1. A Growth Model That Creates Value but Struggles to Capture It
Senegal's economy has grown steadily for the better part of a decade, averaging above 5% annually through most of the 2010s. On paper, it is one of West Africa's more legible success stories—a stable democracy, a regional services hub, an increasingly diversified formal sector anchored in Dakar. But beneath the headline growth lies a structural problem that has shaped the country's trajectory since independence: the formal economy produces significant profits, but the majority of those profits do not stay.
Where the Money Goes
Take telecommunications. Sonatel, Senegal's dominant operator and the largest listed company on the West African regional stock exchange, is controlled by France's Orange S.A. with a 42% stake. The Senegalese state holds 27%. In its 2025 results, Sonatel reported net income of FCFA 413.5 billion—and disclosed that FCFA 54 billion had been distributed to local shareholders. The arithmetic is plain: for every franc of profit the company earns, the large majority leaves Senegal. Orange's controlling stake means the biggest single slice of dividends crosses the Mediterranean. The CFA franc's euro peg ensures it arrives without a currency haircut.
This is not an anomaly. It is the template.
In retail, Auchan entered Senegal in 2014 and within a decade became the country's dominant modern food retailer. What matters here is not Auchan's revenue but what its expansion displaced. When Auchan opened stores in neighborhoods like Marché Castors—where small-scale Senegalese vendors had long served the local market—consumer spending that had previously circulated within an informal, locally owned distribution network was redirected into a corporate structure whose profits are consolidated in France. The backlash was concrete: the "Auchan dégage" movement in 2018, led by the FRAPP coalition, framed the issue explicitly as one of economic sovereignty. During the 2021 and 2023 protests, Auchan stores were among the primary targets of unrest—alongside Total stations and Orange offices. The pattern of resentment follows the pattern of ownership.
In banking, the structural issue was less about profit extraction than about who the system was built to serve. For decades, the largest commercial banks in Senegal were French subsidiaries—Société Générale, BNP Paribas, Crédit Lyonnais. Their lending culture was conservative, collateral-heavy, and oriented toward large formal enterprises. The result: fewer than 5% of Senegalese firms received commercial bank financing. The formal financial system operated in the country without meaningfully serving the domestic private sector. The Faye government's acquisition of Société Générale's local subsidiary for €268 million in late 2024 was a deliberate attempt to change this—to bring a major bank under domestic control and redirect it toward local SMEs. Whether it succeeds is an open question. But the impulse is telling: the state reached for a banking license because the existing one was not designed with Senegalese borrowers in mind.
Energy makes the cost structure visible. Senegal's residential electricity prices run at roughly 144% of the African average, driven by dependence on imported fuel oil. SENELEC, the national utility, cannot cover its own production costs at current tariffs. The government fills the gap with subsidies that reached FCFA 280 billion in 2023—nearly half a billion dollars transferred from the public budget to sustain an import-dependent energy supply chain. TotalEnergies—a French MNC—operates the largest fuel distribution network. The subsidy, in effect, is a transfer from Senegalese taxpayers to keep an externally oriented energy system functioning at prices households can partially afford. It is the CFA franc's price-level problem in miniature: costs are set by global markets, priced in a currency dicated by EU monetary conditions, and borne by a population earning West African wages.
The Paradox of the Peg
The thread connecting these sectors is monetary architecture. The CFA franc, pegged at a fixed 655.957 FCFA per euro, provides the exchange-rate stability that makes Senegal attractive to foreign capital. FDI inward stock grew nearly tenfold between 2010 and 2023. Repatriation of profits is legally unrestricted—Senegal's investment code explicitly guarantees free transfer of earnings for foreign investors.
The peg keeps macroeconomic volatility low. But it also eliminates the mechanism through which a currency normally adjusts to reflect the fundamentals of the economy it serves.
Senegal runs persistent current account deficits. It imports far more than it exports. Under a floating exchange rate, that imbalance would weaken the currency over time. A weaker currency would make imports more expensive—painful—but it would also make domestic production relatively cheaper, improve export competitiveness, and push the overall price level toward something more aligned with local productivity and wages. The self-equilibrating mechanism of free fx policy forces the economy to recalibrate.
The peg prevents this. Because the CFA franc is locked to the euro, it does not depreciate when Senegal's external position deteriorates. Import prices stay at whatever the euro-denominated world market dictates, converted at a fixed rate—regardless of whether Senegalese incomes can sustain them. GDP per capita is roughly $1,524. The median after-tax salary in Dakar is estimated at around $158 per month. The currency never sends the signal that the cost structure needs to come down.
This does not mean Dakar prices equal Paris prices. They do not. But the formal-sector cost of living—electricity, telecommunications, supermarket goods, fuel, formal rent—sits higher than it would if the currency were free to reflect Senegal's actual economic position. The peg removes the pressure valve. And it works in both directions: the same rigidity that keeps import costs elevated for Senegalese households also guarantees that when Orange repatriates Sonatel's dividends, or when Auchan consolidates its Dakar earnings, the conversion is clean and predictable. For foreign investors, the peg is a guarantee. For the domestic economy, it is a constraint that keeps the cost of participating in the formal sector out of reach for most of the population.
Two Economies, One Country
The disconnect becomes clearer when you consider who actually participates in the formal economy. According to the ILO and Senegal's national statistics agency, approximately 97% of economic units in the country are informal. About 96% of the workforce operates outside the formal sector entirely.
The formal economy—the one reflected in GDP growth figures, the one that generates tax revenue, the one where Sonatel and Auchan and the commercial banks operate—is a thin layer. It is profitable, globally connected, and largely foreign-controlled. The informal economy is where most Senegalese work and earn. It is locally owned but starved of capital, untaxed, unbanked, and invisible to the institutions governing the formal sector. I myself saw this first hand, with the innumerable pop-up shops, bustling local markets, and half-empty high-end establishments that could have appeared anywhere in Europe.
This is why headline growth does not translate into proportional welfare gains. The formal sector can post record profits while the fisherman in Saint-Louis and the tailor in Kaolack see little change in their material conditions. Poverty has fallen meaningfully since the 1990s. But the question of who captures the returns from growth has not been answered in a way that matches the scale of the country's ambitions.
The Ledger
The balance of payments reflects this dynamic in aggregate. Senegal has run persistent current account deficits—reaching 19.9% of GDP in 2022. The primary income account, which captures profit repatriations and investment income outflows, is structurally negative. Diaspora remittances, at roughly 9% of GDP, partially offset the outflows. The rest is covered by borrowing. An audit in late 2024 revealed that fiscal deficits had been significantly understated, triggering the suspension of the country's IMF program. The gap between what Senegal earns and what it spends—and between what the formal economy produces and what stays—is financed on credit.
The Question
None of this means foreign investment is inherently extractive. Sonatel built real infrastructure. Auchan lowered prices for urban consumers. The CFA franc prevented the monetary chaos that has plagued several neighbors.
But the model produces a recurring outcome: growth concentrated in a narrow formal sector, profits flowing outward through structures designed to facilitate exactly that, and a vast informal economy left to absorb the costs—high energy prices, a currency peg that keeps the formal cost of living elevated beyond what local wages support, a financial system that was never designed to lend to it. Stability is real, but what it stabilizes is a distribution of value that consistently favors outward flow over domestic accumulation.
The Faye government has signaled it wants to change the terms. The Société Générale acquisition, the Vision 2050 plan, the renegotiation of oil and gas contracts—these are early moves. Whether the architecture will bend far enough to allow meaningful redistribution without triggering the capital flight that the entire framework was built to prevent is the central tension in Senegalese economic policy.
