Document(s) 6 de 14

Introduction

The economic history of independent Senegal can be divided into two main characteristic periods: spanning the 1960s and 1970s: the first one was dominated by sustained interventionism in the economic sector; the second one, which started in the early 1980s, has been characterized by policies of liberalization and private sector development under the aegis of the World Bank and IMF. The transition between the two was marked not only by a change in policies and economic strategies, but also by a replacement of a good number of the political ruling elites and by a steady rise of a new breed of economic operators (Diop and Diouf, 1990).

Senegal is one of the first developing countries to have experimented with the structural adjustment programmes initiated by the World Bank and IMF in the early 1970s (Rodrick, 1992). With the exception of World Bank publications, there exists little systematic research on the conditions of implementation of such reforms, though. Yet, besides being increasingly influenced by the institutional framework, structural adjustment affects a country’s social and political environment. It is therefore not easy to understand the episodes of economic policy reforms without a systematic analysis of institutional aspects which, as everyone knows, condition a mastery of such policies and the adjustment of economic players to the reform process. In this context one understands better why the role of the state and other social players has become once again one of the most important discussion topics on strategies for the industrialization and international integration of Sub-Saharan Africa.

The aim of this chapter is to bring to the fore the historical context in which economic policies and industrial strategies have been carried out in Senegal since independence, the institutional environment and the trade and industry policy reforms elaboration process, the relationship between the social forces and the institutions that inspired the design of such reforms, as well as the reaction of social and economic players to the implemented measures.

After an overview of the various phases of the industrialization of Senegal and of the strategies used to achieve it, the chapter analyzes the institutional environment of trade and industry policies and assesses their impact on Senegal’s economic performance. The last part of it talks about the prospects and conditions of implementing a successful trade and industry policy in Senegal.

Economic Policies and Industrial Performance: Historical Landmarks

In Senegal, the phases of state formation, the turning points of political and economic life have been for a long time closely linked with groundnut production performance. That is why, by abruptly putting an end to the “socialist” leanings of the first leaders of independent Senegal, subjecting the Senegalese economy to structural adjustment, also coincided with a time when the model of economic regulation essentially relying on exploiting of this groundnut industry had run out of steam.

From the various episodes of the structural adjustment programme implementation and the social players’ response to the proposed reforms, there transpires an attempt to overhaul a political and economic management model adopted soon after independence, with a view to submitting the national economy to new organizational and functioning standards. In order to better understand the underpinnings of such changes, it is essential to shed light on the process of industrialization of the Senegalese economy.

The Trade and Industry Model during the Colonial Period

Located at the crossroads of the trade routes linking Africa, America, Europe and, through the Maghreb, the Arab world, Senegal aroused great interest for the outside world very early. Brought by the trans-Saharan caravans, the Islamic influence penetrated the region in the 13th century. Two centuries later, it was the turn of Portuguese navigators to reach the Senegalese coast. They were followed by the British and the French who set up their first trading posts in the first half of the 17th century. Since then, Senegal remained a bridgehead first, for the triangular trade, and then for the French colonial expansion in Sub-Saharan Africa, which completely shaped Senegals’ mode of economic development.

Thus, the slave trade, the trading post of which was at Gorée, was replaced by the gum arabic trade along River Senegal with Saint-Louis as the main trading post. However, after brief experiments in growing cotton and indigo, groundnuts stood out as the most dominant crop, thus establishing Dakar’s dominant economic role (Daffé, 1994). The passage from a slave trade-based economy to that based on the groundnut as a cash crop was going to deeply influence the subsequent economic development of Senegal.

Built between 1863 and 1898, the port of Dakar established its pre-eminence at the time when the town was promoted to the rank of administrative capital of French West Africa. As the first port of call for European ships en route to South America, Dakar port was also destined to serve, like those of Gorée and Rufisque, as a warehouse between Europe and the other ports of call in Africa. Most of trade companies had their main African headquarters in Dakar. With Dakar playing such a prominent role, one can understand why Senegal got ahead of other French speaking territories in Africa by several decades from the point of view of industrial installations.

The captive trade and private credit system linking manufacturers and metropolitan suppliers to merchants and dealers based in Senegal were progressively replaced by monetary exchanges whose popularisation was due to the extension of groundnut growing, to the inflow of the first public investments needed for the development of transport infrastructure and to timid industrialization attempts (Daffé, 1994).

Moreover, the expansion of the French colonial empire which, in Senegal, translated into an unprecedented increase in groundnut production towards the end of the 19th century, demanded a widening of the activity domain and possibilities of intervention of the banking system. Having replaced the Bank of Senegal (created in 1853), the West African Bank (BAO — Banque de l’Afrique Occidentale) was not only vested with the right of issuance for the whole of French West Africa, but it equally functioned as a deposit-cum-business bank (Suret-Canale, 1964). This change was a response, at the level of the banking system organization, to the rise of America’s industrial power at the end of the 19th century and to the tight competition that ensued at the international level. The liberalism that had characterized trade relations between colonial powers and their empires was to be replaced by a type of protectionism that guaranteed to each metropolis preferential access to markets in the territories under its domination (Rocheteau, 1982).

The exchange economy and, before it, the goods exchange trade thus put Senegal in a state of total dependence vis-à-vis its metropolis. The economic circuit set up looked like a mere extension of that in France. The venal nature of such a system, and the dissociation of production from the commerce it entailed were not conducive either to the integration of various activity sectors or to national capital accumulation.

With the colonial administration being definitely established, relations between France and French West Africa in general and with the colony of Senegal in particular were governed by what was called the “colonial pact,” which was a clever balance between the interests of metropolitan manufacturers and those of trade companies established in the colonies. Suret-Canale (1964) and Rocheteau (1982) have aptly described how such a mechanism managed to reconcile the divergent interests of commercial firms among these, on the one hand, and between the same firms and metropolitan manufacturers, on the other. As far as these firms are concerned, two groups of interest can be distinguished: on the one hand, the marseillaises (so called because they originated from the city of Marseilles) and, on the other hand, the Bordelaises (so-called because they originated from Bordeaux) and other firms. Connected with the manufacturers at the oil factory in Marseilles, the first group, headed by the French Company for West Africa (CFAO-Compagnie Française de l’Afrique Occidentale), was hostile to trade protectionism in the colonies, which it considered as an obstacle to the free supply of goods by the metropolitan industry.¹

The second group, mainly composed of commercial firms from Bordeaux, was linked to branches of the metropolitan industry that exported textiles and cars especially. In search of outlets, this group was naturally favourable to trade protection of colonial markets. Colonial administration, which closely followed the trends in the prices of colonial products and tax and customs revenues, became a natural ally of the group.

However, in spite of their divergent interests, the two groups had in common their hostility towards the industrialization of colonies. By guaranteeing the selling, at high prices, of manufactured goods on colonial markets, while at the same time allowing the metropolitan industry to get supplies from the same markets at low prices, the colonial pact thus constituted a barrier to the development of industry in the colonies. Suret-Canale (1964) has shown how the collusion between manufacturers who supplied goods to the metropolis and commercial companies allowed the former to get a foothold on restricted but regular and very profitable trade outlets, and the latter to maintain a de facto monopoly that guaranteed them handsome profit margins. Furthermore, there was a concentration of commercial activities de facto controlled by three big firms sharing among them a quarter of investments and 50 to 90 percent of French West Africa’s imports and exports². One can thus understand why, until World War II, the investments made in the French African territories remained so low compared to those made in the Portuguese and British territories³. In addition, of the rare capital flow to French West Africa, only a very small proportion was invested in industry: the bulk of investments was destined for trade, real estate and, regarding public investment, for transport infrastructure.⁴

The first important industrial activities started only as an aftermath of World War II, when the shortage that resulted from the maritime blockade created the need for new consumer industries oriented towards the local market, while the activity of the first industries set up in 1920s, oil factories in particular, was strongly stimulated (NguyenVan Chi-Bonnardel, 1978).

From the end of World War II to independence, the process of development and diversification of Senegal’s industrial apparatus never stopped. The socio-economic concerns in France’s colonial politics led to the adoption of infrastructure development plans the implementation of which was entrusted to a special French government fund, namely the Investment Fund for the Development of Overseas Territories (FIDES — Fonds D’investissement pour le Développement Economique et Social des Territories D’outre-mer). At the same time, there was an increase in the flow of private investments in trade and industry. As a result, almost the whole industrial apparatus in Senegal was set up 1955. It underwent very few changes during the entire decade that followed independence. Activities were little integrated because they essentially rested on import substitution industries that relied on the sole criterion of profitability. The industrial sector was rather directly pegged either to export agricultural produce, of which it was just an extension, or to the final consumption.

Even though most of the efforts to industrialize the colonial economy were done by metropolitan manufacturers, this industrialization was not done without resistance. As for the big colonial trade, it is only in the mid-fifties that it really started to become important, especially in the cotton industry. This period indeed corresponded to the end of the “colonial pact” and, with the suppression of authorization required before setting up industries, to a certain amount of the trade and industry policy liberalization for colonies. The French government’s strategy aimed both at adapting and strengthening dependence links between the colonies and the metropolitan economy. Trade interdependence was effected through a system of reciprocal preferences guaranteeing the selling of products from colonies to the metropolis as well as support for farm gate prices higher than world market ones (Rocheteau, 1982).

At the monetary level, the adaptation consisted in creating the franc for the French Community of Africa (CFA — Communauté Française d’Afrique) in 1945 and in instituting unlimited convertibility of this CFA franc vis-à-vis the metropolitan franc at a fixed exchange rate⁵; it also consisted in total free money circulation within the Franc area. Such a system which, even today, constitutes the pivotal element of economic and political relations with France and its former colonies in Sub-Saharan Africa, has proven to be remarkably stable.

Naturally, neither the “colonial pact” nor the readjustments brought to it on the eve of independence worked in favour of the promotion of Senegalese economic operators. On the contrary, all the trade policies and strategies were meant to systematically evict them from the business community and decision-making centres (Marfaing and Sow, 1998). With the big crisis of 1929–30, it was first the massive arrival of economic operators of Lebanese origin that started to eat into the economic space which national independent traders had managed to carve for themselves during World War I. Some of these gave up their own businesses to be employed by the big colonial firms. Others were reduced to engaging in contraband trade, particularly in areas bordering British (Gambia) and Portuguese (Guinea-Bissau) territories.

With World War II, some Senegalese economic operators were given an opportunity to widen their field of action by establishing, for their imports, direct contacts with representatives of French firms. To other operators, the shortage of merchandise and of means of transport and technical skills owing to the severance of relations with the metropolis, created business opportunities in urban centres. However, those operators had only limited contact with the big French commercial firms which could serve as their only intermediaries for their transactions with Europe, as they themselves were Lebanese (Marfaing and Sow, 1998). With the return to economic liberalism, which was heralded by the end of a war economy, there was a massive withdrawal of French economic operators from the interior of the country. They gave up general trade to devote their time to importing heavy equipment, goods and to highly protected light industry. At the same time as the French interest groups were withdrawing, there started a policy of “Senegalisation,” followed by that of putting the groundnut circuit under state control. The two policies fostered the emergence of Senegalese operators on the economic scene. But even in this context, the Lebanese operators were more efficient and swift in taking over areas of activities abandoned by French firms. That period was even put to better use by certain big Lebanese businesses, which tried to diversify businesses, notably in the food industry.

It is only in the transport sector that Senegalese operators in the end managed to achieve a lasting breakthrough. Taking advantage of the shortage of vehicles and workforce during World War II, many of them indeed turned to this sector. This change of sector increased soon after independence and continued until all agricultural produce marketing circuits were brought under state control.

Economic Policies and Industrial Strategies of the Post-colonial Government

The Rampant Interventionism of the 1960s and 1970s

The Global Economic Project of the Post-colonial Government

More than changes in the political life inside France, it is a number of events that took place in the mid-fifties (military defeats in Indochina and Algeria, the anti-colonialist conference in Bandung) that explain the abrupt change in France’s development policy towards its colonies. These events called for a different policy that would allow France to safeguard its interests and involve the African elites more in the management of political and economic power. But the aspirations of the African populations at independence influenced the restructuring of the colonial system.

In Senegal, it is under the leadership of Léopold Sédar Senghor that, since independence, the ruling class tried to set up political, administrative and economic structures capable of taking over from the colonial system. Guided by the doctrine of “the African way of socialism,” it quickly took control of the country whose economy was on the decline.

The option taken by the first rulers of Senegal for state capitalism was permanent, even though strategies for its implementation varied with time (Rocheteau 1982). Soon after independence, the state was perceived as a foreground player in economic life. Asserted in the first four-year plan (1961–64), this general orientation was regularly reaffirmed in all the next three plans. It was also in the first plan that the role of “engine” which the new state was going to play in the process of industrialization was stated. State intervention on the economic scene in general, and in the industrial sector in particular, remained, in keeping with the blueprint drawn in the first four-year plan⁶.

Two phases can be identified in the economic policies and development strategies of the two decades after independence. The first, the 1960s, was marked by the setting up of state institutions and agriculture intervention structures. The second, from 1970 to 1979, is a phase which some authors like Berthélemy et al. (1996) have labelled the “interventionist U-turn” in favour of industrialization.

The 1960s: the State as Promoter of Agricultural Development

In their search for accelerated economic and social development, the rulers of the newly independent state placed emphasis first on increasing and diversifying agricultural production. A large programme to control, manage and support farming activities and the rural population was launched. It had a double objective: to replace the foreign private sector by the State in the groundnut circuit and to modernize agriculture and increase output by providing seeds, fertilizers and agricultural implements on credit⁷.

