The sophistication of the Senegalese economy in question (By Professor Ahmadou Aly Mbaye)

Development is a process of structural transformation reflected in the diversification of a country's productive base and export basket, incorporating products with higher added value, productivity, and economic complexity (sophistication). In Senegal, despite the various programs and policies implemented since independence, the productive structure has remained concentrated on a limited number of basic commodities (agricultural or mining), corresponding to low levels of sophistication. This trend has intensified considerably in recent years with the growing importance of hydrocarbons and mining in the country's export structure. Consequently, the country is falling in most international rankings of economic complexity. A proactive and strategic industrial policy would modernize the national economy and upgrade its productive system.

Export structure and economic sophistication

The sophistication of an economy is manifested by the predominance, in its export basket, of relatively complex goods—that is, goods whose production requires a higher level of technology and human capital. Conversely, the predominance of basic commodities, such as those from traditional agriculture, mining products, and other minimally processed goods, is indicative of a less complex economy. Based on the types of products a country exports, it is therefore possible to deduce the level of sophistication of its economy, compared to those of other countries in the world. Six categories of products can be distinguished, based on their complexity scores, using the Harvard Growth Lab database: very low complexity products (scores below -2), low complexity products (scores between -2 and -1), relatively low complexity products (scores between -1 and 0), relatively complex products (scores between 0 and 1), highly complex products (scores between 1 and 2), and finally, very highly complex products (scores above 2). Most agricultural and mining products correspond to very low levels of complexity (scores around -2). Conversely, some chemical products, lithography equipment, and advanced photography equipment have scores well above 2. Traditional manufactured goods, such as food processing and textiles/apparel, have intermediate scores.

Similarly, economies can be classified according to the structure of their exports. Economies that primarily export raw and minimally processed products are less sophisticated than others. This is the case for most African countries, which have an average complexity score of -1.02, compared to 1.42 for East Asia. The advantages for a country of having a diversified export structure that includes relatively complex goods are numerous and varied. Such goods have higher levels of added value, and therefore higher prices. They are less exposed to price fluctuations than primary commodities, whose prices vary according to the vagaries of the global market. They have a higher level of productivity, thus allowing for better wages for the workers who produce them. They absorb technological innovation more effectively and offer product differentiation options that insulate the country from exogenous shocks.

The Senegalese paradox: a level of sophistication that decreases over time

Despite many favorable conditions, including proximity to European and American markets and a level of political stability quite rare on the continent, Senegal paradoxically exhibits rather modest economic performance. With a GDP per capita growth rate that has remained almost stagnant in the long term, an overwhelming majority of the population is unemployed or underemployed. While the incidence of poverty has significantly decreased in recent years, a substantial number of Senegalese still live in extreme poverty, and the country continues to struggle to achieve the coveted status of an emerging economy. While several factors contribute to this situation, the country's specialization model, based on a relatively undiversified and unsophisticated production base, is a significant factor, one that the recent discovery of hydrocarbons only exacerbates.

Over a 30-year period, the African continent, in general, saw its average complexity score rise from -1.06 to -1.02, an increase of only 2%. By contrast, East Asia improved by 42% over the same period. Meanwhile, Senegal fared significantly worse than the African average. From a score of 0.352 in 1995, it plummeted to -0.507 in 2025—a decline of 244%! This clearly demonstrates that the level of economic complexity was paradoxically much higher thirty years ago than it is now. Tracking the evolution of the country's export basket over the long term provides a better understanding of the erosion of its productive base. In 1966, peanut products (oil, oilseed cake, and groundnuts) accounted for two-thirds of the country's exports. In the 1990s, the peanut sector experienced a crisis, and its share of exports plummeted, with peanut oil falling from 27% to 14% and table peanuts nearly disappearing. At the same time, fishing experienced explosive growth, accounting for up to 50% of the country's total exports. In recent decades, mining has represented an increasingly significant portion of the country's exports. For example, in 2019, gold's share of exports rose to approximately 20%, while fishing's share fell to less than 20%.

Consequently, despite the restructuring of exports over time, they have remained concentrated on a very limited number of commodities, corresponding to low complexity scores. Agricultural and fisheries products are generally considered to be of low complexity, with scores ranging from -0.5 to -1.5. Mining and mineral products are even less complex. For example, gold has a complexity score of -1.8, while oil has a score of -2.8. It is therefore quite logical that Senegal, having transitioned from an agricultural country to a fishing country, and finally to a mining country, has seen its complexity score decline over time. More worryingly, the remaining production of manufactured goods such as textiles, machinery and equipment, and footwear, which the country successfully exported in the 1970s, has almost completely disappeared. With the increasing importance of hydrocarbons in the country's exports, this trend is likely to become even more pronounced in the coming years.

What are the implications for public policy?

Analyzing the complexity of an economy reveals much more than the nature of the goods (high value-added or not) that a country exports. It also reveals the country's level of expertise: what it is capable of (or can aspire to) producing with its available technology and skills. Among the more complex products, Senegal should target those that can also boost employment and have a ripple effect on the rest of the economy. Currently, the products in which Senegal has a tangible comparative advantage (revealed comparative advantage) do not fit these categorizations. Refined petroleum products, which represent an increasingly large share of exports, are often re-exports, particularly to Mali, of products that are largely imported. Furthermore, petroleum products, cement, tobacco, and chemicals, which represent a growing share of the country's exports, are very capital-intensive and very labor-intensive.

If Senegal is to achieve emerging market status by 2050, efforts must be made to clearly identify the sectors into which it could diversify its production and exports, and to implement a suitable strategy to promote them. The challenge will be as much about diversifying its productive base as it is about developing new sectors based on specialized skills and technologies. Traditional agriculture creates many jobs but has a low level of productivity that does not allow for decent wages for those who practice it. Conversely, hydrocarbons and mining use a lot of capital but create very few jobs without having much of a multiplier effect on the rest of the economy. Modernizing agriculture while developing activities around this sector that produce high value-added goods and services is a viable option. Avoiding any form of dependence on hydrocarbons and mining would be a minimum rule of thumb. Indeed, these are rent-seeking sectors whose expected utility for the economy is essentially to generate the financial resources necessary to develop other sectors and finance structural investments.

Professor Ahmadou Aly Mbaye