Financial times investing in senegal

FT SPECIAL REPORT

Investing in Senegal www.ft.com/reports | @ftreports

Thursday April 19 2018

Infrastructure at the heart of government’s grand plan Physical foundations are central to a strategy to develop the economy and alleviate poverty, writes Neil Munshi

V

isitors to Dakar nowadays arrive at a gleaming new $575m airport and take a freshly tarmacked road past a glittering conference centre at a new, business-focused city that is rising from the scrublands outside the capital.

Dakar’s 1m citizens no longer experience the water and power cuts that plague many cities in west Africa. Rural regions, where more than 70 per cent of Senegal’s 16m people live, are becoming more connected both digitally and physically. More land is being irrigated as the nation, which imports even staples such as rice, strivesforfoodself-sufficiency.

Yet Senegal still faces great problems asitseekstoimprovethelotofthenearly half of its population who live below the

poverty line. It has turned to infrastructure spending to spurdevelopment.

President Macky Sall was elected in 2012 with promises to clean up corruption and bolster flagging infrastructure.

In 2013, he endorsed the Emerging Senegal Plan (ESP), an ambitious strategy to make Senegal a middle income economy by 2035. It is centred on 27 infrastructure projects and 17 structural reforms aimed at attracting foreign investment, reducing poverty and inequality, and ranges from power generation and agriculture to tourism and education. It also involves recent oil and gas discoveries near the border withMauritania.

The government seeks to create 600,000 jobs and increase productivity to boost gross domestic product growth to an average of 8 per cent. The economy inched closer to that goal with a surprise 7 per cent expansion for 2017.

It is forecast to hit 6.8 per cent this year, which would be the fourth consecutive year of growth above 6 per cent.

“Senegal is trying to bet on an infrastructure, public investment-led growth [and] the plan mostly makes sense,” says Amadou Sy, an adviser with the

Inside Why FDI is no longer all about France Foreign investment increasingly comes from new sources Page 2

Stuttering start-ups call for more support Entrepreneurs want private money and government help Page 3

Looking ahead: the entrance to the business-focused city of Diamniadio being built near the new airport — Ricci Shryock for the FT IMF, which has signalled approval for Senegal’s policies with a special, nonfinancing support and monitoring programme. He notes that some questions remain around costs and efficiency.

There have been concerns about Senegal’s ability to move towards productivity growth driven by the private sector.

“Right now the state will have to be in the lead. They will have to invest heavily in infrastructure, address infrastructure deficits and expand the size of the state,” says Bineswaree Bolaky, economic affairs officer at the United Nations ConferenceonTradeandDevelopment.

“That’s not an issue so long as the infrastructure ends up building the capacity of the private sector so that it can become more competitive and productive . . . Down the road, what is

really needed is for the private sector to take over, but this may take a while.”

President Sall told the FT that the government’s reforms last year brought Senegal up to 140 on the World Bank’s Doing Business index, from 178th out of 190 in 2012. The government continues to “work daily” to improve the business environment so that private enterprise can take over development, “because the public [sector] has limits”.

He says that international response to recent bond issues showed “the policies that we put in place are robust and durable . . . it’s a positive sign that reassures us and that shows us we must continue down this path”. In March, Senegal received more than $10bn of orders for a $2.2bn eurobond to fund infrastructure andpaydownolderdebt.

As part of the ESP, Senegal is building a new city near the airport called Diamniadio,withspecialeconomiczones,a free-tradearea,atechcity,researchcentres andamedicalcampus.

Ibrahima Cheikh Diong, who served in economic positions in the previous administration and at the World Bank before founding Dakar consultancy Act Afrique, says that project delays and red tape continue to be concerns. “My feeling is that [the government] may not have the capacities to have those projects on the fast track,” he says.

But he adds that there is no denying the transformation of the energy sector.

Generation capacity has grown from 540MW in 2010 to 864MW in 2017, according to the US government’s Power Continued on page 3

Interview Wari’s CEO Kabirou Mbodje: ‘Africa isn’t prosperous because we’re not integrated’ Page 4

Avoiding the ‘oil curse’ Can country learn from others’ mistakes?

Page 6

Tourism entrepreneurs want their share ‘We have to control our own businesses,’ say local founders Page 10

★

2

FINANCIAL TIMES

Thursday 19 April 2018

Investing in Senegal

Reputation for stability lures new investment FDI There has been a surge of interest from non-western countries, writes Neil Munshi

FDI in Senegal $m 600 500 400

L

ast month, during a visit by Turkish leader Recep Tayyip Erdogan, companies from his country announced deals worth $582m in Senegal, in the latest sign that foreign investment in Africa’s westernmost country is shifting eastward.

Businesses from France, Senegal’s former colonial ruler, have long dominated foreign investment. In recent years, however, the country has seen a surge in interest from further afield.

Since 2003, according to data from the UN Conference on Trade and Development (Unctad), most new foreign investment projects into Senegal have come from non-western countries, including announced projects of $2.8bn from the United Arab Emirates, $1.23bn from South Korea, $695m from China and$653mfromIndia.

Senegal has a reputation for being one of Africa’s most politically stable countries, enjoying one of the continent’s fastest economic growth rates and having a government that says it is committed to improving the business climate and cutting red tape. As such, the country is trying to position itself as a regional economic hub. Inflows of foreign direct investment increased from $276m in 2012 to $532m in 2017.

Senegal is already home to a number of regional headquarters for multinationals, non-governmental organisations and international bodies, and the government is working to attract foreign investors beyond the western companies that have traditionally dominated trade in Africa.

The new international airport is run

by Turkey’s Summa. Its new seaport will be built and managed by Dubai-based DP World, which also runs the Dakar

300 200 100 0 2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Source: Unctad

port. Attijariwafa Bank, one of the biggest banks in Senegal, is Moroccan.

India’s Jindal Steel & Power has signed an agreement to build a $558m, 350MW coal-based power plant. Dangote Cement of Nigeria makes the construction staple at a local $400mplant.

China’s presence in the country is relatively small compared with that in other African nations. Beyond financing and infrastructure, however, Senegal is trying to attract Chinese light manufacturers to industrial parks in the new city of Diamniadio outsideDakar.

Some in Senegalese business circles complain that the government is too focused on attracting foreign investment.Butthecountry’spresidentMacky Sall says the government prioritises local businesses when possible and encourages foreign companies to co-operate with local businesses.

“I know this song, but . . . less than 20 per cent [of contracts] are won by the big international businesses, [often] in the sectors where we don’t have the [technology],” he says. “But we are in an op en world. We can’t . . . close ourselves within these borders and say, ‘I give all to national businesses’ and exclude others.”

The government is focused on further

improving its position on the World Bank’s Doing Business index, which measures ease of operation in a country, from 140th out of 190 nations. Yet one foreign investor who has bid on large projects in the country says uncertainty around the tax code is such that one of the Big Four global accounting firms was unable to give clear guidance on what thecompany’stax liabilitiesmightbe.

“There’s nothing more scary than having a grey area — on taxes you’d rather know you are being taxed 70 per cent so you can model it than a range where you don’tknow,”theinvestor says.

