Foreign direct investments (FDI) in Senegal are projected to experience a sharp reversal, according to the UNCTAD’s World Investment Report 2026. The report signals an end to a period of significant capital inflows for the West African nation. This development suggests a major shift in the country's economic landscape, impacting its trajectory for growth and development. The findings indicate a substantial decline in investment, contrasting with previous years' trends. The reversal could have implications for various sectors within Senegal's economy that have relied on foreign capital for expansion and job creation.
The Investment Boom Explained
Senegal experienced a significant surge in foreign direct investment (FDI) between 2020 and 2024, accumulating a total of US$15.472 billion. FDI inflows steadily increased during this period, rising from US$1.846 billion in 2020 to US$2.588 billion in 2021, and further to US$2.929 billion in 2022. The peak was reached in 2023 with US$4.790 billion, before a slight dip to US$3.319 billion in 2024. This substantial growth was largely driven by massive investments in major oil and gas projects within the country, specifically the Sangomar and Greater Tortue Ahmeyim (GTA) developments. However, this trend is set to reverse sharply in 2025, with projected FDI inflows plummeting to US$337 million.
Reasons for the Sharp Decline
Foreign direct investment (FDI) flows into Senegal are projected to decrease significantly to US$337 million in 2025. This sharp reduction is attributed in part to major oil and gas projects reaching their production phases, indicating that the bulk of their construction-related investments have now concluded.
Professor Amath Ndiaye, an economist, explained that the substantial capital inflows observed in previous years were heavily tied to the development of these large-scale energy infrastructures. As these projects transition from construction to operation, the associated FDI naturally diminishes.
Separately, undisclosed public debt commitments made between 2019 and 2024 contributed to a crisis of confidence within the international financial community. This situation led to the suspension of Senegal's program with the International Monetary Fund (IMF) and a subsequent deterioration in the country’s sovereign risk perception among investors.
Expert Analysis and Future Outlook
The projected 2025 foreign direct investment (FDI) figure of US$337 million represents a decrease of nearly 90% compared to the US$3.319 billion recorded in 2024. This sharp downturn contrasts with the annual average of US$3.094 billion in FDI that Senegal received between 2020 and 2024. Professor Amath Ndiaye, who has been teaching at the Faculty of Economics and Management Sciences at Cheikh Anta Diop University in Dakar since 1987, commented on the situation. "The major oil and gas projects have now entered the production phase. With construction investments largely completed, the need for new foreign capital naturally decreases. Such a decline was therefore partly predictable," Professor Ndiaye stated.
Professor Ndiaye added, "However, this explanation probably does not fully account for the extent of the observed drop. This also occurs in a context marked by the revelation of significant undisclosed public debt commitments between 2019 and 2024. This situation led to a crisis of confidence, the suspension of the programme with the IMF, and a deterioration in Senegal’s sovereign risk perception. Although UNCTAD statistics do not establish a direct causal relationship, it is plausible that this context may have delayed or discouraged some foreign investment projects." He emphasized the path forward: "The real challenge now is to attract more diversified and sustainable investments. Senegal will need to enhance its attractiveness in manufacturing, agro-industry, digital services, renewable energies, logistics, tourism, and infrastructure."