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Senegal's slide from "model economy" to "least developed country" Misanet.com / IPS - Once considered a "model economy" in Africa, Senegal is now a candidate for relegation to the unenviable United Nations' list of "Least Developed Countries" (LDCs), because of a series of economic and political missteps, according to informed observers in Dakar. Amadou Sakho asked Senegalese key players how this could happen. - Senegal may soon join the list since it meets all the requirements, including the fact that it is already on another list to be avoided, namely, the HIPC list (heavily indebted poor country) said Abdourahmane Ndiaye, a professor of economics at the University of Dakar who has extensive experience in development. Professor Ndiaye believes the reason for Senegal's decline from a moderate income to a least developed country is due to its failure to put some muscle behind its structural adjustment programme. - Postponing adjustment efforts and 'prettying-up' the macroeconomic indicators for many years have not contributed to the country's economic health, Ndiaye explains. And former prime minister, Lamine Loun commented, "After all our successes until 1988, our gradual economic improvement was brutally halted by problems which grew out of the presidential and legislative elections. This catastrophic period unfortunately lasted from 1989 to 1993." Based on a review in July 2000, the UN Economic and Social Council (ECOSOC) declared the eligibility of Senegal for designation as an LDC. However, this is subject to the government so desiring, according to a background paper prepared by the UNCTAD ( the UN Conference on Trade and Development) ahead of the Third UN Conference on LDCs which opens in Brussels 14 May 2001. UNCTAD uses various criteria to define LDC, including gross domestic product (GDP) per capita of US$ 800 or less; weak human resources as measured by indicators like life expectancy at birth, per capita calorie intake, combined primary and secondary school enrolment, and adult literacy. A third criteria is low level of economic diversification, as measured by a composite index that includes the share of manufacturing in GDP, the share of the labour force in industry, annual per capita commercial energy consumption, and UNCTAD's merchandise export concentration index. The category of LDC, created with 24 countries in 1971, has grown to 49 now. Botswana has been the only graduate though the Maldives is now also eligible. The weeklong conference in Brussels is yet another attempt by the UN to deliver in promises to implement special measures to help the world's poorest countries. Observers trace Senegal's recent decline to the devaluation of the CFA franc in January 1994 had, among other negative consequences, the effect of instantly reducing purchasing power by almost one-half, while at the same time doubling debt without improving the country's ability to make payments.
According to official figures, the country devotes 74 percent of its normal expenditures to debt servicing. The devaluation of the CFA franc only served to worsen an already daunting economic situation. Former prime minister and finance Loum, in his book, "Senegal on 1 April, 2000", published last month, charged that the country fell into a rapidly-spiralling economic crisis toward the end of the 1980s. In August 1993, the government asked the National Assembly to vote in an emergency plan which limited government expenditures and public employee salaries as a remedy to the crisis. According to Loum, who at the time was Minister of the Budget although he became Minister of Finance three years later, the plan aimed to "restore the financial capabilities of a government which had been forced to stop virtually all payments." At the same time, however, it provoked two general strikes within the space of two months. The combined effects of structural adjustment and devaluation have had harsh societal and economic repercussions. According to the last national survey of households, the number of poor families practically doubled in two years. The rate shot up from 33 percent in the mid-1990s to 58 percent by the end of the decade. The 1997 survey, conducted by the country's statistical unit, also indicated that "the Senegalese people have overextended their credit and are living beyond their means." Another study, conducted several months later by Senegalese researchers, found that nationally, only 16.7 percent of all households have access to running water, and only 23 percent have electricity. Even in the capital, Dakar, only 24.7 percent of homes have proper sanitation, although 36 percent have television sets, 28.6 percent have refrigerators, and 11.8 percent have cars. Although poverty is more apparent in rural settings, it is encroaching more and more on urban areas, especially Dakar, where the percentage of households whose income is less than a dollar a day per person varies between 6.6 and 12.9 percent. In addition, unemployment has increased since the beginning of the 1980's in the cities, affecting a quarter of the working age population. In the big cities, the runaway birth rate has also served to makes life more difficult. The country's rate of urbanisation is now 40 percent. Since 1989, Senegal has repeatedly restructured its debt repayment schedule while it continues to borrow money. "During this time, there were other economic disasters, such as drought and poor market rates for raw materials," Ndiaye noted. - All these factors worsened the economic situation of many African countries, including Senegal, explained the economics professor. "In addition, there was the explosion of exports from Asia to industrialised countries which effectively put the brakes on exports from other developing nations. Senegal's economy depends on the export of seafood and phosphate, as well as on tourism." Given the country's real economic stress, officials under Abdou Diouf, Senegal's previous president, lobbied the international aid community to put Senegal on the LDC list so it could enjoy some of the aid and development programs afforded to such countries. In July 1991, President Diouf, returning from abroad, declared that Senegal "is not a moderate income country but a least developed country." This declaration, which drew indignant reactions from the public, was surprising since the government tended to continually cite macroeconomic statistics showing how healthy the nation's economy was.. By Amadou Sakho, IPS
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