Title Page
Race to the Next Income Frontier
How Senegal and Other Low-Income Countries Can Reach the Finish Line
EDITORS
Ali Mansoor, Salifou Issoufou, and Daouda Sembene
Ministry of Economy, Finance, and Planning, Republic of Senegal
International Monetary Fund
Copyright
© 2018 International Monetary Fund
Cataloging-in-Publication Data
Joint Bank-Fund Library
Names: Mansoor, Ali M., editor. | Issoufou, Salifou, editor. | Sembene, Daouda, editor. | International Monetary Fund.
Title: Race to the next income frontier : how Senegal and other low-income countries can reach the finish line / edited by Ali Mansoor, Salifou Issoufou, and Daouda Sembene.
Description: Washington, DC : International Monetary Fund, [2018] | Includes bibliographical references.
Identifiers: ISBN 9781484303139 (paper)
Subjects: LCSH: Senegal—Economic conditions. | Africa, West—Economic conditions. | Economic development—Senegal. | Economic development—Africa, West.
Classification: LCC HC1045.R32 2018
978-1-48430-313-9 (paper)
978-1-48434-059-2 (ePub)
978-1-48434-061-5 (Mobipocket)
978-1-48434-064-6 (PDF)
The views expressed in this book are those of the authors and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Contents
Foreword
Amadou Ba
Foreword
Abebe Aemro Selassie
Acknowledgments
About the Authors
1 | Overview
Salifou Issoufou and Ali Mansoor
PART I | SETTING THE STAGE
2 | Can Plan Sénégal Émergent Growth Rates Be Achieved—and If So, How?
Ali Mansoor and Salifou Issoufou
3 | A Review of Senegal’s Industrial Framework
Mor Talla Kane
4 | Macro-Structural Reforms and Emergence: Lessons for Senegal
Alexei Kireyev
5 | Inclusiveness and the Social Dimensions of Growth in Senegal
Alexei Kireyev
PART II | ESTABLISHING A SOUND, BALANCED, AND EFFICIENT FISCAL FRAMEWORK
6 | Reforms to Mobilize Revenue in Senegal: Lessons from Six Emerging Markets
Patrick Petit and João Tovar Jalles
7 | Composition and Rationalization of Public Consumption for Emergence
Serigne Moustapha Sène
8 | On the Quest for Higher Growth: The Role of Public Expenditure in Senegal
João Tovar Jalles and Carlos Mulas-Granados
9 | Making Public Investment More Effective: Lessons for Senegal
Salifou Issoufou, Mouhamadou Bamba Diop, and Rajesh Anandsing Acharuz
10 | The Sustainability of Senegal’s Public Debt
Birahim Bouna Niang
PART III | PROMOTING AN INCLUSIVE, STABLE, AND DEEPER FINANCIAL SECTOR
11 | Key Financial Stability Reforms as a Path to Emerging Market Economy Status
Patrick A. Imam
12 | Financial Inclusion in Senegal: A Catalyst for Emergence
Bamba Ka
PART IV | STRUCTURAL REFORMS TO PROMOTE PRIVATE INVESTMENT, INCLUDING FOREIGN DIRECT INVESTMENT
13 | Structural Reforms in Countries That Have Achieved Emerging Market Economy Status: A Comparative Study
Aliou Faye, Bertrand Belle, and Nyasha Weinberg
14 | Governance, Institutions, and Emergence
Daouda Sembene
15 | Relieving Constraints on the Business Environment and Supporting Foreign Direct Investment
Mamadou Lamine Ba and Tom O’Bryan
16 | Improving the Contribution of the Informal Economy to GDP Growth
Ahmadou Aly Mbaye and Nancy Benjamin
17 | Policies, Prices, and Poverty: The Sugar, Vegetable Oil, and Flour Industries in Senegal
Ahmadou Aly Mbaye, Stephen S. Golub, and Philip English
18 | Social Protection and Poverty Reduction in Senegal
Oumar Bassirou Diop
Index
Foreword
Through the Plan Sénégal Émergent, the President of the Republic of Senegal, His Excellency Macky Sall, has communicated his clear vision for leading our country along the road to emergence.
