Economywide impacts of expansion of maritime trade efficiencies in Senegal - A recursive dynamic computable general equilibrium approach

Senegal's strategic location along the Trans-Saharan trade route play a crucial role in the country's trade industry. About half of the country’s demand for food crops is imported. However, the port capacity is increasingly facing pressures due to its infrastructural constraints leading to hidden iceberg type of costs. Infrastructural investment can potentially raise the port capacity, hence increasing the efficiencies of trade transactions by doing away with the existing iceberg costs. The study applies a recursive dynamic computable general equilibrium model to evaluate potential outcomes of increased efficiencies in maritime trade on Senegal’s economic performances and wellbeing of Senegal. The findings indicate that increasing the efficiencies of maritime trade would result in lower costs for imported food products and inputs to the domestic activities, enhancing country’s competitiveness in the export markets that would boost domestic output, particularly of cash crops, industrial food and chemical products. Increased availability of food supply with higher purchasing power of the households would support the country’s food security. Improved maritime efficiencies would improve country’s economic growth and overall welfare with urban households benefiting the most. There would be significant reduction in poverty incidence at the national level, with larger impacts on rural areas. However, impacts on extreme poor are substantially lower than poverty incidence.