By Thierno Seydou Nourou Sy, Banker, President and Founder of Nourou Financial Consulting (NFC) Dakar-Senegal
The new partnership between the State and BOAD paves the way for a strategic valuation of public assets, requiring careful and rigorous implementation. The recent signing of a memorandum of understanding between the State of Senegal and the West African Development Bank (BOAD) for the creation of the Senegal Asset Valuation Fund (FOVAS) marks an ambitious step. This mechanism, aimed at harnessing the economic potential of public infrastructure to generate new financing, is a commendable initiative. However, its success will depend on a thorough analysis and meticulous implementation to avoid pitfalls and maximize its impact on the real economy and the daily lives of Senegalese people.
An Innovative Mechanism with Sukuk-like Features
In principle, FOVAS resembles an asset securitization mechanism similar to Sukuk financing that Senegal has already experimented with. This resemblance calls for the utmost caution. It is imperative to clearly map out public assets already linked to existing financial structures, such as Sukuk, to avoid any overlap or conflict of guarantees. FOVAS must be built on a basis of “clean” and available assets, or integrate these existing assets into a broader and more effective restructuring.
Strategic Investments with Proven Social Impact: Lessons from Concrete Experiences
Senegal already has compelling examples of strategic investments with tangible social impact. FOVAS could draw inspiration from these and amplify them:
– The Urban Pole of Diamniadio: This integrated ecosystem (administrations, universities, industrial hubs) has created a pool of jobs, decongested Dakar, and improved the quality of life. By valorizing similar assets, FOVAS could finance the extension of such new cities, resulting in access to decent housing, creation of local jobs, and reduction of land pressure in major cities.
– Blaise Diagne International Airport (AIBD) and the Toll Road: These infrastructures have boosted tourism, trade, and created thousands of direct and indirect jobs. By capitalizing on the toll road model, FOVAS could finance the maintenance and extension of the road network. Better connectivity of rural areas, facilitation of transport for agricultural goods, and reduction of the cost of living.
– The Emergency Community Development Program (PUDC): By specifically targeting access to water, electricity, and roads in rural areas, PUDC has changed the lives of millions of Senegalese people. FOVAS, by generating new resources, could sustain and expand such programs. Rural women, for example, would see their water chores reduced and their income-generating activities facilitated.
– The Bokhol and Malicounda Solar Power Plants: By diversifying the energy mix and reducing dependence on fossil fuels, these projects have both economic (cost reduction) and environmental impact. FOVAS could finance new plants, allowing households and SMEs to benefit from more stable and cheaper electricity.
Stimulating the Economy and the Daily Lives of Senegalese: An Integrated Approach
The major risk of this type of financing is displacement. To avoid this, FOVAS must be designed as a catalyst for the population. The funds raised must be directed towards structural investments that directly improve the quality of life. The concrete impact on the lives of Senegalese people could be manifold:
– Creation of local jobs: The management and maintenance of assets (such as highway rest areas or public buildings) could be entrusted to Senegalese SMEs, boosting employment and the local economy.
– Improvement of public services: FOVAS revenues, by supporting the state budget, could be used to invest in vital sectors such as health and education, thereby reducing household expenses.
– Revitalization of the construction sector: By mobilizing funds to complete unfinished infrastructure, FOVAS would revive the construction sector, a major job provider, and finally deliver long-awaited public facilities to the population.
BOAD, a Trust Catalyst Tested by the Market
The international credibility of BOAD, reinforced by its presidency of the International Development Finance Club (IDFC), is a significant asset for mobilizing investors. However, market confidence will be earned through the transparency of the structure, the legal strength of the fund, and the demonstrated quality of the underlying assets. BOAD’s ability to structure a secure and profitable investment offer will be the true test.
The Founding Audit: The Cornerstone of Trust and Efficiency
The success of FOVAS relies entirely on the rigor of its preliminary phase: the Founding Audit. More than just an inventory, this audit is the truth operation that will give legitimacy to the fund. It must be three-dimensional:
– The Comprehensive Legal Audit must lift the veil on asset ownership. It is essential to verify the absence of disputes, mortgages, or hidden charges that could hinder their transfer to the fund. For citizens, this transparency is a guarantee of trust: it ensures that national heritage is managed with integrity and that the generated revenues will be legitimate.
– The Transparent Financial Audit must establish the real value of assets and clarify the state of debts associated with them. By identifying assets whose financing is not fully released, FOVAS can precisely mobilize the necessary resources to complete them. The direct impact on daily life is clear: completing an unfinished dam, road, or hospital with this residual financing is a concrete improvement in access to water, transportation, and healthcare for the population.
– The Operational and Potential Audit assesses the capacity of assets to generate sustainable income. A well-maintained and optimized bridge, public market, or power plant will yield more. These revenues, reinvested in the national budget, are the fuel for public policies. For the ordinary Senegalese, this translates into the possibility of seeing the state finance new schools, health subsidies, or community infrastructure without burdening taxation.
In conclusion, FOVAS represents a major conceptual advancement. If built on the rock of an irreproachable Founding Audit and oriented towards the general interest, it can transform this innovative partnership into a sustainable pillar of sovereign finance and a lever for tangible improvement in the living conditions of all Senegalese people. Ultimately, the goal is to ensure that the financial performance of the Fund translates into measurable social progress: a road that connects, a school that educates, a clinic that heals, and an economy that includes.
