Nations earmark $2.7bn for Senegal infrastructure

A coalition of wealthy nations and multilateral development banks have pledged to provide 2.5 billion euros in financing to help Senegal reduce its reliance on fossil fuels, according to President Macky Sall. The commitment aims to increase the share of renewable energy in Senegal’s electricity generation to 40 percent by 2030. Currently, only slightly over 30 percent of power comes from renewable sources, but President Sall noted that this has been based on unfavourable loans. The agreement, supported by France, Germany, Britain, Canada, and the European Union, is part of a series of “just energy transition partnerships.”

While the renewable energy target proposed by Senegal is lauded as a positive step, experts urge caution in the financing approach. Observers have expressed concerns about relying heavily on loans rather than grants. The initial just energy transition partnership, announced at the CO26 climate conference in 2021, promised $8.5 billion to support South Africa’s transition away from coal-fired power. However, critics argue that the reliance on loans may exacerbate debt burdens. Similar partnerships have since been established with Indonesia ($20 billion) and Vietnam ($15.5 billion).

Ronan Palmer, an analyst at climate think tank E3G, emphasised the need to avoid the mistakes made in the South Africa deal. While supporting Senegal’s renewables target, he stressed the importance of finance providers carefully navigating the financing structure to prevent further debt accumulation. The goal is to ensure that Senegal does not become locked into long-term dependence on gas.

President Sall’s commitment to strengthening democracy and freedom in Senegal follows recent unrest in the country. In response to deadly unrest triggered by the conviction of an opposition leader, Sall acknowledged the need for stability. The violent incidents, which occurred from June 1 to June 3, resulted in a significant loss of life and have tarnished Senegal’s reputation for stability. Sall also highlighted the country’s growing economic profile, including upcoming oil and gas extraction, as a possible motive for the recent unrest.

Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.

Contact us