The plan explicitly identifies a critical mass of landmark reforms that will lay the basis for emergence through strong and sustainable growth, the benefits of which will flow to all social segments of the country, including the most vulnerable population groups.
Based on the recognition that the effectiveness of the development plans that have been adopted since independence has always been undermined by implementation challenges, the government has taken every useful step to ensure that the plan will be fully put into effect in line with the presidential vision.
From this perspective, I have encouraged the personnel of my ministry to work with the IMF to explore the possibilities for adopting new partnership formulas. Thus, I have consented, without hesitation, to efforts to organize innovative capacity-building activities, with the participation of experts from countries that have evolved in circumstances similar to those of Senegal, and have successfully met the challenge of emergence. The workshop that resulted in the drafting of this book on emergence was an integral part of these pilot activities that we have had the pleasure of carrying out with staff of the IMF.
Beyond the participation of our colleagues from peer countries, the most interesting feature of this exercise lies, in my opinion, in the involvement of representatives of the private sector, civil society, and the academic world. In addition to reflecting the government’s spirit of inclusiveness, it illustrates our awareness that the challenge of emergence cannot be met without the contribution of these stakeholders who play such an important role in the economy, the governance, and the intellectual life of Senegal. I want to express my profound gratitude to those partners for their important contributions to the thinking distilled in this book.
I also want to thank the European Union for the generous support it has provided in our pursuit of this undertaking. That support is an additional illustration of what is already a fertile partnership and one that will, I am convinced, continue to gain strength day by day.
With respect to the IMF, I want to express my strong appreciation for the steadfast support it has given our government in its efforts to set Senegal on the road to emergence. I have no doubt that our partnership will be strengthened yet further by the novel collaborative approach that we have jointly adopted.
Amadou Ba
Minister of Economy, Finance and Planning of Senegal
Foreword
Senegal has made significant progress in preserving macroeconomic stability in the past few decades. Notwithstanding this progress, however, until recently growth has been modest, limiting improvement in living standards. The Plan Sénégal Émergent is a welcome and ambitious response by the government of Senegal to improve growth outcomes and make Senegal an upper-middle-income emerging market economy by 2035. Part of the strategy will require breaking with the past and opening economic space for small and medium-sized enterprises and foreign direct investment to achieve higher rates of equitably shared growth. As these new policies are being designed and implemented, due consideration will need to be given to how to navigate the political economy of reform to move Senegal to the higher-growth path.
In keeping with the well-known Senegalese tradition of storytelling, this book aims to bring together a broad range of perspectives from international experience to help inform implementation of this new strategy. The origins of this book arose from a December 2014 brainstorming session between Senegalese officials, peers from Cabo Verde, Mauritius, and Seychelles, and World Bank and IMF experts, facilitated by the IMF. The focus was on “how to” get things done rather than on “what to do,” thereby helping the government of Senegal make progress on specific areas such as improving the investment planning cycle and monitoring fiscal risks linked to projects financed under public-private partnerships.
This book, Race to the Next Income Frontier: How Senegal and Other Low-Income Countries Can Reach the Finish Line, addresses the pointed issue of how to overcome the political economy constraints on reforms. From the perspective of Senegalese participants from academia, civil society, and government; retired and active World Bank experts; experts and practitioners from peer countries including Mauritius, Morocco, and Seychelles; and experts from the IMF, the book reviews reforms needed for a low-income country to move to upper-middle-income emerging market economy status.
The book draws on policy lessons from successful countries that have managed to overcome some of the political economy constraints and successfully reached upper-middle-income emerging market economy status. The areas covered by this book include (1) creating a sound, balanced, and efficient fiscal framework through new revenue-raising measures, expenditure rationalization, and more efficient public investment; (2) promoting an inclusive and deeper financial sector; (3) relieving constraints on doing business and promoting private investment, including foreign direct investment; and (4) achieving high, sustained, and inclusive growth. As many low-income countries in sub-Saharan Africa face similar challenges in their aspiration to move to middle-income status, this book has a broader application for the region.
