2020 Investment Climate Statements: Senegal

Policies Toward Foreign Direct Investment

The Government of Senegal welcomes foreign investment. The investment code provides for equitable treatment of foreign and local firms. There is no restriction on ownership of businesses by foreign investors in most sectors. Foreign firms generally can invest in Senegal free from systematic discrimination in favor of local firms. Nevertheless, some U.S. and other foreign firms have noted that, in practice, Senegal’s investment environment favors incumbents and insiders – often other foreign firms – at the expense of new market entrants. Common complaints include excessive and inconsistently applied bureaucratic processes, nontransparent judicial processes, and an opaque decision-making process for public tenders and contracts. Financial and capital markets are open, attracting domestic, regional, and international capital.

The government conducts ongoing dialogue with the private sector through the Conseil Presidentiel de l’Investissement (Presidential Council on Investment, or “CPI”). Among other activities, the CPI sponsors an annual forum at which investors comment on the government’s policies and actions. Details are available at cpi-senegal.com. Another important venue for dialog is the annual Assises de l’Entreprises sponsored by the Conseil National du Patronat, the national employers’ association. More information can be found at www.cnp.sn. Senegal does not have a business ombudsman or other official charged with coordinating complaints about the business climate. In practice, investors must often engage directly at the minister level to resolve business climate concerns.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no barriers to ownership of businesses by foreign investors in most sectors. There are some exceptions for strategic sectors such as water, electricity distribution, and port services where the government and state-owned companies maintain responsibility for most physical infrastructure but allow private companies to provide services. Senegal allows foreign investors equal access to ownership of property and does not impose any general limits on foreign control of investments. Senegal’s Investment Code includes guarantees for equal treatment of foreign investors including the right to acquire and dispose of property.

The Government of Senegal does some screening of proposed investments, primarily to verify compatibility with the country’s overall development goals and compliance with environmental regulations. The Ministry of Finance and Budget reviews project financing arrangements for projects implicating public funds to ensure compatibility with budget and debt policies. Senegal’s Investment Promotion Agency (APIX) can facilitate government review of investment proposals and the project approval process.

Other Investment Policy Reviews

On January 10, 2020, the Executive Board of the International Monetary Fund (IMF) approved a new three-year Policy Coordination Instrument (PCI) for Senegal. For more information, see: https://www.imf.org/en/News/Articles/2020/01/10/pr206-senegal-imf-executive-board-approves-three-year-policy-coordination-instrument 

Business Facilitation

The point of entry for business registration is Senegal’s Investment Promotion Agency (APIX), www.investinsenegal.com , which provides a range of administrative services to foreign investors. Since 2007, APIX has significantly reduced the average number of days it takes to start a business. While the government claims the average for starting a business is two days, the World Bank Doing Business 2020 estimates it takes six days to register a firm. In addition to other bureaucratic and documentary requirements, registering a business requires certification of certain documents by a public notary registered in Senegal. Senegalese law provides special preferences to facilitate investment and business operations by medium and small enterprises including reduced interest rates for Senegalese-owned companies. The government continues to expand its “single window” system offering one-stop government services for businesses, opening a new service centers in various locations and projecting to have at least one service center in each of the country’s 45 regional departments by 2021. Property owners can apply for construction permits online.  In 2019, the GOS made tax information and some payment options available online. With the support of UNCTAD and the government of Luxembourg, APIX recently launched an online portal, https://senegal.eregulations.org/ , containing extensive information regarding regulations applicable to businesses and investments in Senegal.

Despite these efforts, business climate challenges remain. Because the informal sector dominates Senegal’s economy, legitimate companies bear a relatively heavy tax burden.  Some U.S. companies complain about delays in the project development process due to excessive red tape and uncertainty over rules and processes.

Senegal’s Agency for the Development and Supervision of Small and Medium-sized Enterprises (ADEPME) has launched initiatives to support small and medium-sized enterprises (defined in Senegal as companies with fewer than 50 employees and annual revenues of less than 5 billion CFA (about $9 million). These include tax incentives, grants for capacity building and for feasibility studies, and technical assistance to help firms operating in the informal sector formalize and register. ADEPME has also launched a program to certify the creditworthiness of SMEs, making them eligible for loans at preferential rates.

