After four years of remarkable growth, with foreign direct investments (FDI) averaging three billion dollars annually, Senegal saw a dramatic decline in 2025, dropping to just 37 million dollars. This sharp fall, highlighted in the United Nations Conference on Trade and Development (UNCTAD) annual report, raises a critical question: Is this a natural end to a massive investment cycle, or a sign of growing investor caution toward the government’s financial policies?
Investment surge fades as major projects enter production phase
The decline in foreign investments is largely cyclical. Major oil and gas projects such as Sangomar and Grand Tortue have drawn substantial funding in recent years, but these projects are now transitioning into production phases. The initial investment surge is over, and the country is left with fewer new projects to attract fresh capital inflows.
Moubarak Lo, former economic advisor to the Prime Minister and now a private consultant, believes Senegal has the potential to sustain three to five billion dollars in annual FDI. However, he warns that this requires a more proactive approach to economic promotion. “Senegal can structurally maintain three to five billion dollars per year in investments,” he explains, “but this depends on active economic promotion. The country lacks a dedicated foreign investment promotion network, unlike other nations. While roadshows are organized, they are insufficient. Waiting passively is not an option; a proactive strategy is essential. The country excels in attracting portfolio investments like government bonds and treasury bills but falls short in promoting direct investments, and that mindset shift is urgently needed.”
Debt levels fail to deter private investors
Senegal’s high debt levels, which stood at 132% of GDP at the end of 2024 according to the IMF, might seem like a deterrent on paper. However, experts argue that this does not necessarily impact private investors. Justin Maria, Director of Access Bank France, supports this view, pointing to France as an example where private investors continue to pour capital despite its public debt exceeding 3.5 trillion euros.
For him, the lack of visibility is the real concern. “Senegal has become a country perceived as risky. Not necessarily due to long-term fundamentals, as no one has a crystal ball, but because of short-term uncertainties. Investors lack clarity on public finances and liquidity conditions, and this uncertainty is what holds them back.”
Recovery expected with targeted strategies
Moubarak Lo dismisses the “risky country” label and believes Senegal has the tools to quickly restore its appeal. Despite the IMF suspending its program at the end of 2024, discussions with Dakar are ongoing. “The country currently has around 20 to 30 major projects in the pipeline. Each project must be approached by targeting five or six key global companies and convincing at least one to invest in Senegal. We can turn the tide this year or, more realistically, by 2027,” he asserts.
While Senegal’s FDI has plummeted, other countries in the region have seen increases. In 2025, Guinea led the way, attracting over 7.7 billion dollars in FDI, according to UNCTAD’s report.