Transparency of the Regulatory System
Senegal has made progress towards developing independent regulatory institutions, including regulators for the energy, telecommunications, and financial sectors. The government also seeks to increase transparency of its regulatory system. The government has made good governance and transparency in the management of public affairs a high priority. While Senegal lacks established procedures for a public comment process for proposed laws and regulations, the government frequently holds public hearings and workshops to discuss proposed initiatives.
Authority to make rules and regulate rests with the relevant government ministry unless there is a separate regulatory authority for a particular industry. But in some instances, a ministry or the president will exert authority over regulatory matters—e.g., determining electricity tariffs. Local government bodies do not have a decisive role in regulatory decisions.
In 1988, the government established the Commission de Regulation du Secteur de l’Electricite (CRSE) as an independent agency that regulates the electricity sector. The government is preparing to expand the CRSE’s role to include regulation of hydrocarbon fuels. The CRSE holds public consultations every three years as part of its technical process for reviewing electricity tariffs. The Autorite de Regulation des Telecommunications et des Postes is responsible for licensing and regulation of telecommunications and postal services in Senegal. The regulator of financial institutions is the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), the regional central bank for the eight-member West African Economic and Monetary Union (WAEMU). In October 2013, Senegal was approved as a candidate country for the Extractive Industries Transparency Initiative (EITI). The government of Senegal is working to comply with EITI requirements and submitted its first EITI in 2015.
Senegal is a member of UNCTAD’s international network of transparent investment procedures. At senegal.eregulations.org there is detailed information on administrative procedures applicable to investment and income generating operations. This includes the number of steps required, name and contact details of the entities and persons in charge of procedures, required documents, and conditions, costs, processing time and legal bases for procedures.
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.
International Regulatory Considerations
As a member of the Economic Community of West African States (ECOWAS), Senegal adheres to regional requirements concerning the movement of people and goods. Similarly, financial and fiscal-policy directives of WAEMU are also enforced in Senegal, as are regulations issued by the BCEAO. Senegal is a member of the World Trade Organization (WTO) and notifies draft regulations to the WTO Committee on Technical Barriers to Trade.
Legal System and Judicial Independence
While Senegal has well-developed commercial and investment laws and a legal framework for resolving business disputes and enforcing property rights, settlement of disputes is cumbersome and slow. Senegal’s legal system is based on French traditions and practice. While Senegal’s legal system is one of the most effective in francophone Africa, it presents a challenging environment for resolution of commercial disputes. Court cases tend to proceed slowly, with ample opportunity for the parties involved to prolong the proceedings. Even when courts issue judgments, companies may encounter challenges in implementing court decisions and enforcing their contractual rights. Investors may consider including provisions for binding arbitration in their contracts in order to avoid prolonged entanglements in Senegalese courts. To alleviate the growing backlog and delays in resolution of commercial disputes, the government of Senegal has taken steps to establish commercial courts, as part of its investment climate reforms.
Senegal’s constitution states that the judiciary is independent of the legislature and executive. In practice, however, the executive’s influence over the courts is occasionally evident though generally not overt. Executive interference in judicial matters is, however, rare in strictly commercial matters. While often cumbersome and time-consuming, judicial processes in Senegal are, as a rule, procedurally competent. Companies may seek judicial redress against regulatory decisions. Such cases are heard in administrative tribunals that specialize in adjudicating claims against the state.
Laws and Regulations on Foreign Direct Investment
Senegal’s 2004 Investment Code provides basic guarantees for equal treatment of foreign investors and repatriation of profit and capital. It also specifies tax and customs exemptions according to the investment volume, company size and location, with investments outside of Dakar eligible for longer tax exemptions. A law to enhance transparency in public procurement and public tenders entered into force in 2008, establishing a public procurement regulatory body, the Autorite de Regulation des Marches Publics(ARMP), which publishes annual reviews of public procurement. The government enacted a law on public-private partnerships in 2014 to facilitate expedited approval of projects that include a minimum share of domestic investment.
More information on Senegal’s legal and regulatory environment, including texts of the investment code, the mining code, and many other reference documents can be found at www.investinsenegal.com.
Competition and Anti-Trust Laws
Senegal’s national competition commission, the Commission Nationale de la Concurrence, is responsible for reviewing transactions for competition-related concerns.
Expropriation and Compensation
Senegal’s Investment Code includes protection against expropriation or nationalization of private property, with exceptions for “reasons of public utility” that would involve “just compensation” in advance. In general, Senegal has not pursued expropriations against private companies. The government may sometimes use eminent domain justifications to procure land for public infrastructure projects, with compensation provided to land owners. Senegal’s bilateral investment treaty with the United States also specifies that international legal standards are applicable to any cases of expropriation of investment and the payment of compensation.
ICSID Convention and New York Convention
Senegal is a member of the International Center for the Settlement of Investment Disputes (ICSID) and a signatory of the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention). Senegal is a signatory to the Organization for the Harmonization of Corporate Law in Africa Treaty (OHADA). This agreement supports enforcement of awards under the New York Convention.
Investor-State Dispute Settlement
Senegal has growing experience in using international arbitration for resolution of investment disputes with foreign companies, including some cases involving tax disputes with U.S. firms. The government has also prevailed in some arbitration cases, including a 2013 arbitration decision in a high-profile case with a multinational company over an integrated mining/railway/port project, fostering greater confidence within the government to the arbitration process. Senegal’s bilateral investment treaty with the United States includes provisions to facilitate the referral of investment disputes to binding arbitration.
International firms have pursued a variety of investment disputes during the last decade, including at least two U.S. firms involved in tax and customs disputes. One U.S. energy firm was involved in a tax dispute and ultimately prevailed in arbitration. Another company has an ongoing case over whether imported industrial inputs would be subject to customs duties. Other foreign companies in the mining and telecommunications sectors have pursued commercial disputes over licensing. These disputes have often been resolved through arbitration or an amicable settlement.
Senegal has no history of extrajudicial action against foreign investors.
International Commercial Arbitration and Foreign Courts
The government has initiated several programs to establish commercial courts and use alternative dispute resolution mechanisms in order to reduce the time required for resolving business disputes. Under the OHADA treaty, Senegal recognizes the corporate law and arbitration procedures common to the 16 member states in western and central Africa. Senegalese courts routinely recognize arbitration clauses in contracts and agreements. It is not unusual for courts to rule against state-owned enterprises in disputes involving private enterprises.
Senegal has commercial and bankruptcy laws that address liquidation of business liabilities. Foreign creditors receive equal treatment under Senegalese bankruptcy law in making claims against liquidated assets. Monetary judgments are normally in local currency. Under the OHADA treaty, Senegal permits three different types of bankruptcy liquidation through a negotiated settlement, company restructuring, or complete liquidation of assets. Senegalese law does not treat bankruptcy as a criminal matter. Senegal ranked in 101st place of 190 countries on the “Resolving Insolvency” indicator in the World Bank’s 2017 Doing Business survey.