Outward Investment

The government neither promotes nor restricts outward investment.

According to UNCTAD, https://investmentpolicy.unctad.org/international-investment-agreements/countries/186/senegal , Senegal has signed 29 bilateral investment treaties (BITs), of which 18 are currently in force. Senegal signed a BIT with the United States on December 6, 1983, which entered into force on October 25, 1990. Other notable BIT partners include: Canada (2016); United Kingdom (1984), Kuwait (2009); Portugal (2011); Turkey (2012) Argentina (2010); France (2010); India (2009); Mauritius (2009) and Spain (2011). Senegal ratified the WTO Trade Facilitation Treaty in February 2017.

Senegal is a member of the Economic Community of West African States (ECOWAS), which seeks to create a regional free trade zone with approximately 300 million inhabitants. The ECOWAS Trade Liberalization System (ETLS), approved in 1979, has yet to be fully implemented, however. Senegal has adopted and implemented the ECOWAS Common External Tariff (CET) System and generally imposes tariffs in a transparent and rules-based way. In March 2018, Senegal signed the African Continental Free Trade Area agreement (AfCFTA), a step toward a continent-wide liberalized market for goods and services. The AfCFTA entered into force in May 2019, and 27 countries have ratified the agreement, including Senegal. Negotiations for full implementation of the AfCFTA are still underway.

Senegal does not have a bilateral taxation treaty with the United States. Senegal has concluded agreements for the avoidance of double taxation with some 15 partners, including Belgium, Canada, Egypt, France, Kuwait, Lebanon, Malaysia, Mauritania, Mauritius, Morocco, Norway, Qatar, Chinese Taipei, Tunisia, Malaysia, and Portugal.

Negotiations continue toward an Economic Partnership Agreement between the European Union and several West African countries, including Senegal. More information may be found here: http://ec.europa.eu/trade/policy/countries-and-regions/negotiations-and-agreements/#_pending 

Some foreign firms, including U.S. companies, report concerns over Senegal’s system for assessing and collecting taxes from corporate entities. According to some reports, the processes used by tax authorities to calculate tax assessments are cumbersome, complex, and inconsistent, making necessary lengthy and uncertain negotiations over tax bills. Some observers, including tax professionals, have reported that Senegalese tax authorities seem to target large, prominent companies for discriminatory taxation, ignoring smaller, unregistered firms that operate informally and pay little or no taxes. The government is implementing a program to incentivize SMEs to formalize their operations, but progress has been slow. By some estimates, the informal sector represents up to 90 percent of the economic activity in the country. According to statements of officials, Senegal has increased its ratio of taxes collected to GDP by three percentage points over the past two years (from a base of 16 percent in 2017), suggesting some tentative progress in broadening the tax base.

Senegal has made no recent changes to its tax code, which can be accessed here: http://www.investinsenegal.com/IMG/pdf/cgi2013-2.pdf /  http://www.impotsetdomaines.gouv.sn/fr/documentation/code-general-des-impots-cgi .

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.

The Commission de Regulation du Secteur de l’Electricite (CRSE) was established in 1998 to regulates 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. Under the Millennium Challenge Corporation (MCC) Compact focused on the power sector, the government has committed to reforms in the sector, including enacting a new electricity code and strengthening the CRSE’s capacity and independence. As part of these efforts, the MCC Compact, will fund technical assistance and capacity building for CRSE and other key stakeholders who govern the power sector.

The Autorite de Regulation des Telecommunications et des Postes is responsible for licensing and regulating telecommunications and postal services in Senegal. The Dakar-based regional Central Bank of West African States (known by its French acronym BCEAO) regulates the banking sector.

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. Financial statements must be prepared in accordance with the SYSCOA system, based on Generally Accepted Accounting Principles in France.

Senegal’s budget and information on debt obligations are 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 2017 online. 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.

