This paper deals with the impact of poor business environment on Total Factor Productivity
(TFP), output and investment of manufacturing firms in Senegal. A benchmark study coupled
with results from the World Bank Enterprise Survey narrowed down the list of relevant
constraints to doing business in Senegal. As a result, a Real Business Cycle model in a Small
Open Economy is used to measure the impact of crime, corruption, power interruptions, poor
infrastructures, and tax burden and regulations. Results show that poor business environment
has sizeable negative impact on output and investment which is a common feature of recent
studies. Solving those problems would lead to both investment and output increasing
respectively by 94% and 79%.