Macky Sall, President of Senegal, addresses the 68th United Nations General Assembly at U.N. headquarters in New York, September 25, 2013.
CREDIT: REUTERS/MIKE SEGAR
(Reuters) – Fast-growing African economies represent a “land of opportunity” for investors and those deterred by short-term turbulence in emerging markets will be the losers in the long run, Senegal’s president said on Monday.
President Macky Sall said his West African country would nearly double its annual economic growth to 7 percent by 2017 thanks to a $21 billion program of investment to turn Senegal into a regional hub for transport, logistics and tourism.
Elected in 2012, Sall has won praise from investors and multilateral agencies for anti-corruption measures and fiscal reforms but is under pressure to create more jobs and diversify the economy from fishing and agriculture.
He said his government would borrow between $500 million and $800 million a year to fund large-scale rail, energy and road projects under the 2014-2018 “Emergent Senegal” investment plan.
With many African countries hungry for infrastructure investment, Sall said foreign investors should not heed concerns that capital will flee frontier markets as the U.S. Federal Reserve winds down its monetary stimulus program this year.
“Africa is a land of opportunity,” Sall told the Reuters Africa Summit. “If people withdraw their credit, others will replace them because business opportunities are there, growth is there and the population is there.”
“If someone does not see this opportunity, and turn their back on Africa – well, it won’t be Africa that loses.”
Regarded as a bastion of political stability in a region notorious for coups and civil wars, Senegal’s nearly $15 billion economy has nonetheless underperformed some others in the region in recent years, partly due to poor harvests.
It grew around 4 percent in 2013, according to the IMF, below the average in sub-Saharan Africa of around 5 percent.
NEW AIRPORT NEXT YEAR
Sall’s government aims to open a new international airport next year 30 kilometers (20 miles) outside Dakar. It also wants to attract private capital for Senegal Airlines, the national carrier relaunched in 2011 under the previous administration.
“So far, we have not decided who will be our partner, but that should come very soon.”
To address a long-standing electricity deficit, Sall plans to more than double Senegal’s generation capacity to some 1,000 megawatts by the end of his mandate in 2017.
The government also plans to refurbish a defunct rail line to the Malian capital Bamako, linking Senegal to the interior of the continent, and a high-speed passenger train from the new airport to Dakar.
“The railway network in West Africa has been almost entirely dismantled for several years and we’re going to rebuild it,” Sall said, noting this formed part of a regional plan.
To help fund infrastructure spending, Senegal won commitments for $7.8 billion in financing from donors at a conference in Paris in February.
Sall has received praise from multilateral institutions for paring back the budget deficit to around 5.4 percent of GDP last year, and aims to cut it below 5 percent this year.
His government has shut or merged dozens of state agencies and cracked down on public sector graft, obliging 6,000 senior state officials to declare their assets for the first time.
As a result, Senegal’s 2011 Eurobond has been among the best performers in Africa. The government said last year it could issue a new $500 million Eurobond in the first half of 2014.
“We have the choice of doing a new Eurobond or using other borrowing mechanisms, but it’s clear that we are going to borrow to finance these infrastructure activities,” he said. “It could be $500 million a year, or $800 million a year – it depends on how we manage our Treasury.”
Sall said the government was also studying several new offers for the Faleme iron ore concession, after it won a court case against steelmaker ArcelorMittal (ISPA.AS) to rescind a $2.2 billion deal. The mine, some 750 km (406 miles) east of Dakar, has estimated iron ore reserves of 750 million tons.
“We reached an amicable deal with ArcelorMittal so it can return whenever it wants,” he said. “But we do not want to make a mistake again so this time we are not going to rush.”