Dangote’s experience highlights two of the country’s other challenges, common across the region: power and land administration. The Nigerian cement company began construction of its plant in Senegal in 2010, finished it in 2012, but took close to two years to start fullscale operations because it first had to build a 30MW station to power the plant and then fell into legal disputes over land ownership.

Luk Haelterman, Dangote’s country head for Senegal, says it can be a difficult place to do business because with just over 16m people it is a limited market and has significant logistical shortcomings. “This has nothing to do with

Doing business: Senegal’s President Macky Sall with Turkey’s President Recep Tayyip Erdogan in March Kayhan Ozer/AP

government efforts, because I think they are trying to improve it,” he says.

Souleymane Ba is a partner in London-based private equity fund Helios InvestmentPartners,whichhasinvested in the payments, fertilisers, petrol stations and food sectors in Senegal. He says that, counter-intuitively, Senegal’s small economy is what makes it attractive to carve out and buy the local business of a multinational that might otherwisebea“corporateorphan”.

“You can buy these businesses that have great brands, great legacy positioning, that need to be more focused on the country,”headds.

Senegal’s membership of the Central Bank of West African States also makes it attractive for foreign investors. As one western diplomat says, “[it] has the important effect of taking monetary policy completely out of politics”. The currency’s peg to the euro is also helpful, although intra-regional trade remains difficult.

Fabrice André, west Africa director for Orange, the country’s largest mobile carrier, says Senegal has made an ideal hub forexpansiontoneighbouringcountries, where it also partners with Sonatel, the Dakar-based company in which it has a 42 per cent stake. “Senegal is a country

Senegal is attempting to position itself as a regional hub for economic activity

where the institutions are working well, justice is working well, parliament is working well, and so on. That is not the caseeverywhereinAfrica,”hesays.

That reputation has been tarnished for some by the sentencing of Khalifa Sall, the popular mayor of Dakar, to five years in prison on what supporters say are trumped-up embezzlement charges meant to stymie a challenge to Macky Sall (no relation) in next year’s presidential elections.

France continues to have the largest presence in Senegal, with nearly $2.4bn in accumulated foreign investment, followed by $423m from tax haven Mauritius, according to Unctad.

Vincent Toussaint, economic counsellor for the French embassy in Dakar, notes the recent revival of interest from French agricultural companies in the country. However, he says the real testament to Senegal’s promise is how France’s share of FDI inflows has shrunk to about 20 per cent.

“Eighty per cent of inflows are coming from other countries,” he says. “A change is happening not because our companies are retreating from Senegal, but because it’s a much more open economy than it was in the past and all players are coming.”

★

Thursday 19 April 2018

3

FINANCIAL TIMES

Investing in Senegal Entrepreneurs Founders say high taxes and a lack of funding hold businesses back, says Neil Munshi

Stuttering start-ups call for more help from president

F

rom its launch in 2013 until last year, OuiCarry, a Dakar delivery service company, was, like many start-ups, lossmaking — but it still had to find CFAFr30m ($56,000) a year to pay business taxes.

Oumar Yam says he and his co-founders at the company, which allows people without bank accounts to order items online from services such as Amazon, were lucky. “We had another company that we could take money from to pay tax — not everyone has that,” he says.

When OuiCarry raised CFA Fr200m ($370,000) in venture funding from a local fund, it paid about $56,000 in tax.

Mr Yam says the tax system in Senegal, where start-ups get neither the tax holidays nor the incentives that other countries provide, is “killing” many of the entrants to Dakar’s small but growing start-up scene.

It is a common complaint among the dozens of new businesses in sectors including agriculture, healthcare and ecommerce that are trying to use Senegal as a base from which to expand across francophone west Africa. Dakar

provides safety and stability along with a cheap but fairly well-educated workforce; it also has more reliable internet connectivity than much of Africa, making it an ideal base for continental expansion.

In the case of tech start-ups, it is the English-speaking part of the continent — particularly east African countries such as Kenya and Rwanda — that have received most global attention and funding, says Regina Mbodj, who runs CTIC, the capital’s first incubator.

“I’ve seen companies with great potential who needed $15,000 — peanuts — who shut up shop,” she says.

“When people talk about Rwanda [and] Kenya, I don’t think they’re more talented. They have access to funds, they have help from the government, the president is engaged.”

Last year was an important one for Dakar start-ups. The city saw the opening of its first free computer coding school at CTIC, which received 10,000 applications for 50 places.

Three venture funds also arrived.

Grégoire de Padirac opened an office for Orange Digital Ventures, Orange’s

Infrastructure at the heart of government’s grand plan

Start-up stop: a OuiCarry delivery driver makes a call in Dakar. Founders complain of high business taxes — Ricci Shryock for the FT venture arm. It will target francophone markets although it invests across the continent: the first of its first-round investments worth up to €3m will be in Kenya this year.

Mr de Padirac says that even if ODV and every other French venture capitalist focused on the region, “there isn’t enough seed funding from France to cover all of francophone Africa”, and most English-speaking funds remain focused on where communication is easier.

Many local start-ups operate on a hybrid model — doing web or app design for clients to pay the bills while trying to develop their own products.

Omar Cisse has tried to change that with Teranga Capital, a VC fund that raised about €5m and has made three investments of CFAFr100m each.

Dakar provides safety and stability and a cheap but educated workforce

Mr Cisse founded CTIC in 2011 and is behind InTouch, one of the country’s biggest start-ups. This is a unified platform for the many mobile payments apps in eight countries in Africa, and started with a partnership with France’s Total in Senegal. InTouch raised €7.1m from Total and Atos at a valuation of €20m in December. “I started a company and after that I launched an incubator, then an investment fund. I did all that because for start-ups there is nothing to help them grow,” he says.

Laissa Mouen, a former banker, says a lack of seed funding in francophone west Africa is stifling, while local banks are not interested in lending to the sector. She is launching Kinaya Lab, which aims to link start-ups to large corporations “that will generate revenue for the start-up and make it easier to access the mass market”, she says.

One local ecommerce entrepreneur with $1m annual sales, who did not wish to be named, said the government had made the process of starting a business easier. “But that is registering — then the problems start,” he says. That includes getting the electricity con-

nected, or “regulatory bodies that come and make your life difficult by soliciting small bribes”.

Entrepreneurs can find themselves dealing with informal local suppliers who cannot provide wholesale inventory for retail orders. “You may not even know if they can supply the item you have listed on your site,” he adds.

Mr Cisse, one of the grandees of the local scene, has some suggestions for how the government could boost the sector. “There is no interaction at all between the government and [the] start-ups — there is a minister of digital economy, but I’ve never spoken to him — I don’t know what type of projects they’re involved in,” he says. “[So] they could start by . . . chatting with us from time to time, to discuss our problems and do the follow-up to see how we can create an ecosystem for start-ups.”

In mid-March, Senegal’s president Macky Sall showed signs of following that advice at the country’s first annual tech conference. He promised his “unqualified support” to tech entrepreneurs and “significant reforms to improve the business environment”.

