Senegal offers investors a relatively stable political environment, democratic institutions, two-day business registration, a relatively robust telecommunications infrastructure, an advantageous geographic location, a major sea port, non-stop flights from the U.S., a bilateral investment treaty with the United States, a stable regional currency (pegged to the Euro), easy repatriation of capital and income, and abundant semi-skilled and unskilled human resources. Despite these obvious strengths, overly rigid and demanding labor laws, high factor costs, lack of clear title to property outside the greater Dakar area, an inefficient and inconsistent judiciary, and constraints in obtaining long-term credits from commercial banks have restrained private foreign and domestic investment. Judicial, tax, customs, and regulatory decisions are frequently slow to be issued, influenced by political considerations, and non-transparent.
The country's Investment Code offers incentives to companies willing to locate off the Cap Vert peninsula. In theory, Senegal accepts binding foreign arbitration of investment disputes. French companies are the largest foreign investors, and U.S. direct investment is estimated at USD 50 million.
OPENNESS TO FOREIGN INVESTMENT
The Government of Senegal officially welcomes foreign investment, but potential investors, and indeed all businesses, face obstacles, including non-transparent regulation and high factor costs. There is no legal discrimination against businesses conducted or owned by foreign investors. There are no barriers regarding 100 percent ownership of businesses by foreign investors in most sectors. In some key sectors such as electricity, telecommunications, water and mining, and security-related services, foreign investors may have majority control, but may not acquire 100 percent ownership.
In recent years, Senegal has pursued major investment deals with foreign partners, both private and government-controlled companies. Some projects have been offered via public tenders and some have been negotiated privately. Foreign investors have recently secured contracts to exploit mineral resources, provide garbage services, and manage Dakar's maritime port. A new law to enhance transparency in public procurement and public tenders entered into force in 2008. In September 2010 changes made to the public procurement code to exclude procurements by the presidency and ministries in charge of national security from ARMP (public procurement regulatory body) were criticized by the both the donors and the private sector.
The Government does some screening of proposed investments, mostly to verify compatibility with the country's overall development goals. Foreign investors are encouraged to utilize the "one stop" service of Senegal's Investment Promotion Agency (APIX) for registration and obtaining APIX, Ministry of Finance, Senegalese Customs, and other approvals needed to secure a business license, which can now be completed in approximately eight days. Depending on the proposed business activity, other approvals from specific ministries, such as Agriculture and Interior, can take additional time. There is no provision in Senegalese law permitting domestic businesses to adopt articles of incorporation or association that limit or control foreign investment. There is no pattern of discrimination against foreign firms making investments in Senegal.
Senegal's 2004 Investment Code remains the main body of law regulating foreign investments. The Code provides basic guarantees for the repatriation of profit and capital and equality of treatment. It also specifies tax and customs exemptions according to the size of the investment, classification of the investor (such as small or medium-sized enterprise versus a larger corporation), and location (investments outside of Dakar receive longer periods of exoneration from taxes). Following recommendations by major donors, Senegal established a Presidential Investors Council (PIC) designed to improve the business climate and reduce obstacles to domestic and foreign private investment. The PIC has had some success in lobbying for certain "pro-business" changes in Senegal's tax code, such as lowering the corporate tax rate from 33 to 25 percent, eliminating the equalization tax on the informal sector, and lowering the VAT on tourist industries from 18 percent to 10 percent.
Both foreign and domestic firms tend to cite the same problems in doing business in Senegal -- inefficient regulation and bureaucracy, ineffective commercial courts, high factor costs, labor laws that makes it difficult to fire for cause, and occasional disputes over customs classification, valuation, and taxation. The country's private sector, as well as donors who are focusing on enhancing Senegal's potential for rapid economic growth, are specifically encouraging the full implementation of a 1997 revision of Senegal's Labor Code. Out of 88 decrees needed, only 25 are "on the books," but since 2008 both USAID and the World Bank have been assisting the Government to implement an additional 22 decrees.