The process for allocating licenses and contracts for natural resource extraction was outlined in law and appeared to be followed in practice.  In 2019, Senegal approved a new Petroleum Code, clarifying investment terms and local content requirements for foreign investment in the sector.  Senegal is currently offering new offshore exploration blocks through an open tender conducted in accordance with international standards. In February 2020, Senegal finalized a new Gas Code to govern development of a mid-stream gas distribution network that will be the subject of a competitive tender. Basic information on natural resource extraction awards was publicly available, and the government participated actively in the Extractive Industries Transparency Initiative (EITI).

International Regulatory Considerations

As a member of the Economic Community of West African States (ECOWAS), Senegal generally adheres to regional requirements concerning the movement of people and goods. Similarly, fiscal policy directives of WAEMU are enforced in Senegal, as are regulations issued by the BCEAO. Senegal is a member of the World Trade Organization (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 without notifying the WTO.

Legal System and Judicial Independence

Senegal has well-developed commercial and investment laws. Although settlement of commercial disputes has historically been cumbersome and slow, in February 2018 Senegal launched a new commercial court system with jurisdiction over commercial matters and a mandate to resolve cases within three months.  The business community has welcomed the move, and in the past two years, the court has heard 11,054 cases involving disputes with a combined total value of nearly $500 million.  Companies may nevertheless encounter challenges in executing court decisions and enforcing their contractual rights.

While Senegal’s constitution mandates that the judiciary operate independently of the legislature and executive, the executive frequently exerts influence, particularly in high-profile criminal cases. This type of influence is rare in strictly commercial matters. Some foreign investors, however, report discriminatory treatment by local courts. Investors may consider including provisions for binding arbitration in their contracts to avoid prolonged and unpredictable entanglements in Senegalese courts.

Companies may seek judicial redress against regulatory decisions. Regulatory appeals are heard in administrative tribunals that specialize in adjudicating claims against the state.

Senegal is a member of the World Intellectual Property Organization and the Bern Copyright Convention, and in June 2019 hosted a regional workshop on protecting intellectual property in the pharmaceutical and pesticide industries that gathered prosecutors, customs, and law enforcement officers. Nevertheless, the country has insufficient capacity to reliably protect intellectual property rights.

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. As of July 2020, the GOS was in the process of revising the public-private partnership law.

Regulations of the Central Bank of West African States (known by its French acronym BCEAO) proscribe the use of offshore accounts in project finance transactions within the WAEMU except where approved by the Ministry of Finance and Budget, with the express consent (“avis conforme”) of the BCEAO. According to the BCEAO, these restrictions allow visibility over international transactions, deter money laundering, and help the BCEAO maintain adequate foreign currency reserves. The BCEAO emphasizes the importance of these rules in enabling it to fulfill its mandate of maintaining the stability of the franc CFA’s peg to the euro.

Since 2018, the BCEAO and Senegalese Ministry of Finance Budget have tightened their approach to the approvals of offshore accounts. Although there is no strict “maximum” number of accounts that will be permitted, informal guidelines suggest that transactions using one to three such accounts have the greatest chance of being approved. According the BCEAO, the intent is to encourage the minimum number of such accounts necessary to legitimately conduct the transaction. Project managers and lenders should raise the subject of offshore accounts with the Ministry of Finance as early in the process as possible and should be prepared to submit a functional justification for each requested account. All offshore accounts must be “reauthorized” on an annual basis.

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:

• Investment Code:
• Mining Code:
• Petroleum Code:

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 landowners. 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.

Dispute Settlement

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. 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.

Bankruptcy Regulations

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 96th out of 190 countries on the “Resolving Insolvency” indicator in the 2020 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 cents per every dollar owed in such proceedings, compared to an average of 20.5 for sub-Saharan Africa and 70.2 for OECD high income countries.

Investment Incentives

Senegal’s Investment Code provides for investment incentives, including temporary exemption from customs duties and income taxes, for investment projects. Eligibility for investment incentives depends upon a firm’s size and the type of activity, amount of the potential investment, and location of the project. To qualify for significant investment incentives, firms must invest above CFA 100 million (approximately $165,000) 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,” investment incentives may not be available.