Continued from page 1 Africa programme, some from a handful of solar plants. It is now rare to experience large-scale power cuts in Dakar. Yet less than 30 per cent of rural citizens have access and an estimated 2,000MW isneededforuniversalelectrification.

Dakar has improved its water supply, but some observers fear it could face shortages if it does not build a desalinationplantaspartoftheESP. Sidy Diop, head of francophone Africa for Deloitte, says the plan “is starting to bear some good fruits” with growth for example. But he notes that “with all of the developmental challenges, that’s still not enough for the population to feel it . . . you have this issue of poverty that isnotdecreasingsignificantly”.

He says that while there has been progress in healthcare and education — which are central to the ESP — the biggest challenge remains these types of social infrastructure, for which financingislimited.

“Today if you want to find $1.5bn to build a new metro or a road, it’s quite easy,” he says. “The real challenge for Senegal and also for most African countries is to find resources to finance social infrastructure . . . that will have an impactonpovertyreduction.”

MAURI TANIA

Dakar

Touba

SENEGAL

GAMBI A

GU INEA- BIS SAU

200 km

★

4

FINANCIAL TIMES

Thursday 19 April 2018

Investing in Senegal Interview Kabirou Mbodje Money transfer CEO on connecting the continent and a contentious telecoms deal. By Neil Munshi

‘Africa is not prosperous because we’re not integrated’

Contributors Neil Munshi West Africa correspondent

K

abirou Mbodje says he knows what ails Africa: a lack of integration.

“This is the key part of the problem in terms of developing on the continent,” says Mr Mbodje, the founder and chief executive of Wari, a money-transfer company, and at 53 one of the most prominent Senegalese business people of his generation.

“Africa is 54 countries. We’re talking about a billion people, a huge continent, 30 currencies. Why it is not prosperous is because we’re not integrated,” he argues. “We are small countries with no effect on a global scale [ . . .] If we don’t aggregate those markets together, we will not have leverage.”

His company, claims the French-born chief executive, is key to that integration. “That’s what Wari is all about.”

The group was founded in Dakar in 2008 and now has more than half the country’s money-transfer market. It processes at least 1m transactions daily in 60 countries, allowing customers to pay bills and school fees, and transfer money worldwide.

Mr Mbodje says Wari can become an African version of MasterCard and Visa — a neutral platform that will harmonise commerce across the continent.

“We are trying to just put, let’s say, a bridge between everybody in an agnostic way, where you can be a telecom player, you can be a bank, you can be an

insurance company, you could be a mom-and-pop shop,” he says. “You have access to the whole global African market without having to move from where you are.”

For now, the barriers to commerce in Africa are such that even trading with businesses in Gambia, a country that Senegal surrounds, is difficult.

“I have no link from here to Gambia,” he says. “If I want to transfer money via my bank account, I have to use [Belgium-based] Swift. We’re talking about 200km from here. Why would I go to . . . Belgium to use a service to do something that is next door? Those are the kinds of problems we need to solve.

And we need to do it by ourselves.”

Mr Mbodje has come up against multinational companies trying to stake a claim in Africa by launching moneytransfer businesses. “Total [the French oil group] have tried; they failed. Banks are trying; they fail. Other people will try eventually and they willalsofail.”

To expand Wari’s footprint, which is so large in Senegal that people say simply “Wari me money”, Mr Mbodje last year announced a $129m plantobuyTigo,the Senegalese mobile telecoms operation of Stockholm-listed Millicom. The deal would give Wari access to the mobile money market that is dominated in west Africa by France’s Orange, Senegal’s biggest telecoms operator via its joint venture Orange Sonatel.

Andrew Ward Energy editor Eromo Egbejule Freelance journalist Adrienne Klasa Development finance editor, fDi and The Banker Jennifer O’Mahony Freelance journalist Jerry Andrews Commissioning editor

Ambitious: Kabirou Mbodje’s Wari processes 1m transactions daily and aims to expand further in Africa — Ricci Shryock for the FT Millicom cancelled the deal in July, saying the business would be sold instead to a consortium that includes Sofima Ltee, Teyliom Group and NJJ Capital, an investment vehicle controlled by Xavier Niel, the French telecoms billionaire.

Wari is suing Millicom in Senegal and filed for international arbitration in Paris, after Senegal’s President Macky Sall issued a decree approving the initial

‘We are small countries . . .

If we do not aggregate those markets together, we will not have leverage’

deal. Millicom did not respond to a request for comment but has filed its ownarbitrationrequestagainstWari.

Mr Mbodje argues that there are problems around access and fairness. Senegal offers only three telecoms licences, so companies can prioritise their mobile money products on their systems, he claims. “A telco is a tube, it’s just an infrastructure, it’s like a road, and it should be open for everybody. The builder of the road, they should not be able to say, oh, only the red cars can run on this thing because I have red cars.

“So you partner with the telco to offer the service, which we are doing in several countries, but it’s not enough,” he says, adding that companies need to be “part of the telco ecosystem” to build a global business.

Mr Mbodje says support from the Senegalese people has been robust, and the dispute has at times been framed as the local champion pitted against foreign players.

“They have this spirit now: I will not call it nationalism, but they understand now that it has to come from us.

“That’s why you have 99 per cent of the population behind Wari when it comes to that case, and I think the administration sees it,” he says.

“We are not ready to accept that we will sacrifice a local entrepreneur versus some foreign company — even though everybody is welcome because it’s how you create an ecosystem — but you have to take into consideration that you cannot build a country without its own sons.”

Steven Bird Designer Alan Knox Picture editor For advertising details, contact: David Applefield, +33 6 28 93 66 34 or +1 855 707 2747, david.applefield@ft.com; Mark Carwardine +44 (0)20 7873 4880, mark.carwardine@ft.com All editorial content in this report is produced by the FT. Our advertisers have no influence over or prior sight of the articles.

All FT Reports are available at: ft.com/reports Follow us on Twitter @ftreports

Communities weigh up costs and benefits of growth in gold mining Resources

The sector is growing, bringing jobs and questions for people living near the mines, says Andrew Ward Every week to 10 days, a small propeller plane lands on a dusty airstrip surrounded by arid scrubland in a sparselypopulated area of eastern Senegal.

It comes to collect several 20kg bars of semi-pure gold produced at the nearby Sabodala mine. The precious cargo is flown out accompanied by guards and customs officials to Dakar, from where it is taken by commercial airline to Zurich for refining.

A similar routine occurs at mines across west Africa but, for Senegal, the export of gold is still a relatively novel activity compared with the more developed industries of neighbouring Mali and others such as Ghana, Burkina Faso and Ivory Coast.

Richard Young, chief executive of Teranga Gold, the Canadian company which operates Sabodala, says that, while Senegal’s resources are not the most plentiful, the country has other advantages which make it an attractive place to invest.

“There’s four things you are looking for as a miner,” he says. “You have to go where the geology is. There has to be the rule of law and a strong mining code, and you need a government that wants mining in their country. Senegal ticks all those boxes.”