After the dismantling of French West Africa, the break-up of the Mali Federation⁸ and the severing of trade links with Guinea, the Senegalese industrial market abruptly fell from twenty to only three and a half million consumers (Berthélemy et al., 1996). The trade and industry policies set up in various countries refocused on nationalist considerations rather than on demands for regional integration: each country set out to set up its own consumer industries that competed with those in Senegal. The signing of a customs agreement between the member States of the former Federation in 1959, which later changed into a customs union, the Customs Union of West African States (UDEAO — Union Douanière des États de l’Afrique de Ouest), and then into an economic community, the Economic Community of West Africa, (CEAO — Communauté Économique de l’Afrique de l’Ouest), could not prevent the various economies to turn on themselves.

In this first phase, Senegal’s industrial policy limited itself to encouraging diversification of food-processing industries with a view to increasing the value of local resources, and to working towards a better integration of the economy (Rocheteau, 1982). A few food-processing industries were started (essentially fish processing), but on too small a scale to worry the French firms already operational in this sector. Although rare, the attempts to strengthen the farming and industrial sectors were more ambitious⁹. However, these few industrial projects were not meant to go against French firms’ interests. The import-export trade, which in the meantime had fallen into the hands of Lebanese-origin operators, continued to prosper as in the past. The national economic operators, they were kept at the periphery of economic power.

The state’s intervention in economic life and the strong presence of foreign interest groups in the key sectors of the industry, finance and trade thus blocked the emergence of a dynamic national private sector. The only domain in which the new state took initiatives to promote national economic operators was retail and distribution. These initiatives consisted in extending and supporting formulas, whose implementation started towards the end of the 1950s, according to which some former colonial trade companies accepted to take care of management and importation for Senegalese retail traders’ co-operatives (Rocheteau, 1982)¹⁰.

This experimental phase of interventionism in the farming sector ended at the end of the 1960s in a climate of discontent and disillusionment with regard to the hopes raised by independence (Berthélemy et al., 1996). The mismanagement and ineffectiveness of the structures designed to intervene in and control farming activities, the withdrawal of the French support for groundnut farming (which entailed a 25 percent reduction of its price) and the aftermath of the first signs of drought on groundnut production led to an increasing loss of interest in groundnut farming on the part of farmers.

The economic slump in the countryside provoked a rural exodus. This strained urban development by exerting pressure on the supply of public amenities and on the urban labour market. Unemployment and precarious living conditions became the order of the day; so did claims and protests from an ever-increasing urban youth population. The discontent led to social unrest in 1968 and 1969¹¹. As we shall see later, these events were a watershed in the political and economic history of Senegal, as the solution to the problems raised entailed speeding up growth. But this would only be possible through a change of strategy in favour of voluntary participation and a type of interventionism more oriented towards industrialization.

The 1970s: the Interventionist Turning Point in Favour of Industrialization

Senegal’s economic policy immediately after independence was founded on a double challenge: on the one hand, to maintain the former hegemonic positions of the Senegalese industry over the whole of West-Africa and, on the other hand, for the Senegalese economy to continue attracting foreign private capital and investments. It is this double challenge based on the performance and promising prospects of the Senegalese economy that explains the Government’s choice to allocate the bulk of public investments to agricultural development. However, experience has shown that such a choice, as well the hypotheses on which it rested, stemmed from too much optimism on the part of the decision-makers.

Changing the interventionist strategy in favour of industrialization at the end of the 1960s was not a consequence of the sole failure of the experience by the state in running the farming sector; it was also due to the increasing difficulties which the Senegalese industry faced, following the shrinking of its “natural” market and the progressive industrialization of other countries in the sub-region. The massive repatriation of former colonial public servants deprived the domestic market of its most solvent section of the population¹². In the face of the production overcapacity resulting from such a situation, companies (mostly of French origin) reacted either by not renewing their equipment or by relocating production units in countries with fast-growing industrialization such as Côte d’Ivoire and Cameroon.

In contrast, in the face of severe criticisms levelled at the government in the context of structural adjustment programmes for intervention in the industrialization process, it is interesting to recall the role which the World Bank and other sponsors played in the reorientation of economic policy in Senegal and in other developing countries¹³. The change of course was directly inspired by a doctrine defined by MacNamara in 1971. Since the farming sector was not capable of meeting the increasing demand for jobs, it was deemed vital, in the framework of the new approach, to develop industrialization and adapt the methods of intervention in this area. But it was also specified that such rapid industrialization must be backed by production of export goods taking into account existing comparative advantages.

It is on the basis of the reorientation that Senegal opted, in the early 1970s, for outside-oriented industrialization. Nonetheless, the negative reaction which this industrialization engendered in the community of French employers forced the Senegalese government to adopt a less clear but more pragmatic approach. For instance, while opening access to the advantages offered by the new code of investments and export subsidies to the industries producing goods for the West African market, the government maintained and strengthened the measures protecting these advantages. Until the end of the 1980s, this type of compromise remained a constant in the trade policy reforms undertaken in Senegal. The image of the World Bank as a “trouble-maker” in the eyes of a good number of French manufacturers in former French colonies, especially Senegal, can thus be traced to that period.

The interventionist turning point in favour of industrialization began with the creation, in 1968, of the National Company for Industrial Research and Development (SONEPI — Société Nationale d’Étude and Promotion Industrielle)¹⁴. The setting up of SONEPI was followed by that of the National Company for Development Studies (SODED — Société Nationale d’Études pour le Développement) whose role was to provide information and technical advice on the social and economic problems faced by officials from both the public and para-public sectors. The aim behind the setting up of such structures went beyond the need to support the administration in its development endeavour, though; it also consisted in strengthening the government’s negotiating powers in its dealings with foreign financial and industrial institutions.

Taking reference from Galbraith’s theory on the power of “techno-structure” in the modern enterprise (Rocheteau, 1982), the government decided to take a three-pronged action: a progressive senegalisation of executive positions in the subsidiaries of foreign firms, the training of new leaders capable of being at the same time administrators and managers at an international level, and the development of a breed of businessmen likely to compete with foreign entrepreneurs. Contrary to the previous situation where the government bowed to the will of and conditions imposed by foreign partners, it took the initiative to invite international investments, decided on industrial projects, and looked for and selected foreign investors. Industry creation became a political act that necessitated the collaboration of both the administrative services and private managers. It also made investment a state affair. Nonetheless, such change required prior setting up of an appropriate institutional framework¹⁵. To the projects started in the first plan and linked to the agro-industry sector, the third and fourth plans added three new forms of intervention in the industrial sector: i) the setting up of production units until then belonging to developed countries, such as a ship repairing yard built in 1971; ii) support for the diversification of industrial activities in the sectors where private enterprise was dominant, such as the tourist industry; iii) the extension of the investment programme to the areas of activities hitherto solely in the hands of the private sector, in exchange for a revision of the public service concession system¹⁶.

Taking advantage of the massive influx of capital in need of reinvestment and of the favourable economic situation owing to better prices for groundnuts and phosphate, the fourth plan (1973–1977) served as an opportunity for the government to launch a vast and ambitious investment programme. Ignoring the industrialization efforts underway in the other countries of the sub-region, the country’s leaders wanted to restore and strengthen the former hegemonic position of the Senegalese industry on the market of the former French West Africa. Following the international economic crisis of the early 1970s, Senegal widened the circle of financial and industrial partners. Such diversification of financing sources and industrial partnership gave to the public authorities greater freedom in the choice of levels and types of intervention. From 37 billion Francs in the first plan, achieved investments rose to 166 billion Francs in the fourth (Berthélemy et al. 1996). Similarly, the proportion of investments devoted to industry and energy rose to 28 percent, while it was almost non-existent in the first two plans.

By deciding not to intervene any further in the processing industries, the government designed a new set of projects that aimed to provide the country with a heavy industry notably in the mineral and petrochemical areas. However, due to the complexity of institutional and technical problems raised by these projects, as well as the very high cost of developing them, their implementation required the government to increase its own funding capabilities. This was the main reason for the decision to extend the public authorities’ control over a bigger number of industrial activities.

It all started in the oil and mining industry sectors. Through the creation and acquisition of industrial units, the government progressively extended its control over as varied sectors as food processing industries, chemical, and textile industries, oil refining and banking. The number of para-public companies created between 1970 and 1975 was thus estimated at 70 (Berthélemy et al. 1996).

That said, the Senegalese decision-makers of the 1960s and 1970s were as much explicit about the objectives and strategies for the country’s industrial development as they remained relatively discreet about the corresponding trade policies. Development programmes nonetheless contained a number of objectives and measures pertaining to these policies¹⁷. Nevertheless, even though the option of diversifying exports was asserted in the early 1970s, there had to come the fifth plan (1977–80) to see the trade openness become a major axis for Senegal’s trading policy. In addition to the increased measures designed to promote and diversify exports, this plan was actually an opportunity to standardize customs tariffs, while at the same time non-tariff-related protection measures were made more selective.

Created in 1974, the industrial free trade area in Dakar was the first initiative aimed at encouraging export-oriented industrial investments¹⁸. Its creation was followed by numerous other institutions destined to give support to export companies in the form of advice and information (one of them being the Senegalese Centre for Foreign Trade) or in the form of insurance and favourable credit conditions.

However, even though the different measures were oriented towards a growth strategy relying on foreign trade, they still remained within the limits of a relatively protectionist political framework. As a matter of fact, from 1960 to 1979, import duties and taxes varied about 20 percent of the value of imports, which was not a negligible rate if one considered the relative share of imports in the resources of Senegal’s economy. In the face of the reduction of French public aid, the Senegalese Government resorted more and more to customs receipts to cater for its expenditure. On the other side, to escape such tariff protection that had become increasingly complex and selective, numerous companies sought to benefit from exemptions and special the advantages linked either to the code of investments or to special conventions¹⁹. In 1977, more than 30 companies benefited from this type of convention. The multiplication of such exceptional measures contributed to rendering the protection system even more complex and opaque.

As government appointed executives newly graduated from universities and public service training institutes to head public and para-public corporations, its policy also sought to promote a new breed of Senegalese business people. But the selection was not done on the basis of efficiency and economic management criteria. Instead, bank loans and fiscal advantages were granted based on “clientelism” (Diop and Diouf, 1999)²⁰. It was in this context that some Senegalese private operators, who were used to a more open commercial and economic environment, chose, after independence, to run their businesses through a contraband system that got round protectionist barriers. This change of strategy coincided with the decline in groundnut production and the call from the religious leaders of the Mouride brotherhood urging their members to engage in activities that were more lucrative. Rural exodus and migratory waves which followed that call provoked the explosion of the informal sector. It was then that big Senegalese business people emerged who, owning huge capital often of dubious origin, invested in immediate profitability sectors²¹.

The poor performance of the Senegalese economy in the 1960s and 1970s as regards productivity and competitiveness worsened the problem, which the industrial sector faced soon after independence: that of finding markets for its production. Moreover, with the industrial development unable to rely any longer either on levies from an agricultural sector hard hit by drought, or on foreign public aid in constant decline, it became impossible to find an alternative to a groundnut economy out of steam (Duruflé, 1994).

The 1980s and 1990s:
The Economic Crisis, Institutional Changes and Structural Adjustment

Origins of the Crisis

The crisis in which the Senegalese economy stayed for a long time at the end of the 1970s was already noticeable with the break in the trend in groundnut production from the second half of the 1960s to the mid-1970s. At the same time, consequences of the closure of the West African market could be noticed in the domestic industry. The decline in groundnut production and the ensuing financial difficulties led to a slowing down of GDP growth. This fell from an annual rate of 2.5 percent between 1960 and 1970 to that of 1.8 percent between 1975 and 1980. Given the high rate of population growth, the per capita GDP fell to -1 percent.

The economic imbalance was compounded by a trend in consumer expenditure that was not commensurate with the resources of the economy. Supported by the inflow of foreign financial resources of the early 1970s and by the export revenue boom that followed on the heels of this inflow, the GDP proportion of consumer expenses rose to more than 100 percent in 1979. But its decline in elasticity that was to follow had disastrous effects on domestic savings, the GDP proportion of which plunged to about -7 percent in 1981. The fall in domestic investment could not be made up for by greater recourse to external sources of funding, since these were drying up.

Senegal’s foreign accounts depreciated at an alarming rate too. Taking the place of a slowing down domestic production, imports kept increasing while export revenue fluctuated according to climatic vagaries and increasingly unstable prices on international markets. From an average of 0.1 percent between 1960 and 1970, the growth rate of export goods and non-factor services rose to 6 percent between 1970 and 1975, before becoming negative between 1975 and 1980. No surprise then that the current account deficit grew larger by rising from 10.4 percent of GDP in 1970 to almost 26 percent in 1981.

The country’s budget deficit followed a similar trend by rising from 0.6 percent of GDP in 1970 to 12.5 percent in 1981. The deterioration of public finances increased as the debt service became a necessary component of budget expenditure, while at the same time foreign borrowing had become the preference source for financing Senegal’s domestic and external deficits (Boye, 1992).

The deterioration of the country’s exchange rates and the frequency of occurrence of the shocks that had to do with climatic factors, oil crises and an international environment, were undoubtedly linked to the increasingly mediocre performance of the Senegalese economy since the end of the 1970s. However, in spite of the option taken in favour of a type of industrialisation aimed at diversifying exports, this poor performance was also the result of an absence of a strategy for external competitiveness.

