A debate on a possible exit of Senegal from the category of Least Developed Countries (LDC) has animated the public space in recent days. LDCs are countries that face particularly low levels of socioeconomic development. When we talk about the exit of a country from the LDCs, this means that this country has reached a certain threshold of economic, social and human performance. The exit constitutes a transition synonymous with progress, but also a vector of challenges, which marks a major turning point in the journey of a country, raises many questions and requires in-depth reflection.
What is PMA?
LDCs constitute a category of countries defined since 1971 by the United Nations, in greatest need of international aid. According to the United Nations’ conception, LDCs are the poorest and weakest segment of the international community. They are characterized by structural socio-economic problems that keep them in the vicious circle of underdevelopment. These problems are called low income, vulnerability to exogenous shocks, low accumulation of human capital, etc. To be admitted to the LDC category, a country must have a Gross National Income (GNI) per capita of at least USD 1,088. In 2024, there would be forty-five (45) LDCs. LDC status is thus associated with significant economic and social challenges. To help these countries meet these challenges, benefits are provided to them. These include, among other advantages, preferential access to developed country markets (reduction or elimination of customs duties, lifting of quotas on exports, lifting of non-tariff barriers, etc.), technical and financial support (public development assistance, green funds, climate financing, technical cooperation, etc.), of international visibility, notably through international conferences on LDCs, including among the most famous, the United Nations conferences on LDCs in Paris (1981 And 1990), Brussels (2001), Istanbul (2011), and Doha (2023).
Exiting the LDC category
Graduation from the LDC category is subject to success following a series of three reviews, followed by a recommendation from the United Nations Committee for Development Policy (UN-CDP) to the Economic and Social Council (ECOSOC) of the United Nations. The exams are based on three criteria.
The first criterion is GNI per capita. The threshold considered is USD 1,306 (or USD 3,918 if only income is considered).
The second criterion is the Human Capital Index. The threshold considered is 66 out of 100. This index is calculated with health indicators (infant mortality rate, maternal mortality ratio, prevalence of stunting) and education indicators (education completion rate average, adult literacy rate, gender parity index for lower secondary school completion).
The third criterion is the Economic and Environmental Vulnerability Index. The threshold considered is 32 out of 100. The index is evaluated taking into consideration two factors. The first is the economic vulnerability index calculated with indicators such as the share of agriculture, forestry and fishing in GDP, the level of remoteness and landlockedness, the concentration of merchandise exports and the instability of exports of goods and services. The second is the environmental vulnerability index calculated with indicators such as the proportion of the population in low-lying coastal areas, the proportion of the population living in arid areas, the instability of agricultural production, disaster victims .
Success is conditional on positive results on at least two consecutive examinations, with the satisfaction of at least two criteria out of three. A country that succeeds in emerging from the LDCs improves its international image, with recognition of the progress made in terms of socio-economic development. It also improves its attractiveness, which could result in an increase in incoming foreign direct investment flows. Also, it is strengthening its economic and financial autonomy by gradually doing without international aid. However, exit means losing certain advantages linked to LDC status.
Senegal exits the LDC category
For Senegal, the process of exiting the LDC category actually started in 2018. The country successively achieved, in February 2021 then in March 2024, two of the three exit criteria. This is the GNI per capita which came out to US$1,370 and US$1,558 respectively. Then there is the Human Capital Index which came out at 66.1 and 66.5 respectively. Thus, during the last triennial review, held from March 4 to 8, 2024 in New York, the Committee for Development Policies (CPD) recommended to the Economic and Social Council (ECOSOC) of the United Nations, the exit of Senegal from the category of PMA, with a transitional period of 5 years. In other words, Senegal is able to exit the LDC category, and has a period of five years to prepare for its exit.
This preparation is undoubtedly important given the potential disadvantages that this exit could cause. Among these disadvantages, the loss of certain advantages such as preferential access to the markets of developed countries.
This loss entails the obligation for greater competitiveness of the country candidate for exit to establish itself on international markets in the face of direct competition from reference countries in terms of competitiveness. Also among the disadvantages are financing conditions that could be less and less concessional as well as a tightening of financial privileges with multilateral institutions and bilateral partners. These reasons make preparation for discharge important. It must help avoid economic disruption and stem the loss of benefits by seizing the opportunities it presents.
It is for this reason that the press release from the Ministry of African Integration and Foreign Affairs informs that, in the sense of the new framework for economic and social policies, “Senegal 2050: national transformation agenda”, the government of Senegal is working on the development of a national transition strategy.
PMA and classification according to income level are not linked
A journalist recently said that Senegal should graduate from the LDC category and enter the category of middle-income country. This is a mistake. It should be understood that the two classifications, which come from two different institutions, are not linked, so Angola is in the LDC category and at the same time in the lower middle-income country category. Moreover, Senegal has also been a lower middle-income country since 2019 and an LDC since 2001. The classification of countries according to income level is the responsibility of the World Bank Group which, with the economic capacity indicator Current Gross National Income (GNI) per capita classifies the world’s economies into four groups, according to the thresholds for the 2025 financial year (from July 1, 2024):
– the group of low-income countries: a country included therein has a GNI per capita of less than US$1,145.
– The group of lower middle-income countries: a country included in this group has a GNI per capita between US$1,146 and US$4,515.
– The group of upper-middle-income countries: a country included has a GNI per capita between US$4,516 and US$14,005.
– The group of high-income countries: a country included therein has a GNI per capita greater than US$14,005.
This World Bank classification is updated each year, based on the GNI per capita of the previous calendar year.
Dr. Abdoulaye DIEYE
Economist
[email protected]