CONVERSION AND TRANSFER POLICIES
Commercial transfers are normally carried out rapidly and in full by local banking institutions. Companies find that the import and export of funds can be accomplished in a manner similar to commercial bank transactions. The African Financial Community Franc (CFA), used by Senegal and 13 other African countries, is pegged to the Euro at the rate of 100 CFA to 0.152 euros. There are no restrictions on the transfer or repatriation of capital and income earned, or on investments financed, with convertible foreign currency. However, the Government does limit the amount of foreign exchange individuals may obtain for trips outside Senegal. Outgoing travelers may obtain a maximum of 6 million CFA in Euros or other
foreign currency/travelers checks (approximately USD 13,000) upon presentation of a valid airline ticket at banks. There is a small informal market for currency exchange in Senegal. Remittances to Senegal from its citizens living overseas are routine and provide a significant source of foreign currency for the country. In 2010, the estimated value of remittances, formal and informal, was estimated by Senegalese authorities at USD 1.2 billion, which is equal to 8 percent of GDP.
EXPROPRIATION AND COMPENSATION
In recent history, there have been no major expropriations in Senegal. There have been some instances recently in which the Government has revoked minerals concessions or contracts to develop housing projects, alleging failure to pay taxes or meet contractual obligations. Foreign investors have generally failed to obtain compensation or damages through the courts. In other cases, the Government has failed to intervene to resolve disputes between foreign investors and firms with local ownership or substantial local participation. This failure to provide mediation, or any decision in some cases, has been noted as less-than-equitable treatment for foreign investors. However, there is no indication of discriminatory treatment against U.S. investors.
Senegal is a signatory to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. However, dispute actions are more likely to be taken through the International Center for the Settlement of Investment Disputes
(Washington Convention), of which Senegal is a member, or through the Dakar Arbitration Center, which is administered by the Dakar Chamber of Commerce. In November 2008, the government announced it was revoking the mobile phone license of Sentel, the country’s second operator for alleged failure to meet contractual obligations. The company, which continues to operate, denies the allegations and has instituted arbitration proceedings against the government of Senegal at the International Center for the Settlement of Investment Disputes. In response, the government has submitted a breach of contract case against Sentel in Senegalese courts.
Foreign creditors receive equal treatment under Senegalese bankruptcy law in making claims against liquidated assets. Monetary judgments are normally in local currency.
While Senegal has well-developed commercial and investment laws, and a legal framework for regulating business disputes, settlement of disputes within the existing framework is cumbersome and slow. Few judges or lawyers are conversant in commercial laws. Court cases are expensive and rarely resolved expeditiously. Decisions can be inconsistent, arbitrary, and non-transparent. Foreign investors have found it difficult to fire employees for cause or malfeasance. Foreign firms are often sued in the Senegalese courts by terminated employees who are frequently awarded damages and placement in their former positions. Although these decisions are sometimes overturned on appeal, the appeals process is costly and time consuming. Foreign firms in Senegal often cite burdensome labor law and arbitrary rulings by courts on labor cases as their number one frustration in doing business in Senegal.
PERFORMANCE REQUIREMENTS AND INCENTIVES
Senegal's Investment Code defines eligibility for investment incentives according to a firm's size and type of activity, the amount of the potential investment, and the location of the project. To qualify for significant investment incentives, firms must invest above 100 million CFAF (approximately USD 200,000) or in activities that lead to an increase of 25 percent or more in productive capacity.
Investors may also deduct up to 40 percent of retained investment over five years. However, for companies engaged strictly in "trading activities," defined as "activities of resale in their existing state products bought from outside the enterprises," investment incentives might not be available.
Eligible sectors for investment incentives include agriculture and agro-processing, fishing, animal-rearing and related industries, manufacturing, tourism, mineral exploration and mining, banking, and others. All qualifying investments benefit from the "Common Regime," which includes two years of exoneration from duties on imports of goods not produced locally for small and medium sized firms, and three years for all others. Also included is exoneration from direct and indirect taxes for the same period.
Exoneration from the Minimum Personal Income Tax and from the Business License Tax is granted to investors who use local resources for at least 65 percent of their total inputs within a fiscal year.
Enterprises that locate in less industrialized areas of Senegal benefit from exemption of the lump-sum payroll tax of three percent, with the exoneration running from five to 12 years, depending on the location of the investment. The investment code provides for exemption from income tax, duties and other taxes, phased out progressively over the last three years of the exoneration period. Most incentives are automatically granted to investment projects meeting the above criteria as well as to those with the "Enterprise Franche d'Exportation" (EFE) status, which is directed at export-oriented firms.