The leaders of the newly independent state were mistaken not only in opting for import substitution industrialization — no alternative strategy was possible then — but also in deluding themselves that industrialization projects in themselves were enough to make of the manufacturing sector the main source of export diversification, without explicit strategic measures (Mkandawire and Soludo, 1999).

Nevertheless, from the possible explanations for the crisis of the Senegalese economy one cannot exclude the behaviour, on the part of some social groups, of a predatory nature in the pursuit of unearned income (Berthélemy et al. 1996), the ambivalence and contradictions of state policies (Mkandawire and Soludo, 1999), and the wrong choices or mismanagement by a government that led a life not commensurate with own resources.

Structural Adjustment at the Backdrop of Institutional Changes

The gravity of the crisis in the Senegalese economy at the end of the 1970s led to deep changes in the institutional mechanisms of decision-making and economy management. Before the Senegalese economy underwent structural adjustment, the first “therapy” was to make the government admit that the previous economic policies were inappropriate and inefficient, and that these had indeed been responsible for the genesis and depth of the crisis. The second one brought it to accept reforms that could rectify the deficiencies. A voluntarist policy oriented towards the strengthening of development foundations was thus replaced with a set of “recipes” for managing economic imbalances.

Since 1979, three generations of structural adjustment programmes that came directly from the offices of IMF and the World Bank in Washington replaced one another, all with the objective of rectifying macro-economic imbalances and re-launching the growth of the economy. However, with a close look at the succession of the reforms implemented, one will be struck by the correspondence between the events linked to those reforms and the cycle of presidential and legislative elections in Senegal. It can actually be observed that each one of the elections in 1983, 1988 and 1993 put an end to one adjustment programme while ushering in a more severe one.

The 1980–84 Economic and Financial Recovery Plan was, after the short-lived stabilization plan of 1979–80, the first adjustment programme of the Senegalese economy. The episodes of its implementation, as well as the ins and outs of the accords signed with the Bretton Woods institutions, were largely written about by the World Bank (Banque Mondiale 1987, 1989, 1993) and Berg (1990). As the objectives set for those reforms were not achieved, neither the extended facility accord signed with the IMF, nor the programme concluded with the World Bank when the first structural adjustment loan was granted were implemented to the full. The 1983 elections created a context of uncontrolled overspending in the management of public expenditure the deficit of which reached a record level of 28 percent of GDP.

However, soon after elections, the Government took vigorous action to cut down expenses, which thus allowed the resumption of talks with international financial institutions. This resumption took place on the occasion of the first meeting of the Advisory Group for Senegal in December 1984 during which a Medium and Long-Term Structural Adjustment Plan (PAMLT — Plan d’Ajustement Structurel à Moyen et Long Terme) was designed (Banque Mondiale, 1987).

Planned to cover the 1985–92 period, this latest programme was not implemented to completion either, even though its implementation was better carried out than that of its predecessors. Still, it was characterized by a weak grasp of the constraints, objectives and urgency of stabilization measures, despite the important financial contribution that was put into it. Shortly after the launch of the PAMLT, the Government’s will eroded as the reform programme became harder and its implementation met with stiff resistance from “above” (Diop and Diouf, 1990). This resistance came, for instance, from certain administrative circles — like that of the customs — which were hostile to World Bank recommendations (Berg 1990). Nevertheless, in the end it was the 1988 post-elections unrest and the violence which arose from the border conflict with Mauritania in 1989 that got the better of PAMLT for good.

Neither the political relaxation moves which followed those events (Diop and Diouf, 1999), nor the attempts to resume economic policy talks with multilateral institutions succeeded in relaunching the reform process suspended in 1991. And with the February 1993 presidential and legislative elections approaching, the implementation of the remaining set of measures was postponed for good. Replacing the “emergency plan” adopted immediately after these elections, the CFA franc devaluation in 1994 — which we shall talk about further below — became the starting point of the last wave of structural adjustment policies implemented in Senegal.

The Senegalese Industry: Its Trends and Current Characteristics

The current state of the Senegalese industry would make one believe that the country has never benefited from the historical advance, which it enjoyed in the industrial sector compared to other African countries. In spite of the shrinking of its markets following the dismantling of French West Africa and industrialization efforts in other countries, the Senegalese industry continued, until the mid-seventies, to record relatively strong growth. As the World Bank (Banque Mondiale, 1992) itself recognized, this sustained dynamism of the industrial sector rested mainly on considerable investments made by the country to modernize, diversify and promote old and new import, substitution or export industries. However, in 1975, the Senegalese industry entered a long decline phase marked by a sharp slow-down of growth that was going to develop into a recession in the early 1980s. From 100 in 1976, the industrial production index indeed rose to 103.3 in 1982, before falling down to 96.3 in 1986 (Banque Mondiale, 1992).

The contribution of the secondary sector to GDP (in current value) which was 11.5 percent in 1960 and 15.4 percent in 1980 is currently around 22 percent, against 24 percent, 19 percent and 18 percent, respectively, in the primary sector. However, in view of the weight of the energy, housing and public works sub-sectors, and of the development which the informal sector (also called “other industries”) has experienced since the beginning of the 1980s, the share of the manufacturing industry in the growth of the secondary sector appears extremely weak, if not nil.

As we shall see later, the New Industrial Policy, which was designed to reinvigorate the Senegalese industry, had rather a recessionary impact (Latreille and Varoudakis, 1996) both on production and industrial employment, while its expected effect on competitiveness and diversification of manufacture exports did not materialize at all.

Forced to give up its driving force role and to withdraw from various industrial activities, the government left whole patches of the industrial fabric to fall in ruin. From 10 percent in the 1960s, the share of the Senegalese manufacturing industry has reached the ceiling of only 14 percent since the beginning of 1990s.

In the last industrial sector census (République du Sénégal/PNUD, 1997), the number of industrial firms active in Senegal between 1992 and 1995 was estimated at a little more than 500. In 1995, the 300 firms for which data could be obtained offered permanent employment to 27,000 people and to 18,000 seasonal workers. Their turnover was CFAF 920 billion, one third of which was from exports. Measured by the amount of gross fixed assets, the realized investments were CFA 1,120 billion.

With 41 percent of permanent employment, 74 percent of seasonal employment and 42 percent of the turnover of the overall industrial sector, the food industry constitutes the most important sub-sector. It is followed by the chemical industry and the “water-energy” sub-sector. In terms of realized investments, this sub-sector tops the Senegalese industry with 34 percent of fixed assets. This is proof of the importance in the Senegalese economy of SENELEC (the national electricity company) and SONEES (the national water company).

Despite relatively old industrialization, Senegal’s industrial production is little diversified. Industrialization is principally concentrated in the Dakar area, which in 1995 alone, accounted for nearly 90 percent of the companies and three quarters of permanent employment and turnover.

Before being largely stripped by the recent privatisations, public corporations had for a long time enjoyed a quasi-monopoly in strategic sectors such as electricity distribution, water and telecommunications. They continue to play an important role in industrial activity, investment and employment. According to the World Bank (Banque Mondiale, 1994), before the first privatisation programme in 1987, the public sector counted 66 national corporations or those with private minority interest. Because of this, this sector represented 29 percent of investment and 17 percent of employment, but only 7 percent of GDP. In 1995, shortly before the second wave of privatisations, public corporations still employed one third of industry workers and contributed half of the turnover and nearly three quarters of exports (République du Sénégal/PNUD, 1997).

Unlike the public sector, the private sector is of a heterogeneous nature in terms of type of activity, age and size of companies. In addition to a small number of big industries set up before or during the first years of independence, industries which were controlled either by foreign interests or by the State, there are countless numbers of informal enterprises. According to the last industrial sector census (République du Sénégal/PNUD, 1997), while the big industry brought together hardly 10 percent of enterprises in business between 1992 and 1995, it however represented 70 percent of investments and jobs and 75 percent of the turnover of the entire industrial sector. Although the small industry accounted for 60 percent of the enterprises identified during the census, it nevertheless accounted for only 13 percent of jobs and 8 percent of the turnover.

Moreover, studies of the Senegalese private sector, such as that by the World Bank (Banque Mondiale, 1994) or that by Qualmann (1995), show that out of the ten biggest enterprises in business in Senegal in 1991, five were controlled by private foreign capital at more than 50 percent, against only three companies in which the government held majority interest and just one controlled by private Senegalese individuals²². Another source (Pigato et al. 1997) shows that of the 22 biggest industrial enterprises in the country, 13 were entirely controlled by foreign interests, against only five controlled by private Senegalese interests. Although industrial groups formed by private Senegalese individuals or linked to religious brotherhoods (especially the Mourides brotherhood) have been set up since the early 1980s, foreign interests still head the most powerful and oldest of the groups.

The Socio-Political Context and Policy Choice Institutional Capacities

In the preceding sections we have been able to reconstruct the paths followed by the Senegalese government, the conditions under which Senegal underwent structural adjustment of its economy, the major episodes of the implemented reforms, as well as some results achieved in this respect. It is now time to draw the lessons relating to the role of the public authorities and other economic and social players in the structural adjustment process and, especially, in trade and industry policy reforms. The specificity of the “Senegalese case” lies in that the context in which the first programmes of structural adjustment and economy liberalization occurred was marked by a renewal of the ruling class following Senghor’s departure and Diouf’s arrival as Head of State.

The Socio-political Context

The Colonial Heritage

The current political life in Senegal originates from the old administrative and political management traditions of the colonial era. From the beginning, Senegal was indeed governed through a “direct administration” system, following the same rules as the metropolitan territory. Apart from exercising its authority at all levels, the colonial government had the mandate not only to govern the territory but also to levy taxes, administer the judiciary and protect France’s interests which, as we have seen, were the same as those of trading firms and metropolitan industries. This protection was even more necessary since the network that set up these firms inside the territory often served as an efficient intermediary for the administrative and political control of populations (Rocheteau, 1982).

Unlike British colonialism, the French colonial system did not want to allow traditional chiefs to keep their traditional prerogatives. All over the colonial territory their sovereignty was purely and simply abolished and replaced with that of the colonial administration (Suret-Canale, 1964). But as the number of French administrators was not enough to cover the whole territory, the colonial government had to seek the services of indigenous assistants. However, because of territorial expansion, the need for a wider network of intermediaries made it necessary to set a new chieftainship that was less traditional but more administrative.

It is in this same context that religious brotherhoods were also made party to the endeavour to get rid of traditional chiefs²³. The specificity of the role of religious societies in Senegal — especially that of the Mourides — lies in that they allowed for extensive growing of groundnuts.

However, the setting up of the new indigenous and religious-based administration (Diouf, 1992) went hand in hand with a policy to assimilate part of the population. It started with granting, in the 1782–89 years, French citizenship to the populations of the communes of Gorée, Saint-Louis, Rufisque and Dakar. Later, in 1946, this citizenship was granted to the entire Senegalese population. Before that, in 1914, the election to the French National

Assembly of deputy Blaise Diagne, an indigenous Senegalese, had put an end to the monopoly of the Whites and Mulattoes over the political life (Suret-Canale, 1964).

This political life was coupled with equally intense trade union activity. As a matter of fact, while the first workers’ strikes took place in the mid-1920s, it is the coming to power of the Popular Front government in France that effectively paved the way for trade unionism²⁴ and extended the application of some provisions of the metropolitan labour code to its colony, Senegal.

Political Confrontation and the Strengthening of State Authoritarianism

As Berthélémy et al. (1996) have pointed out, even before independence Senegal had a political and intellectual elite capable of running public affairs. After independence, the first rulers of the country first tried to unify the ranks of the political class in order to tackle the huge task of economic and social development. However, Diop (1992) shows that this period was not spared social and political unrest, be it in rural areas or in towns. But the political power more or less adjusted to this situation by restructuring the State apparatus, strengthening political authoritarianism, and repressing or co-opting opposition leaders. At the political level, the result of such initiatives was the creation of a de facto single party following the integration of all legal parties into the Progressive Senegalese Union (UPS-Union Progressiste Sénégalaise), which held power²⁵.

Diop (1992) stresses the fact that the army is one of the institutions that have contributed the most to assert the authority of political institutions. By strengthening the corporate nature of the different sections of the army, by constantly reorganizing its command structure and awarding substantial perks to army personnel, the political establishment managed to make the army stay loyal to the government and pacify the social and political environment. This can partly explain why the army in Senegal was little keen on coups d’état, unlike in most countries of the sub-region²⁶.

Nonetheless, political authoritarianism and the constant restructuring of the state apparatus were not enough to appease the social front. Social discontent was evidenced by the strikes and violent confrontations of the end of the 1960s (Diop and Diouf, 1999). The challenges which such events constituted for the government brought about an abrupt taking over of unions. This taking over consisted in instituting the so-called “responsible participation” trade unionism, the ultimate end of which was to make workers’ unions partners in the running of the state apparatus by affiliating them to the ruling party and appointing their leaders to legislative and ministerial positions. The creation, in 1969, of the Senegal National Workers’ Confederation to replace the Senegal National Workers’ Union, which had been dissolved, was one move to take over the social environment in the country.

Business communities were not spared this general trend to strengthen state authoritarianism. The modest breakthrough of Senegalese operators on the economic scene²⁷ just before independence translated into the creation, in addition to the first unions controlled by French and Lebanese traders and manufacturers, of small professional groupings of Senegalese traders which, by widening their reach to other professions, attempted to unite into one single organization. Created in the thick of students’ and workers’ protest movements in 1968, the Union of Senegalese Economic Groupings manifested, from the outset, its political independence and its “nationalist” orientation. But its too critical analysis of the economic situation could not leave the government indifferent: this reacted by sponsoring a new federation called the Senegalese

Economic Grouping (GES — Groupement Économique Sénégalais). Like the union of workers’ trade unions, the GES was thus created as an organization affiliated to the government.

