In-Depth Analysis: Senegal’s Election and the Implications for Investors

In-Depth Analysis: Senegal’s Election and the Implications for Investors

© Reuters. FILE PHOTO: Supporters applaud as Senegalese opposition leader Ousmane Sonko holds a joint news conference with the presidential candidate he supports in the March 24 elections, Bassirou Diomaye Faye, a day after their release from prison, in Dakar,

By Rachel Savage

JOHANNESBURG (Reuters) – International investors will closely monitor Senegal’s presidential election, scheduled for March 24, after delays sparked widespread protests.

The country, usually one of West Africa’s most stable coup-prone democracies, has been gripped by tensions since early February, when President Macky Sall tried to postpone the vote for 10 months which was due to take place on February 25, leading to warnings of democratic backsliding.


Senegal has approximately $4.2 billion in international bonds outstanding, two issued in euros and three in U.S. dollars. For investors in these bonds, the focus currently is on whether the presidential vote will be peaceful and fair.

“The market will be very clearly looking to understand whether or not voters will be able to express their views in a way that is perceived as credible,” said Yvette Babb, portfolio manager at William Blair Investment Management.

Babb said there was no clear consensus among bond investors on who would win among the 19 presidential candidates, any of whom would need to get more than half the vote to avoid a runoff .

“If you look at market prices, in my opinion it’s mostly about the process and not necessarily the outcome,” she said. “The market is most certainly working to put this behind us first.”


Senegal is generally considered a business-friendly country with good economic prospects, thanks to projects expected to start production later this year and forecasts from the International Monetary Fund (IMF), which are expected to bring GDP growth to two figures by 2025.

It secured $1.9 billion in IMF financing in October, which was seen as a stabilizing force for public finances. The anchoring of the regional currency from the CFA franc to the euro is considered a positive element in keeping inflation relatively contained.

“Ultimately, the biggest risk is political in Senegal right now,” said Joe Delvaux, a portfolio manager at Amundi, Europe’s largest asset manager.

“Do I think…economically it will change a lot in the country? As long as the political actions are implemented, I don’t think there will be a complete reversal of policies, discussions of the IMF or cooperation with the IMF,” he said. .


All but one of Senegal’s 19 presidential election candidates largely support maintaining the country’s business-friendly landscape, said Mucahid Durmaz, senior analyst for West Africa at the intelligence firm on Verisk Risks (NASDAQ:) Maplecroft.

But the opposition coalition backed by popular firebrand Ousmane Sonko, who has exploited frustration over a lack of jobs among young people, has pledged to create a new national currency and renegotiate mining and energy contracts.

Sonko and his coalition presidential candidate, Bassirou Diomaye Faye, were released from prison on Thursday evening, celebrated by thousands of supporters in the streets of the capital Dakar.

Although there are no public elections, Faye is considered a strong candidate to replace Sall, who is stepping down as president after two terms.

“Despite the influx of investment, people wonder why it didn’t change my life, why didn’t I take advantage of it?” Dumaz said. “It’s a huge popular sentiment in Senegal right now and Faye’s premise reflects that.”

($1 = 0.9187 euros)

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