Furthermore, an existing firm requesting an extension of such incentives must be at least 20 percent self-financed. Large firms -- those with at least 200 million CFA (USD 400,000) in equity capital -- are required to create at least 50 full-time positions for Senegalese nationals, to contribute the hard currency equivalent of at least 100 million CFAF (USD 200,000), and keep regular accounts that conform to Senegalese standards. In addition, firms must provide APIX with details on company products, production, employment and consumption of raw materials.
The government does not, by statute, impose specific conditions or performance requirements on investment activities. However, the government does negotiate with potential investors on a case-by-case basis special terms, especially within extractive industries. For example, Arcelor Mittal's agreement for the exploitation of iron ore reportedly includes provision for approximately USD 2 billion in investments by Mittal to improve rail and port facilities should iron ore deposits prove out to expectations.
Acquiring work permits for expatriate staff is typically not an onerous process. Citizens from the other seven West African Economic and Monetary Union (WAEMU) member countries are permitted to work freely in Senegal.
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
In addition to traditional guarantees offered to investors, e.g., free transfers of capital and income, and national treatment, private entities are permitted to establish and own businesses and to engage in most forms of remunerative activity. Foreign nationals are permitted to buy and hold land. Local majority ownership is not necessary. Land holdings for investors are frequently offered on the basis of long-term leases (i.e., 99 years). Several of the state-owned firms privatized in recent years were sold in part or in whole to foreign entities.
PROTECTION OF PROPERTY RIGHTS
The Senegalese Civil Code, based on French law, enforces private property rights. The code provides for equality of treatment and non-discrimination against foreign-owned businesses. Property title and a land registration system exist in Senegal, but application is uneven outside of Senegal's urban areas. The government streamlined procedures for registering property these procedures and reduce the associated costs in 2008 so that property can be duly registered within 18 days. Confirming ownership rights on real estate can be difficult, but once established, ownership is protected by law. Investors have also expressed concerns about the lack of investment-ready, developed business sites.
The government generally pays compensation when it takes private property through eminent domain actions. Senegal's housing finance market is underdeveloped and few long-term mortgage financing vehicles exist. There is no secondary market for mortgages or other bundled revenue streams. The judiciary is inconsistent when adjudicating property disputes.
Senegal is a member of the African Organization of Intellectual Property (OAPI), a grouping of 15 francophone African countries, which established a common system for obtaining and maintaining protection for patents, trademarks and industrial designs. Senegal has been a member of the World Intellectual Property Organization (WIPO) since its inception. Local statutes recognize reciprocal protection for authors or artists who are nationals of countries adhering to the 1991 Paris Convention on Intellectual Property Rights. In particular:
I. Patents: Patents are protected for 20 years. An annual charge is levied during this period. Trade secrets and computer chip designs are respected.
II. Trademarks: Registered trademarks are protected for a period of 20 years. Trademarks may be renewed indefinitely by subsequent registrations.
III. Copyrights: Senegal is a signatory to the Bern Copyright Convention. The Senegalese Copyright Office, part of the Ministry of Culture, attempts to enforce copyright obligations. The bootlegging of music cassettes and CDs is common and of concern to the local music industry. The Copyright Office undertook actions in 2001, 2002, 2003 and 2006 to combat media piracy, including seizure of counterfeit cassettes and CD/DVDs and in 2008 established a special police unit to better enforce the country's anti-piracy and counterfeit laws.
However, despite an adequate legal and regulatory framework, enforcement of intellectual property rights is weak. In general, the Government has not committed the resources to combat IPR violations or to seize counterfeit goods. Customs screening for counterfeit goods coming from China, Nigeria, Dubai and other centers of illegal production is weak and confiscated goods occasionally re-appear in the market. Nonetheless, there has been a recent effort by Customs to understand the impact of counterfeit products on the Senegalese marketplace, and officers have participated in trainings offered by manufacturers to identify counterfeit products.
TRANSPARENCY OF THE REGULATORY SYSTEM
There is no requirement for public comment process for proposed laws and regulations, however, the Government frequently holds public hearings and workshops to discuss proposed initiatives and programs. The National Assembly, though currently dominated by the ruling party, does host open debates on substantive legislation.