Until recently, Senegalese mining was concentratedonextractionofphosphate for use in agriculture and industry. That remains one of the country’s biggest export items. However, gold is becoming more important as Sabodala expands andfurtherresourcesaredeveloped.

“Senegal is starting to emerge,” says Martin Horgan, chief executive of UKbased Toro Gold, which in January started production from the country’s second gold mine after Sabodala at Mako in the south-east. “Mali is five to 10 years ahead but Senegal has the same rock and it is politically and economically stable.”

Randgold Resources, the UK-listed gold company, has a large undeveloped discovery in the country and Iamgold, a mid-tier Canadian miner, is exploring.

Gold was first discovered at Sabodala

by French state geologists in 1961 but it was not until 2009 that the resources were finally brought into commercial production. About 1.5m ounces of gold have been produced and $500m invested since then, with a further 2.7m oz of proven and probable reserves still to recover. Additional exploration opportunities could increase that figure to 4.4m oz, giving the mine at least another 13 years of expected life.

Sabodala has become one of Senegal’s largest employers with almost 95 per cent of its 1,200-strong workforce hired in the country. Heavy equipment operators can earn more in a month than the annual gross national income per capita of $950.

Gold has been extracted from several open-pit mines across the Sabodala site, excavated to depths of 150m or more. A fleet of 24 large dumper trucks shuttle along red earth tracks between the pits and a processing plant where tonnes of ore are unloaded into a filtering machine known as the grizzly. This is the first of several steps involved in

Delicate balance: Sabodala mine and children in the neighbouring village

crushing rock to a fine slurry from which tiny particles of gold can be extracted. It takes about a tonne of ore to produce 1.5g of gold.

Critics of the mining industry might despair at the disfigurement of landscapes and the heavy carbon emissions involved in extraction of a metal with few practical applications beyond its use as a store of value. Sabodala is located in an otherwise unspoilt environment where baboons roam freely and crocodiles doze by a swamp near the mine.

Yet relations between Teranga and the local community seemed generally good based on interviews by the FT with village leaders. It helps that almost a third of the mine’s labour force is recruited from the surrounding area, creating work where previously there were few options except agriculture.

Teranga has also invested millions of dollars in health clinics, ambulances, schools, a local radio station and “market gardens” which use solar-powered irrigation to grow vegetables all year, ratherthanonlyintherainyseason.

“There is an improvement in the income of the village because we are able to grow more vegetables and sell the surplus,” says one female elder dressed in a red headscarf and vivid blue dress.

A bigger test of community relations will come in the next year as work begins to relocate Sabodala village and its 2,500 residents to allow a new mining pit to be dug. Modern homes will be built in the new village to replace the wood shacks and mud huts which are common in the existing settlement, as well as a school, nursery, mosque, sports ground and better sanitation.

Teranga’s Mr Young says the $30m project will bring “material improvement” to living standards and extend the life of the mine so that jobs and other economic benefits for the local community will last longer. He admits it is a difficult process uprooting 500 families who, in many cases, have lived in Sabodala for generations. Bodies laid to rest in the local cemetery will be exhumed and reburied in the new village.

When the FT visited the existing village with a senior mine manager last month, the reception was friendly. But Mr Young knows it is a risky project.

“We are very focused on ensuring we do the relocation right and with the support of the local community,” he says.

“We don’t take it for granted.”

Thursday 19 April 2018

★ †

FINANCIAL TIMES

5

★

6

FINANCIAL TIMES

Thursday 19 April 2018

Investing in Senegal Energy Executives and diplomats believe the country is in a good position to dodge pitfalls of large offshore finds — but questions remain, writes Andrew Ward

Discoveries focus attention on avoiding the ‘oil curse’

F

or decades, Senegal was an afterthought for oil and gas explorers, caught in a no man’s land between prolific hydrocarbon provinces in north and west Africa.

That changed in 2014, when Cairn Energy of the UK took a gamble on the country and came up with the biggest offshore oil discovery anywhere in the world that year.

Further successes followed from Cairn and Kosmos Energy, the Texasbased company which has found the largest offshore gas deposits in west Africa in waters straddling Senegal and neighbouring Mauritania.

These companies and their partners are now gearing up to develop the resources, promising to place Senegal firmly on the map of large African oil and gas producers.

“When we struck first oil in 2014, there had never been a deepwater well drilled in Senegal,” says Simon Thomson, Cairn chief executive. “But it was the epitome of our strategy: to go somewhere which has been under-explored and put dollars at risk when we have a belief in a place. Kosmos did the same.”

Discovering the resources, however, is only half the challenge. At least as difficult will be the next step of building an industry almost from scratch in a country whose prior experience of

hydrocarbons is limited to small-scale onshore gas production.

Senegal does not have to look far for cautionary tales of pitfalls ahead.

Nigeria, Angola and other African countries have suffered the “oil curse” of economic and political instability when exposed to a rush of petrodollars.

Diplomats and oil industry executives say Senegal has a better chance than most of making a success of its windfall.

The country’s relatively strong, Frenchinfluenced institutions and bureaucracy should help it avoid the worst of the corruption, inflation and inequality which has befallen oil producers elsewhere, they say.

This optimism is heightened by the background of Senegal’s president, Macky Sall, a geological engineer who trained at the French Institute of Petroleum and was previously in charge of the country’s national oil and gas company, Petrosen.

“It is helpful to have a president who understands the industry,” says one international oil executive. “He has been managing expectations in government and among the public that it’s not going to be an overnight bonanza.”

Not everyone is convinced of Senegal’s ability to avoid the ugly side of oil wealth. A controversy involving the award of offshore permits to a company once linked with the president’s

Petrol stations raise their game In a Shell petrol station in the busy Hann Bel-Air district of Dakar, Senegal’s rising demand for energy meets its growing service sector.

There is a car wash, a wellstocked convenience store and a vacant space reserved for a fastfood chain such as Kentucky Fried Chicken or Burger King.

Growth in non-fuel sales helped Vivo Energy, which operates the Shell retail brand in Africa, increase Senegal sales by 11 per cent last year and narrow the gap on market leader Total, whose dominance dates back to French colonial rule.

Vivo, owned by Vitol, the oil trader, and Helios, the private equity company, operates more than 1,800 fuel stations across Africa and 104 in Senegal. “The market is not so big but the potential is interesting,” says Franck Konan-Yahaut, the local managing director.

AW

Anger: protests in 2016 calling for transparency in the handling of gas finds Seyllou/AFP/Getty Images

brother, Aliou Sall, prompted street protests in 2016. Many ordinary Senegalese remain suspicious of Cairn, Kosmos and the procession of other foreign energy companies that have followed them into the country.

BP of the UK has formed a partnership with Kosmos to develop the latter’s gas discoveries, as well as the processing facilities needed to export them as liquefied natural gas. Cairn has teamed up with Woodside Petroleum of Australia to develop its oil, while Total of France acquired exploration rights in nearby waters last year.

