
In the legislative elections held in November in Senegal, President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko’s PASTEF party achieved a remarkable victory, taking 130 out of 165 parliamentary seats. The party also excelled in 40 of the nation’s 46 departments, signifying the most substantial electoral win in Senegal since 1988.
This success has delivered a significant blow to the disorganized opposition, led by former President Macky Sall, as his TWS coalition managed to capture only 16 seats, a sharp decrease from the 83 seats attained in the previous election.
PASTEF’s impressive electoral performance may have considerable ramifications for businesses. Prior to the elections, President Faye and Sonko had struggled to make a lasting impact. While Faye won the presidential election in March, promising change, there appeared to be minimal difference between his initial months in office and the previous administration under Sall.
The failure to deliver on various campaign promises was likely a result of the limited power that PASTEF held in the national assembly, where it did not have a majority. However, the results of the November elections have shifted that landscape.
Foreign Policy Shift
With a renewed mandate, President Faye is now positioned to implement significant reforms and is expected to face little opposition in parliament. The implications could be substantial.
“With this newfound political capital, PASTEF possesses the institutional stability and coherence to implement reforms consistent with the government’s ‘Vision Senegal 2050’ national transformation initiative,” states Tiffany Wognaih, a senior associate at JS Held, a strategic advisory firm.
In the weeks following the legislative elections, Senegal announced that France, its former colonial power, would be obligated to withdraw its troops from the region and would no longer be allowed to have a military base in Senegal.
This decision, which starkly contrasts with Faye’s previously cautious attitude toward France before the elections, highlights the assertive measures he is prepared to undertake regarding his commitment to reduce French influence in Senegal.
Furthermore, shortly after the elections, President Faye accepted an invitation from President Vladimir Putin to visit Russia, indicating a further departure from the close ties Senegal maintained with Western allies during President Sall’s tenure.
While Faye emphasizes that relations with France will remain cordial and that Paris will continue to be a vital partner for Senegal, a reconfiguration of Senegalese foreign relations appears imminent.
Businesses Prepare for New Dynamics
The extent to which the government is willing to renegotiate contracts and revise its relationships with foreign businesses—one of the key promises of Faye’s campaign—remains unclear.
In mid-December, Faye’s administration revealed its budget, which aims to reduce the deficit. This budget includes an 8.8% cut in funding to state institutions, seeking to prioritize sectors like agriculture and vocational training.
On one hand, a pro-market budget indicates that the government is considering the interests of businesses.
“Importantly, although both Sonko and Faye campaigned on populist platforms, the administration has not taken a notably aggressive approach toward foreign investors, showing a readiness to collaborate with them,” explains Wognaih.
Nonetheless, the budget indicates that the government is both able and willing to advance its policies with renewed determination.
In the long term, this could involve changes to the operational environment for foreign companies, in light of PASTEF’s pre-election reform commitments.
“The considerable victory has granted them all the power. They can implement changes to the constitution, endorse any laws they choose. There is no real opposition at this point,” remarks Nicolas Soyere, a representative from the EU Chamber of Commerce in Dakar.
The government’s focus on anti-corruption initiatives, long advocated by both Sonko and Faye, may also lead to increased scrutiny of companies associated with the Sall administration, as Wognaih points out.
“Given that the current administration has identified several notable cases of corruption and misconduct under the former government, we can anticipate heightened scrutiny on companies closely linked to Sall,” he adds.
A Senegalese entrepreneur in Dakar, speaking anonymously, expresses concern over the current circumstances.
“The initial nine months under PASTEF have already raised alarm bells for many businesses… Numerous companies might shut down in the coming months if the state does not provide assistance,” he warns.
Oil and Gas Sector Prepares for Oversight
One sector likely to receive increased government focus, due to its transformative potential for Senegal’s future, is oil and gas.
Senegal’s state-owned oil company, Petrosen, forecasts that the two primary oil and gas reserves in the country could yield an annual average of 700 billion CFA francs ($1.1 billion) over the next 30 years. During his campaign leading up to the general election victory, Faye pledged to keep a larger share of that expected revenue within the country. His administration has also begun reviewing contracts with oil and gas firms, with results anticipated by 2025.
Actions against companies viewed as having underpaid taxes—like the $68.6 million tax demand issued to Australian oil and gas company Woodside in August—suggest that the government is not inclined to negotiate.
“Tax exemptions that were routinely granted by previous administrations will now be significantly limited and subjected to strict criteria to ensure they genuinely benefit the national economy,” states Mamadou Baldé, chief of party for the USAID TRACES project at the Natural Resource Governance Institute.
However, Wognaih anticipates that the government will emphasize regulatory changes rather than amendments to existing contracts.
“Unlike its Sahelian neighbors, Senegal is unlikely to adopt a resource nationalism approach; operators will likely encounter proactive changes in policies and regulations—such as new local content or procurement laws—rather than retroactive adjustments to contracts.”
“The government has already signaled its intention to introduce a new set of policies in the hydrocarbons sector by 2025, aimed at developing a local content strategy and revising the tax framework,” Wognaih elaborates.
Minimal Retrospective Changes Expected
Baldé agrees that amending existing laws rather than overturning current contracts will likely take precedence.
“The robust mandate and resolve of the PASTEF-led government to address contractual imbalances suggest that it may pursue indirect routes. This could involve reassessing excessive tax exemptions and operational conditions within existing contracts. The government might also prioritize optimizing revenue through stricter enforcement of legal and contractual obligations to ensure a fairer distribution of benefits for Senegal.”
However, Baldé believes that Faye recognizes the importance of maintaining investor goodwill. The government’s pro-market budget emphasizes its commitment to fostering a reasonably amicable relationship with businesses, he asserts.
“PASTEF will maintain an open approach toward foreign investment,” Baldé claims. “Incoming investors will be treated fairly under the PASTEF-led government, as the country urgently needs foreign investment, regardless of origin.”