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
In general, domestic investment is hampered by an under-developed financial sector. French, Nigerian and Moroccan-owned banks with conservative lending guidelines and high interest and collateral requirements dominate bank lending. In 2008-2009, Senegal's banking sector is dealing with a severe lack of liquidity, further diminishing credit opportunities for enterprises.
Few firms are eligible for long-term loans, and small and medium sized enterprises have little access to credit. However, because the Senegalese banking sector is dominated by foreign banks, foreign investors can take advantage of parent banks in France and the United States (Citibank). U.S. firms also have access to U.S. Overseas Private Investment Corporation (OPIC) and Export-Import Bank (EXIMBANK) facilities.
Private bond issuances have yet to make a tangible impact on investment in Senegal. Public bonds equaling USD 270 million were issued in 2010. In general, the infrastructure for expanding business lending, credit risk analysis, skilled commercial law specialists, and auditors, etc. does not exist. The West African Regional Stock Exchange (BRVM), headquartered in Abidjan, with local offices in each of the WAEMU member countries offers additional opportunities to attract increased foreign capital and to give private investors access to more diversified sources of financing. However, to date only one Senegalese company, Sonatel, is currently traded on the BRVM. There is no system to encourage and facilitate portfolio investment.
Legal, regulatory and accounting systems closely follow French models and WAEMU countries present their financial statements in accordance with the SYSCOA system, which is based on Generally Accepted Accounting Principles in France.
Senegal is a moderately decentralized republic dominated by a strong Presidency.
President Abdoulaye Wade's Senegalese Democratic Party (PDS) holds an overwhelming majority of seats in National Assembly and Senate. In 2008, Human rights organizations underlined their concerns about the arbitrary arrest of opposition activists and journalists. There have been incidents of sporadic civil disturbances over the past two years, but they have generally taken place as unions, opposition parties, merchants or student demand better salaries, living or working conditions. Sporadic incidences of violence as result of petty banditry continue in the Casamance region, which has suffered from a two-decade-old conflict ignited by a local rebel movement seeking independence for the region.
Corruption, including bribery, raises the costs and risks of doing business. Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law.
It is important for U.S. companies, irrespective of their size, to assess the business climate in the relevant market in which they will be operating or investing, and to have an effective compliance program or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the relevant anticorruption laws of both the foreign country and the United States in order to properly comply with them, and where appropriate, they should seek the advice of legal counsel.
The U.S. Government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize their own companies’ acts of corruption, including bribery of foreign public officials, by requiring them to uphold their obligations under relevant international conventions. A U. S. firm that believes a competitor is seeking to use bribery of a foreign public official to secure a contract should bring this to the attention of appropriate U.S. agencies, as noted below.
- U.S. FOREIGN CORRUPT PRACTICES ACT: In 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA), which makes it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to foreign public officials for the purpose of obtaining or retaining business for or with, or directing business to, any person. The FCPA also applies to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States. For more detailed information on the FCPA, see the FCPA Lay-Person’s Guide at: http://www.justice.gov/criminal/fraud/docs/dojdocb.html.
- OTHER INSTRUMENTS: It is U.S. Government policy to promote good governance, including host country implementation and enforcement of anti-corruption laws and policies pursuant to their obligations under international agreements. Since enactment of the FCPA, the United States has been instrumental to the expansion of the international framework to fight corruption. Several significant components of this framework are the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Antibribery Convention), the United Nations Convention against Corruption (UN Convention), the Inter-American Convention against Corruption (OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and a growing list of U.S. free trade agreements. This country is party to the UN Convention, but generally all countries prohibit the bribery and solicitation of their public officials.
- OECD ANTIBRIBERY CONVENTION: The OECD Antibribery Convention entered into force in February 1999. As of December 2009, there are 38 parties to the Convention including the United States (see http://www.oecd.org/dataoecd/59/13/40272933.pdf). Major exporters China, India, and Russia are not parties, although the U.S. Government strongly endorses their eventual accession to the Convention. The Convention obligates the Parties to criminalize bribery of foreign public officials in the conduct of international business. The United States meets its international obligations under the OECD Antibribery Convention through the U.S. FCPA. Senegal is not a party to the OECD convention.