Oil executives worry about the government’s capacity to handle the growing volume of regulatory work and commercial negotiations involved in advancing resources towards development. BP and Cairn are both aiming for final investment decisions around the end of 2018 for their Tortue gas project and

SNE oilfield, respectively, with a view to startingproductionassoonas2021.

Mr Sall is keen to keep that timetable on track so he can demonstrate progress when he seeks re-election next year.

Western governments are watching closely, given the importance of Senegal as a beacon of stability in west Africa.

The World Bank last year lent Senegal $29m to help strengthen its institutional capabilities to negotiate with energy companies and regulate the nascent industry. Faheen Allibhoy, country manager for the International Finance Corporation, the World Bank’s private sector investment arm, says initial signs are encouraging. “Most Senegalese are very sensible about wanting to avoid the malaise that has plagued other countries,” she says. “Hopefully they can be a laboratory on how to do this right.”

Plans are being drawn up by Mr Sall’s administration to ration the amount of

Strong institutions should help avoid the worst of the problems which have befallen producers elsewhere

hydrocarbon revenue made available for immediate public spending, with the rest set aside for longer-term sovereign investment.

Oil and gas companies have also sought to lower expectations for their economic impact. All the production, processing and exports will initially be done from floating offshore infrastructure, limiting the amount of work for locals. “We want to avoid the perception that we are going to be employing thousands of people,” says Geraud Moussarie,BPcountrymanagerSenegal.

In the longer run, however, there is potential for development of a local oilfield services sector, as well as benefits from lower electricity prices, if infrastructure is put in place to bring gas ashore and generate power. “We’re going to be here for decades,” says Mr Moussarie. “So we want to build a mutually beneficial relationship.”

★

Thursday 19 April 2018

7

FINANCIAL TIMES

Investing in Senegal

From blackouts to gas and green energy Power Progress is swift, but there is a long way still to go to universal access to electricity, says Andrew Ward

I

n the control room of the Cap des Biches power station on the outskirts of Dakar, a framed photograph of Senegal’s president Macky Sall hangs on a wall overlooking a bank of computer screens showing data from the plant’s five generating units.

The presidential portrait hints at the importance of a facility which accounts for about 10 per cent of domestic power generation and acts as a symbol of the country’s progress towards making electricity more reliable and widely available.

“This is the brain of the power station and the engines are its heart,” says Gionata Visconti, the plant’s Italian manager, gesturing towards an adjacent building where throbbing combustion engines powered by heavy fuel oil generate 86 megawatts of electricity when running at full capacity.

“Blackouts have dramatically reduced since we started operating in 2016 and electricity prices have decreased,” he adds, standing beside a telephone which provides a direct hotline to grid operators at the country’s state-owned power utility, Senelec.

Cap des Biches is run by ContourGlobal, a UK-listed power company. It was developed with $132m of financing from the Overseas Private Investment Corporation (Opic), a US government agency which supports development in emerging markets, and the International Finance Corporation (IFC), the World Bank’s privatesectorinvestment arm.

As such, the plant, beside a sandy Atlantic beach with palm trees lining its access road, is a showcase for the combination of private international capital and development finance which has helped overcome the power shortages which until recently bedevilled Senegal.

“The government has put a lot of focus on power production,” says Massaer Cisse, senior manager in the

Dakar office of Deloitte, the global consultancy. “In the past five years, power generation capacity has increased by 25 per cent.”

Senegal has relatively high levels of electricity access compared with the rest of west Africa, with 61 per cent of the population connected to a reliable supply. Yet there is a big divide between the 88 per cent connection rate in urban areas and 40 per centinthecountryside.

About 1.2m households across Senegal have no access to electricity, according to Power Africa, the US development programme aimed at closing

Fired up: Cap des Biches power station, which is oil-fuelled but can be converted to gas; and a solar array near Thiès in western Senegal Xaume Olleros/Bloomberg

There is a divide between 88 per cent connection in urban areas and 40 per cent in the countryside

the continent’s energy deficit. That leaves the government a long way from its goal of universal access to electricity by 2025. A big expansion in renewable power will be critical.

So far, only 80MW of solar power has been installed and most of the country’s 864MW of generating capacity involves burning of heavy fuel oil. However, plans are under way for a further 350MW of solar and wind projects which would represent one of the biggest and fastest buildouts of renewable power in the region.

A French alliance of Engie, the utility,

and Meridiam, the infrastructure investor, this month won an auction to build 60MW of capacity as part of the IFC-led Scaling Solar scheme, at a 60 per cent lower cost than past solar projects in Senegal.

Faheen Allibhoy, IFC country manager in Senegal, says falling costs make renewables an attractive option in a country with plentiful wind and sun.

Until now, electricity prices have been inflated by the cost of importing fuel oil.

A further 158MW is due to come from a wind farm planned at Taiba N’diaye, 80km north-east of Dakar, by Lekela

Power, a joint venture from Mainstream, the Irish renewables developer, and Actis, a UK private equity investor focused on the developing world. Like the Cap des Biches plant, the Taiba Ndiaye wind farm is receiving support from the US Power Africa programme in theformof$250mofOpicfinancing.

Chris Antonopoulos, chief executive of Lekela, says his company is ready to start construction of what will be west Africa’s largest wind farm as soon as final approval is received from Senegalese authorities. It will take about two years to complete.

Ms Allibhoy cautions that more investment in transmission and distribution infrastructure is needed to absorb rising amounts of renewable power, the intermittent nature of which makes for more volatile supplies. “We’ll have gone from zero renewables to 20 per cent [of generating capacity] by the end of next year,” she says. “It is extraordinary progress but we are reaching the technical limits.”

In the longer term, the government is counting on newly discovered offshore gas reserves providing a further source of domestic power generation after production starts in the 2020s. The Cap des Biches plant is designed to be converted to burn gas, rather than oil, once supplies are available. However, as with renewables and the grid network, heavy investment will be needed in gas processing and distribution infrastructure before the promise of cheap and plentifulgas-firedpowercanberealised.

In the meantime, some investors are focusing on smaller-scale local projects to fill gaps in access. A Senegalese start-up called Oolu, for example, provides off-grid solar panel and battery kits to rural households for a low monthly fee paid through mobile phones. The company has received investment from Y Combinator, the Silicon Valley fund which has backed companiesincludingDropboxandAirbnb.

With demand growing at 40-50MW per year, a range of energy sources will be needed to keep expanding Senegal’s power system. As Mr Cisse at Deloitte says: “It’s going to take a lot of investment and a lot of co-operation between the public and private sectors.”

★

8

FINANCIAL TIMES

Thursday 19 April 2018

Investing in Senegal

Modernising agriculture is vital to future prosperity Rural economy There is progress but land reform and irrigation are still lacking, says Neil Munshi

A

s part of its plans to become a middle income country by 2035, Senegal has vowed to modernise an agricultural industry that employs the majority of its citizens but produces far less of thefoodthecountryconsumes.

As it seeks to reach food self-sufficiency, Senegal faces hurdles common to many developing countries: an antiquated and informal land administration system, a decrepit and often nonexistent value chain and a dearth of irrigated land, leaving farmers at the mercy of changes in climate.

