Macky Sall. Picture: REUTERS/JONATHAN ERNST
Kigali— Senegalese President Macky Sall said his administration will tap the global bond market this year to fund infrastructure development and accelerate growth that is being driven by higher peanut and rice production.
The West African nation intended raising $500m-$1bn through the sale of a Eurobond, sukuk or Samurai bonds, Sall said in a May 13 interview in Kigali, Rwanda’s capital, where the World Economic Forum held its Africa summit.
Senegal put on hold plans to sell at least $500m of debt last year after costs rose.
“This year, we will definitely have a bond,” Sall said. “The money will be used totally for infrastructure, roads and power. A little bit may be for health facilities and education.”
The economy was expected to expand 6.6% this year, the most in sub-Saharan Africa after Côte d’Ivoire and Tanzania, the International Monetary Fund said last month.
Growth has averaged 4.7% since Sall wrested the presidency from Abdoulaye Wade in 2012 elections and set about improving transport links and power supplies, and boosting farm output by increasing the use of tractors and genetically modified seed.
Peanut production had reached a record 1.1-million tonnes last year and might be even higher this year if good rains materialised as expected, Sall said.
Rice output has doubled to 900,000 tonnes since 2012 and Sall is targeting 1.7-million tonnes by next year, which would make the country self-sufficient as it strives to be less exposed to international market prices. Senegal also produces corn and millet.
Senegal’s dollar-denominated bonds have returned 8.2% this year, compared with an average of 7.6% for 17 sub-Saharan African securities.
Yields on the $500m of debt due in July 2024 increased 2 basis points to 7.1% on Monday.
The government is targeting a yield of 6% or less for the bond.
SA, the only sub-Saharan African nation to sell debt this year, issued a $1.25bn Eurobond last month at a coupon of 4.875%.
The Democratic Republic of the Congo said yesterday it had scaled back its plans to sell $1bn of Eurobonds and instead asked multilateral lenders for direct budgetary support, as it expected to pay an interest rate of 12% to 14%.
Sall’s plans to double the growth rate are set to gain impetus from 2020 when gas is expected to start flowing from two fields discovered by Kosmos Energy this year.
One field, which lies offshore Senegal’s northern border with Mauritania and is shared by the two nations, contained about 17-trillion cubic feet of gas and the other about 5-trillion cubic feet, the president said.
Senegal is also set to start producing oil from 2021 or 2022 from a deep-water well that is being developed by Cairn Energy.
Sall said energy revenues should help diversify the economy and would be accounted for.
He has set up a sovereign wealth fund to ensure any windfall is not squandered.
Senegal’s infrastructure development plans include building a rail link servicing a new airport in Dakar.
– Bloomberg and BDLive
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