- UN CONVENTION: The UN Anticorruption Convention entered into force on December 14, 2005, and there are 143 parties to it as of December 2009 (see http://www.unodc.org/unodc/en/treaties/CAC/signatories.html). The UN Convention is the first global comprehensive international anticorruption agreement. The UN Convention requires countries to establish criminal and other offences to cover a wide range of acts of corruption. The UN Convention goes beyond previous anticorruption instruments, covering a broad range of issues ranging from basic forms of corruption such as bribery and solicitation, embezzlement, trading in influence to the concealment and laundering of the proceeds of corruption. The Convention contains transnational business bribery provisions that are functionally similar to those in the OECD Antibribery Convention and contains provisions on private sector auditing and books and records requirements. Other provisions address matters such as prevention, international cooperation, and asset recovery. Senegal is a party to the UN Convention.
- OAS CONVENTION: In 1996, the Member States of the Organization of American States (OAS) adopted the first international anticorruption legal instrument, the Inter-American Convention against Corruption (OAS Convention), which entered into force in March 1997. The OAS Convention, among other things, establishes a set of preventive measures against corruption, provides for the criminalization of certain acts of corruption, including transnational bribery and illicit enrichment, and contains a series of provisions to strengthen the cooperation between its States Parties in areas such as mutual legal assistance and technical cooperation. As of December 2009, the OAS Convention has 33 parties (see http://www.oas.org/juridico/english/Sigs/b-58.html) Senegal is not a party to the OAS Convention.
- COUNCIL OF EUROPE CRIMINAL LAW AND CIVIL LAW CONVENTIONS Many European countries are parties to either the Council of Europe (CoE) Criminal Law Convention on Corruption, the Civil Law Convention, or both. The Criminal Law Convention requires criminalization of a wide range of national and transnational conduct, including bribery, money-laundering, and account offenses. It also incorporates provisions on liability of legal persons and witness protection. The Civil Law Convention includes provisions on compensation for damage relating to corrupt acts, whistleblower protection, and validity of contracts, inter alia. The Group of States against Corruption (GRECO) was established in 1999 by the CoE to monitor compliance with these and related anti-corruption standards. Currently, GRECO comprises 46 member States (45 European countries and the United States). As of December 2009, the Criminal Law Convention has 42 parties and the Civil Law Convention has 34 (see www.coe.int/greco.) Senegal is not a party to the Council of Europe Conventions.]
- FREE TRADE AGREEMENTS: While it is U.S. Government policy to include anticorruption provisions in free trade agreements (FTAs) that it negotiates with its trading partners, the anticorruption provisions have evolved over time. The most recent FTAs negotiated now require trading partners to criminalize “active bribery” of public officials (offering bribes to any public official must be made a criminal offense, both domestically and trans-nationally) as well as domestic “passive bribery” (solicitation of a bribe by a domestic official). All U.S. FTAs may be found at the U.S. Trade Representative Website: http://www.ustr.gov/trade-agreements/free-trade-agreements. Senegal does not have a free trade agreement (FTA) in place with the United States. Consult USTR Website for date: http://www.ustr.gov/trade-agreements/free-trade-agreements.]
- LOCAL LAWS: U.S. firms should familiarize themselves with local anticorruption laws, and, where appropriate, seek legal counsel. While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel.
- ASSISTANCE FOR U.S. BUSINESSES: The U.S. Department of Commerce offers several services to aid U.S. businesses seeking to address business-related corruption issues. For example, the U.S. and Foreign Commercial Service can provide services that may assist U.S. companies in conducting their due diligence as part of the company’s overarching compliance program when choosing business partners or agents overseas. The U.S. Foreign and Commercial Service can be reached directly through its offices in every major U.S. and foreign city, or through its Website at www.trade.gov/cs.
The Departments of Commerce and State provide worldwide support for qualified U.S. companies bidding on foreign government contracts through the Commerce Department’s Advocacy Center and State’s Office of Commercial and Business Affairs. Problems, including alleged corruption by foreign governments or competitors, encountered by U.S. companies in seeking such foreign business opportunities can be brought to the attention of appropriate U.S. government officials, including local embassy personnel and through the Department of Commerce Trade Compliance Center “Report A Trade Barrier” Website at tcc.export.gov/Report_a_Barrier/index.asp.