The agriculture sector makes up roughly 15 per cent of gross domestic product, down from a quarter in the 1980s, yet it remains a key source of foreign exchange and employs 77 per cent of the workforce, according to the World Bank. The current administration’s reform efforts seem to be bearing fruit.

According to government data, production of peanuts — the most important cash crop — rose 268 per cent in the six years to 2017, to 1.4m tons. Meanwhile, high-value farming exports such as melons and other fruits nearly doubled from 56,778 tons in 2012 to 106,200 tons in 2017, due in part to investment encouraged by reformsinthesector.

Papa Sall, Citi’s head in Senegal, says GDP growth, at 7 per cent last year, is rising on the back of increased agricultural production. “Clearly the plan is working”, he adds. “There are a lot of

opportunities in agribusiness, and the government is still working and putting in place some reforms in terms of land tenure, to ensure that people have access to land and can secure their investments.”

However, as a western diplomat says, “land administration is a really difficult problem”, as in many developing countries, causing uncertainty that scares off investors who cannot be sure who owns land they might wishtoacquire.

“Without much exaggeration I think I can say there’s no such thing as a completely transparent real estate transaction in Senegal,” the diplomat says.

“That’s a real challenge for someone comingfromoutsidewhowantstoinvest in something or set up a business. It’s one of the things that Senegal really needs to work on in order to attract private investment to transform the economy.

It’s a completely non-trivialproblem.”

Land administration reform is working its way through the political system but further change is likely to be delayed as the country prepares for presidential elections next year. In the meantime, Fonsis, Senegal’s recently established sovereign wealth fund, has been granted $1bn in state assets. This includes tracts of land that can be used by agricultural companies the fund invests in, says Ibrahima Kane, chiefexecutiveatFonsis.

The government’s infrastructure investment is targeting high-profile projects such as the new international

Scaling up: selling melons in Dakar. Exports of high-value fruits are also growing fast Seyllou/AFP/Getty Images

airport, but it is also meant to bolster the rural economy, with electricity and roads aimed at connecting the country’s hinterlands and improving a supply chain in need of modernisation.

“The government is spending a lot of money to improve production of rice, wheat, millet, sorghum, which is good to see because it’s a very poor country — agriculture can feed the country and boost growth going forward,” says Katrien Smuts, an economist covering Senegal for South Africa-based NKC African Economics. “The agricultural sector can be a big part of growth in the country, but it’s still very vulnerable considering half of the country is basically desert, so it is very susceptible to droughts.”

One difficulty, says Ousmane Sène, head of the West Africa Research Center in Dakar, is the lack of irrigated land.

“The problem with this type of agriculture is the availability of water because we are dependent on the will of the sky to pour rain or not to pour rain,” he says.

“You need to renew and modernise the tools which are used for agriculture.”

A 2010-2015 project by the USfunded Millennium Challenge Corporation addressed some of those shortcom-

‘The sector is very vulnerable . . . half the country is basically desert, so it’s susceptible to droughts ’

ings. The MCC spent $300m in part on improving the irrigation system in the Senegal River Valley in the north, the heart of rice production, while $172m went on constructing tarmacked highways in the north and south. Rice production has soared in the north, roughly tripling between 2007 and 2017, an important development for most Senegalese given the country imports roughly 70 per cent of the daily staple.

The government’s focus on agricultural development, along with international aid such as the MCC programme, is attracting attention from investors who had previously overlooked the relatively small market. Vincent Toussaint, economic adviser for the French embassy in Dakar, points to new investments from French companies in rice, sugar, bananas, watermelons and groundnuts as evidence of a resurgence.

“The agricultural sector is a good example of new interest . . . [French companies have a] historic presence in Senegal which was maybe a bit sleepy the last decades, but we’ve had this revival these last few years,” Mr Toussaint says. “It’s really a renewal. And thesecompaniescontinuetoexpand.”

Celebrity chef goes with grain Senegal-born celebrity chef Pierre Thiam, renowned for restaurants in New York and cookery books, is planning to import Fonio — a high-protein, gluten-free grain — from his homeland. Initially sourcing it from Mali, he tells Neil Munshi how road improvements will allow a mill to be set up in Senegal by late next year. ft.com/thiam

★

Thursday 19 April 2018

9

FINANCIAL TIMES

Investing in Senegal

Small fry take on the sharks Food Local fishing suffers from the impact of large and often-illegal foreign trawlers, writes Adrienne Klasa

Profile

Dakar is modernising fast but feels safe, vibrant and relaxed, says Andrew Ward

A

ll along Senegal’s 530km coast, colourful canoes line beaches that are washed by salt and surf. These pirogue boats are a staple of Senegal’s culture and economy as well as a testament to the difficulties faced by an artisanal fishing industry in a globalised world.

“We face two major challenges,” says Diène Ndiaye, director for industry transformation at the Ministry of Fisheries and the Maritime Economy.

“The first is the weak ‘value creation’ of our production . . . the second is the need to modernise all our processes through investment.”

Fishing is a cornerstone of life in Senegal. The sector contributes only 4 per cent to gross domestic product but employs 17 per cent of the working population. Directly and indirectly, it creates about 600,000 jobs in a country where full-time employmentremains scarce.

Fish also accounts for half of Senegalese people’s animal protein intake, according to the World Bank. The country’s national dish, ceebu jen in the Wolof language or thieboudienne in French, has marinated fish as a main ingredient and is served with flavoured rice and vegetables.

The dominance of artisanal fishermen — who work in teams in canoes or as individuals using net or line to catch sardine or grouper — creates several problems. Such fishing has expanded sixfold in 30 years, according to the World Wide Fund for Nature, and accounts for 80 per cent, or 400,000 tonnes, of total local annual catch, most of it for Senegalese consumption.

However, it is hard to monitor and regulate. Technically, licences are required but this requirement is rarely enforced. The situation contributes to the depletion of fish stocks caused mainly by high-volume trawlers

Capital letter: view from a changing city

Local colour: fishermen’s boats at Soumbedioune market in Dakar. Fish stocks have been hit by foreign trawlers — Bloomberg operating, legally and illegally, in Senegal’s waters.

It also means that little processing, packaging or cold storage takes place in Senegal, so the country misses out on the revenues such activities could provide. “We need to modernise all of our equipment,” Mr Ndiaye says.

Investments in infrastructure and storage facilities for the fishing industry are part of the government’s Plan for an Emerging Senegal (PSE).

National efforts can only achieve so much when an issue transcends borders Some work is under way in co-operation with other regional governments and international organisations including the World Bank, but progress is slow.

Perhaps the biggest threat to fisheries in Senegal comes from outside the country. Illegal fishing is a problem all along the west African coast. The most

damage is caused by large trawlers — mostly foreign, operating under flags of convenience or acting in violation of national maritime sovereignty — which scoop up huge catches in poorly monitored coastal waters.

According to Western Africa’s Missing Fish, a study published by the Overseas Development Institute, Senegal lost $300m in revenues, or 2 per cent of GDP, to illegal fishing in 2012. West Africa as a whole is said to lose $2.3bn in revenues to illegal and illicit fisheries every year.

