Groundnuts Export Tax in Senegal: Winners and Losers

Groundnut is the most common cash crop and the main source of income for farmers in Senegal. Groundnut exports, so far marginal, have increased significantly in recent years. This new dynamic motivated Senegalese Government to introduce an exit tax on groundnut exports in the 2017 Finance Act. Empirical analyses produced so far paid little attention to countries like Senegal which have a weak market power on the global groundnut market. This study uses the multi-sectoral general equilibrium model to contribute to apprehend ex-ante global and distributive effects of the tax on groundnut exports in Senegal. Findings indicate that economic activity will slow down and the well-being of the population will deteriorate with the enforcement of the groundnut export tax. Producers and processors suffer the most adverse effects of the export tax. Economic activities and rural area populations also pay the high price. These negative effects are cancelled when tax revenue is used primarily to compensate the losers. However, economic activities that are subject to increased competition from abroad benefit from the export tax by improving their price competitiveness. Acknowledgement :