Rachel Savage
JOHANNESBURG (Reuters) – International investors will be closely watching Senegal’s presidential elections scheduled for March 24 after delays sparked widespread protests.
The country, usually one of West Africa’s most stable, coup-prone democracies, has been gripped by tension since early February when President Macky Sall tried to delay the Feb. 25 vote by 10 months, leading to warnings of democratic backsliding.
WHAT ARE INVESTORS FOCUS ON?
Senegal has approximately US$4.2 billion worth of international bonds outstanding, two of which are issued in euros and three in US dollars. For investors in these bonds, the current focus is whether the presidential election will be peaceful and fair.
“The market will be watching closely to see whether voters are able to express their opinions in a way that they believe is credible,” said Yvette Babb, portfolio manager at William Blair Investment Management.
Babb said there is no clear consensus among bond investors about who will emerge victorious among the 19 presidential candidates, of whom more than half the votes will be needed to avoid a runoff.
“If you look at market prices, in my opinion they are mostly about the process and not necessarily the outcome,” she said. “The market is certainly primarily focused on putting all this behind us.”
WHAT ABOUT ECONOMIC POLICY?
Senegal is generally considered a business-friendly country with a strong economic outlook, thanks to projects set to begin production later this year and International Monetary Fund (IMF) forecasts that will boost GDP growth to double digits by 2025.
The country received $1.9 billion in IMF funding in October, which was seen as a stabilizing force for government finances. The peg of the regional currency, the CFA franc, to the euro is seen as a positive factor for curbing inflation.
“Ultimately, the biggest risk in Senegal right now is political,” said Joe Delvaux, portfolio manager at Amundi, Europe’s largest asset manager.
“Do I think… economically this will change much in the country? As long as policy action is taken, I don’t think there will be a complete overhaul of policy, IMF discussions or cooperation with the IMF,” he said. .
CAN SENEGAL BE Governed BY A POPULIST?
All but one of the 19 candidates in Senegal’s presidential election generally support maintaining the country’s business-friendly environment, said Mukahid Durmaz, senior West Africa analyst at risk analytics firm Verisk (NASDAQ:) Maplecroft.
But the opposition coalition, backed by popular firebrand leader Ousmane Sonko, who has capitalized on frustration over a lack of youth jobs, has vowed to create a new national currency and renegotiate mining and energy contracts.
Sonko and his coalition’s presidential candidate Bassirou Diomaye Fay were released from prison on Thursday evening, as thousands of supporters celebrated in the streets of the capital Dakar.
Despite the lack of opinion polls, Fay is seen as a strong contender to replace Sall, who is stepping down as president after two terms.
“Despite the influx of investment, people are asking why hasn’t this changed my life, why haven’t I benefited from it?” – said Dumaz. “That’s a very popular sentiment in Senegal right now, and Fay’s spaces reflect that.”
($1 = 0.9187 euros)