Finally, this book represents an excellent collaborative effort with country officials in Senegal, experts from peers including Cabo Verde, Mauritius, Morocco, and Seychelles, and experts from the IMF and the World Bank. We are particularly grateful to His Excellency Mr. Amadou Ba, Minister of Economy, Finance and Planning of Senegal, for his support and encouragement. The participation of the IMF is part of our continued efforts to support member countries in achieving their socioeconomic development and macroeconomic objectives. We would like to extend our thanks to all those who have made this book a reality. We at the IMF have benefited greatly from learning from the experiences of others and hope that by sharing this more widely it will help others on their path to higher and sustainable living standards.
Abebe Aemro Selassie
Director, African Department
International Monetary Fund
Acknowledgments
The authors would like to thank the country authorities of Mauritius, Morocco, Seychelles, and Senegal, and colleagues from the World Bank, International Monetary Fund, London School of Economics, European Commission, European Center for Development Policy Management, International Growth Center, and Centre d’Etudes et de Recherches sur le Development International for their helpful comments on an earlier draft of this publication and for their input. Inter alia we would like to thank Anand Rajaram, Karim El Aynaoui, Bertrand Belle, Rajesh Acharuz, Vishnu Bassant, Andrew Berg, Amadou Sy, Prakash Loungani, Michael Sarris, and Bruce Byers for their constructive comments. Our gratitude also goes to Abebe Aemro Selassie, Roger Nord, and the other senior reviewers in the IMF’s African Department for their support for this publication and their guidance and wise counsel. This publication would not have been possible without financial support from the European Union, the excellent research assistance of Yanmin Ye, Hilary Devine, and Edna Mensah; and the editorial support of Philip English, Tom O’Bryan, and Nyasha Weinberg. All remaining errors or omissions are, of course, our own.
About the Authors
Ali Mansoor is an Assistant Director in the IMF’s Strategy, Policy and Review Department and Chief of its Developing Markets Strategy Unit (DU). At the time this book was written, he was an Assistant Director in the IMF’s African Department and mission chief for Senegal. Previously he was the Financial Secretary in Mauritius from 2006 to 2013, where he formulated and implemented a wide-ranging reform program. He also served as Chair of the Global Forum for Migration and Development (GFMD) in 2012 and was Chief Executive Officer of the Common Market for Eastern and Southern Africa (COMESA) Clearing House (1997–99). Prior to his return to Mauritius, he had worked in the Office of the Chief Economist for the Europe and Central Asia Region in the World Bank (2003–06), in the Independent Evaluation Office of the IMF (2001–03), and as a senior economist in the IMF’s Fiscal Affairs Department (1999–2001). He also spent three years at the EU Directorate for Development from 1992 to 1995. He has written on regional integration, privatization, migration, fiscal decentralization, the informal economy, and capacity development.
Salifou Issoufou is an Economist in the IMF’s African Department and desk economist for both Mauritius and Seychelles. At the time this book was written, he was desk economist for Senegal, where he and Ali Mansoor led innovative work on peer learning for successful reform implementation in Senegal. He has also worked on Botswana, the Republic of Congo, Côte d’Ivoire, South Sudan, and Togo on issues that include fiscal rules for resource-rich countries and public investment, economic growth, and debt sustainability. Prior to joining the African Department, he worked in the IMF’s Research Department, where he used dynamic general equilibrium models to analyze the growth and public debt sustainability implications of public investment scaling-up. Previously, he was a research associate at the Federal Reserve Bank of San Francisco and teaching assistant at the University of California at Berkeley. He holds a PhD in economics from the University of California at Berkeley.
Daouda Sembene is currently an Executive Director representing 23 African countries on the IMF’s Executive Board. He joined the IMF in 2002, taking various positions in the Research Department, the Independent Evaluation Office, and the Executive Board until 2015. Prior to assuming his current position in November 2016, he worked as an IMF Alternate Executive Director after serving in his home country of Senegal as Senior Adviser to the Minister of Economy, Finance, and Planning. He also worked as a consultant at the World Bank in 2001, as part of a team of lecturers in macroeconomic management. He holds a PhD in development economics from American University and various master’s degrees in economics from the George Washington University, the University of Montreal, and University Cheikh Anta Diop.
Rajesh Anandsing Acharuz is currently a Director in the Ministry of Finance and Economic Development in Mauritius, responsible for public financial management and budgeting issues. In 1996, he joined, as an economist, the former Ministry of Economic Planning and Development, which was merged with the Ministry of Finance in early 2000. He is actively involved in public financial management and fiscal reform and works in close collaboration with the IMF’s African Regional Technical Assistance Center (AFRITAC) South and the Collaborative Africa Budget Reform Initiative (CABRI) in this area.
