Transparency of the Regulatory System
Senegal has made some progress towards developing independent regulatory institutions, including regulators for the energy, telecommunications, and financial sectors. 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. Proposed regulations are not always made available to the public in a timely way, however. Although Senegalese law requires proposed legislation to be published in advance in the government’s official gazette, the government does not consistently update the gazette’s website.
Authority to make rules and regulate rests with the relevant government ministry unless there is a separate regulatory authority for a particular industry. However, 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) to regulate the electricity sector and set electricity tariffs. Although the CRSE is, by law, an independent agency, observers note that the government frequently exercises influence over its decisions. 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), based in Dakar.
Senegal is a member of the United Nations Conference on Trade and Development (UNCTAD)’s international network of transparent investment procedures. At https://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. There is no legal requirement to conduct impact assessments of proposed regulations, and regulatory agencies rarely do so. There is no specialized government body tasked with reviewing and monitoring regulatory impacts.
Legal, regulatory and accounting systems closely follow French models, and West African Economic and Monetary Union (WAEMU) countries present their financial statements in accordance with the SYSCOA system, based on Generally Accepted Accounting Principles in France.
Senegal’s budget and information on debt obligations were widely and easily accessible to the public, including online. The budget was substantially complete and considered generally reliable. Senegal’s supreme audit institution reviewed the government’s accounts, and has published its audit reports for Senegal’s budgets through 2016 online. The process for allocating licenses and contracts for natural resource extraction was outlined in law and appeared to be followed in practice. Basic information on natural resource extraction awards was publicly available, and the government participated actively in the Extractive Industries Transparency Initiative (EITI). Senegal is the first Francophone country in sub-Saharan Africa to submit to a fiscal transparency evaluation (FTE) by the IMF. In its January 30, 2019 FTE, the IMF rated Senegal “average” overall for countries of similar income and institutional capacity. Senegal was rated “advanced” or “good” on fiscal forecasting, budgeting, and fiscal reporting. It was rated “basic” on monitoring risks triggered by subnational governments. Senegal’s fiscal transparency would be improved by the supreme audit authority making its reports on the budget available in a timely manner.
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 WTO and generally notifies draft regulations to the WTO Committee on Technical Barriers to Trade. However, since 2005 Senegal has banned imports of uncooked poultry and poultry products from the world without notifying the WTO.
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 often 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. Some foreign investors report experiencing discriminatory treatment by local courts. Investors may consider including provisions for binding arbitration in their contracts in order to avoid prolonged and unpredictable entanglements in Senegalese courts. To alleviate the growing backlog and delays in resolution of commercial disputes, the government of Senegal recently launched a Commercial Court as part of its investment climate reforms, although the court’s operations have yet to be fully implemented.
Senegal’s constitution provides 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 Autorité de Régulation des Marchés Publics (ARMP), which publishes annual reviews of public procurement. Procedures for challenging tender awards are available. 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, a new Petroleum Code finalized in February 2019, can be found at the following:
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 no history of expropriation or creeping expropriation 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 U.S. 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 Convention 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). Senegalese law recognizes the Cour d’Appel (Appeals Court) as the competent authority for the recognition and enforcement of awards rendered pursuant to ICSID. Senegal is also 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. The Autorité de Régulation des Marchés Publics (ARMP) manages a dispute resolution mechanism for public tenders.
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 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. As a member of OHADA, Senegal permits three different types of bankruptcy liquidation through a negotiated settlement, company restructuring, or complete liquidation of assets. Senegal ranked 94th out of 190 countries on the “Resolving Insolvency” indicator in the 2019 World Bank Doing Business Index. According to the index, it takes an average of 36 months to complete liquidation proceedings in Senegal. Secured creditors recover an average of 30.1 cents per every dollar owed in such proceedings, compared to an average of 20.3 for sub-Saharan Africa and 70.5 for OECD high income countries.