Observers who welcome the relative “success” of the Eurobond recently raised by Senegal do not take into account the success of issues carried out by the country’s previous governments, or even by other African countries whose results speak even louder. 

The vast majority of the media yesterday welcomed the raising of international bonds -Eurobonds- by the Senegalese government. For the most part, referring to the Bloomberg website, the media reported that the country had carried out an issue in two tranches. The first, on June 3, for US$500 million, and the second, the following day, for US$250 million. Both issues have a maturity of 7 years, at an interest rate of 7.75%.
The opinion is that this show is a “success”.

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This year, Senegal is the fourth sub-Saharan African country to issue Eurobonds, after Côte d’Ivoire, Benin and Kenya. It is therefore a success story, albeit one that needs to be strongly nuanced.
The country’s last bond issue dates back to June 2, 2021. In the midst of Covid, Senegal was able to raise 775 million euros, or just over 508 billion CFA francs, at a rate of 5.3%, for a maturity of 16 years. The circumstances of the pandemic meant that lenders were not very confident. This did not prevent Senegal from obtaining particularly favourable terms.
Today, people are welcoming the country’s return to the international markets, after the turmoil that preceded last March’s presidential election and the speeches that followed Bassirou Diomaye Faye and his teams’ arrival in power. What’s more, compared with the 3 other countries that went to the bond market, Senegal achieved the lowest score.

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Côté d’Ivoire issued two Eurobonds last January, for a total of $2.6 billion at a rate of 6.6%. Maturity is 9 and 13 years respectively. Benin launched in February, for an amount of 750 million dollars, similar to that of Senegal. If Patrice Talon’s ministers have obtained a rate of 7.9%, they have a maturity of 14 years, so there’s plenty of time to see what’s coming.

Meanwhile, Kenya, was able to secure over $1.3 billion at over 10%, for a 10-year maturity. Makes you wonder why you one goes back to their financial partners.
Those who had followed the declarations of Prime Minister Ousmane Sonko, then a presidential contender, who mocked Macky Sall’s Emerging Senegal Plan as “Senegal Debt Plan” and criticized the propensity of the outgoing government to go into debt abroad, did not think that the newcomers would be quick to follow in the footsteps of the former Finance and Budget officials.

It didn’t take 3 months for them to follow in their footsteps. Unfortunately, Cheikh Diba and Abdourahmane Sarr were forced to accept more draconian conditions. Neither under Amadou Ba nor Abdoulaye Daouda Diallo was Senegal obliged to borrow at such usurious rates, and above all for such short periods. Did the arrival of the International Monetary Fund (IMF) Mission precipitate matters? We know that the Bretton Woods authorities are constantly putting pressure on the authorities to clean up the State’s finances, before they can hope for any extension from their partners.

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And unfortunately, the money raised will only be used, on the whole, to cover part of the State’s debt. The $500 million raised on the first day of the issue will be used first and foremost to relieve the country of its outstanding debt, and prevent it from defaulting on certain loans. This amount also includes more than $120 million for repayment of the 2021 Eurobond. Among other things. The second tranche of the issue, i.e. the $250 million, will be used for “current expenses”. In particular, to pay salaries? Only they know. 

The country’s leaders certainly realize how difficult it is, for a country as poor and extroverted as Senegal, to free itself from the straitjacket of foreign debt and foreign interests. Getting rid of them cannot be done with militant incantations and vigorous slogans. We can see it from the prices of staple foodstuffs that we were promised would not to rise.

By Mohamed GUEYE / mgueye@lequotidien.sn

  • Translation by Ndey T. SOSSEH