One can thus date to the end of the 1960s the government’s interference in the business circles with the aim of channelling the development of national economic operators’ activities and weaken their capacity to organize and mobilize against French interest groups. For the government, such a strategy had a twofold objective: i) to facilitate its own entry into the economic world; ii) to avoid any collision with the interest of French firms on which the former colonial power was still keeping a watchful eye. As we shall see later, the private sector’s current level of organization and negotiation ability are still marked by such a policy.

For Senghor’s regime this reorganization of the state apparatus and social institutions was not enough; it had to take into account technical competence in the appointment of ministers and top public service officials. This translated into the sudden appointment, to the ruling party organs, of young executives without popular support or force of persuasion, which the first political leaders had. The political relaxation moves, which were designed to respond to the demands of the urban lower middle class, were thus accompanied measures to “technocratize” the regime with such appointments of young executives, among whom were Abdou Diouf as Prime Minister and Babacar Bâ as Minister of Economy and Finance²⁸.

Such moves went in parallel with the setting up of a patronage apparatus that would enable the functioning of a “mercenary support” system. We have already seen how the government, through a special bank account which received money from the public revenue department, allowed its political supporters to have access to bank loans (Diop and Diouf, 1999). The “big growers” of groundnuts, the majority of whom were the marabouts, also had access to loans which were often not reimbursed, thus taking part in the plundering of national companies such as the National Marketing and Assistance Board for Development (ONCAD — Office de Commercialisation et d’Assistance pour le Développement). Likewise, senior young executives suddenly found themselves at the head of newly created public corporations.

Combined with growing adverse natural factors and unfavourable changes in world groundnut markets, as well as the reduction of French aid, such a submission of the national economic activity to the government’s objectives of social and political pacification brought about, towards the end of the 1960s, severe deterioration of the economy, a fall in peasants’ living conditions, and dissatisfaction on the part of urban workers. For the best-organized and most rebellious groups, such as teachers’ and students’ unions, the situation offered good opportunities for strikes and uprising. Leaders of the Mourides brotherhood, who traditionally were allies and supporters of the ruling class in the rural community, also echoed the peasants’ grievances against the administration. The political openness marked by the authorization, in 1974, of the Senegal Democratic Party headed by Abdoulaye Wade, together with the reinstatement of a multi-party system limited to four political “opinion currents” in 1976, failed to appease the urban middle class that was becoming increasingly hard to please (Diop and Diouf, 1999).

The End of a Political and Economic Regulation Mode

The 1970s was the most significant period for the economic and political management of Senegal. The hard economic times demanded a totally different strategy and mobilization of exceptional institutional capacities that would enable the implementation of austerity measures required to access external funding. The social unrest of 1968 and 1969 was the first warning sign of the end of an economic system built on the revenue from a single crop, the groundnut. The same unrest also exposed the failure of a mode of management of the economy and political power that served only the interests of a heterogeneous coalition of politicians, bureaucrats and religious leaders. Senghor’s resignation from power and the changes at the top of the country in December 1980 were a culmination of all the restructuring of the political, social and economic environment that had been going on since the late 1960s (Diop and Diouf, 1990).

At the same time, a new generation of entrepreneurs and a network of very dynamic traders (named Baol-Baol, after the name of the region where most of them came from) who drew their socio-economic influence from their ties with Mouride marabouts emerged (Cruise O’Brien, 1971). With their emergence, the renewal of the political and administrative leadership of the country made it possible to put an end to the old mode of economic and social life. The growing economic imbalances, the multiplication of regionalist protests (in Casamance) and the rising of tensions at the borders (with Guinea-Bissau, Gambia and, later, Mauritania) were particularly suitable opportunities to part with previous political and economic strategies.

When he came to power, Abdou Diouf admittedly strengthened his legitimacy by proclaiming economic nationalism. However, due to strong financial constraints, the support from external partners was conditional to his government’s dealing with the macro-economic imbalances that beset the national economy. The economic development imperative was therefore replaced by the demand to achieve macro-economic balance in the short term. Donor funding thus consolidated Diouf’s power, but, in return, weakened his government’s ability to define and achieve its economic objectives with relative autonomy.

The dismantling of the Government’s intervention — and sources of funding — in the economic sphere thus went hand in hand with a renegotiation of social, economic and political compromises which, for two decades, had enabled the whole country to function. The “extended cabinet” formula (which brought together ministers from both the ruling party and the opposition) was one of the political manifestations of such compromises. At the economic and social level, the modifications to the post-colonial consensus provoked the emergence of protests and forms of association whose methods of action were totally different from those of traditional trade union and employer organizations.

It was in such circumstances that “techno-bureaucrats” were appointed to the top positions of government. Their role was to implement the “new economic policy” prescribed by the Bretton Woods institutions. The claim to technical expertise was the instrument of legitimating the hegemonic structure of the new ruling class. Nonetheless, by virtue of the severity of the socio-political constraints which the leadership of the country had to face, and of the arbitration to carry out among the various factions into which their supporters were grouped, the management of the political and economic system was predicated on the short term, as what was accepted one day could be rejected the following one. The strategies to maintain the new decision-makers in power were thus carried out to the detriment of the country’s socio-economic balance and cohesion among politicians. This cohesion was becoming increasingly fragmented because of the heterogeneous nature of the coalition and the shrinking of its base. The process of designing and implementing the reforms the country was engaged in until the mid-1990s showed a weak appropriation of the same reforms by the organs in charge of their implementation.

An upheaval occurred in the early 1990s, though. That was on the occasion of the evaluation missions carried out by the World Bank and IMF on the macro-economic situation in the country (Banque Mondiale, 1992 and 1993; Rouis, 1994). Following up on an equally critical report by Berg (1990) on economic reforms in Senegal, these evaluations outlined a new approach to adjustment and a turning point in the relations between the Bretton Woods institutions and the Senegalese Government. One of the conclusions of the evaluations was that while the adjustment programmes had allowed the Senegalese economy to record undeniable results, the manner in which these were achieved was questionable. The government was accused of a lavish lifestyle, mismanagement of public resources, protection of unearned income, lack of transparency, and lack of willingness to combat corruption. At the same time, it was discovered that techniques of massaging and hiding some indicators had, for a long time, enabled the country to get access to external resources without honouring its commitments²⁹.

In 1993, after a long period of prevarication and strained relations with international financial institutions, the government was obliged to anger workers’ unions by adopting an austerity programme baptized “emergency plan,” which was followed by the devaluation of the CFA franc one year later. Relations between Senegal and its foreign partners took a different look. At the same time, the restructuring of France’s co-operation policy, the more pragmatic economic approach and the new language adopted by the Balladur government signalled the limits of the financial support from France³⁰. This new approach, which was in keeping with the point of view of international financial institutions, constituted a constraint which the Senegalese government had no choice but take.

The Ability of the State and the Private Sector to Implement Policies

The analysis of the steps and context of policy options has allowed us to show how each new phase came with its own methods and instruments of economic and political power management. But, for their part, these instruments depend on the administrative ability to make decisions and implement policies, as well as on the degree of involvement of the parties involved in the reform process.

The Administration’s Force of Inertia

In its evaluation of the trade and industry policy reform implemented in the framework of the New Industrial Policy of 1986–88, the World Bank (Banque Mondiale, 1992) believed that the failure of the reform could be explained by the weak determination on the part of the government. Nevertheless, whatever a government’s level of involvement in implementing a reform programme, its success may largely depend on the human, intellectual and technical capacities of the implementing institutions.

Yet, the structural adjustment programmes implemented in Senegal did not only lead to government institutions (the National Assembly, ministries, etc.) relinquishing power on economic policy (Dieng, 1995); they also undermined the human, intellectual and moral capacities of the administration. The overwhelming involvement of international financial institutions on the economic policy front meant legitimate political organs would not be involved in the study of the main economic policy orientations, and also that the details of the measures and conditions would be known only to an inner circle of senior civil servants close to the President, the Prime Minister³¹ and the Finance and Economy Minister (Dieng, 1995). The frustrations created by this development were compounded by those generated from the gradual deterioration of civil servants’ working conditions.

Praised for a long time for its political stability and efficient administration (Banque Mondiale, 1989), Senegal now saw its achievements in human resources and administrative capacities progressively melt at the pace of the implementation of stringent budgetary policies and the restructuring of the public service. Opinion from some administration officials suggests that while a small number of directors and heads of departments had the required profile for the positions they held, most of the public service employees had neither the competence nor the experience required to design and implement economic policies in general, and trade and industry reforms in particular. With the exception of the Customs Directorate, no other department had personnel capable at the same time of formulating economic reform programme policies, implementing them and assessing their impact. For instance, the sectional policies division in the Planning Directorate did not have a single expert in industrial economics. In the Industry Directorate, out of 18 members of staff, only eight were highly educated, among whom only four were economists. In this directorate, as in the rest of the departments in charge of the implementation and follow-up of the reform measures, the bulk of the officials actually had civil administrators’ training³³, while the few specialists available, whether economists or not, had generally received on-the-job training which was complemented, for some of them, by short training courses with organizations such as the IMF and the World Bank.

There are several explanations for the lack of competence within the administration, in designing and implementing economic policies. In addition to the public service restructuring plan, there were the freeze on recruitments and the “voluntary retirement” scheme that was proposed to a good number of civil servants³⁴. The incompetence in the civil service was also due to poor working conditions and delays in the payment of wages and salaries. Taken together, all these reasons can explain why an increasing number of senior civil servants were attracted by job opportunities with international organizations such as the World Bank, IMF and UN agencies, where career prospects and salaries were definitely more attractive³⁵. These new “expatriates” thus joined the already big numbers of senior employees who, after graduating from European or American universities, preferred to offer their services to the international job market rather than to the Senegalese one. In this respect, the overwhelming intervention of international financial institutions in designing and implementing adjustment programmes thus had the effect of attracting to the best trained civil servants rather than strengthening the administration’s capacities for policy analysis and management.

The Private Sector’s Weak Intervention Capacities

The lack of prior consultations between the government and the private sector during the formulation and implementation of the trade and industry reforms, and of the New Industrial Policy in particular, is characteristic of the way adjustment programmes in Senegal were imposed on social players until the mid-1990s. The lack of openness and transparency is all the more surprising because the socio-political environment in the country was, since the colonial era, characterized by permanent dialogue between the central power and interest groups, whether these were socio-professional, political or religious. As we have already seen, besides the role played by religious brotherhoods in the colonial endeavour to conquer land, especially in the hinterland, political and trade union organisations have always found a way of claiming and benefiting from the same freedom and rights as existed in the former colonial metropolis.

One can analyse the capacities and intervention means of the social players in the trade and industry policy in Senegal from two angles: on the one hand, the crumbling and weak capacity of private sector organisations and, on the other hand, the strength and the negotiating power of civil society organisations. As we have seen, professional groupings from the business community date back to the colonial period. While these first employer organisations were in the main made up of foreign business communities, the Senegalisation of executive and managerial staff in companies and the subsequent rapid expansion of activities of Senegalese economic operators, both of which followed independence, diversified and widened these operators’ make-up and forms of grouping. But, in spite of all unification attempts that marked the first three decades of independence, the Senegalese private sector representation remained marked by fragmentation and internal competition which was detrimental to its credibility, its intervention capacity and its negotiating power (Barbier, 1993).

Created in 1987, the Senegal National Council of Employers (CNP — Conseil National du Patronat du Sénégal) was the first framework uniting the interests of both foreign business community and national economic operators. Even today, it brings together about 27 professional unions. However, the hegemonic position held in the CNP by unions such as those representing manufacturers (SPIDS)³⁶, banks (APB) and fishermen (GAIPES), in which a strong presence of foreign interests was visible, led to the split of the council and the creation of the National Confederation of Senegal’s Employers (CNES — Confédération Nationale des Employeurs du Sénégal) in 1993. From the outset, this CNES was seen as oriented towards defending the interests of Senegalese entrepreneurs rather than those of foreign employers.

One striking phenomenon in the union landscape was the creation, in 1990, of the National Union of Senegal Traders and Manufacturers (UNACOIS — Union Nationale des Commerçants et des Industriels du Sénégal). The specificity of this organisation, which claims to have tens of thousands of members, lies in its quite heterogeneous make-up, with the majority of the members coming from the informal sector. Moreover, while employers’ unions had until then brought together national economic operators whose membership had built up during the first two decades, the economic crisis that followed raised doubts about the system of economic and social promotion that relied on occupying sectors neglected by French capital or the government. At the same time as a number of individual success story cases were highlighted, the dramatic rise of UNACOIS came as a kind of revenge against this post-colonial model of promoting national business people. Combined with the weight of the informal sector in the economy, the economy liberalization context made this union a key player on the economic scene and an interlocutor for the debate about trade and industry policy reforms. However, falling victim to its success, the UNACOIS in turn increasingly threatened to split up.

The most recent case of unification of professional organizations consisted in the setting up of the Senegal Employers’ Coordination (CPDS — Co-ordination Patronale du Sénégal). Set up in 1995, the CPDS was an initiative of almost all the unions and professional associations in the country. By allowing all the constituent organisations to show their unity on one of the many consultation occasions created after the devaluation of the CFA franc, the existence of the CPDS was proof of the role which the private sector was bound to play in the new context of choosing and implementing structural adjustment policies.