Eligible sectors for investment incentives include agriculture and agro-processing, fishing, livestock 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 can be 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 may 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. The new tax code was published December 31, 2012 (law # 2012-31 of December 2012 published in journal # 6706 of 31/12/2012).

An existing firm requesting an extension of such incentives must be at least 20 percent self-financed. To qualify for these benefits, firms are required to create at least 150 full-time positions for Senegalese nationals, to contribute the hard currency equivalent of at least 100 million CFA ($165,000 USD), and keep regular accounts that conform to Senegalese (European accounting system) standards. In addition, firms must provide APIX with details on company products, production, employment, and consumption of raw materials.

Foreign Trade Zones/Free Ports/Trade Facilitation

In 2017, Senegal passed legislation to create Special Economic Zones (SEZ) regime. Enterprises approved under the SEZ regime may be granted tax and customs concessions for up to 25 years. Benefits may include: exemptions from duties and taxes on imports of goods, raw materials and equipment (except for community levies); application of a reduced 15 percent corporate tax rate; and exemption from certain taxes and charges such as the business tax and property taxes. To qualify for these benefits, companies must represent a minimum investment of CFA 100 million ($165,000), create at least 150 direct jobs during their first year of operation, and generate at least 60 percent of their revenue from exports. In November 2018, President Sall inaugurated the country’s first SEZ, the Integrated Industrial Platform of Diamniadio, a suburb of Dakar. The platform is now operational with seven companies established. It is expected to create approximately 20,000 jobs by 2023. The government has launched two additional SEZ, one in Sandiara, 80 kilometers from the capital city Dakar, and the other in Ndiass, in the vicinity of Dakar’s International Airport. With growing interest in economic zones, there is a need for more clarity and coherence in the incentives offered by the government.

Performance and Data Localization Requirements

Except in the petroleum sector (discussed below), the government does not currently impose, by statute, specific requirements for including local content, input, or employment in investment activities. However, the government has announced that it favors local content, and the current administration is pursing legislation that would require some level of local content in new investment projects. The government also negotiates with potential investors on a case-by-case basis to support local employment or ensure incentives for investors to meet their contractual commitments. The U.S. Bilateral Investment Treaty with Senegal includes provisions for companies to engage freely professional, technical, and managerial assistance necessary for planning and operation of investments. Nevertheless, foreign firms often find that voluntarily including local content in their projects makes their proposals more competitive.

Senegal approved a new Petroleum Code in February 2019. The new law updated Senegal’s oil and gas legal framework, which was initially adopted two decades ago when the country sought to attract initial investments for largely untested resources.  Senegal’s recent string of major offshore petroleum discoveries, however, has attracted major international players and led the government to adjust the legislation to preserve a greater share of the profits for Senegal. The revised law guarantees more favorable terms to the national oil company Petrosen, including a minimum of 10 percent interest in projects in the exploration phase and up to 30 percent interest when projects reach the development and exploitation stages.  Although oil and gas blocks will still be awarded through open international tenders, the new law will require foreign oil companies to source a portion of labor and materials locally and contribute to a training fund for local workers.

Acquiring work permits for expatriate staff is typically straightforward. Citizens from WAEMU member countries may work freely in Senegal.

Real Property

The Senegalese Civil Code provides a framework, based on French law, for enforcing private property rights. The code provides for equality of treatment and non-discrimination against foreign-owned businesses. Senegal maintains a property title and a land registration system, but application is uneven outside of urban areas. Establishing ownership rights to real estate can be difficult. Once established, however, ownership is protected by law.

The government has undertaken several reforms to make it easier for investors to acquire and register property. It has streamlined procedures and reduced associated costs for property registration. The government has developed new land tenure models intended to facilitate land acquisition by resolving conflicts between traditional and government land ownership. If the new models are widely adopted, the government and donors expect they will facilitate land acquisition and investment in the agricultural sector while providing benefits to traditional landowners in local communities.