The issues go beyond fishing. Illegal fisheries “enable other criminal economies, like when fishing vessels are used for trafficking drugs, migrants and weapons, or to carry out acts of terrorism,” says Jorge Moreira da Silva, the OECD director of development co-operation. “This is not an African problem alone. We all bear responsibility for stopping illegal trade at every step of the commodity chain.”

Most of the large fishing vessels operating illegally are from the EU, China and Russia, according to researchers at

Greenpeace and Oceana, the environmental campaign groups. “Many west African countries face challenges monitoring their waters and enforcing laws,” says Lacey Malarky, an analyst with Oceana.

Studies by both groups found that many vessels in west African waters that were either flouting laws and regulations or engaging in dubious behaviour such as “going dark”: turning off the systems that monitor their identity and movements.

“This behaviour may indicate that a vessel is hiding its location and identity to conceal illegal activities like fishing in no-take protected areas or entering another country’s waters without authorisation,” according to Oceana.

To date, Senegal is one of only a handful of African countries to have adopted a national strategy to combat illegal fishing but national efforts can only achieve so much when an issue transcends borders.

“This is a challenge of globalisation,” says Mr Ndiaye. “It is a global fight that must reinforce regional co-operation.”

Flying in or out of Dakar was not, until recently, the best advertisement for Senegal. An account in The New York Times described “the grimy walls, broken seats, stale croissants, struggling air-conditioning and mosquito-infested area” of the old Léopold Sédar Senghor Airport.

All that changed in December with the opening of the $575m Blaise Diagne International Airport, boasting efficient, comfortable facilities and eyepleasing architecture.

Locals gripe about its location 40km east of Dakar at the end of a pricey toll road, compared with the old airport near the city. For business travellers, however, there could be no clearer demonstration of President Macky Sall’s Emerging Senegal Plan to upgrade the country’s economy.

The 45-minute drive from Blaise Diagne to central Dakar (up to twice as long in rush hour) provides a snapshot of progress towards Mr Sall’s goal. A cluster of apartment and office blocks under construction on arid wasteland near the airport are part of a planned new city, Diamniadio, intended to ease pressure on congested Dakar. Work is also under way on an express rail link between the airport and capital.

For now, taxis are the commonest means of reaching Dakar, where the toll road spits out traffic on to gridlocked slip-roads and chaotic roundabouts.

Passengers hang off the back of overcrowded minibuses, misnamed as “car rapides” and famous for the multicoloured murals painted on their sides.

These rickety vehicles, which have provided low-cost communal transportation since the 1970s, are being gradually replaced by modern buses. A step forward for public safety and fuel efficiency, no doubt, but also a sign of modernisation upsetting old traditions.

Occupying the bulging tip of the

Cap-Vert peninsula — the most westerly point in Africa — Dakar was a Portuguese slave-trading hub from the 15th century and later became a dominant city in French West Africa. French remains the official language, with English only patchily spoken.

Colonial influence can be seen in the Parisian-style patisseries that coexist with Senegalese street food. Locals generally wear their Muslim religion lightly and the merging of African, Islamic and European influences makes for a cosmopolitan atmosphere and vibrant cultural scene.

These characteristics, as well as the country’s relative safety, make Dakar a popular place for multinational companies and aid agencies to base regional offices. Diplomats say there is no guarantee that Senegal will always avoid terrorist attacks of the kind made by Islamist militants elsewhere in west Africa.

But there have been none so far and, when western expatriates mingle with locals at night in seafront restaurants, the mood is tolerant and relaxed.

The control tower at the new $575m Blaise Diagne airport, 40km outside Dakar

With the economy growing at an annual 6-7 per cent, Senegal feels, to the fleeting visitor, like a country heading in the right direction.

Yet, affluent expat haunts are unrepresentative of the nation at large. Almost half the population remains in poverty and the high youth unemployment rate is visible in groups of young men milling around Dakar street corners during the working day. With a national median age of just 19, the race is on to create the jobs needed to give Senegalese youth a better future.

As one European diplomat puts it, Senegal “is a pillar of stability in an unstable region”, scoring high grades for governance, democracy and institutions. But he adds: “It’s just not had the full economic reward yet.”

★

10

FINANCIAL TIMES

Thursday 19 April 2018

Investing in Senegal

Senegalese want their share of tourist money Tourism Entrepreneurs and politicians are reaching beyond the traditional French and Belgian markets, says Jennifer O’Mahony

A

li Dieng has come a long way from hawking souvenirs at Dakar’s Marché Kermel, where he gave his sales pitch in English, French and Spanish. The entrepreneur, whose Andaando tour company is popular with American and British tourists, represents a new type of tour operator: local people making their mark in a sector dominated by foreigners.

“Senegalese are waking up, the younger generations, and saying we have to control our own businesses,” he says on the drive to Dakar after a day leading a tour to the Lompoul desert.

There are several obstacles to attracting visitors, he grumbles. These include overpriced hotels and plane tickets, dirty beaches and potholed roads that make travel beyond the capital and coast an uncomfortable experience.

“Everything is expensive here for tourists!” Mr Dieng exclaims. “We need to be more like Morocco.”

Tourism in Senegal is at a crossroads, with hopes that a new airport 50km outside Dakar and a planned airline will boost visitor numbers, while the government implements a policy to clean up the sector and improve regulation.

There is work to be done: tourism has suffered from institutional neglect while its proximity to the 2014-16 Ebola outbreak and bouts of terrorism in neighbouring countries have dented Senegal’s appeal. Yet the country has beautiful colonial-era architecture in the northern coastal city of Saint Louis; zebra, rhino and giraffe in the Fathala nature reserve; a boisterous music scene and nightlife in Dakar; and beach resorts such as Saly and Popenguine near to the new airport.

Tourism minister Mame Mbaye Niang says a publicity push in its main European markets will promote Senegal

as a stable, safe democracy blessed with year-round sunshine and a long coast.

Policy is also focused on encouraging local businessmen such as Mr Dieng, who often struggle to access credit and well-trained staff for their ventures.

“We need to raise the level of service,” Mr Niang says, and “make what we offer to tourists in Senegal attractive and allow all actors in the sector to shine”.

Tourism accounts for CFA Fr500bn ($940m), or 7 per cent of GDP, and is at the heart of President Macky Sall’s Plan for an Emerging Senegal (PSE). The development programme is intended to create jobs and improve infrastructure

Destinations: (clockwise from above) a young lion in the Fathala nature reserve; the coastal city of St Louis; the new airport Minden Pictures; Danita Delimont/Alamy; Seyllou/AFP/Getty Images

with the goal of reaching “middle income” country status by 2035.

Mr Niang is putting in place a code to regulate those working in tourism, provide licences and obtain data on how the sector works. Travel is already visa-free for those coming from the EU, North America and most of Africa.

“We are working to increase the length of time tourists stay here and how much they spend, to reach 3m visitors by 2023,” the minister says. This target is more than double the 1.36m visitors achieved in 2017.

