The fragile veneer of political stability in Senegal has been shattered. President Macky Sall has dismissed Prime Minister Amadou Ba after a bitter public feud, sending shockwaves through the region and troubling investors who had begun to view the country as a rare beacon of democratic reliability in West Africa. For the City of London, this is not merely a foreign affair but a reminder that political risk remains a stubbornly priced-in feature of emerging markets.
The sacking follows weeks of tension between Sall and Ba, culminating in the prime minister's open criticism of the president’s economic policies. While details remain murky, the immediate trigger appears to be a dispute over the management of Senegal’s burgeoning oil and gas revenues. With production expected to begin later this year, the question of how these windfalls are allocated has become a political grenade.
For the UK, which has been courting Senegal as a strategic partner in the fight against jihadist insurgency and irregular migration, this is an unwelcome development. British officials have privately expressed concern that the infighting could derail reforms needed to attract foreign direct investment, particularly in the energy sector where UK firms like BP hold significant stakes. The Foreign Office’s Africa director was reportedly in Dakar last week, urging restraint.
The market reaction has been predictable. The Senegalese CFA franc, pegged to the euro, has come under slight pressure in offshore trading, and yields on the country’s Eurobonds have ticked up by 15 basis points. This is hardly a crisis, but it is a reminder that political cohesion is a currency in its own right. Capital flight, though not yet material, is a real risk if the feud deepens.
President Sall, who has governed since 2012 and is widely expected to seek a controversial third term, may calculate that removing a rival strengthens his grip. But the optics are poor. Senegal has long prided itself on its democratic credentials, a rarity in a neighbourhood where coups and strongmen rule. Sall’s move risks turning the country into just another African state where power is concentrated in the presidency.
For UK investors, the calculus is simple: stability is priced into Senegalese assets, and any deviation from that norm will be punished. The country’s GDP growth has averaged 5% in recent years, driven by construction and services, but the oil and gas sector is the real prize. If political uncertainty delays those projects, the opportunity cost will be substantial.
The Treasury is watching closely. Chancellor Jeremy Hunt has made Africa a priority for post-Brexit Britain, and Senegal is seen as a linchpin of that strategy. A destabilised Dakar would ripple across the region, affecting UK interests from Ghana to Nigeria.
In the meantime, the IMF has urged both sides to resolve their differences swiftly. The Fund’s resident representative in Dakar reminded the government that fiscal discipline and institutional credibility are non-negotiable if Senegal is to access further financing. The message was pointed: don't let a political soap opera jeopardise your credit rating.
As the dust settles, one thing is clear. The City will be watching Senegal’s next move with the same scepticism it reserves for any government that puts politics before the bottom line. If Sall’s gamble pays off, the market will forgive. If not, the cost of capital will rise, and the UK’s grand designs on West Africa will meet their first real test.
