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 
------- 
¶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