- GUIDANCE ON THE U.S. FCPA: The Department of Justice’s (DOJ) FCPA Opinion Procedure enables U.S. firms and individuals to request a statement of the Justice Department’s present enforcement intentions under the antibribery provisions of the FCPA regarding any proposed business conduct. The details of the opinion procedure are available on DOJ’s Fraud Section Website at www.justice.gov/criminal/fraud/fcpa. Although the Department of Commerce has no enforcement role with respect to the FCPA, it supplies general guidance to U.S. exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information, see the Office of the Chief Counsel for International Counsel, U.S. Department of Commerce, Website, at http://www.ogc.doc.gov/trans_anti_bribery.html. More general information on the FCPA is available at the Websites listed below.
Exporters and investors should be aware that generally all countries prohibit the bribery of their public officials, and prohibit their officials from soliciting bribes under domestic laws. Most countries are required to criminalize such bribery and other acts of corruption by virtue of being parties to various international conventions discussed above.
The potential for corruption is a significant obstacle for economic development and competitiveness in Senegal, in spite of the country's anti-corruption laws, regulations, penalties, and agencies. Credible allegations of corruption have been made concerning government procurement, dispute settlement, and decisions by the judiciary and regulatory and enforcement agencies. Transparency International, in its 2010 Perceptions of Corruption Index, ranked Senegal 105 out of 178 countries.
Senegal has several government agencies authorized to fight corruption and fraud. These include the National Commission against Corruption and Non-Transparency, "L'Inspection Generale d'Etat," a cabinet-level office; "La Commission de Verification des Comptes," "La Cour des Comptes," and Cotecna S.A., a pre-shipment inspection contractor hired by the Government. At a higher level, President Wade has made numerous pronouncements against corruption, but a significant gap persists between the rhetoric and its implementation. A new procurement code was established in 2008 which should reduce the number of projects that are sole-sourced or receive exemptions from following international tender procedures.
Some useful resources for individuals and companies regarding combating corruption in global markets include the following:
· Information about the U.S. Foreign Corrupt Practices Act (FCPA), including a “Lay-Person’s Guide to the FCPA” is available at the U.S. Department of Justice’s Website at: http://www.justice.gov/criminal/fraud/fcpa.
· Information about the OECD Antibribery Convention including links to national implementing legislation and country monitoring reports is available at: http://www.oecd.org/department/0,3355,en_2649_34859_1_1_1_1_1,00.html. See also new Antibribery Recommendation and Good Practice Guidance Annex for companies: http://www.oecd.org/dataoecd/11/40/44176910.pdf
· General information about anticorruption initiatives, such as the OECD Convention and the FCPA, including translations of the statute into several languages, is available at the Department of Commerce Office of the Chief Counsel for International Commerce Website: http://www.ogc.doc.gov/trans_anti_bribery.html.
· Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 180 countries and territories around the world. The CPI is available at: http://www.transparency.org/policy_research/surveys_indices/cpi/2009. TI also publishes an annual Global Corruption Report which provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents and an overview of the latest research findings on anti-corruption diagnostics and tools. See http://www.transparency.org/publications/gcr.
· The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 212 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See http://info.worldbank.org/governance/wgi/sc_country.asp. The World Bank Business Environment and Enterprise Performance Surveys may also be of interest and are available at: http://go.worldbank.org/RQQXYJ6210.
· The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index, and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. See http://www.weforum.org/en/initiatives/gcp/GlobalEnablingTradeReport/index.htm.
· Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at http://www.state.gov/j/drl/rls/hrrpt/.
· Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 92 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems. The report is available at: http://report.globalintegrity.org/
BILATERAL INVESTMENT AGREEMENTS
Senegal and the U.S. have a Bilateral Investment Treaty, which allows for international arbitration. (U.S. companies entering the Senegalese market should ensure that their contracts with third parties make a provision for binding international arbitration in case of a dispute.) The treaty also provides for Most Favored Nation treatment for investors, internationally recognized standards of compensation in the event of expropriation, free transfer of capital and profits, and procedures for dispute settlement, including international arbitration. Senegal has signed similar agreements for protection of investment with France, Switzerland, Denmark, Finland, Spain, Italy, the Netherlands, South Korea, Romania, Japan, Australia, China, Iran, Morocco, and Sudan. Senegal has concluded tax treaties with France, Mali, and WAEMU member states. There is currently no tax treaty and no imminent prospect of one between the United States and Senegal.