Mamadou Lamine Ba, a doctoral candidate in economics at the University of Dakar, is currently the Director of Business Environment of Senegal. He has been coordinating the work of Senegal’s Presidential Investment Council in Senegal since 2012. He has worked essentially on private sector development in Africa during his tenure at various public international and national organizations (the United Nations Industrial Development Organization [UNIDO], the United Nations Development Programme [UNDP], the United Nations Educational, Scientific and Cultural Organization [UNESCO], the Investment Promotion Agency (APIX), and the Environment Directorate) and in the private sector (the SATINA Group and the OASIS Group). He has significant experience in the design, implementation, and monitoring and evaluation of private sector projects/programs aimed at supporting growth by promoting productive activities, improving the business climate, and strengthening the capacities of stakeholders. He holds certification from Ecole des Hautes Etudes Commerciales de Paris (HEC Paris) in management and leadership as well as from the Kennedy School of Government at Harvard University in driving government performance, in addition to certificates from the World Bank Institute on public-private partnerships and the conduct of public policies. He is also Executive Director of MeetinAfrica, which promotes the leveraging of African savoir faire and intragenerational sharing and dialogue.
Oumar Bassirou, an economist and advisor on planning, is currently the Coordinator of the Economic Policy Monitoring and Coordination Unit in Senegal’s Ministry of Economy, Finance, and Planning. He previously held the posts of Technical Advisor, Ministry of Foreign Affairs, and Senegalese Abroad. His research interests and work focus on social inclusion and poverty issues.
Bertrand Belle is Economic Advisor to the President of Seychelles. Born and raised in Seychelles, he graduated with first-class honors from a master’s program in chemical engineering in Manchester, England. He started his professional life in the Ministry of Finance of Seychelles just before the country started on an IMF reform program. He worked on a number of projects during the reforms, including the design and implementation of a new social welfare system to facilitate floating of the exchange rate and abolition of universal subsidies; the creation of a new revenue forecasting unit within the Ministry of Finance for better budgeting; and the implementation of a public-private partnership, with heavy domestic private investment, to lay the only submarine fiber-optic cable between Seychelles and the African coast. In 2013, by which point he had gradually moved up to the post of Principal Secretary for Economic Policy and Planning, he obtained a scholarship from the Kennedy School of Government at Harvard University, graduating with a master’s in public administration in international development in June 2015. During his time at Harvard he was one of the main contributors to Africa on the Move: Unlocking the Potential of Small Middle-Income States, published by the International Monetary Fund in January 2016. As a nine-year-old in 1993, he was inspired by the Indian Ocean Island Games, which were held locally, and decided to take up swimming. He managed to break onto the national team in 1998 and was a silver medalist for Seychelles at the 2003 Indian Ocean Island Games. He has recently developed an interest in the triathlon.
Nancy Benjamin is a Senior Economist at the World Bank. Following a PhD in economics from the University of California at Berkeley, she worked as an Assistant Professor at Syracuse University, in the Asia Department of the IMF, and in the Research Department of the US International Trade Commission, and published on resource-rich countries, the impact of trade policy on productivity and growth, nontariff barriers, and trade in services. At the World Bank, she has worked on West African and Middle Eastern countries, focusing on public expenditures, growth, governance, and informality, as well as the regulation of multi-country infrastructure. She enjoys working closely with the World Bank’s client countries; her work on the informal sector is the product of extensive collaboration with local research teams.
Mouhamadou Bamba Diop is an economist and currently Director of Planning in the Ministry of Economy, Finance, and Planning of Senegal. He previously held the post of Deputy Director in the Directorate of Forecasting and Economic Studies in the Ministry of Economy and Finance of Senegal. His research interests focus on growth and economic and social development issues.