The Senegalese private sector’s weak capacity to intervene in adjustment policies was compensated for by the relative influence and negotiating power gained by civil society associations. Created in the context of structural adjustment, these gained their strength from the control they exerted over the associative mediation system as well as from the initiative they showed in response to the good governance demands from donors. The strong position enjoyed by the associations also arose from the fact that as from the late 1990s the government fell into disrepute with regard to both its management of public resources and governance. This disrepute indeed led a number of outside contributors to establish more and more direct links with the beneficiary populations.

In another respect, the evolution of the process in Senegal has led to the loosening of the grip over the rural population thanks especially to the marabouts. The system is today threatened by the exit of the first generation of religious brotherhoods’ leaders and their replacement by a new generation, that of “ordinary marabouts,” more concerned with their “own business” or their political career than with their traditional functions.

Finally, the lack of transparency and consultation in the choice of economic policies is all the more unacceptable because private sector and civil society players can now boast of having wide knowledge. The increase in the number of independent newspapers, the setting up of private radio stations and television channels, the dramatic expansion of new information technologies, all play an important role by making available, for the population, information that concerns not only their daily life but also the management of public affairs.

Assessment of Trade and Industry Policy Reforms

The second phase of the structural adjustment programmes in Senegal was marked by the introduction of two sectional policies, which pioneered a drastic change of course: the New Agricultural Policy (NAP) and the New Industrial Policy (NIP) (Qualmann, 1995). In the history of structural adjustment in Senegal, the NIP passed as a global programme of the reform of a trade policy and an industrial strategy that were considered responsible for the slow industrialization of the Senegalese economy. The results of the NIP were so disappointing that today, almost seven years after the CFA franc devaluation, the Senegalese economy is in search of lost foreign competitiveness.

The 1986–1988 New Industrial Policy Experiment

The NIP Conception

Considered as the trade and industry component of the adjustment programme, NIP is the name that was given to the “Action Plan for the Industry” devised in 1986. The main characteristic of this policy lies in that it was not only one of the most radical reforms ever undertaken in Senegal since the country’s economy underwent structural adjustment, but also one the implementation of which was judged, in its time, as satisfactory by the World Bank.

As in many other countries of Sub-Saharan Africa, structural adjustment in Senegal rested on the assumption that the decline of the economy originates from market inelasticity and price imbalance resulting from the administrative management of the economy, the government’s excessive intervention and protectionist measures. It is therefore not surprising that the economic reforms took such a considerable place in the reform programmes implemented to break with a strategy of industrialization based on import substitution and which was held responsible for the Senegalese industry’s loss of competitiveness. The caricature was pushed to the point of baptizing the reform programme the “new industrial policy,” that is the same name the Word Bank had decided to give to what it considered the only alternative to the “old” strategy of import substitution industrialization (Bhagwati, 1994; Lall, 1993, 1995).

However, as for all the adjustment-related reforms, the official line and the World Bank’s and IMF’s beliefs were all identical at the time when NIP was conceived and only the World Bank appeared keen to defend the model from which this policy was inspired (Qualmann, 1995). It was thus normal that the World Bank was the main interlocutor of the government while designing the gist of the proposed reform programme.

Although France never expressed its disagreement with the main orientations of NIP, given the importance of French interests in the Senegalese industry it, however, showed reservations about suddenly abandoning the idea of protecting the industry.

For the Senegalese government, one can say that initially there was total adherence to the NIP reform programme. There were three reasons for this: one, the hope for a pickup of industrialization through greater openness of the economy to foreign competition; two, the temptation to put to test a private sector dominated by French interests and taken to be unduly protected; three, the urgency of an accord enabling access to financial resources to which adoption of NIP entitled the country.

But this official position was not defended in the same manner by all sectors of the administration. As the project manager of NIP and the main interlocutor of the World Bank, the Industry Ministry was obviously favourable to the proposed reform. As for the Finance and Economy Ministry, besides having in its midst an influential core of “technocrats” who supported the reform process (Berg, 1990; World Bank, 1993), it was keeping an eye on the extra income expected from the tariff structure. It is in this perspective that the customs directorate staunchly defended the principle of lowering entrance fees, since such a measure would contribute to reducing smuggling. However, the same directorate underscored the risks, which the industry was running if there was a hasty reduction in tariff protection and the abolition of non-tariff barriers at the same time. To simplify import and export procedures, the Foreign Trade Directorate for its part defended the abolition of import quantity restrictions.

Even if employers admitted the excessive protection industries they had benefited from in the past, they reluctantly accepted the implementation modalities and schedule for trade openness measures. Arguing that the protection mechanisms did not benefit all the industries equally, manufacturers wanted prior sector-based studies to be carried out in order to allow adjusted application of the reform and the supportive measures.

Instead of furthering the opening of dialogue between the various players, the divergent positions were, on the contrary, an obstacle to making all the parties concerned partners in defining the reform programme. In fact, despite the existence since 1983 of a framework of dialogue between the government, donors and the private sector, no consultation was organized to discuss the NIP principle. Motivated by budgetary considerations, and in the absence of a coherent project of its own, the government hastened to agree in principle to the programme proposed by the World Bank. The discussions that were later held between some sections of the administration and the World Bank were limited to specific points such as the timetable for modifying customs duties or revising special conventions.

The private sector was not invited to take part either in the discussions on selected reform measures or in defining supportive measures. The only meeting to which its representatives were invited took place only three weeks before the meeting of the interministerial council that officially adopted NIP (Geourjon, 1990)³⁷.

Workers’ unions were not less surprised when it came to relaxing the provisions of labour regulations relating to recruiting and laying staff. Reactions to this relaxation were strong as well. Started in 1986, the numerous attempts by the government to have a new labour legislation by the National Assembly came to fruition only at the end of 1994.

The Objectives of NIP

The definition of NIP objectives and measures was thus based on a prognosis made by the World Bank on the weak competitiveness of the Senegalese economy. This diagnosis put emphasis on the strong protection of the domestic economy, the overvaluation of the real exchange rate, the low level of work productivity, the high level of the cost of production and the mediocre quality of the institutional environment³⁸.

Three objectives were set for the NIP: i) to restore the competitiveness of the industry on both the foreign and domestic markets, which supposed an increase in productivity and the quality of industrial products; ii) to promote export-oriented activities and to restructure inefficient enterprises; iii) to relax labour market conditions.

These objectives show the extent to which NIP was in line with the trade reform programme that was in fashion with the World Bank in the mid-1980s. Aiming at an abrupt liberalization of the economy in order — so said its proponents — to avoid the political pressure that would result from reforms spread out in time, the method underpinning such a programme was known as the “shock therapy,” in contrast with a gradual implementation of reforms (Fanelli and Frenkel, 1994). The drawback of such a method lies in that it does not adequately take into account the “time” factor, which is crucial in a period of structural adjustment (Geourjon, 1992).

Planned to last two years, the reform programme comprised five principal types of measures: i) the reduction and harmonization of customs tariffs; ii) the abolition of import quantity restrictions; iii) the reorganization of the export promotion system in favour of activities with a higher local value added; iv) the revision of the investment code and the gradual abolition of special conventions. To these measures were added those called supportive measures, which bore on the lowering of the cost of technical factors, on the relaxation of labour laws and better access to credit by small and medium-sized enterprises.

However, of all those measures, only those having to do with the protection system reform were implemented in accordance with the programme and the planned implementation schedule. This made the World Bank (Banque Mondiale, 1992) itself say that NIP had in the end been relegated to trade liberalization. In less than three years, all the non-tariff barriers had been abolished and replaced by lower customs duties that brought the protection differential between finished products and intermediate goods down from 40 percent in 1986 to 20 percent in 1988 (Geourjon, 1992)³⁹. Similarly, the system of market price list values and levy minima was dismantled before the end of the year of NIP implementation⁴⁰.

With the exception of those concerning company products protected by a special convention⁴¹, the import quantity restrictions were all abolished between July 1986 and February 1988. Some of these measures were even taken before the initially set date (Geourjon, 1992). Relaxing the conditions of access to the import-export card made it possible for the number of holders of it to increase three-fold (Banque Mondiale, 1992).

Other measures towards liberalizing domestic and foreign trade were taken, among them the adoption of a new investment code and customs laws that were less repressive vis-à-vis smuggling, or the abolition of price controls in competitive sectors. The restructuring of the export activities promotion system consisted in fixing an export subsidy at 25 percent of the local value added and in widening the range (about a hundred) of the products likely to benefit from it. However, the subsidies actually granted were not only insufficient, but also very irregular⁴².

While all the reforms having to do with the system of protection and export incentives were more or less implemented in the scheduled period, it was not the case at all with the supportive measures designed to facilitate the adaptation of the domestic industry to the new competitive environment. Except for a small reduction in the electricity price that occurred in 1987, no measure designed to reduce the cost of technical factors was applied. The liberalization of the labour market, which had after all been planned as a key arrangement of the structural adjustment of the Senegalese economy (Rouis, 1994), was limited to the abolition of the recruitment monopoly held by the labour force department⁴³.

The NIP Failure

The exceptional fall in customs and tax receipts that came as a consequence of the 1988 series of tariff restructuring measures gave the government the pretext to call into question the reform programme. After rising from 73 billion francs in 1985 to 83 billion in 1987, customs receipts indeed dropped to 74 billion francs following the 1988 tariff restructuring measures. Consequently, in August 1989 the government decided to annul those measures by reinstating the pre-1986 customs duty rates. At the same time it “rectified the errors” in the list of import products in order to increase the number of those of them that would be subject to standard or raised taxation. The second raising of tariff barriers came in July 1990, with the institution of a customs stamp (of three percent) on almost all the imported goods. Finally, market price list and levy minima were reintroduced. These reversals in tariff restructuring provoked the rise in the economy protection level: the legal average rate of imported goods tax, which had fallen from 98 percent to 68 percent between 1986 and 1988, again arose to 90 percent in 1991 (Banque Mondiale, 1994b).

Even though, as Berg (1990) says, the conclusions of the first evaluation⁴⁴ (carried out only a few months after the implementation of the first reform measures) of the NIP impact were neither alarming nor reassuring, they are evidence of the haste with which the de-protection measures were designed and applied, as it is on the occasion of this study that the reform supportive measures were identified and investment needs estimated. All the NIP evaluations that followed this report, including those that acknowledged that the reform programme was coherent (Valette, 1989; Geourjon, 1992;

Banque Mondiale, 1992), were unanimous in admitting the negative effects of the liberalization of imports on industrial production and job creation in Senegal. Such poor performance is indicative of the disastrous consequences which NIP’s trade openness measures had on the industrial sector. It shows that for 13.5 percent decline in production between 1985 and 1989, there was indeed a 14 percent job loss. While in the manufacturing industries proper there was a lesser decline (five percent) in production, job losses were far more important (16 percent).

With regard to enterprises that closed, the Senegal Industries Professional Union (SPIDS) estimated their number to be about 30 between 1985 and 1989, while the World Bank (Banque Mondiale, 1993) put the number at about 50, among them big companies which could not survive the opening of the domestic market to foreign competition. Comparatively, only one industrial unit was created during the period (Geourjon, 1990).

Aggravated by the crisis in the banking sector, the slowdown in industrial activity was accompanied by a drop in private foreign investments. According to statistical data cited in Geourjon (1992), from US$ -3 million in 1985, the flow of direct investment from outside fell to US$ -50 million in 1987⁴⁵.

NIP did not have positive effects on Senegal’s trade balance either. The upturn in exports that was observed during NIP implementation could be attributed to an increased demand of phosphate at world level. The other traditional exports either stagnated or diminished (Rouis, 1994; Pigato, 1997). With a 46 percent increase in imports between 1986 and 1990, the current account deficit rose to 11 percent of GDP. Despite the macro-economic positive aspects one likes to see in implemented structural adjustment programmes (Pigato et al. 1997), the share of Senegal’s exports on foreign markets fell by one fifth of what it was in the 1960s.

Although in the modern sector the measures to reduce the tariff and non-tariff protection ruined some enterprises in difficulty and weakened others that were in a better situation, they, on the other hand, benefited informal sector trading activities. As a number of authors (Duruffé, 1994; Geourjon, 1992; Diouf, 1992) have shown, the consequences of the lowering of tariff barriers indeed were the transformation of a big number of producers into “importers-traders” and the expansion of the informal sector.

While the economic constraints on the competitiveness of the Senegalese economy were more or less well diagnosed when NIP was being designed, in the end no prior analysis allowed for assessing the government’s ability to carry out, in such a short period of time, a reform of such a scale, or to assess the level of preparedness and the private sector’s reactions to the implemented measures. It is therefore not surprising to notice such a big contrast between the abruptness of the measures proposed on the one and, on the other hand, the flimsiness of the institutional mechanisms used in their design and implementation.

As the World Bank (Banque Mondiale, 1993) has admitted, the government’s will to implement agreed-upon measures eroded as the other social players not only showed hostility towards the reforms already underway, but also organized to defend their interests. Thus, the greater the intensification of the structural adjustment implementation, the stronger the reaction of the parties concerned, and the more hesitant the institutions in charge of co-ordinating the reforms. This hesitation in turn contributed to creating a climate of uncertainty around the reforms and to strengthening the interest groups’ defence means.

By admitting, afterwards, the imperfections of the reform programme, the government — as well as the World Bank — implicitly proved right employers’ unions, which, as soon as NIP was announced, had tried in vain to draw its attention to the harmful consequences of trade openness, if this was not accompanied by compensatory measures. Angered by the government’s failure to listen to them, entrepreneurs then came together to form — as we have seen — the CNP (National Employers Council). Bringing together almost all national and foreign business circles, CNP at one moment stood as the sole defender of the interests of Senegal’s modern private sector enterprises.

