Inclusive Growth And Inequality In Senegal

The paper examines Senegal’s growth performance from the perspective of its povertyreducing and distributional characteristics, and discusses policies that might help make growth more inclusive. The main findings are that poverty has fallen in the last two decades, but poverty reduction has slowed in recent years. Although available indicators sometimes give conflicting signals on distributional shifts, people in the middle of the income distribution have received the most benefit, mainly in urban areas. Further progress in poverty reduction and inclusiveness would require sustained high growth and exploration of growth opportunities in the sectors with high earning potential for the poor. Better-targeted social policies and more attention to the regional distribution of spending would also help reduce poverty and improve inclusiveness.

Senegal’s growth has been sluggish in recent years with implications for poverty reduction. Average growth was relatively strong in 1995–2005 and accompanied by a large drop in poverty incidence. Due partly to a series of exogenous shocks, growth decreased to an average of 3.3 percent in 2006–11. As a result, per capita income increased only modestly and poverty incidence barely decreased during this period and remains high.

Through 18 chapters, this book draws on policy lessons from successful countries that have managed to overcome political economy constraints and reach upper-middle-income emerging market economy status to examine how Senegal can achieve per capita growth rates of four to five percent per year over a 20-year period, as well as lessons for other low-income countries. Contributors working in academia, civil society, and government in Senegal, as well as at the World Bank, in peer countries like Mauritius, Morocco, and Seychelles, and the International Monetary Fund, address creating a sound, balanced, and efficient fiscal framework through new revenue-raising measures, expenditure rationalization, and more efficient public investment; promoting an inclusive and deeper financial sector; relieving constraints on doing business and promoting private investment, including foreign direct investment; and achieving high, sustained, and inclusive growth. They discuss Senegal's macroeconomic environment and what it means to be an upper-middle-income emerging market economy, including the country's industrial framework, the Plan Senegal emergent growth targets, and dimensions of inclusive growth; revenue mobilization, public expenditure efficiency and rationalization, and debt sustainability; ways to make Senegal's financial system more stable, deeper, and more inclusive in the context of the West African Economic and Monetary Union; aspects of structural reform in the country and ways to implement reforms to achieve growth; and social inclusion and protection in Senegal.

Senegal’s growth has been sluggish in recent years with implications for poverty reduction. Average growth was relatively strong in 1995–2005 and accompanied by a large drop in poverty incidence. Due partly to a series of exogenous shocks, growth decreased to an average of 3.3 percent in 2006–11. As a result, per capita income increased only modestly and poverty incidence barely decreased during this period and remains high.

Senegal’s growth has been sluggish in recent years with implications for poverty reduction. Average growth was relatively strong in 1995–2005 and accompanied by a large drop in poverty incidence. Due partly to a series of exogenous shocks, growth decreased to an average of 3.3 percent in 2006–11. As a result, per capita income increased only modestly and poverty incidence barely decreased during this period and remains high.

The joint staff Advisory Note on Senegal’s Poverty Reduction Strategy Paper reviews policies and strategies required to push forward the authority’s agenda for high, sustained, and inclusive growth and poverty reduction. The private sector is recognized as the main engine of growth in the Senegalese economy. The strategy is clearly focused on improving the investment climate, fostering entrepreneurship, and facilitating access to financial services for small and medium-sized enterprises, and consolidating support institutions. Senegal’s water and sanitation sector is one of the most developed in sub-Saharan Africa. The urban water Millennium Development Goal has been achieved, with access for 98 percent of the urban population, and the goal for rural water access is within reach.

The paper examines Senegal’s growth performance from the perspective of its povertyreducing and distributional characteristics, and discusses policies that might help make growth more inclusive. The main findings are that poverty has fallen in the last two decades, but poverty reduction has slowed in recent years. Although available indicators sometimes give conflicting signals on distributional shifts, people in the middle of the income distribution have received the most benefit, mainly in urban areas. Further progress in poverty reduction and inclusiveness would require sustained high growth and exploration of growth opportunities in the sectors with high earning potential for the poor. Better-targeted social policies and more attention to the regional distribution of spending would also help reduce poverty and improve inclusiveness.

The paper suggests an operationally usable framework for the evaluation of growth inclusiveness—the inclusive growth framework (IGF). Based on the data on growth, poverty, and inequality, the framework allows for the quantitative assessment of growth inclusiveness. The assessment relies on the decomposition of the change in poverty into growth, distribution, and decile effects, which can be calculated using the Distributive Analysis Stata Package (DASP). Availability of at least two household surveys is the main precondition for the use of the IGF. The application of the IGF is illustrated with two country cases of Senegal and Djibouti.