The government generally pays compensation when it takes private property through eminent domain actions. Senegal’s housing finance market is under-developed 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 ranked 116 out of 190 countries in the 2020 Doing Business Index for Registering Property. According to the World Bank methodology, it requires an average of 41 days to register property against an average of 51.6 days in sub-Saharan Africa and 23.6 days in OECD high-income countries. Five separate procedures are required for property registration.

Intellectual Property Rights

Senegal maintains an adequate legal framework for protection of intellectual property rights (IPR), but the country has limited institutional capacity to implement this framework and enforce IPR protections. Senegal has been a member of the World Intellectual Property Organization (WIPO) since its inception. Senegal is also a member of the African Organization of Intellectual Property (OAPI), a grouping of 15 francophone African countries with a common system for obtaining and maintaining protection for patents, trademarks, and industrial designs. Local statutes recognize reciprocal protection for authors or artists who are nationals of countries adhering to the 1991 Paris Convention on Intellectual Property Rights. Patents may be registered with the Agence sénégalaise pour la Propriété industrielle et l’Innovation technologique (ASPIT) and are protected for 20 years. An annual charge is levied during this period. Registered trademarks are protected for a period of 20 years. Trademarks may be renewed indefinitely by subsequent registrations. Senegal is a signatory to the Berne Convention for the Protection of Literary and Artistic Works. The Senegalese Copyright Office, part of the Ministry of Culture, protects copyrights. Bootlegging of music CDs is common and concerns the local music industry. The Copyright Office has taken actions to combat media piracy, including seizure of counterfeit cassettes and CD/DVDs. In 2008, the government established a special police unit to better enforce the country’s anti-piracy and counterfeit laws. In general, however, the government has limited capacity to combat IPR violations or to seize counterfeit goods. Customs screening for counterfeit goods production is weak, and confiscated goods occasionally re-appear in the market. Nevertheless, the government has made efforts to raise awareness of the impact of counterfeit products on the Senegalese marketplace, especially regarding pharmaceuticals, and officers have participated in trainings offered by manufacturers to identify counterfeit products.

Senegal is not included in the United States Trade Representative(USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

Senegalese authorities take a generally positive view of portfolio investment. Assisted by the debt management office of the BCEAO and thanks to a well-functioning regional debt market, Senegal has historically issued regular debt instruments in local currency to manage its finances. Beginning in 2011, the government began accessing international debt markets, issuing U.S. dollar-denominated Eurobonds in 2011, 2014, 2017, and 2018. Some observers, including the IMF, have expressed concern over the recent rise in Senegal’s external debt, which reached 62 percent of GDP in 2019, compared to 52 percent in 2018. Due to borrowing needed to fund its COVID-19 response, Senegal’s debt-to-GDP ratio is expected to rise further, to 68 percent in 2020.

A handful of Senegalese companies are listed on the West African Regional Stock Exchange (BRVM), headquartered in Abidjan, Cote d’Ivoire. The BVRM also has local offices in each of the WAEMU member countries, offering additional opportunities to attract foreign capital and access diversified sources of financing.

In 2018, the BCEAO launched the region’s first certification program for dealers in securities and other financial instruments. Modeled on accreditation programs offered by the Chartered Institute for Securities and Investment (CISI), the new program was supported by the U.S. Treasury’s Office of Technical Assistance.

Money and Banking System

While Senegal’s banking system is generally sound, the financial sector is under-developed. Senegal’s approximately twenty commercial banks, primarily based in France, Nigeria, Morocco, and Togo, follow generally conservative lending guidelines, with collateral requirements that most potential borrowers cannot meet. Few firms are eligible for long-term loans, and small- and medium-sized enterprises have little access to credit. According to a 2014 government survey, less than 5 percent of enterprises receive financing from commercial banks. Senegal’s banking sector is regulated by the BCEAO, the regional central bank, and the WAEMU regional banking commission. Increasingly available mobile money services offer Senegalese consumers alternatives to traditional banking and credit services.

