During the legislative elections in Senegal in November, President Bassirou Diomaye Faye and Prime Minister Ousmane Sonko’s PASTEF party secured a resounding victory, claiming 130 out of 165 parliamentary seats. Additionally, they triumphed in 40 out of 46 departments nationwide, marking the most substantial election win in Senegal since 1988.
This triumph poses a significant setback for the disjointed and dissatisfied opposition, which is led by former President Macky Sall. His TWS coalition was only able to secure 16 seats, a dramatic drop from the 83 seats obtained in the last election.
PASTEF’s remarkable success at the polls could have far-reaching consequences for businesses. Prior to the elections, President Faye and Sonko had struggled to leave a meaningful impact. Although Faye won the presidential election in March with promises of change, his initial months in office seemed to align closely with the previous administration under Sall.
The failure to deliver on numerous campaign commitments was likely due to PASTEF’s limited power in the national assembly, where they lacked a majority. However, the results of the November elections have altered that scenario.
Transformation in Foreign Policy
With a renewed mandate, President Faye is now positioned to implement significant reforms and is expected to encounter minimal opposition in parliament. The implications of this could be profound.
“With this new political leverage, PASTEF has the institutional stability and coherence necessary to enact reforms in accordance with the government’s ‘Vision Senegal 2050’ national transformation initiative,” comments Tiffany Wognaih, a senior associate at JS Held, a strategic advisory firm.
Following the legislative elections, Senegal announced that France, its former colonial power, must withdraw its troops from the region and will no longer be allowed to maintain a military base in Senegal.
This declaration, which sharply contrasts with Faye’s previous cautious approach toward France before the elections, exemplifies the bold steps he is willing to take concerning his pre-election promise to reduce French influence in Senegal.
Furthermore, shortly after the election, President Faye accepted an invitation from President Vladimir Putin to visit Russia, indicating a further shift from the close ties Senegal had with Western allies during President Sall’s administration.
While Faye insists that relations with France will remain amicable and that Paris will continue to be a key partner for Senegal, a reconfiguration of Senegal’s foreign relations appears likely.
Businesses Prepare for New Dynamics
The extent to which the government is willing to renegotiate contracts and adjust its relationships with foreign businesses—one of Faye’s major campaign pledges—remains uncertain.
In mid-December, Faye’s administration revealed its budget, which aims to reduce the deficit. This budget features an 8.8% reduction in funds allocated to state institutions, striving to direct resources toward sectors such as agriculture and vocational training.
On one side, a pro-market budget suggests that the government is mindful of business interests.
“Crucially, while both Sonko and Faye campaigned on populist themes, the administration has not adopted a notably adversarial posture toward foreign investors, demonstrating a willingness to engage with them,” Wognaih explains.
Nonetheless, the budget signals that the government is both ready and willing to implement its policies more energetically.
In the long term, this could lead to changes in the operating environment for foreign companies, following PASTEF’s pre-election commitments to reform.
“This significant victory has granted them complete power. They can amend the constitution and endorse any laws they see fit. At this stage, there is virtually no opposition,” remarks Nicolas Soyere, a representative from the EU Chamber of Commerce in Dakar.
The government’s emphasis on anti-corruption initiatives, long advocated by both Sonko and Faye, may also lead to increased scrutiny of firms associated with the Sall administration, according to Wognaih.
“Given that the current administration has identified several crucial instances of corruption and misrepresentation under the former government, we can anticipate heightened scrutiny on companies closely linked to Sall,” he adds.
An entrepreneur in Dakar, speaking anonymously, shares concerns about the situation.
“The initial nine months under PASTEF have already unsettled many businesses… Numerous companies may close down in the coming months if the government does not extend support,” he warns.
Oil and Gas Sector Readies for Oversight
One sector that is likely to attract renewed government focus, due to its transformative potential for Senegal’s future, is oil and gas.
Senegal’s state-owned oil company, Petrosen, forecasts that the country’s two primary oil and gas deposits could generate an annual average of 700 billion CFA francs ($1.1 billion) over the next 30 years. During his campaign leading to the recent election win, Faye pledged to retain a larger share of this anticipated revenue within Senegal. His administration has begun a review of contracts with oil and gas companies, with findings expected in 2025.
Measures against companies viewed as underreporting taxes—such as the $68.6 million tax claim leveled against Australian oil and gas company Woodside in August—demonstrate that the government is not inclined to compromise.
“Tax exemptions typically granted by previous administrations will now be significantly curtailed and subject to rigorous criteria to ensure that they genuinely benefit the national economy,” notes Mamadou Baldé, chief of party for the USAID TRACES project at the Natural Resource Governance Institute.
However, Wognaih predicts that the government will focus more on regulatory reforms rather than alterations to existing contracts.
“Unlike its Sahelian neighbors, Senegal is unlikely to adopt a resource nationalism approach; operators can expect proactive policy and regulatory shifts—such as new local content or procurement laws—rather than retroactive changes to contracts.”
“The government has already indicated plans to introduce new policies in the hydrocarbons sector by 2025, aimed at developing a local content strategy and revising the tax framework,” Wognaih clarifies.
Minimal Retrospective Changes Expected
Baldé agrees that modifying existing legislation instead of overturning current contracts will likely take priority.
“The strong mandate and commitment of the PASTEF-led government to address contractual disparities suggest that it may pursue indirect approaches. This could involve reassessing excessive tax exemptions and operational terms within existing contracts. The government may also focus on optimizing revenue through stricter enforcement of legal and contractual obligations to ensure more equitable benefit distribution for Senegal,” he explains.
Nevertheless, Baldé believes that Faye understands the importance of maintaining investor goodwill. The government’s pro-market budget reinforces its commitment to fostering a reasonably amicable relationship with businesses, he adds.
“PASTEF will maintain an open approach toward foreign investment,” Baldé asserts. “Incoming investors will be treated fairly under the PASTEF-led government, as Senegal urgently requires foreign investment, no matter its origin.”
