This week on Business Africa: Senegal faces a budgetary crisis following a damning report, Ibrahim Traoré bets on industrialization for Burkina Faso’s self-sufficiency, and Nigeria seeks to harness its mining potential to reduce imports.

Senegal: Public Finances Under Strain After Court of Auditors Report

Senegal is facing a financial transparency crisis after the latest report from the Court of Auditors revealed significant irregularities: public debt at 99.67% of GDP, well above the initially announced 74.41%, and a revised budget deficit of 12.3% of GDP for 2023. These accounting errors have eroded investor confidence and threaten the country’s economy.

The Crisis’s Causes: Accounting Anomalies and Opaque Practices

The Court of Auditors’ report highlights unaccounted debts, opaque spending, and irregular budget transfers. These practices have inflated the debt and worsened the deficit. Senegalese economist Ousmane Dieng explains that the cash-based accounting system is outdated and that switching to accrual accounting could have prevented these adjustments. “If this transition had been made, many of these errors would not have occurred,” he says.

Government Response: Reform Promises and Suspension of IMF Withdrawals

In response to the crisis, the government has suspended its IMF disbursement requests and committed to reforms, including the centralization of debt management and tighter controls over external projects. Ousmane Dieng urges investors to view the situation in context and criticizes the crisis communication. “The government must avoid sensationalism and reassure donors,” he emphasizes.

The crisis could delay or suspend several infrastructure projects funded by loans. Dieng advocates for alternative financing and the inclusion of natural resources in GDP calculations. He argues that, like Algeria, Senegal should factor in its natural resources to ease the pressure on public finances.

Raising Financial Literacy and Revalorizing Savings

Dieng also stresses the importance of raising public awareness about financial literacy. Public savings schemes could help capture idle savings for development financing. “We must involve Senegalese people in financing their own development,” he concludes.

Senegal needs to undertake structural reforms to restore transparency and investor confidence. Adopting accrual accounting and ensuring rigorous public finance management are essential to maintain the country’s economic stability and secure confidence in its future.

Burkina Faso Under Ibrahim Traoré: Industrialization as a Lever for Economic Sovereignty

Since taking power in 2022, Captain Ibrahim Traoré, leader of Burkina Faso, has focused on economic self-sufficiency to reduce dependence on foreign aid and harness internal resources. This strategy, shared with Mali and Niger within the Sahel States Alliance, aims to strengthen economic sovereignty, as explained by Professor Hamidou Sawadogo.

The focus is on agriculture, with significant investments and an increase in production tools. The 2024 farming season produced nearly 6 million tonnes of cereals.

However, securing the territory remains a major challenge to ensure the sustainability of this strategy. The government continues to improve economic efficiency, with a projected growth rate of 3.7% in 2024. However, due to security and structural challenges, Burkina Faso must adjust its model to meet development realities.

Nigeria: Underdeveloped Mining Potential Costing the Nation Dearly

In a report by Tesem Akende, Nigeria, despite spending $10 billion annually on importing raw materials, possesses significant untapped mineral deposits. Geologist Eric Biame points out that exploiting these resources could transform the economy by reducing import dependence. Yet, the mining sector contributes less than 1% of GDP, with $9 billion lost annually due to illegal mining.

In response to this challenge, the government is working to eradicate illegal mining and attract investors. Mining engineer Plankat Dashwet calls for issuing permits to encourage investment. The government has already arrested over 300 illegal miners and is implementing reforms to regulate the sector, reduce imports, and create jobs, as explained in this report by Tesem Akende.