The government’s lack of preparedness to the effects of NIP was in fact such that as the measures were implemented, the advantages of the reform — which seemed obvious at the time it was designed — became less important than the costs linked to its implementation (Rouis, 1994). The post-electoral riots of 1988 and the violence that followed the border disagreement with Mauritania in 1989 added to the doubts as to whether the government was able to carry out reform, the economic and social consequences of which had become harder and harder. This climate of tension contributed to exacerbate the negative response from both manufacturers and workers and caused by enterprise closures.

With the decline in customs revenue, which resulted from the 1988 tariff reduction measures, the administration was not short of political and “budgetary” arguments to convince the World Bank and IMF to reconsider many of the measures. This turn-about was further made possible by the falling influence of members of the government who supported the economic policy reforms (Rouis, 1993). It is therefore not surprising that some authors, like Foroutan (1993), consider the implementation of NIP in Senegal to have taken the form of “one step forward” followed by “two steps back.”

NIP thus constitutes one of the reform programmes launched in Senegal the implementation of which obeyed both the spirit and the letter of the World Bank’s requirements. Its implementation also mobilized much energy on the part of the government and its administrative departments responsible for applying the different measures. In this respect, the government indeed deserved full marks from the World Bank and IMF. But experience shows that there was an “overdose” of the medicine prescribed for the patient. Not only did the shock therapy that was applied fail to cure the illness, but also the results obtained from it proved contrary to the expected effects.

The Trade and Industry Policy After the CFA Franc Devaluation

Added to the weak impact of internal adjustment policies on economic growth, the growing pressure from the World Bank and IMF got the better of the CFA franc countries which in the end accepted that only a “surgical” operation of the CFA franc devaluation would provoke the shock needed to spur economic growth without entailing prolonged political resistance on the part of economic and social players.

Senegal had thought it would escape the devaluation by adopting an emergency plan (dubbed the Sakho-Loum Plan)⁴⁶ immediately after the 1993 elections. The scope and robustness of the measures contained in the Plan reflect the enormous pressure put on the government to accept monetary adjustment. The implementation of the Plan lasted only six months, since the economic recession (decline in industrial production, company closures, job losses) and the financial crisis (fall in tax revenues, investment decrease, flight of capital) had deepened. Such an economic situation, compounded by the rising economic and social costs of internal adjustment, rendered the pursuit of such a programme politically dangerous (Rouis, 1994). In another respect, the overvaluation of the CFA franc had become incompatible with the deterioration of exchange rates that resulted from the fall of the dollar compared to the French franc, and from the competitive devaluations carried out in other sub-region countries like Nigeria and Ghana.

For donors, the World Bank and IMF in particular, the shock of a 50 percent CFA franc devaluation was inevitable if the new adjustment programme was to be spared the lack of credibility, institutional obstacles and social and political pressure which the implementation of previous reforms had suffered. The idea of making change in the CFA franc exchange rate a unanimous decision by the CFA franc area heads of state in person rested on a four-pronged message: i) to give a strong signal on the involvement of the countries concerned in a strategy that marked a total break with the hesitations and institutional weaknesses of the past; ii) to guarantee, through the simplicity and scope of the operation, the irreversible nature of the option of a strengthened liberalization of the economy; iii) to create a framework that would be more conducive to deepening the structural reforms designed to liberalize the economy; iv) to dispel the fears linked to a possible break up of the CFA franc area after France had abandoned it.

Soon after the devaluation, Senegal, as well the other countries of the CFA franc area, received important support from international financial organizations and bilateral partners. In order to facilitate the implementation of the measures that immediately followed the devaluation, the National Assembly passed a law authorizing the President to take, by decree, decisions relating to the salaries of the public sector, foreign tariffs, basic consumer goods and taxes.

Designed to curb inflation and stabilize public finances, these measures were accompanied by a wide programme of structural reforms aimed at substantially reducing the government’s role in the economy, at strengthening labour market flexibility, at further opening the economy to the outside world, and at creating a more favourable environment for the private sector (Pigato et al. 1997). The Private Sector Adjustment and Competitiveness Project (PASCO — Projet d’Ajustement du Secteur Privé et de Compétitivité), which was adopted a few months after the devaluation, is one of the major mechanisms set up to lift the obstacles to competitiveness and to support the private sector⁴⁷. Important measures were equally taken to liberalize investments, to pursue the privatisation of public corporations and to revise the customs and tax laws⁴⁸. The withdrawal of state funding, which constituted the frame of the “new economic policy,” was accelerated especially with the privatisation of the National Telecommunications Company (SONATEL — Société Nationale des Télécommunications) and the floating of the shares of the Senegal National Water Company (SONES — Société Nationale des Eaux du Sénégal) and of the National Electricity Company (SENELEC — Société Nationale d’Electricité).

The devaluation of the CFA franc thus provoked a real turnaround in the relations between Senegal and donors by creating a new climate of trust. This change was facilitated by transfers within the political community. As a matter of fact, while until the end of the 1980s political parties, especially opposition ones, had always made a detailed critical analysis of adjustment policies, in the 1990s there was a change that significantly reduced the head-on opposition to the policies recommended by the Bretton Woods institutions.

Another important element related to the government’s change of priorities. During the post-devaluation period, the problems of access to foreign markets and the creation of an environment favourable to the private sector development indeed became a major preoccupation for the government, in addition to a reform of public finances and a restructuring of the public sector. All that was accompanied by a reorientation of state interventions towards areas such as the environment, institutional reforms or the fight against poverty.

In spite of the speeding up of the macro-economic, structural and institutional reforms undertaken since the CFA franc devaluation and the subsequent economic upturn, for many analysts the road to a sustained and lasting growth is still not smooth for the Senegalese economy. As far as the trade and industry policy is concerned, the progress achieved along the lines of price and import liberalization, of the reduction of port dues, of the abolition of non-tariff barriers and of a better access to international trading was translated neither into higher factor productivity, nor into a sustained export growth (See inset below.) Likewise, the private sector’s contribution to the objectives of investment rates remained modest despite donor support, which funded public investments and some private projects.

Finally, it should be pointed out that few measures — other than those taken to strengthen the reforms undertaken before 1994 — were taken to reduce the cost of inputs and to create incentives that would enable enterprises to withstand the devaluation-related inflationary effects or to set off to conquer foreign markets under the best auspices (Qualmann, 1995).

The Administration’s and Private Sector’s Assessment of the Trade and Industry Policy Reform: Study Findings

The Administration’s Point of View

As the adjustment process after a trade and industry policy reform is structural in nature, the new rules of the game must be known beforehand as they contain a long-time guarantee from the institutions responsible for their application. Such guarantee is indeed necessary to reassure the new investors that the reforms undertaken are meant to last and that the risks involved are minimal (Nash, 1992). The role of the institutions in charge of implementing the proposed measures is thus crucial to ensuring the credibility of the trade reform. Personal and unequivocal commitment on the part of senior government authorities could even prove decisive. (See Inset 2.)

And yet, in its hurry to get access to resources from the second Structural Adjustment Loan (SAL II)⁵⁰, the government had willingly refrained from examining the trade reform scheme proposed by the World Bank within the framework of the New Industrial Policy (Geourjon, 1992). The adjustment programme was thus globally perceived as a set of measures imposed from outside Senegal. The Government’s acceptance of NIP was also suspicious because of the influence exerted in the whole process by some senior officials who completely supported the World Bank’s and IMF’s policies in advance⁵¹.

It is thus, not surprising that public institutions in charge of policy implementation, follow up and evaluation hardly agreed on the objectives to be pursued and the means to achieve them. That is why many administration officials took it that the principal aim of structural adjustment programmes in general was to achieve macro-economic balance. But they agreed less when it came to giving their opinion on the objectives set for a sectional reform like the NIP one. Thus, while for the Customs Directorate the improvement of economic competitiveness was perceived as an objective subordinate to that of maximizing customs revenues and that of fighting fraud, for the Foreign Trade Directorate this improvement was the only means of promoting Senegalese exports. As for the directorates of planning and industry, they had a more precise idea of the advantages to expect from a trade and industry policy, since they considered that its effects could only show after a long period during which investment, employment and growth were stimulated.

This difference of opinion on the objectives of trade reform could be found not only in directorates belonging to distinct ministries, but also within the same ministry. The situation was obviously bound to have consequences on the implementation of the proposed measures and on the order of priorities and the coherence of actions undertaken by different parties involved in the reform.

Regarding the government’s responsibility and commitment in the formulation and implementation of policies, the opinion of the chief officials was, on the whole, quite reserved. However, those who expressed opinion suggested that even though at the time the reform was launched the administration’s commitment and will were genuine; the motivation of the players in the field could only remain intact if the results expected from various measures were significant. Furthermore, it has been stressed that the determination of the departments responsible for implementing reform is a function of the government’s financial incentives for the administrative staff. This latter factor was generally related to the corruption that was eating into the administrative machinery.

The administrative officials’ points of view on success or failure of the trade and industry policies implemented in Senegal were equally varied from one interlocutor to another. While some interlocutors considered that making a policy a priority was the key to its success, others thought the key lay in the political will and determination of the players responsible for carrying out the reform. And still, others thought that consulting with all stakeholders and getting their approval were prerequisites for success.

Paradoxically, it was observed that although almost all the administrative officials complained of lack of competence, only a few considered administration weaknesses as the possible cause of the failures in economic policy implementation. However, many of them agreed that the diagnosis and policy recommendations by foreign experts who were hardly conversant with local economic realities were responsible for the failures. This explanation is closely related to co-ordination problems stemming from the multiplicity of implementing agencies set up with the initiative of donors.

The administrative recognition, of the growing role of the private sector in the reform process does not necessarily translate into greater influence on the policy orientations adopted. For most of those that we interviewed, the strengthening of government-employer consultations had the advantage of enabling the parties to identify and better grasp the constraints likely to hinder the process of implementing the proposed reforms.

Administration officials admitted that whatever amount of pressure they came under from interest groups bore more on the measures than on the major policy orientations, which confirmed our analysis of the Senegalese private sector’s weak negotiating power.

Furthermore, there was a relative agreement on what officials considered to be the place and role of the state in the economy. While for some the state must limit its role to defining the rules of the game as laid down in international accords, others considered that it should, in addition, facilitate and protect private enterprise. In some directorates, those of industry and customs for example, officials went a step further to readily admit that the state should also provide impetus and support sectors deemed to be strategic.

Nonetheless, only a few believed the state must withdraw from all sectors of commercial activity in favour of the private sector if the sector was to survive in an environment that had grown more competitive. This scepticism can be explained by several reasons: the private sector’s organisational weakness and lack of preparedness in accessing technology and finance a weak capacity for initiative and the absence of development strategies, a weak market size, and a small of enterprises.

The Private Sector’s Point of View

We have already seen that even if a big number of manufacturers agreed with the diagnosis that the Senegalese industry was excessively protected, the abruptness of the methods used to impose the reform programme, the haste with which this was undertaken and the lack of coordination between liberalization measures and supportive ones, all combined to transform the manufacturers’ initial scepticism vis-à-vis the reform into its rejection. This is one of the main conclusions that emerged from the survey conducted with manufacturers in preparation of this study.

The views collected during the interviews with company managers and representatives of employers’ organizations gave some idea on the extent of the role that the problem of credibility played in the implementation of the trade and industry policy reform undertaken by Senegal. For the private sector, the reform programme’s lack of credibility was visible in three respects: the foreign paternity of policy options, the weak government’s appropriation capacity, and the mediocrity of results in relation to the expected results.

Used to seeing the government impose, without consultation, measures usually agreed upon only with foreign donors, the private sector indeed ended up making no distinction between the options of the former and the demands of the latter. It is this state of affairs that explains why a big number of manufacturers (three fifth of the surveyed enterprises and all professional unions) still considered that the trade reform measures implemented by the government were a faithful reflection of the recommendations of the World Bank and IMF. Only a minority of company managers (one fifth of them) thought that government policies also took into account the demands of the development of the economy in general and the interests of the domestic industry in particular. The government’s room for manoeuvre regarding trading policy decisions was equally constrained by the international accords linking the country to organizations such as the World Trade Organization, the Economic Organization of West African States and the European Union.

But, even when manufacturers considered the recommendations from international financial institutions as a simple general reference framework, only a few of them believed the government had the ability to appropriate these recommendations and formulate them in the form of a trade openness policy for industrialization. The findings of our survey showed that nine-tenth of enterprises shared this scepticism about the government’s capacity and determination to carry out to the end the trading policy reform designed in the NIP framework. The repeated calling into question of the measures already undertaken is proof that the private sector players’ feeling was not without reason.

In the face of the private sector’s perception of the paternity of policy options and the government’s inability to undertake a programme of sufficiently sustainable reforms, the trade and industry policy implemented in Senegal became even less credible due to lack of proof of their supposed effectiveness. Since they considered NIP trade openness measures to benefit more the finished products importing sector, company managers did not miss any opportunity to voice their disappointment with the effects of those measures.

What Industrial and Trade Policy?

The way in which the trading reform programme was designed and implemented in Senegal highlighted three main reasons for its failure: a dogmatic bias for the market and against the State, a wrong appreciation of the institutional constraints facing the implementation of trading policy reforms, and the fact that the programme content was deeply unbalanced in favour of strictly commercial reforms at the expense of industrial policy measures.

