by Senegal’s rapid urbanization and the disproportionate growth of its capital, Dakar, have considerably reshaped its urban landscape (Friedrich-Ebert, 2022). Home to 48.7% of the urban population, 90% of industry, and 80% of infrastructure, Dakar is fuelled by transformative infrastructure projects such as the Regional Express Train (TER), Bus Rapid Transit (BRT), and the Diamniadio Urban Pole. These projects aim to modernize transport, reduce congestion, and catalyze economic growth. The Senegalese economy lost 100 billion FCFA due to traffic congestion in Dakar (Senegalese Prime Minister’s Office, 2017). While these initiatives are laudable, their effects on small and medium-sized enterprises (SMEs), the backbone of the Senegalese economy, merit closer examination. This article explores the effects of these urban projects on the development, challenges, and resilience of SMEs in and around Dakar.
Urban Infrastructure and Economic Change
Major infrastructure projects such as the TER, the BRT, and the Diamniadio Urban Pole have redefined connectivity and spatial organization in Dakar. The TER project is improving mobility between Dakar and Diamniadio. The BRT is used between Guidewaye and Pétersen, reducing journey times and facilitating access to economic centers (CETUD, 20018). The Diamniadio and Lac Rose urban centers were created to provide solutions to Dakar’s urban development problems. The aim is to find solutions to the housing deficit, the limited availability of industrial land, the development of research and training infrastructures, and the promotion of a strong economy to achieve Emergence (DGPU, 2015).
Senegal’s private sector is essentially made up of SMEs, which account for almost 90% of businesses in Senegal, providing around 40% of jobs and 25% of turnover, and contributing 20% of national added value (African Development Bank, 2017). These SMEs operate in a variety of sectors, including agro-industry, services, trade, and crafts (NotreContinent, 2024). Improving infrastructure improves market access, facilitates supply chain efficiency, and promotes opportunities in sectors such as transport, construction, retail, and services (FasterCapital, 2024).
Opportunities for SMEs
Market Expansion: Improved connectivity gives SMEs access to a wider customer base. Indeed, with the BRT project, projections were that 60% of Dakar residents would have access to an additional market, providing more customers for SMEs (CETUD, 2018). Businesses previously limited by logistical challenges can now extend their reach to neighboring regions. Improving public transport operating conditions will generate compensation savings (PTB and DDD) estimated at FCFA 4.5 billion annually (Senegalese Prime Minister’s Office, 2017).
Job Creation: Infrastructure projects generate jobs directly through construction and indirectly by stimulating demand in support industries, many of which are carried out by SMEs. 10,000 direct and indirect jobs have been created by the TER construction (Senegalese Prime Minister’s Office, 2017).
Increased Investment: The modernization of Dakar’s urban fabric is attracting local and foreign investors. SMEs offering innovative products and services are likely to benefit from this investment.
Urban Development Opportunities: The new urban areas, such as Diamniadio, offer SMEs opportunities to set up businesses in less saturated markets. Following the inauguration in 2018 of phase 1 of the Diamniadio International Industrial Platform (P2ID), which has led to the creation of 22 businesses and 1,334 jobs in various sectors (EnQuete +, 2023).
Challenges Faced by SMEs
Despite the potential benefits, urban infrastructure projects pose significant challenges for SMEs:
Displacement and Gentrification: The acquisition of space for infrastructure often displaces small businesses, leading to disruption and loss of customers (Business News Africa, 2021). According to CETUD, the BRT project destroyed 244 business places due to structural losses (CETUD, 2017).
Increased Costs: Infrastructure improvements often lead to increased rents and property values, making it difficult for SMEs to maintain their activities in urban areas. In the case of Dakar, this increase in rents results from a combination of factors such as political stability, infrastructure development, tourist appeal, and opportunities for investors (Senegal Tribune, 2024).
Competition: The influx of large companies into newly developed areas intensifies competition, potentially marginalizing smaller players.
Limited Access to Credit: Although infrastructure projects can stimulate growth, SMEs often find it difficult to obtain finance to capitalize on emerging opportunities.
Policy Recommendations
To maximize the positive impact of urban infrastructure projects on SMEs, policymakers should consider:
Inclusive Planning: Better integrate the needs of SMEs into urban planning processes to minimize displacement and ensure equitable access to resources. This will also involve promoting, based on a proximity approach, the plans for major infrastructure projects at least 10 years before they are carried out and putting in place measures to prevent planned spaces being occupied by SMEs to reduce losses.
Affordable Credit Facilities: Establish targeted financing schemes to help SMEs develop and adapt to changing urban dynamics.
Capacity Building: Provide training and support to SMEs to improve their competitiveness and resilience in changing markets.
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