Philip English, a Canadian national, is a consultant specializing in African economic policy. He worked for 20 years at the World Bank, where his last assignment was as Lead Economist based in Dakar and responsible for Senegal as well as Cabo Verde, Guinea-Bissau, Mauritania, and The Gambia. Before that he was the World Bank’s Lead Economist for Benin, Burkina Faso, Côte d’Ivoire, and Togo. Between 2005 and 2008, he conducted numerous country-level trade and export development studies in West Africa. From 1995 to 2005, he worked at the World Bank Institute, designing and delivering courses on trade policy, public expenditures, and labor issues, with a particular focus on Africa. Before that, he worked at International Development Research Centre (IDRC) in Canada, the African Development Bank (AfDB) in Côte d’Ivoire, and the North-South Institute in Canada. He has written and edited books on international trade, small-scale enterprise, tourism, foreign aid, and the AfDB. He holds a PhD in economics from the University of Toronto.
Aliou Faye, a statistician-economist, is the Manager of the Centre for the Study of Development-Oriented Policies (CEPOD) in the Directorate-General of Planning and Economic Policies of Senegal’s Ministry of Economy, Finance and Planning. The centre’s activities are focused on building capacity in public administration, the private sector, and the civil society. It is funded by the government of Senegal and the African Capacity Building Foundation (ACBF). Prior to joining CEPOD, formerly the Economic Policy Unit, in 2003, he worked in the Cabinet of the Ministry of Economy, Finance and Planning as advisor on planning issues from 1991 to 1995. He also worked in the Directorate of Statistics as head of the Bureau of Enterprise Statistics and Accounts from 1982 to 1986 and as Adjunct to the Director in the Directorate of Forecasting and Economic Studies from 1986 to 1991. He holds a professional degree in statistics and economics from the Ecole Nationale de la Statistique et de l’Administration Economique (ENSAE/CESD) in France, awarded in 1981; a graduate-level degree in planning from Paris I Pantheon Sorbonne University; and an MBA from the State University of New York at Buffalo.
Stephen S. Golub is the Franklin and Betty Barr Professor of Economics at Swarthmore College and an adjunct professor at the Wharton School of the University of Pennsylvania. He has been a visiting professor at Columbia, Yale, Berkeley, and Cheikh Anta Diop University of Dakar. He has written numerous articles and coauthored Money, Credit and Capital with James Tobin. He has served as a consultant to the United Nations, the World Bank, the International Monetary Fund, the Organisation for Economic Co-operation and Development, and the Federal Reserve Banks of San Francisco and Philadelphia.
Patrick A. Imam is a Senior Economist at the IMF and currently the Resident Representative in Madagascar. Since joining the IMF, he has worked on IMF programs and surveillance cases in the Middle East and Central Asia Department, the African Department, the IMF Institute, and more recently in the Monetary and Capital Markets Department. His publications have focused on issues related to financial stability, macroprudential policies, and financial sector development. Prior to joining the IMF, he worked as an investment banker at Credit Suisse First Boston in London. He has a PhD in economics from Cambridge University.
João Tovar Jalles, a Portuguese national, is an Economist in the IMF’s Fiscal Affairs Department. Previously, he was an Economist in the OECD’s Economics Department, where he was responsible for Portugal and Brazil. Before that, he was a Fiscal Economist at the European Central Bank (ECB), responsible for Malta and part of the Troika team for the Portuguese bailout program. He has also held visiting positions such as Visiting Scholar in the IMF’s and Bank of Portugal’s Research Departments. Academically, he was an Invited Lecturer at Sciences Po (France) and an Assistant Professor at the University of Aberdeen (UK), and he also taught at the University of Cambridge (UK) and Universidade Nova de Lisboa (Portugal). He has worked mainly on fiscal-related topics and has published more than 50 academic papers in refereed journals. He holds a BSc, MSc and PhD, all in economics, from Universidade Nova de Lisboa, University of Warwick (UK), and University of Cambridge, respectively.
Bamba Ka is an Economist at the Central Bank of West African States (BCEAO). He is currently the Head of the Research and Statistics Department at the Principal Office of the BCEAO in Dakar.
Mor Talla Kane is the Executive Director of the Senegalese National Confederation of Employers (CNES). He started his career at the Ministry of Industry as head of the unit responsible for the business environment and international industrial cooperation before moving to the private sector. He chairs the Working Group on Administrative Reform of the Presidential Investment Council (CPI). He holds a Diplôme d’Etudes Approfondies in socioeconomics and a further advanced degree in industrial economics (IEDES) from Paris I Sorbonne.