Foreign Exchange and Remittances

Foreign Exchange

As one of the eight WAEMU countries, Senegal uses the CFA franc – issued by the BCEAO – as its currency. The CFA franc is pegged to the Euro. Senegal’s Investment Code includes guarantees of access to foreign exchange and repatriation of capital and earnings, although repatriation transactions are subject to procedural requirements of financial regulators, including limitations imposed by the BCEAO on the use of offshore accounts. Local financial institutions routinely carry out commercial transfers in a timely fashion. The government limits the amount of foreign exchange that individual travelers may take outside Senegal. Departing travelers may carry a maximum of 6 million CFA francs (approximately $10,000) in foreign currency and travelers checks upon presentation of a valid airline ticket. Senegal’s bilateral investment treaty with the United States includes commitments to ensuring free transfer of funds associated with investments.

Remittance Policies

Remittances from Senegal’s large diaspora represent about 10 percent of GDP and are one of the main resources for the country. According to the last IMF review of Senegal’s economy, remittances remains a significant component of the current account but are expected to decline as a percent of GDP over the medium term. Remittances fell sharply in 2020 as a result of the global COVID-19 crisis.

Sovereign Wealth Funds

In 2012, Senegal established a sovereign wealth fund (Fonds Souverain d’Investissements Strategiques, or FONSIS) with a mandate to leverage public assets to support equity investments in commercial projects supporting economic development objectives, FONSIS invests primarily in strategic sectors defined in the Plan Senegal Emergent (PSE), including agriculture, fishing, infrastructure, energy, mining, tourism, and services.

Senegal maintains several taxes and funds allocated for specific purposes such as expanding access to transportation, energy, and telecommunications, including the autonomous road maintenance fund and the energy support fund. For these funds, some information is included in budget annexes; these funds are subject to the same auditing and oversight mechanisms as ordinary budgetary spending. FONSIS reports that it abides by the Santiago Principles for sovereign wealth funds.

Senegal has generally reduced government involvement in state-owned enterprises (SOEs) during the last three decades. However, the government still owns full or majority interests in approximately 20 such companies, including the national electricity company (Senelec), Dakar’s public bus service, the Port of Dakar, the national postal company (National Post), the national rail company, and the national water utility. The state-owned electricity company, Senelec, retains control over power transmission and distribution, but it relies increasingly on independent power producers to generate power. The government has also retained control of the national oil company, Petrosen, which is involved in hydrocarbon exploration in partnership with foreign oil companies and operates a small refinery dependent on government subsidies. The government has modest and declining ownership of agricultural enterprises, including a state-owned company involved in rice production. In 2018, the government re-launched a wholly state-owned airline, Air Senegal. The government owns a minority share in Sonatel-Orange Senegal, the country’s largest internet and mobile communications provider.

The Direction du Secteur Parapublic, an agency within the Ministry of Finance, manages the government’s ownership rights in enterprises. The government’s budget includes financial allocations to these enterprises, including subsidies to Senelec. SOE revenues are not projected in budget documents, but actual revenues are included in quarterly reports published by the Ministry of Finance. Senegal’s supreme audit institution (the Cour des Comptes) conducts audits of the public sector and SOEs. Its reports are made publicly available at www.coursdescomptes.sn and www.ige.sn, but not always in a timely fashion.

Privatization Program

The government has no program for privatizing the remaining SOEs.

Following the lead of foreign companies, some Senegalese firms have begun adopting corporate social responsibility programs and responsible business conduct standards. However, this movement is not yet widespread.

The criteria and procedures by which the government awards natural resource extraction contracts or licenses are specified in Senegal’s 2016 Mining Code. The new code requires mining companies to participate in transparency reporting, following the guidelines of the Extractive Industries Transparency Initiative (EITI). The government appeared to follow the Mining Code and its implementing regulations in practice, although unregulated artisanal mining is common in some areas. Basic information on awards was publicly available online through the government’s official journal, and included details regarding geographic areas, resources under development, companies involved, and the duration of contracts. In January 2019, the government adopted a new Petroleum Code, in response to major offshore hydrocarbon discoveries since 2014. The new code clarifies mechanisms for reserving revenues from oil and gas projects to the government. Senegal has been an active member of the Extractive Industries Transparency Initiative (EITI) since 2013. In May 2018, the EITI Board declared Senegal the first country in Africa to have made “satisfactory progress” in implementing EITI standards. In October, Senegal hosted the 41st quarterly meeting of the EITI Board, along with a conference on EITI implementation in Africa. The government’s EITI committee reports directly to the president.