This approach must reflect how tourism has changed since Senegal became a

popular Club Med destination in the 1970s, says Mamadou Marème Diop, Senegal manager for Jumia Travel, a flight and hotel booking website.

“Senegal’s offer to tourists is stuck in the 1990s and has struggled to renew itself and adapt to demand,” Mr Diop says. This is reflected in the demographic most visible in Senegal’s resorts: retired Belgians and French who still book through a traditional travel agent.

Jumia wants to attract local and African tourism, with a model similar to Expedia or Booking.com. This has yet to take off in a nation where few outlets accept credit cards and most people buy

‘We decided we have to open up for Englishspeaking tourists’

flight tickets with cash. “Buying online is still uncommon, either due to a lack of internet access but also because of consumers’habits,”MrDiopsays.

Jumia is addressing these problems with solutions specific to west Africa.

These include the design of websites and apps that do not consume a lot of mobile data, extending the use of mobile money services for payment and building more of a physical presence in traditional travel agencies.

Mr Diop is hopeful that these efforts will work: “Mobile penetration is racing ahead and we are in a phase of educating our market and investing in the medium term.”

Jumia also wants to attract more tourists from other African nations, which currentlyaccountforaquarterofforeign visitors,andespeciallyitsneighbours.

“African incomes have risen considerably, and there are a lot of executives working in neighbouring countries.

African tourism is finding its momentum,” says Mouhamed Deme, an adviser to the tourism minister.

Many flock to Senegal for its religious pilgrimage sites, as home to the heads of severalMuslimgroupsaffiliatedwiththe moderate Sufism practised by most Senegalese. Yet negative perceptions are hard to shift. The Casamance region south of Gambia was once a money-spinner. Its fortunes revived after a ceasefire with separatists but jitters returned in January when 14 men were killed in a gunfight over illegal logging and two Spanishtouristswereallegedlyraped.

Mr Deme shifts in his chair. “Casamance is a part of Senegal where unfortunately westerners and some media focus on small details or sensationalise,” he says. “The government is in constant communication with embassies to calm nerves and explain that Casamance is not in danger and is hardly Syria or Yemen.” Nevertheless, France still “advises caution” to its citizens if they visit the area.

Tourists from France, the former colonial ruler, is not the only market that matters, says Mr Dieng, whose business model is centred on an English-speaking niche in a nation of francophones. “We decided we have to open up for Englishspeaking tourists,” he said, adding proudly:“IhaveanEnglishwebsite.”

Sall must raise school attendance for education reforms to bite Education

Cases of children sent from religious schools to beg highlight need for change, writes Eromo Egbejule Senegal’s president Macky Sall declared in June 2016 that all talibés — the hundreds of thousands of child beggars in the country, including those from neighbouring Guinea, Mali and Guinea-Bissau — must be taken off the streets.

Those forcing them to beg risked a hefty fine or jail, he said.

The high number of youngsters begging is not due to poverty alone. It also occurs because many Muslim families send children to Koranic boarding schools called daaras. Some teachers then send the pupils out to beg, knowing that good Muslims will give unquestioningly, and the money raised goes towards shelter and upkeep.

Mr Sall’s action was welcomed by children’s rights advocates, coming soon after the deaths of several talibés at the hands of abusive marabouts — spiritual guides. A year on, however, and the talibés were back on the streets, most having been handed over to marabouts at transit shelters.

A report by Human Rights Watch last July said: “Despite promises of sanctions by the president . . . not a single [Koranic] teacher was arrested or prosecuted for forcing talibé children to beg during the first year of the programme.”

A disdain for family planning in the conservative and predominantly Muslim country has led to a high birth rate; at least 60 per cent of Senegalese people are aged under 24. In a country where the UN Children’s Fund estimates that 22 per cent of citizens live on less than a dollar a day, Unicef says that more than a third of children aged 5-14 are involved in some form of labour.

Education is free and compulsory up to secondary level but often parents do not send children to school and many drop out after the primary stage. In the north-east and central regions, parents often favour daaras over schools based on French education, or they send boys to daaras and girls to French-style schools for religious reasons.

The state is intent on reform and appears willing to work with outside agencies. In February, the singer

Ready to learn: a student in class Rihanna joined French president Emmanuel Macron for a Global Partnership for Education conference in Dakar. GPE is trying to raise $3.1bn to improve classrooms in 65 countries, including Senegal.

After Mr Sall became president in 2012, he launched the Plan for an Emerging Senegal (PSE) to transform the economy, create jobs and cut poverty. Education is one of its pillars. The intention is to focus on the quality of teachers and increasing attendance.

However, critics say this has yet to take effect and that youths are not developing skillsfor newjobs,shouldtheyarrive.

“PSE is one of [the president’s] biggest visions. He has been on it since he came into power but it is not working”, says Mariéme Jamme, a campaigner for women’s and technology education.

“There is no data to track how much has been spent on education . . . and this is why it is important to have advocacy movements mobilising government and the private sector to make policies favourable to women and girls.

“Hopefully, that meeting with Macron will create mechanisms for funding education well — or maybe it is just a publicity stunt.”

The country’s system is based on that of France, the colonial ruler until 1960.

There have been talks for years about merging elements of French and Arabic education by sending teachers from French-style schools into the daaras.

Pilot schemes have taken place but the

initiative has not yet been implemented, says Maimouna Mbacke, a Dakar consultant with Dalberg, which worked with the United States Agency for International Development for a study on education.

“It is a quite political and sensitive topic,” she says. “In areas where parents prefer to send their children to daaras . . . the government doesn’t want to be disliked. Some kids are not part of any Koranic school and are just on the streets begging. There are individual or community-run programmes trying to integrate them into vocational schools, but there is no nationally co-ordinated programme.”

“The educational system has failed young people in Senegal”, says Ms Jamme. ”There is a big gap between the poor and those who can afford private schools run by the French. I started reading and writing when I was 16 because myfamilycouldnotaffordschool.Africa has failed the children absolutely and we need systematic change to the curriculumeverywhereonthecontinent.”

Speaking at the GPE conference, Jim Yong Kim, president of the World Bank, said: “Advances in digital technology, automation and robotics will change the nature of work and disrupt traditional paths to prosperity. The best investments for developing countries hoping to grow will be in people in greymatter infrastructure and the building blocks of human development: nutrition, healthcare, education and skill-building.”

In 2012, Ms Jamme established a tech hub and network for girls and young women to be fast-tracked into careers in science, technology and mathematics.

They called it Jjiguene, after the word for “woman” in Wolof, the most common language in Senegal.

“Many Senegalese aged 21-27 have no proper jobs because they are unemployable,” Jamme says. “The children learn theories only and creativity is killed at a young age, so they lack 21stcentury skills.”

Ms Jamme believes that the key to taking advantage of Senegal’s demographic boom lies in encouraging private-sector participationanddonorprojects.

“Government cannot do it alone. It needs private sector and movements like I Am the Code [her organisation overseeing Jjiguene],” she says, stressing that private-sector know-how can help modernise teaching in public schools.

“Wehavetodoitforour children’ssake.”