Has Growth in Senegal After the 1994 Devaluation Been Pro-Poor?

Azam, Jean-Paul and Dia, Magueye and Tsimpo, Clarence and Wodon, Quentin (2007): Has Growth in Senegal After the 1994 Devaluation Been Pro-Poor? Published in: Growth and Poverty Reduction: Case Studies from West Africa (edited by Quentin Wodon, published in World Bank Working Paper No. 79) (January 2007): pp. 45-67.

Abstract

The devaluation of the CFA Franc in 1994 generated a public investment boom in Senegal. The increase in public investment was made possible thanks to an improved budgetary situation related to the reduction in real terms of the public wage bill which had been too large for some time. The rise in public investment was subsequently accompanied by a (smaller) increase in private investment due in part to the attractiveness of Senegal as a place to do business within West Africa, at least compared to other West African nations. In turn, higher public, and to some extent private, investment led to higher growth rates and substantial poverty reduction, with the share of the population living in poverty declining from 67.9 to 57.1 percent. Poverty in urban areas was reduced faster than in rural areas, as most of the investment benefited the manufacturing and services sectors. Also, a few years of poor rainfall in the second half of the 1990s coupled with an initial drop in the real prices of crops in the aftermath of the devaluation affected negatively rural incomes. As a result, while virtually all segments of the population (including the rural poor) benefited from improved standards of living in 2001 as compared to 1994, growth was not strictly speaking “pro-poor” because the growth in consumption per equivalent adult in the upper half of the distribution was larger than that observed among the poor.

• Item Type: MPRA Paper
• Language: English
• Keywords: Poverty; Senegal; devaluation; pro-poor
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O2 - Development Planning and Policy > O24 - Trade Policy ; Factor Movement Policy ; Foreign Exchange Policy; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I32 - Measurement and Analysis of Poverty

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