Key statistics:
Despite being a regional leader in West Africa in terms of financial inclusion and the progress made in extending its social protection system, there are still many issues that need to be addressed before the successful development of inclusive insurance can be achieved in Senegal. The increasing impact of natural hazards and climate change on this coastal state, for example, presents both a challenge and an opportunity, and key developments in agricultural insurance could help bring about a solution.
Located in the western-most part of the African continent, Senegal is one of the more politically stable countries in Africa and has been spared the violence engulfing much of the region in recent years, although terrorist group activities in neighbouring countries and cross-border trafficking risk fuelling instability.
Senegal has a population of 16.7 million – characterised by a large youth population with more than 50% of the population under the age of 25; around 60% of the population on low incomes; approximately 70% of the population living in urban coastal areas; and significantly higher unemployment among women.
Classified as a lower-middle-income country by the World Bank, the key sectors of the economy are services which contribute about 50% of GDP – mainly tourism and telecoms – followed by industry which contributes about 25%. Although contributing only about 15% of GDP, agriculture employs about three-quarters of the workforce.
Strengthening economic and social resilience
The impacts of the COVID-19 pandemic have been significant with the Senegalese economy entering a recession in 2020. In response, the country has implemented an "Economic and Social Resilience Programme" with the objective of supporting the health sector, strengthening the social resilience of the population, ensuring macroeconomic and financial stability to support the private sector and maintain jobs.
Given its coastal location, Senegal is vulnerable to several natural hazards such as droughts – which are particularly damaging to the agricultural sector – and floods as well as rises in sea levels and coastal erosion. These risks, coupled with the consequences of climate change, impact the vulnerability of the population and food insecurity in a country that relies on imports to meet about 70% of its food needs.
To address these risks, Senegal enhanced its National Social Protection Strategy in 2016 with the goal of building a social protection system accessible to all Senegalese by 2035 – providing everyone with a guaranteed minimum income and health coverage, but also a comprehensive safety net ensuring resilience to all those who suffer shocks or crises that push them into poverty.
This social protection system includes a cash transfer programme and health coverage for the most vulnerable households. From 2013 to 2019, the programme aided 316,941 households and 197,592 households enrolled in universal health coverage.
While the social protection system has achieved some successes, its limitations are highlighted by the existence of fragmented social protection coverage for different target groups and difficulties in coordinating the various actions.
Significant financial inclusion opportunities
Senegal is one of the countries with the highest levels of financial inclusion in West Africa with a financial services usage rate of 76%. As a member of the West African Economic and Monetary Union, it has been engaged since 2016 in a regional financial inclusion strategy implemented by the Central Bank of West African States, aimed at cultivating a population with permanent access to financial services and effective use of a diversified range of adapted and affordable products.
This regional strategy runs alongside actions at a national level, including the organisation of workshops on the promotion of Islamic finance, financial education and the development of a national financial inclusion strategy.
In terms of microinsurance, the main products in Senegal are life insurance, health insurance, individual accident, property damage and crop loss – with agricultural insurance being the principal non-life product that is marketed within the country. The number of microinsurance policies issued in Senegal dropped significantly (66%) in 2020, due to the restrictive impacts and economic volatility caused by COVID-19.
A key player in the field of inclusive insurance in Senegal is the National Agriculture Insurance Company of Senegal (CNAAS) which offers agricultural insurance products and issued about 64% of the microinsurance policies in Senegal in 2020.
Given the ongoing success of the CNAAS, a public-private partnership, it is clear that there is a roadmap for greater financial inclusion and insurance penetration in Senegal, as well as opportunities with significant potential – particularly given its relatively young population and sizeable potential for economic growth.
While some progress has been made in areas such as agriculture, much more can be done to drive inclusion across the wider population where insurance penetration remains low – including drawing on regional expertise within the CIMA region as well as through public-private partnerships, with the support of development partners.
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