Senegalese law provides criminal penalties for corruption. The National Anti-Corruption Commission (OFNAC) has a mandate to enforce anti-corruption laws. In January 2020, OFNAC released long overdue reports on its activities for 2017 and 2018 and swore in six new executive-level officials, bringing its managing board to a full complement for the first time in several years. A 2014 law requires the president, cabinet ministers, speaker and chief financial officer of the National Assembly, and managers of public funds in excess of one billion CFA francs (approximately $1.8 million) to disclose their assets to OFNAC.

The government has made some limited progress in improving its anti-corruption efforts. The current administration has mounted corruption investigations against several public officials (primarily the president’s political rivals) and has secured several convictions. In July 2020, President Sall launched an initiative to enforce a requirement that cabinet members and other high-level officials disclose their assets, and issued a report disclosing his own personal assets. The government of Senegal has also taken steps to increase budget transparency in line with regional standards. Senegal ranked 66 out of 180 countries, in Transparency International’s 2019 Corruption Perception Index (CPI), representing a substantial improvement over Senegal’s ranking of 94 in 2012.

Notwithstanding Senegal’s positive reputation for corruption relative to regional peers, the government often did not enforce the law effectively, and officials continued to engage in corrupt practices with impunity. Reports of corruption ranged from rent-seeking by bureaucrats involved in public approvals, to opaque public procurement, to corruption in the police and judiciary. Some high-level officials in President Sall’s administration are rumored to be involved in corrupt dealings.

Senegal’s financial intelligence unit, Cellule Nationale de Traitement des Informations Financières (CENTIF) is responsible for investigating money laundering and terrorist financing. CENTIF has broad authority to investigate suspicious financial transactions, including those of government officials. In February 2019, the regional FATF body, GIABA, issued a Mutual Evaluation Report of Senegal’s anti-money laundering and countering terrorist financing (AML/CTF) performance, measured by FATF standards. Although GIABA found the GOS’s understanding of AML/CTF standards and risks adequate, it gave Senegal non-compliant or partially compliant ratings on 26 of FATF’s 40 recommendations concerning the AML/CTF legal framework (“technical compliance”). Senegal also received ten low ratings and one moderate rating on the FATF’s 11 indicators measuring Senegal’s practical efforts to combat money laundering, terrorist financing, and weapons of mass destruction proliferation financing. Key weaknesses included: failure to domesticate relevant BCEAO AML/CTF directives; inadequate monitoring of nonprofits and non-bank professions, such as lawyers and accountants, who engage in financial transactions; inadequate inspections and sanctions of financial institutions; weak interagency cooperation; and low levels of AML/CTF capacity among judicial and customs authorities.

It is important for U.S. companies to assess corruption risks and develop an effective compliance program or measures to prevent and detect corruption, including foreign bribery. U.S. firms operating in Senegal can underscore to interlocutors in Senegal that they are subject to the Foreign Corrupt Practices Act (FCPA) in the U.S. and may consider seeking legal counsel to ensure compliance with anti-corruption laws in the U.S. and Senegal. The U.S. Government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize all acts of corruption, including bribery of foreign public officials, and 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 may bring this to the attention of appropriate U.S. agencies.

Senegal is a signatory of the United Nations Convention Against Corruption but it is not a signatory of the OECD Convention on Combatting Bribery.

