Senegal

Country Profile

Senegal’s urban population has nearly doubled in the last 50 years, growing from 23 percent in 1960 to 43 percent in 2010.[1] The urbanization rate hovered around 5.5 percent until 1975, while the past 25 years saw a decrease, with Senegal’s urban population growth rate averaging 3.4 percent.[2]

Senegal is one of eight member states of the West African Economic and Monetary Union (WAEMU), along with Benin, Burkina Faso, Guinea Bissau, Côte D’Ivoire, Mali, Niger, and Togo.[3] The Central Bank of West African States (BCEAO), located in Dakar, Senegal, carries out several functions, including monetary signs issue, pooling of the union foreign exchange reserve, management of monetary policy and accounts of WAEMU member states, and establishment of the banking law governing banks and financial establishments within the Union.[4]

Banque De L’Habitat (BHS), Senegal’s housing bank, is recognized as a major player in national housing finance;[5] however, as the role of commercial lending continues to grow in both commercial and residential housing finance, this will likely lead to a “drop in activity of BHS.”[6] In 2010, mortgages made up nearly 32 percent of the BHS portfolio, equal to 76.635 million USD in 2010 and 0.6 percent of the GDP.[7]

While BHS reports a steady increase in consumer credit over the past five years, it is critical to note the shortage of long-term loans being made.[8] Outstanding long-term loans showed only a marginal increase of 2.3 percent between 2009 and 2010, while short-term loans increased by more than 50 percent during the same period.[9]

Senegal boasts a strong and growing microfinance sector, with coverage rates having nearly tripled between 1995 and 2001.[10] The International Monetary Fund (IMF) noted “while the microfinance sector represents only a small part of the system, it has contributed to about one third of the increase in the ratio of total assets to GDP.”[11] The BCEAO has been involved in the supervision of larger microfinance institutions (MFIs), while the 2005 IMF financial report recommended consolidation and better supervision of smaller and weaker MFIs.[12] WAEMU and the BCEAO have established a “poverty reduction mechanism,” establishing banking subsidiaries in each member country with the purpose of providing uncollateralized micro credits to a wide range of potential borrowers.[13]

Despite these positive trends, substantial weaknesses affect the availability of housing finance. For example, though property titles are protected by law and a land registration system exists, the confirmation of ownership rights can be tedious.[14] While “the functioning of justice in Senegal has traditionally been recognized as satisfactory,”[15] inefficiencies in land allocation, titling process, and foreclosure proceedings, and enforcement of arbitral awards have resulted in a “high concentration of credit risk in bank loan portfolios,” and the “discouraging of public and private developers from producing eligible social housing projects.” [16] An improvement in the administrative process resulted from an IMF recommendation: the RTGS program began operation in 2004, with the goal of improving the efficiency, speed, and security of Senegal’s payment system and raising it to international standards.[17]


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[1] The World Bank. World Development Indicators Database. Web. 12 Mar. 2012.

[2] The World Bank. World Development Indicators Database. Web. 12 Mar. 2012.

[3] Central Bank of West African States (BCEAO). Organisation of the banking and financial system. Web. 26 Feb. 2012.

[4] Central Bank of West African States (BCEAO). Organisation of the banking and financial system. Web. 26 Feb. 2012.

[5] International Monetary Fund. Senegal: Financial System Stability Assessment update. 2005, p.18.

[6] International Monetary Fund.Senegal: Financial System Stability Assessment update. 2005, pp.19-18.

[7] Banque De L’Habitat du Sénégal.BHS Annual Report 2010. 2010, p. 10.

[8] Banque De L’Habitat du Sénégal. BHS Annual Report 2010. 2010, p. 19.

[9] International Monetary Fund. Senegal: Financial System Stability Assessment. 2001, p.23.

[10] International Monetary Fund. Senegal: Financial System Stability Assessment. 2001, p.23.

[11] International Monetary Fund. Senegal: Financial System Stability Assessment. 2001, p.21.

[12] International Monetary Fund. Senegal: Financial System Stability Assessment update. 2005, p.22.

[13] International Monetary Fund. Senegal: Financial System Stability Assessment. 2001, p.25.

[14] U.S. Bureau of Economic, Energy, and Business Affairs. 2011 Investment Climate Statement. Web. 22 March, 2012.

[15] International Monetary Fund. Senegal: Financial System Stability Assessment. 2001, p.25.

[16] International Monetary Fund. Senegal: Financial System Stability Assessment update. 2005, p.1, 18-19.

[17] International Monetary Fund. Senegal: Financial System Stability Assessment update. 2005, p.22.