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
OPIC has been examining possible investments in Senegal but has no current projects. Senegal is a member of the Multilateral Investment Guarantee Agency (MIGA), an arm of the World Bank. In 2008, USAID launched a loan guarantee program for small and medium-sized enterprises in Senegal.
Unskilled and semi-skilled labor is abundant in Senegal, but there are relatively few highly-trained workers in the fields of engineering, information systems, and management. In-country opportunities for these workers are not numerous, and as a result, many look outside Senegal for employment.
Relations between employees and employers are governed by the labor code, collective bargaining agreements, company regulations and individual employment contracts. There are two powerful industry associations that represent management's interests: the National Council of Employers (CNP) and the National Employers' Association (CNES). The principal labor unions are the National Confederation of Senegalese Workers (CNTS), and the National
Association of Senegalese Union Workers (UNSAS) - a federation of independent labor unions. Labor issues are often high on the list of complaints by investors.
FOREIGN TRADE ZONES/FREE PORTS
Senegal's Free Trade Zone initiatives have largely been replaced with the Enterprise Franche d'Exportation (EFE), which reduces taxes and provides for duty-free imports as noted above. The Dakar Free Industrial Zone (ZFID) is largely inactive and stopped issuing new licenses in 1999. Firms already located there may continue receiving benefits until 2016. In 2007 the government of Senegal signed an agreement with Jafza International of Dubai to establish a "special economic zone" outside of Dakar. The project remains in the development phase and the zone's incentives portfolio is not yet known.
MAJOR FOREIGN INVESTORS
The dearth of reliable investment statistics makes it difficult to provide a detailed breakdown of foreign direct investment in Senegal. FDI assessments also tend to not include overseas remittances, estimated at more than one billion dollars per year, which fuel much of the growth in the country's real estate market and also contribute as capital investments in small and medium size businesses.
For FY 2010, APIX forecast USD 2.376 billion in new foreign investment thanks to new investment in port and road infrastructures. The majority of Senegal's stock of foreign investment comes from France, whose companies are dominant in many sectors in the economy. Approximately 235 subsidiaries of French groups are present in Senegal, accounting for 25 percent of all formal enterprises. French investors are present in the major multinational import-export firms, shipping companies, banking, food production, mechanical engineering, agribusiness, petroleum distribution, industrial equipment, vehicles, chemicals and pharmaceuticals, tourism and insurance industries. Privatizations in telecommunications and public utilities have confirmed and increased the predominance of France as Senegal's leading foreign investor, with Bouygues present in the water sector and telecommunications giant Orange the operating partner of Sonatel.
Investments by Senegalese citizens of Lebanese origin are significant in light import-substituting industries such as food products, textiles, chemicals, plastics and rubber. Swiss investment includes the multinational Nestle and a waste management company. Germany, Japan, and South Korea have moderate investments in Senegal. Taiwan was active in Senegal's fish and canning industry.
Indian interests have historically been a major investor in Senegal's phosphates industry and purchase nearly all phosphate output, while Mittal's investment in iron ore extraction could be the largest foreign investment in Senegal to date. Moroccan investment has increased since ATTI purchased the majority of shares of Banque Senegalo-Tunisienne (BST), Credit du Senegal, and Compagnie Bancaire de l'Afrique de L'Ouest (CBAO) to become one of the largest commercial banks of Senegal. Sudan's tele-communications company Sudatel recently won an international tender for a new license to provide fixed and mobile telephone and internet services. Iran Khodro Auto Company has recently opened an assembly plant for Samand sedans near Senegal's second largest city, Thies. In recent years, China has increased its commercial presence in Senegal but has not made significant investments.
U.S. direct foreign investment in Senegal is estimated at more than USD 150 million. Significant U.S. investors include General Electric, Fortesa International, Crown Manufacturing, Phillip-Morris, Pfizer, and Citibank. In 2006, Delta Airlines began non-stop Atlanta-Dakar service, continuing to Johannesburg and Cape Town, South Africa. In 2007, Colgate-Palmolive sold its Senegalese production facility for tooth-paste, soap, and similar products.