Resources to Report Corruption

Mrs. Seynabou Ndiaye Diakhaté, President
Office National de Lutte Contre La Fraude et la Corruption (OFNAC)
Lot 72-73, Cité Keur Gorgui à Mermoz-Pyrotechnie
Telephone: 800 000 900 / +221 33 889 98 38
www.ofnac.sn

Birahim Seck
President
Forum Civil
40 Avenue Malick Sy (1er étage) – B.P. 28 554 – Dakar
Telephone: +221 33 842 40 44
forumcivil@orange.sn / http://www.forumcivil.sn/ 

Senegal has long been regarded as an anchor of stability in the West Africa region that is vulnerable to political unrest. It is the only mainland West African country that has never had a coup d’état since gaining independence in 1960. Senegal experienced sporadic incidents of political violence during the lead up to national elections in March 2012 due to strong opposition to former President Wade’s decision to seek reelection for a third term. However, the 2012 presidential election reinforced Senegal’s reputation as the strongest democracy in West Africa. International observers assessed the February 2019 presidential election, in which President Sall easily won a second term, as free and fair, despite some isolated systemic issues and a few instances of campaign violence. Public protests occasionally spawn isolated incidents of violence when unions, opposition parties, merchants, or students demand better salaries, working conditions or other benefits. Sporadic incidents of violence as result of petty banditry continue in the Casamance region, which has suffered from a three-decade-old conflict ignited by a local rebel movement seeking independence for the region, but the level of violence has declined in recent years as the government and rebel groups have engaged in negotiations to resolve the conflict.

Security is a top priority for the government, which increased its defense and security budget by 92 percent between 2012 and 2017.

Senegal has an abundant supply of unskilled and semi-skilled labor, with a more limited supply of skilled workers in engineering and technical fields. While Senegal has one of the best higher educational systems in West Africa and produces a substantial pool of educated workers, limited job opportunities in Senegal lead many to look outside of the country for employment.

Relations between employees and employers are governed by the Labor Code, industry-wide collective bargaining agreements, company regulations, and individual employment contracts. Senegalese law provides legal protection for women and children and prohibits forced or compulsory labor. The law also establishes minimum standards for working age, working hours, and working conditions, and bars children from performing many dangerous jobs. Senegal ratified International Labor Organization Convention 182 on the worst forms of child labor in 2000. The labor code recognizes the right of workers to form and join trade unions. Any group of workers in a similar trade or profession may create a union, although formal approval by the Ministry of the Interior is required. The right to strike is recognized but sometimes restricted. The GOS has the authority to dissolve trade unions and requisition workers from private enterprises.

Two powerful industry associations 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. Collective bargaining agreements cover an estimated 44 percent of formal sector workers. Most workers, however, work in the informal sector, where labor rules are not enforced.

Child labor remains a problem, particularly in the informal sector, mining, construction, transportation, domestic work, agriculture, and fishing, where labor regulations are rarely enforced. Despite some progress, Senegal still has work to do to address the problem of forced child begging. Tens of thousands of religious students (talibés) are enrolled in Koranic schools (daaras) where some are forced to beg to enrich teachers who corrupt the daara tradition. The GOS has made some progress in combatting these practices, but more progress is needed.

The COVID-19 pandemic and the GOS’s initially stringent lockdown measures resulted in significant job losses, primarily in Senegal’s dominant informal sector. The head of Senegal’s leading employers’ association noted that the tourism sector (accounting for 7 percent of GDP) lost 45,000 jobs in April 2020 alone. A May 2020 survey of 800 Senegalese businesses by the National Agency for Small and Medium-Sized Enterprises found that 65 percent had suffered a significant negative impact from COVID-19 and 40 percent had ceased operations. At the same time, a GOS measure prohibiting layoffs raised fears of insolvency among larger formal sector firms.

The U.S. International Development Finance Corporation (DFC, formerly OPIC) offers financing and investment insurance to support U.S. investment projects in Senegal and is actively seeking to strengthen its portfolio in the country. DFC is currently supporting several investment projects in Senegal including two energy projects, one microfinance project and an agribusiness project. Additional projects in the energy and tourism sectors are under consideration. Senegal is a member of the Multilateral Investment Guarantee Agency (MIGA), an arm of the World Bank.

“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment
Data not available.

Heath Bailey
Economic Section Chief
U.S. Embassy, Route des Almadies, B.P. 49, Dakar, Senegal
+221 33 879 4794
BaileyDH@state.gov