Although most of the population works in agriculture, Senegal has a growing industrial sector, one of the largest in West Africa. Nevertheless, two cash crops remain at the foundation of the economy—peanuts and cotton. Important technical and economic assistance has been provided by France and other countries of the European Union and the International Bank for Reconstruction and Development (World Bank). In 1999 the gross domestic product (GDP) was $4.8 billion, or $510 a person.

Economic life is characterized by two factors. The first is the division of the country into two regions—the western region, which is wealthy and dynamic, and the remainder, and larger part, of the country, which remains poor and economically stagnant, depending upon a subsistence economy. The second factor is the existence of a single crop economy, which leads to partial unemployment, an insufficient income, and a dependence on an unpredictable climate and the international market. Before independence, the economy was virtually entirely in the hands of the private sector. Since the economy depended primarily on the peanut trade, the large French companies that marketed the peanuts also controlled the importation of European manufactured goods. After independence, however, the Senegalese government created a state agency responsible for virtually all aspects of the peanut trade; in consequence, while the private sector remained important in the economy as a whole, it received its principal impulse from the state. An investment code is composed of various guarantees and long-term tax concessions, as a result of which capital investment has been attracted from many quarters.

In January 1994, Senegal undertook a bold and ambitious economic reform program with the support of the international donor community. This reform began with a 50% devaluation of Senegal's currency, the CFA franc, which is linked at a fixed rate to the French franc. Government price controls and subsidies have been steadily dismantled. After seeing its economy contract by 2.1% in 1993, Senegal made an important turnaround, thanks to the reform program, with real growth in GDP averaging 5% annually in 1995-99. Annual inflation has been pushed down to 2%, and the fiscal deficit has been cut to less than 1.5% of GDP. Investment rose steadily from 13.8% of GDP in 1993 to 16.5% in 1997. As a member of the West African Economic and Monetary Union (UEMOA), Senegal is working toward greater regional integration with a unified external tariff. Senegal also realized full Internet connectivity in 1996, creating a miniboom in information technology-based services. Private activity now accounts for 82% of GDP. On the negative side, Senegal faces deep-seated urban problems of chronic unemployment, juvenile delinquency, and drug addiction. Real GDP growth is expected to rise above 6%, while inflation is likely to hold at 2% in 2001-02.