TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

TABLE 7
Government revenues and Senegal fiscal balance, % of GDP, 2005–2011
venture, not only for the foreign investor
concerned but also for the wide range of other
stakeholders (producers, service providers, bank,
state institutions, etc.) involved with this industry.
It should be also be remembered that the tomato
is the only food industry in Senegal whereby such
clearly defined working arrangements – including
the setting of guaranteed farm-gate prices –
have been successfully reached among the food
industry participants, contributing to ensure a
win-win outcome for all involved.
4.3 Some FDI related agro-processing
level impacts
Studies have shown that FDI inflowing to Senegal
is essentially directed towards the formal, modern
sectors, including that of agroindustry. As the
following figures will show, there are also some
signs of progress in the country’s agro-processing
subsector as a result of the active participation
of FDI in this area. In the first seven months of
2009, for example, agro-processors experienced
a significant improvement in production levels,
faring about 9 percent year on year, in contrast
with most other industrial sectors. Among the
food subsectors showing the strongest trends in
growth, are vegetable oil production, cereal and
sugar processing. These encouraging trends were
partly attributable to the excellent agricultural
season registered in Senegal in 2008/2009,
particularly for groundnuts and cereals.
The recent developments mentioned
previously are encouraging; however, it should
be remembered that key activities such as
vegetable and groundnut oil production and
exports are still performing below levels reached
in 2006. Taking the agricultural sector broadly
into account, the overall impact of FDI inflows
Part 4: Business models for agricultural
investment: Impacts on local development
Indicators 2005 2006 2007 2008 2009 2010c 2011c
Central government revenue 20.9 21.4 23.4b 22.5 20.0 21.7 22.5
Central government expenditure 23.6 27.4 27.2b 27.5 24.6 25.8 25.1
Central government balance
Source: APIX
-2.7 -6.1 -3.8b -5.0 -4.7 -4.1 -2.6
on the sector so far registered is rated as below
expectations. An exception is the subsector
driven by small farming agriculture which has
demonstrated some real increase in contribution
to GDP formation (Figure 2), while key
subsectors such as fishing, livestock and hunting,
industrial farm and export oriented farming,
forestry and logging have not been contributing
sufficiently to the GDP.
Putting this into a better perspective, the
entire modern sector in Senegal, which currently
best captures the wealth-creation activities
of foreign investors, (all sources considered),
accounted for only US$1 631.416 million in
value addition in 2008. This is comparable to the
individual achievements of selected emerging
bankers in terms of their net 2008 banking
product 16 : The Standard bank group of South
Africa (US$6 504 million); the First Bank of
Nigeria (US$1 547 million). Figure 2 clearly shows
the key contribution which the domestically
oriented small food producers make to GDP
relative to other sectors. This figure also shows
how limited the impacts of industrial and export
oriented activities have been on the country’s
economic output, despite all the FDI incentives
provided. These suggest that Senegal should
thoroughly review the activities of established
foreign investors or established agribusiness
segments, gauging carefully in due context what
each investor or agribusiness venture is really
bringing relative to what is it is costing in the
balance to the country.
16 Standard bank group of South Africa (US$6 504 million),
First Bank of Nigeria (US$1 547 million) and Ecobank
international, Togo (US$826 million). See Les 200
premières banques africaines. Classement exclusive 2008.
Jeune Afrique. Hors série no. 22. octobre 2009.
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SENEGAL