The Senegalese economy faces a sharp decline in foreign investments

After four consecutive years of robust growth—averaging three billion dollars annually—foreign direct investments (FDI) in Senegal plummeted to just 37 million dollars in 2025, according to the latest United Nations Conference on Trade and Development (UNCTAD) report. This dramatic drop raises critical questions: is this the end of a major investment cycle, or a sign of waning investor confidence in the country’s economic policies?

Temporary downturn or structural shift?

The collapse in investment flows is largely cyclical. Major oil and gas projects like Sangomar and Grand Tortue have driven substantial inflows in recent years, but most of these investments have now reached the production phase. While this transition explains part of the decline, Senegal could have attracted significantly more than the 37 million dollars recorded in 2025.

Moubarak Lo, former economic advisor to the Prime Minister and now an independent consultant, emphasizes the need for a more proactive approach: “Senegal has the capacity to consistently attract three to five billion dollars annually in foreign investments. However, this requires an active economic promotion strategy. Unfortunately, the country lacks a dedicated international investment promotion network, unlike many of its regional peers. While roadshows are organized, they are insufficient. Passive waiting is not enough—proactivity is essential. We excel in attracting portfolio investments through government bonds and treasury bills but struggle to replicate this success for direct investments. A fundamental shift in strategy is urgently needed.”

Debt concerns or lack of clarity?

With a public debt exceeding 132% of GDP at the end of 2024, as assessed by the IMF, concerns about Senegal’s financial health might seem justified. However, economists argue that this level of debt does not necessarily deter private investors. Justin Maria, Director of Access Bank France, points out that France successfully attracts private investments despite a public debt of 3.5 trillion euros.

For him, the real issue is the lack of transparency: “Senegal is increasingly perceived as a high-risk destination. Not because of long-term fundamentals—no one has a crystal ball—but due to uncertainty in the short term. Investors are hesitant because they lack clarity on public finances, liquidity conditions, and policy direction.”

Can Senegal regain investor confidence?

Moubarak Lo dismisses the notion of Senegal being labeled a high-risk country and believes the nation can quickly restore its appeal. He notes that Senegal currently has around twenty to thirty major projects in the pipeline. “The key is to approach the world’s top five or six companies for each project and persuade at least one to invest in the country. With focused effort, we could see a recovery this year or, more realistically, by 2027,” he asserts.

While Senegal grapples with this challenge, other West African nations have seen their FDI inflows rise. For instance, Guinea attracted over 7.7 billion dollars in 2025, according to UNCTAD data.