Beyond the Free Trade Dogma

A good understanding of the trade and industry policy reforms undertaken in Senegal, as elsewhere in Sub-Saharan Africa, requires one to bear in mind that such reforms are underpinned by the dogma according to which the market is essentially effective while state intervention is crippling and ineffective (Lall, 1995). As already pointed out, Senegal is one of the countries that served for experimentation of the “new industrial policy,” as a component of the development strategy imposed, in the early 1980s, especially in Latin American countries by the USA and the Bretton Woods institutions (Rodrick, 1992). As a result of a “Washington consensus,” the approach that inspired that strategy holds it that the economic stagnation those countries had experienced since the

1970s could be accounted for by the previous development model which was adopted by most of the countries in the region: the model of industrialization to substitute for imports. With such a diagnosis, there was naturally need for a policy founded on trade openness. In addition to the similarity between this diagnosis and that of the Senegalese economy, the fact that trading reforms were carried out simultaneously in Senegal and some Latin-American countries suggests that they had a common source of inspiration.

A careful examination of the outline of the new industrial policy shows however that what was presented as a prognosis of those economies was in fact only a set of arguments meant to demonstrate the assumed superiority of an export-oriented strategy vis-à-vis the import substitution model. Thus, as it is often the case for any reasoning based on a given dogma, the diagnosis and the hypothesis become the same thing. For the proponents of the new industrial policy it is the protectionist and interventionist measures followed by the country’s first leaders that were responsible for the poor economic performance of the Senegalese industry and for the price and market distortions within the economy. It was therefore enough to replace such practices with a policy strictly based on market mechanisms if the economy was to regain its domestic and foreign competitiveness.

The change of policy was thus aimed at reducing the role of the state to that of a simple guarantor of free trade and a stable macro-economic environment. By insisting that obstacles to a smooth running of markets be abolished, the proponents of the “new industrial policy” supposed that there exist regular trade relations among the economic agents assumed to be rational and equally sensitive to price signals (Mkandawire and Soludo, 1999). Accused of being the “trouble-maker” on markets presumed to be perfect, the state is thus ordered to stop all involvement in economic life.

But our analysis of the context of the Senegalese economy has brought to light the types of constraints which the implementation of such recommendations stumbles against. As Mosley (1995) has indeed stressed, it is a fact that market imperfections, which cannot be attributed to policies followed in the past, are more numerous in Africa in general and in Senegal in particular than elsewhere. Such a particularity did not seem to worry the proponents of the new trade and industry policy, though. If the government had not played the role it effectively played in the setting up of modern economic structures and hence in the development of market relations, those imperfections would certainly have been more important. It is therefore not surprising that each step made by the government in its withdrawal from economic activity translated into a decline of commercial relations in favour of the expansion of the informal sector.

The Crucial Role of Institutional Factors

The big variation observed in the results achieved by the country that experimented with the “new industrial policy” for the past 20 years calls for questioning the relevance of this policy with regard to the institutional environment of the economies concerned. That is why, prior to implementing such a policy, an analysis of organisational factors and political constraints that influence the perception of the concerned players and their response to incentive measures can prove as essential as the study of only economic mechanisms for policy transmission. The Senegal experience has highlighted the decisive role, which such factors play in the implementation and the results of trading reform policy.

Three reasons have generally been put forward to explain the NIP failure in Senegal: the lack of credibility of the reform programme due to weak determination on the part of the government, the non-involvement of the private sector in defining the reform measures, and the non-implementation of the planned supportive measures.

As already pointed out, the credibility of the trade reform undertaken in Senegal first suffered the effects of the financial crisis at the time when it was implemented. After three years of “weaning” following the cancellation of previous adjustment accords signed with international financial institutions, the hasty adoption of a reform that broke so drastically with past policies could hardly be seen as sustainable by industrialists. Such a perception was reinforced by the attitude of the government which at no single time in the implementation of the reform showed any sign of beginning to appropriate it or any willingness to carry it out to the full.

The lack of transparency about the conditions of NIP elaboration was not going to earn it enough credibility in the eyes of the private sector players either. And yet, such a policy stands better chances of succeeding if the main players are involved in the definition of reform measures from the start. This involvement serves also as an opportunity to evaluate the manufacturers’ adjustment ability and to estimate the costs of the implementation of these measures.

In the end, one can understand why in the absence of the supportive measures provided for in the reform measures, the implementation of which would have alleviated the lack of credibility, the manufacturers’ scepticism vis-à-vis the government’s determination to pursue a sustainable reform transformed into a reaction of rejection. This grew stronger as the real impact of the implemented measures departed further and further from the effective gains expected from the change of policy.

Elements of a Trade and Industry Policy

The weak impact of liberalization and trade openness policies on the Senegalese industry leads one to question the effectiveness of the strategies used to curb the industry’s decline that started in the mid-1970s. In order to draw the outline of a trading policy that would enable a resurgence of Senegal’s industrialization, we will look at three elements around which reflection on the industrialization of the whole of Sub-Saharan Africa centres. The three elements are: the compatibility of externally-oriented industrialization on the one hand and the trading system in force in developed countries on the other hand; the required degree of trade openness and its different phases; the position of the government in the reform process and its role in the building of the capacities necessary for industrial development.

Bhagwati (1994) has shown the asymmetry which, for about 50 years, had characterized trade and industry policies in developed countries on the one hand, and developing ones, on the other. It is a fact that while from the 1950s to 1970s the former group of countries constituted the main centre of application of free trade and the latter that of protectionism, in the 1980s arguments in favour of one camp or the other changed sides completely. The context then was marked by the contrast between a “strategic” policy favourable to selective state intervention in developed countries on the one hand and, on the other hand, insistent recommendations urging African countries to liberalize their trading system. Thus, while admitting that state intervention could enable developed countries to reduce market imperfections, governments in developing countries were asked to abandon any policy aiming at protecting domestic industries (Bhagwati, 1994).

By giving the example of Asian countries that benefited from such externally oriented industrial strategies, the proponents of this model too often forget that the adoption of such policies happened before the structural imbalance of the early 1970s. Besides, not many people anymore believe that the state did not play a fundamental role in the industrialization process in Asian economies.

As Mkandawire (1988) has stressed, while the import substitution model adopted at the end of World War II by some developing countries was compatible with the strategy and the needs for industrialization and reconstructing European economies especially, the export orientation that was dictated to Sub-Saharan African countries in the 1980s was hard to reconcile with protectionist barriers set up during the same period by industrialized countries. In the case of Senegal, the question could be asked as to how important the efforts of trade openness could be for a country whose export capabilities still depended on two or three main products. The effects of such dependence lie in placing not only the economy in a situation of extreme vulnerability in the face of external shocks, but also all the economic sectors in a situation of permanent uncertainty. These may be those dealing with foreign markets or those whose activities are entirely oriented towards the domestic market.

Moreover, in a country like Senegal where the integration of economic structures is weak and the industrial fabric is little diversified, it is hard to imagine that the mechanism of allocating resources could function fully without state intervention. This was all the more necessary because there was a tendency to run an increasing number of economic activities following a model different from a market model proper (Fontaine, 1992).

As the Senegalese operators in the fishing and oil industries have learned recently⁵², it is not enough to simply go beyond the traditional protectionist barriers in order to have access to European markets; it is necessary to overcome the obstacles related to quality standards, to lack of professional skills and information on these markets, and to the rising costs of acquiring appropriate technologies. Obviously, these obstacles cannot be overcome by simply opening domestic enterprises to foreign competition. To be effective, the trade openness strategy must go hand in hand with the building of capacities required in all these domains. The liberalization process must be based on a realistic evaluation of activities viable in the medium term, with an exhibition rhythm dictated by the learning needs associated with different activities.

One most significant contributions of industrial economy has indeed been to demonstrate that the process of acquiring technological skills in an industry is not only long, but costly and risky as well. The lack of policies and institutions that would develop professional qualifications and offer the technical information and technological support required for enterprises of the size to be found in Senegal constitutes a serious handicap to the development of competitive capacities.

As we have already seen in the case of Senegal, one of the difficulties in the way of the resource allocation mechanism postulated by the trade and industry reform lies in that in an economy, the industrialization of which is founded on import replacement and domestic resource transformation, foreign competitiveness based on comparative advantage can contradict the promotion of high value added industries aimed at by the reform of the export subsidies system (Siggel, 1991). This conflict can be explained by the fact that formerly protected sectors are generally those where there are over profits and unexploited economies of scale at the same time (Rodrick, 1992). If structural rigidity is not eliminated, it is probable that a simple withdrawal of protection, without compensatory measures, will lead to underusing productive resources instead of transferring them to export activities.

The privatization examples we have seen these last years show that de-nationalization of public corporations more often translated into their being taken over by foreign interests than serving as opportunities for investment for the national private capital. Due to a lack of financial resources and management capacities enough for people to launch into the industrial sector, this sector must usually content itself with service or informal activities with a low value added.

In such conditions it is not surprising to realize that while the great majority of Senegalese industrialists stated their approval of the new economic policy orientations, indifference seemed to be the rule as regards the trade and industry policy proper. To the question of whether they preferred the current strategy or that which preceded the structural adjustment years, 20 out of the 30 enterprises surveyed responded by saying that they were indifferent to the two strategies. Seven company managers said that they preferred the adjustment period, while three stated their preference for the period before SAP.

Company managers considered that the then current economic policies were less conducive to rapid industrialization. Four fifths of the surveyed enterprises even thought that the country did not have a true industrialization policy and that it was not much in favour of industrialization. The findings of the survey show that 18 out of 30 enterprises (i.e. three fifths of them) wanted to see the government play a greater role in promotion of the domestic industry, against eight who, on the contrary, thought the government should rather play a lesser role. Only one-tenth of enterprises (three) did not wish for any intervention by government to promote industrialization.

Regarding types of intervention, 21 enterprises (70 percent) thought that the government should limit its intervention to setting up infrastructure and a competitive environment for all the enterprises, whereas 13 of them wanted the government to facilitate access to credit and 12 of them wanted it to ensure the promotion of some strategic industries through specific incentive measures.

It is evident from the answers that for the majority of enterprises, the state still has a big role to play in industrial development. However, they consider that this role should consist more in promoting domestic industries than in intervening in industrial activity proper.

Conclusion

At least four types of lessons can be drawn from the analysis of the institutional environment of the trade and industry policy reforms undertaken in Senegal within the framework of structural adjustment. Firstly, it is a sound question to ask whether the context of macro-economic instability in which the trade reform was imposed on the economy was opportune for too abrupt a change of policy. As we have already noted, even if the gravity of the economic and financial crisis the country was undergoing brought the Government to be receptive to the recommendations of its principal donor, namely the World Bank, it probably reduced the advantages of liberalization too. Some analyses (Nash, 1993; Fontaine, 1994) show indeed that the macro-economic imbalances brought the country to weigh the following two options: the necessity to limit imports in order not to deepen the domestic and foreign deficit on the one hand, and the need to increase imports of intermediate goods and equipment in order not to strangle the productive sector, on the other hand. We have seen how the Senegalese government came out in favour of the former option through reversing tariff measures. It is thus not surprising that the weak growth of the economy during the 1980–1988 period was coupled with a decline both in the ratio of GDP exports and that of GDP imports, which is a result least expected of a trading policy reform.

The second lesson is that even if the implementation of a trade reform must take place over a short period of time, it is advisable to publicize it beforehand so as to allow the different parties concerned, both the losers and the winners, to get prepared. The impact of announcing the reform measures could even make investors behave in a way that anticipates the objectives of the reform.

The third lesson that stems from the Senegalese experience is that, since the adjustment process after a trade reform is of a structural nature, the new rules of the game must be known beforehand as much as their application must be guaranteed on a long-term basis by the institutions responsible for it. Such a guarantee is not only necessary for the re-allocation of productive resources, but also because even though sectors become profitable, they will attract new investors only if these are convinced that the reforms undertaken are designed to last (Nash, 1992).

Finally, given the duration which enterprises need to adapt to a new environment, it is essential that the reform objectives be shared by a maximum of enterprises and that the behaviour of these should not be frustrated by frequent hesitations and too much calling into question on the part of the institutions responsible for implementing the reform programme.

Notes

¹ Indeed, for merchants and manufacturers from Marseilles, the capturing of the Senegalese market meant a loss of earnings, in view of the fact that it would put restrictions on cheaper supplies to British colonies like India and Nigeria.

² These firms are: the Commercial Company of West Africa (SCOA — Societe Commerciale de l’ouest-Africain,) the French company of West Africa (CFAO — Compagnie Francaise de l’Afrique de l’Ouest) and the New Commercial Company (NOSOCO — Nouvelle Societe Commerciale), a branch of Unilever (Suret-Canale,1964; Assidon, 1984). A similar concentration could be observed in industry and mines, where 13 and 7 firms held a total of 60 percent and 65 percent of investments respectively. According to a study carried out by the French Ministry of Colonies in 1943, the investments of private capital exported from France to French tropical Africa between 1900 and 1940 rose to 28 billion francs, 39 percent of which was invested in trade and 10 percent in the banking sector and real estate, against 9.6 percent in industry and 7.5 percent in the mining sector (Suret- Canale, 1964).

³ It was, for example, estimated that the capital investment between 1870 and 1936 was two pounds sterling per capita in the French territories, while it was about ten pounds sterling in the Portuguese and British territories and 56 in South Africa (as cited by Suret-Canale, 1964). Besides, a study carried out by the French Ministry of Colonies in 1943 showed that 39 percent of private capital investments exported from France were in trade, 10 percent in real estate and banking; against 9.6 percent in industry and 7.5 percent in the mining sector.

