Identifier
Created
Classification
Origin
06DAKAR1270
2006-05-30 16:24:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Dakar
Cable title:  

SENEGAL'S ACCELERATED GROWTH STRATEGY (AGS) AND

Tags:  ECON EAID EAGR SG 
pdf how-to read a cable
VZCZCXRO1811
PP RUEHMA RUEHPA
DE RUEHDK #1270/01 1501624
ZNR UUUUU ZZH
P 301624Z MAY 06
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 5253
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUEHLMC/MCC WASHDC
RUEHZK/ECOWAS COLLECTIVE
UNCLAS SECTION 01 OF 02 DAKAR 001270 

SIPDIS

SIPDIS
SENSITIVE

STATE FOR EB/IFD/ODF, AF/EPS, AF/W AND INR/AA
AID/W FOR AFR/WA AND AFR/SD
TREASURY FOR PETERS

E.O. 12958: N/A
TAGS: ECON EAID EAGR SG
SUBJECT: SENEGAL'S ACCELERATED GROWTH STRATEGY (AGS) AND
CURRENT GROWTH

DAKAR 00001270 001.2 OF 002


SUMMARY
-------
UNCLAS SECTION 01 OF 02 DAKAR 001270

SIPDIS

SIPDIS
SENSITIVE

STATE FOR EB/IFD/ODF, AF/EPS, AF/W AND INR/AA
AID/W FOR AFR/WA AND AFR/SD
TREASURY FOR PETERS

E.O. 12958: N/A
TAGS: ECON EAID EAGR SG
SUBJECT: SENEGAL'S ACCELERATED GROWTH STRATEGY (AGS) AND
CURRENT GROWTH

DAKAR 00001270 001.2 OF 002


SUMMARY
--------------

1. (SBU) The Minister of Finance met with the donors to
update them on the development of Senegal's Accelerated
Growth Strategy (AGS) on March 22. The Government
intends to finalize and implement the strategy on July 1,
but donors have not heard what changes have been made
over the last two months. Agriculture has received the
most attention, but fisheries need more. Energy,
judicial and labor reforms, access to land and credit,
utility costs, subsidies and payment delays must all be
addressed. There is a widespread perception that debt
forgiveness is financing major public works projects
rather than poverty reduction. GDP growth could be as
low as three percent in 2006 -- half of what it was in
2003 through 2005. END SUMMARY.

WHAT'S IN THE AGS?
--------------

2. (U) On March 22, Senior Minister of Economy and
Finance Abdoulaye Diop opened a four-hour meeting to
update donors on the status of Senegal's Accelerated
Growth Strategy (AGS). Diop stressed Senegal's
commitment to reduce poverty significantly by 2015 in
line with the Millennium Development Goals. Diop also
highlighted the GOS' determination to enhance
competitiveness and develop a "world-class" business
climate. He cited six sectors on which the AGS focuses:
-- agro-industry,
-- fisheries,
-- textiles,
-- information technology and telecommunications,
-- tourism and
-- cultural and artisanal products.
Diop underscored the government's determination to
diversify beyond peanuts and cotton, building upon
Senegal's geographic situation and information technology
infrastructure while acknowledging that Senegal's peanut,
phosphate, fishing and tourism industries are all in
crisis and that the trade deficit is chronic. He
insisted that the AGS would increase GDP growth from the
6 percent to 7-8 percent range per annum, doubling GDP in
10 years.


3. (U) The AGS Task Force led by Executive Secretary
Ibrahima Wade then presented its work -- over 200 power
point slides displayed over two hours. The Task Force
discussed the phytosanitary and transport challenges

associated with expanded agricultural exports but
narrowed in on green beans, tomatoes, mangoes, grapes and
onions as crops with significant development and export
potential.


4. (U) Donors made a number of comments. Praising the
obvious progress, they asked about the government's
energy strategy, reforms that will make the judicial
system more transparent and more comfortable with
commercial law, reforms to the labor code, access to
land, access to credit, utility costs, and delays in
payments. Then Charge and USAID/Senegal Director Olivier
Carduner focused on the judiciary, the labor code, the
tax code, a regulatory environment that will encourage
small and medium-sized enterprises, corruption, and
access to credit.


5. (U) NGO and Senegalese agency representatives offered
a number of insights. Aliou Faye, the Director of the
Center for the Study of Development Politics (CEPOD),
said the proposed Millennium Challenge Account (MCA)
Diamniadio Industrial Platform is central to the AGS. He
urged the Task Force to take another look at agro-
industry, focusing on training and inputs, particularly
seeds. He also said that the Task Force should examine
the Ministry of Maritime Economy and Maritime Transport's
new fishing strategy to ensure that the strategies are
integrated. Hamath Sall, the Deputy Director General of
Senegal's Investment Promotion Agency (APIX),said that
the Government and the Task Force should not be too
wedded to single crops or sectors.


6. (U) Ibrahima Wade closed the meeting by thanking
donors for their comments. He assured the donors that
the Task Force and the Government understand that
institutional and structural reforms are fundamental. He
also said that different sectoral policies will be

DAKAR 00001270 002.2 OF 002


harmonized in the final AGS.

TWO MONTHS LATER: WHERE'S THE MONEY?
--------------

7. (U) At a May 26 donors meeting with visiting
International Monetary Fund (IMF) staff, World Bank
ResRep Midani Tall announced that the Government intends
to finalize and implement the AGS and the Poverty
Reduction Strategy (PRSP) on July 1. Donors expressed
concern since there is little awareness of progress or
changes made since March 27.


8. (SBU) Moreover, Senegal's economic situation
deteriorated during the first four months of 2006. While
blackouts have been much less frequent, with GE/GTi back
on line, and while Industries Chimiques du Senegal (ICS)
has resumed operations, the Government and parastatals
have had difficulty paying their bills in a timely
fashion. There is a widespread perception that
-- 1) GDP growth will probably only be three percent --
half of what it has averaged for the last three years --
and
-- 2) proceeds from debt forgiveness are actually being
used financing the major public works projects in the
run-up to the February 2007 presidential and
parliamentary elections.


9. (SBU) Tall and the IMF team acknowledged that there
are "major worries" and that 2006 will be a difficult
year for Senegal. They also said that the IFIs are
examining energy pricing, fishing, tourism and payment
difficulties.

COMMENT
--------------

10. (SBU) Tourism revenues appear to be up, but that may
be the Senegalese economy's only bright sector. ICS is
producing and exporting phosphates again, but fishing is
in decline, and the Government has decided to subsidize
peanuts. 2006 is going to be a tough year, and six
percent growth appears very elusive at this juncture.
END COMMENT.

JACOBS