Alexei Kireyev is a Senior Economist at the International Monetary Fund and the former IMF representative to the World Trade Organization (WTO). He has led advance IMF missions to member countries, provided advice on macroeconomic policies to countries with IMF-supported programs, and reviewed IMF policy advice, financing, and technical assistance. Prior to joining the IMF, he was an economic advisor to Russian President Mikhail Gorbachev, an economist at the World Bank, and a professor of international economics at universities in Russia and the United States. His degrees include an MA in economics from the George Washington University and a DSc in economics from Moscow State Institute of International Relations.
Ahmadou Aly Mbaye, Professeur Titulaire des Universités (equivalent to full professor), is currently the Director of the Development Policy Analysis Laboratory (LAPD) in the Faculty of Economics and Management (FASEG) at the Cheikh Anta Diop University of Dakar. He also serves as scientific coordinator for a large number of international research and capacity-building programs dealing with development issues. He is the author of several publications on economic development and has worked as a consultant to several organizations such as the United Nations Conference on Trade and Development (UNCTAD), the World Trade Organization (WTO, the Food and Agriculture Organization (FAO), the World Bank, the Japan Bank for International Cooperation (JBIC), the United Nations Economic Commission for Africa (UNECA), the West African Economic and Monetary Union (WAEMU), and the government of Senegal.
Carlos Mulas-Granados is a Senior Economist in the IMF’s Fiscal Affairs Department. Since joining the IMF, he has led research for flagship publications such as the Fiscal Monitor and the World Economic Outlook. He has worked on fiscal issues in Senegal, Portugal, Costa Rica, Brazil, and the euro area. He recently coauthored an IMF book, Fiscal Politics. His research spans many areas, from fiscal adjustments and debt reduction to public investment, research and development, and inequality. Prior to joining the IMF, he was Professor of Applied Economics at Madrid’s Complutense University and served as Deputy Director of the Spanish Prime Minister’s Economics Office.
Birahim Bouna Niang is a Professor of Economics and Dean of the Faculty in the Faculty of Economics and Management at the Cheikh Anta Diop University of Dakar. He previously worked in Senegal’s Ministry of the Economy, Finance and Planning of Senegal as a macroeconomist before embarking on a career as a lecturer-researcher.
Tom O’Bryan is a UK Kennedy Scholar at the Kennedy School of Government of Harvard University, focusing on conflict resolution and human rights. He has worked for an array of multilateral, governmental, and nonprofit organizations across the Middle East, North Africa, and sub-Saharan Africa. He has testified before the British Parliament, United Nations, and French Senate; has published articles in Foreign Affairs, Foreign Policy, and The Guardian; and has been interviewed on BBC News and France 24. He is a graduate of Harvard University and Exeter University, having also studied at Nanjing University and Delhi University. He grew up in the United Kingdom; he speaks fluent French and some Swahili.
Patrick Petit is a Senior Economist in the IMF’s Fiscal Affairs Department, where he has led numerous technical assistance missions on tax policy issues since joining in 2009. Before coming to the IMF, he worked as a tax expert in Mali, as well as an excise specialist at the World Health Organization, in addition to spending many years in private practice (litigation consulting). He holds an MSc in economics from the Université du Québec à Montréal, an MSc in finance from the École des Hautes Études Commerciales (Montreal), and an advanced degree in public finance management from the École Nationale d’Administration Publique (Montreal).
Serigne Moustapha Sène has been the Director of Forecasting and Research in Senegal’s Ministry of the Economy, Finance and Planning since 2006. Prior to that, he worked in National Accounts before moving to Forecasting, where he served in turn in the Economic Conditions Unit and in Research as a researcher and then as Division Chief. He holds a doctorate in economics and was an assistant at the Cheikh Anta Diop University of Dakar. He has also worked as a consultant for international organizations. He is the author of several articles on the economy Senegalese economy.
Nyasha Weinberg, public policy consultant, is a Senior Policy Advisor for the Future of Work Commission. She is a graduate of the Kennedy School of Government at Harvard University and of Oxford University. She has worked in rural economic development for the UK government, has coauthored work on making Brexit work for British business with the former UK Shadow Chancellor Ed Balls, and writes on the role of data in urban development.