⁴ Since 1939, it had indeed become necessary to promote by supply of groundnut oil produced in Senegal to North Africa in order to make economies on freight and avoid the double transport of the groundnut raw material from Senegal to France, and then of its oil from France to North Africa (Suret-Calale, 1964). That is why, after its factory in France was put out of use, the Lesieur Company obtained authorization to set up another one in
Dakar. Simultaneously, various small industries were started in Dakar: cement works, shoe or furniture factories, fish canning factories, and carpentry workshops. Between 1942 and 1945, 30 authorizations were granted to set up industrial companies in Senegal (Nguyen Van Chi-Bonnardel, 1978).

⁵ Fixed at 1.70 (old) metropolitan franc in 1945, the CFA exchange rate later rose to 2 metropolitan francs in 1948, a rate that remained uncharged till the 1994 devaluation.

⁶ It can be read in that plan that even if the state “expects the intervention of substantial private capital,” it however does not intend “to stay passive, but rather to play an engine role by defining an industrialization programme, creating and maintaining a climate conducive to industrial expansion by undertaking studies and research essential for the setting up of new industries and participation if need be” (cited by Rocheteau, 1982).

⁷ This policy was in total agreement with the development strategy that had been defined in the “action proposals for the decade of development” adopted in 1962 by the UN (Singer, 1994).

⁸ For more information on this episode, see Thioub (1994).

⁹ One can mention the case of the Senegal Fertilizer Industrial Company (SIES — Societe Indutrielle des Engrais du Senegal) and that of Senegalese Industrial Company for Mechanical Construction and Farming Equipment (SISCOMA — Societe Industrielle Senegalaise de Constructions Mecaniques et Materiel Agricole). Started in 1961, the SIES was the first fertilizer factory in Sub-Saharan Africa. It provided the farming sector with inputs obtained from locally produced phosphate. SISCOMA was an agricultural equipment factory. Neither factory survived the crisis in the groundnut farming.

¹⁰ It is in this context that SOSECOD was created in 1961. It was replaced by SONADIS in 1965. Designed to serve as an instrument of promoting Senegalese traders, SONADIS was an association of both the SCOA company and the Goverment of Senegal. The creation of AFRIDEX in 1960 came about through a similar type of association between CFAO and numerous small Senegalese traders.

¹¹ 1968 and 1969 saw scenes of uprising from students and urban workers which seriously shook up Senghor’s regime.

¹² Nguyen Van Chi-Bonnardel (1978) estimated at 15,000 the number of consumers represented by the sole French military and the family members present in Senegal at the time of independence.

¹³ The World Bank was actually the first to acknowledge the important role it played in shaping the economic policy of Senegal. One of its 1987 reports (see Banque Mondiale, 1987b), indeed states that through its work, its advice in matters relating to economic policy and thanks to continuous dialogue with the Government of Senegal, it has always exerted considerable influence on economic decisions, an influence that was considered incommensurate with the level of its financial contribution.

¹⁴ The SONEPI had a double mission: on the one hand to contribute to the development of national small and medium-sized industries, and on the other hand, to look for foreign private investors.

¹⁵ This corroborates the idea that one of the conditions for implementing an industrialization strategy through import substitution is to have a high level of political independence likely to attract foreign capital or to protect domestic industries (Mkandawire, 1988).

¹⁶ The revision, in 1971, of the public service concession system for the production and distribution of electricity resulted in the creation of SENELEC as a mixed economy company in which the government and the former concessionaire held 50 percent of the capital each. As for the water distribution company, it simply lost all its concession rights because the government re-owned the whole network through SONEES corporation
(Rocheteau,1982). Such were the rare cases of nationalization implicating the Government since independence, as most of the other public corporations were directly set up with public funds.

¹⁷ For instance, the first plan stated as one object to reduce cereal imports in order to “reserve the country’s importing capacity to goods necessary for development,” while customs protection was deemed necessary for the start of new industries, while avoiding to establish monopolies and hence hinder competition. In accordance with the exporting orientation of the 1970s, the third plan re-affirmed the objective — already started in the second plan — to increase and diversify exports. It also provided for a further opening of the domestic markets to foreign competition: protection of the local production was to be limited to the necessary period companies would require to mature. The fourth plan, for its part, aimed at both modifying the structure in favour of equipment goods and at strengthening the measures likely to help domestic companies to win foreign market shares.

¹⁸ Among the important advantages offered to the companies set up in the area, there were: an exemption on import duties and taxes, an exemption on export taxes, fiscal exemptions, and guarantees related to the repatriation of capital income for foreign investors.

¹⁹ A special convention is a mechanism that allows for granting to a company a legal monopoly for the production or importation of one or more products, as well as granting it various advantages in the form of fiscal exemptions, subsidies or guaranteed prices. Such a convention has usually been applied to basic consumer goods.

²⁰ One arrangement used to that effect was a bank account, named Account K2, into which was paid money from the public coffers, which allowed the government to grant bank loans to its suppporters under unorthodox conditions (Diop and Diouf, 1999).

²¹ Djouga Kébé and Djily Mbaye were best known of those business people. The two men had in common the fact that they both acquired their wealth abroad and were linked to the Mourides Brotherhood. After amassing considerable capital from the diamond trade in former Zaire and from cocoa in Cote d’Ivore and Guinea for the latter, they founded groups which, in their lifetime, were among the 12 most important industrial groups in Senegal (Banque Mondiale, 1992). While the Kébé holding company ran operations covering industrial sectors such as food processing, estate, tourism and trade, the Mbaye group had interests in food processing, textile, banking and real estate sectors.

²² The study by the World Bank points out that the majority shareholder in this enterprise was actually a Frenchman naturalized as Senegalese.

²³ Cruise O’ Brien (1981) has shown that the peripheral integration of Senegalese companies into the world market economy, through colonial structures, was made up for by a universal religion, Islam. Like all the authors who have written about this issue, he postulates that there is a connection between the development of religious brotherhoods, the extension of groundnut cultivation and the colonial stranglehold.

²⁴ That is why within one and a half years (from May to November 1937), 42 professional unions had been created (Suret-Canale, 1964). The rapid development of the union movement was crowned, in 1938, with the creation of a union of African trade unions for the Dakar area.

²⁵ The UPS is the ancestor of the current Socialist Party. Being the first party to come to power in 1960, it retained this until the last presidential elections of February-March 2000 which saw the victory of an opposition coalition that supported candidate Abdoulaye Wade from the Senegalese Democratic Party.

²⁶ See also Diop and Paye (1993):

²⁷ The information about economic operators in Senegal was drawn from the various papers published in Marfaing and Sow (ed), (1998), from Kébé (1998) and notably Seck (1998), and from a sturdy we carried out with professional trade unions.

²⁸ The appointment of Abdou Diouf as Prime Minister in 1970 was immediately followed by that of Babacar Ba as Secretary General in the Office of the President, a position which he held until 1971 before becoming Minister for Finance and Economic Affairs. It is worth noting that Ba was the second Senegalese to head this ministry under Senghor, as all the other ministers before him were of French origin.

²⁹ The ease with which the government of Senegal had access to external sources of funding gives an indication of the political support it hat always enjoyed from donors. This support allowed the country not to apply measures of internal adjustment, in particular those relating to the government’s lifestyle.

³⁰ Balladur was France’s Prime Minister between 1993 and 1995. Less inclined to be carried away by the “Franco-African friendship” and impervious to orders from some in the old Gaullist network, the Balladur government played a decisive role in convincing President Mitterrand and member states of the CFA franc to accept its devaluation.

³¹ In Senegal, it is public knowledge that even the Prime Minister is only rarely invited to take part in the process of defining policy reforms: the most part of the negotiations and implementing process is almost exclusively the responsibility of the Head of State and the Finance and Economy Minister.

The economic departments in the administration where we could conduct interviews are the directorates of foreign trade, industry, planning and custom.

³³ Members of the executive staff who had received post-university training had, generally speaking, graduated from the École Nationale (ENAM) in charge of training civil administrators, already holders of a Master’s degree.

³⁴ In the framework of this scheme, about 4,000 servants retired between June 1990 and August 1991 (Rouis, 1994).

³⁵ Such was the attraction to these organizations that it is not rare to find former ministers and senior civil servants in the state apparatus now occupying relatively unimportant positions in the very oganizations they negotiated with in the past in the name of the Government of Senegal.

³⁶ Founded during the colonial period, the Senegal Industry and Mining Professional Union (SPIDS — Syndicat Professionnel des Industries et des Mines du Sénégal) is the oldest employers’ union. It was structured around the heavy industry which, as we have already seen, remained under the control of foreign interests. Moreover, it should be noted that it is the only employers’ organization in existence before the structural adjustment era.

³⁷ Geourjon (1990), observes that although this meeting took place on 18 January 1986 and the Ministerial Council meeting was to be held on 10 February 1986, employers were asked to make comments on the NIP measures but no written document on this policy was given to them.

³⁸ Studies carried out in the mid-1980s had indeed brought to light the fact that quality restrictions concerned not less than 160 products and that 25 enterprises which realized about 30 percent of their total manufacturing value added benefited from special conversion (Banque Mondiale, 1994b). As for the figures of effective protection rates calculated for 198, they revealed that while domestic market-oriented and low value added industries benefited from positive effective protection rates, those for foreign market-oriented industries were negative. In total, the mean effective rate of Senegalese industries had thus reached the excessively high level of 165 percent in 1985.

³⁹ In the scheme initially proposed by the World Bank, the revision of customs tariffs was to be carried out in one go, but the customs administration was eventually allowed to carry it out in two phases: in 1986 and 1988. Geourjon (1992) points out that since the customs administration later did not wish to go beyond the measures taken in 1986, those of 1988 were imposed by the World Bank.

⁴⁰ Used to fight underbilling, market price lists are minimum reference values imposed on importers. Levy minima are specific custom duties fixed by the customs office independently of the goods declared value.

⁴¹ In 1987, enterprises enjoying a special convention represented 30 percent of the total value added of the manufacturing industry. Following the new investment code adopted the same year, it was planned all the special conventions that would expire would be progressively abolished. However, when NIP was abandoned in 1989, only one of the 15 remaining accords had come to an end.

⁴² Instead of increasing, export subsidies diminished, falling from eight billion francs in 1986 to a little more than six billion in 1989, which, in relative terms, represents a fall from 13 percent to 8 percent of the f.o.b. value of the exports for the years in question (Banque Mondiale, 1992).

⁴³ In the end, the revision of certain provisions of the labour legislation by the National Assembly, happened only in 1994, after all sorts of incidents due to the pressure from trade unions. It can therefore be suggested that the government fell victim to its own strategy of “responsible participation” by workers’ unions in the management of political power and economy.

⁴⁴ It was carried out by an American research consultancy firm, the Boston Consulting Group.

⁴⁵ Geourjon (1990) further notes that among the three Sub-Saharan African countries (out of the 19 for which statistics were available whose flow of investment was negative in 1987), Senegal had the worst results.

⁴⁶ Sakho was the Economy, Finance and Planning Minister and Loum the Minister of State for the Budget when the emergency plan was adopted. During a reception of workers’ unions that were striking against the measures contained in this plan, the President of the Republic made it clear to them that the only alternative to the implementation of these measures was devaluation and thousands of lay-offs in the public service. Moreover, it is well known that President Abdou Diouf was, to the last minute, among those who were strongly opposed to changes in CFA franc mint par of exchange.

⁴⁷ Although PASCO was considered as the most important mechanism in support and development of the private sector, it was not the only one. The devaluation was in fact followed by such a big number of projects with the same objective that, according to Berg et al. (1997), their beneficiaries did not even know which institution to address requests for assistance.

⁴⁸ This revision of customs and tax law was meant to anticipate the institution of a common foreign tariff in the year 2000, in the framework of the West Africa Economic and Monetary Union Treaty adopted at the same time as the devaluation of the CFA franc.

This section draws essentially on the findings of three empirical studies conducted as part of the preparation for the present study. The first was a survey of 30 enterprises. It was based on a questionnaire on their technological and productive potential, on the impact of trade and industry policies, on the role of the government and on the enterprises’ level of participation in the design and implementation of policies. The sample selected covered all industry branches on the list of the official system of Senegal’s industrial accounts. The survey was complemented by interviews with four employers’ unions: the Professional
Union of Senegal’s Industries and Mines (SPIDS), the Senegal National Council of Employers (CNP), the Senegal National Confederation of Employers (CNES) and the Senegal National Union of Traders and Manufacturers (UNACOIS). The study also took into consideration the opinions from interviews with official responsible for foreign trade, industry, custom, planning and the Dakar Chamber of Commerce and Industry.

⁵⁰ We know how the first Structural Adjustment Loan (SAL) from the World Bank and the extended facility accord from the IMF were annulled because of non-respect by the Senegalese Government of its commitments made on the occasion of the Economic and Financial Recovery Plan. Because of that, for three years the government was deprived of important financial resources.

⁵¹ Mamoudou Traore, the then Economy Minister, was seen as the best representative of this group of officials. Directly landed from the IMF, where he was its director for the Africa Desk, he made Senegal start walking on the path to structural adjustment. After resigning from the government in 1986, he returned to hold a new position with IMF.

⁵² These last years, European directives aimed at imposing hygiene and quality standards to the Senegalese fishing companies dealing with European markets have succeeded in a campaign denouncing the toxicity of the groundnut oil produced in Senegal.

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