use of delivery units, project management techniques beyond cost/benefit analysis, the importance of political buy-in for project selection, mechanisms for project cancellation during implementation, and pathways to electricity sector reform.

Also, peer learning represents a cost-efficient tool for knowledge sharing. Participants in both the brainstorming and the Mauritius seminar suggested that existing multilateral platforms such the IMF’s Africa Training Institute and regional technical assistance centers, and regional bodies such as the West African Economic and Monetary Union, could be used for more peer-to-peer learning and support, in person and online. By exchanging on these platforms, peer countries could not only learn from each other but also set common policy goals, sharing successful experiences with those facing similar challenges.

Bertrand Belle, Seychelles Ministry of Finance

“Divergence would occur on the strategies to implement certain measures. Although countries may diverge fundamentally, it is more comfortable to assume that the divergence occurs because of the differing contexts. Diverging on the basis of context negates the need to have diverging technical views, the latter of which is quantitative. This could end with a winner and loser and could lead to uncomfortable experiences.”

Road to follow

These events helped establish guidelines for peer-to-peer learning.

• First, there should be natural affinities between participants: all peers should be equally interested in providing and receiving advice.

• The exchange should focus on practical solutions to specific reform issues. A list of specific reforms should be formulated by the interested peer, drawing on its own reform priorities.

To gain traction, discussions may focus on the components of reforms that participants are working on. As no country can excel equally in each area, the right counterparts from the leading peers should be invited for focused discussions. As no country can excel in all areas, peer learning discussion should also be selective and focus on the most successful and relevant reforms in individual countries.

For example, for Senegal these included the introduction of tax identification numbers, investment planning, tourism, and mobilization of the diaspora in Cape Verde; and elimination of subsidies and development of tourism in Seychelles.

The potential of peer learning from the expertise of Mauritius is particularly extensive and includes such areas as setting up credit information bureaus, modernization of land titling and registration, supporting young entrepreneurs, attracting young talent to the civil service, taxation of telecommunications, support for the tourism sector, creating zones with good business practices, certification of service standards in the public service, strengthening the capacity of the public administration, and public-private partnerships.

Ali Mansoor, Assistant Director, IMF African Department

The peer learning approach is experimental for the Fund. It worked because Senegal was interested in learning from its peers. The three middle-income countries, on their side, found it useful to participate. The IMF was essentially a facilitator and played a key catalytic role in bringing together the officials, who had gone through a similar challenge, and providing a platform for expertise sharing. Fund and World Bank experts offered a broad prospective of best international practices. Now, it is for our Senegalese colleagues to make the best use of the advice they got.”

The IMF is a clearing house for cross country experience and offers a unique platform for knowledge exchange. It can provide support through a range of instruments, including through strengthened policy dialogue, technical assistance from headquarters and regional centers, and facilitating future exchanges with peers.

The seven small middle-income countries that participated in the seminar in Mauritius are actively discussing next steps in their peer learning process, drawing a forthcoming book titled “Africa on the Move: Unlocking the Potential of Small Middle Income Countries (SMICs).”

The Senegalese authorities plan to continue engaging with a few comparator countries to develop an active peer learning effort. The next workshop is scheduled for early 2015, focusing on public-private partnerships and involving South Africa and Mauritius among other countries.

Another workshop on delivery units, with the World Bank and possible involvement of the United Kingdom, Malaysia, Mauritius, and South Africa could follow. Finally, these peer-learning discussions will contribute to a forthcoming book tentatively titled “Senegal Emerging: Unlocking the Potential of Low-Income Countries” (“Sénégal: La marche vers l’émergence”).