2022 Investment Climate Statements: Senegal

Policies Toward Direct Foreign Investment

The GOS 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. However, 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, slow judicial processes; and an opaque decision-making process for public contracts. Financial and capital markets are open, attracting domestic, regional, and international capital. In the wake of COVID-19, President Sall called for greater “economic sovereignty” in strategic sectors such as food production, pharmaceuticals, and digital technology to strengthen the country’s resilience to external shocks.

The GOS consults with the private sector through the Conseil Presidentiel de l’Investissement (Presidential Council on Investment, or “CPI”). Among other activities, the CPI for investor-government dialogue. Another important venue for dialogue is the annual Assises de l’Entreprises (Company Meetings) sponsored by the Conseil National du Patronat (www.cnp.sn), the national employers’ association. Senegal does not have a business ombudsman or other official charged with resolving business disputes. In practice, investors must often engage directly at the minister level to resolve business climate concerns. Senegal’s investment promotion agency, APIX, facilitates government review of investment proposals and the project approval process. APIX is also the exclusive administrator of all special economic zones in Senegal.

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. Exceptions include 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 real property.

GOS Ministries offer guidance on large projects, 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 requiring public funds to ensure compatibility with budget and debt policies.

Other Investment Policy Reviews

In October 2017, Senegal, along with other members of the West African Economic and Monetary Union (WAEMU) underwent a Trade Policies Review  by WTO.

In January 2020, the Executive Board of the IMF approved a new three-year Policy Coordination Instrument (PCI) for Senegal. The IMF published its Second Review under the PCI ( IMF PCI ) on January 19, 2021.

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. The World Bank 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-sized and small enterprises, including reduced interest rates for Senegalese-owned companies. The GOS continues to expand its “single window” system, offering one-stop government services for businesses and opening new service centers. Since 2019, the GOS has made 25 government processes available online, including applications for construction permits, tax information searches, and tax and customs payments. In 2020, the GOS continued to expand its eGovernance program, harmonizing 60 government websites and creating 30 online service platforms. In 2019, APIX launched an online portal  containing extensive information regarding regulations applicable to businesses and investments in Senegal.

Senegal’s Agency for the Development and Supervision of Small and Medium-sized Enterprises (ADEPME) supports small and medium-sized enterprises (defined as having fewer than 50 employees and annual revenues less than 5 billion CFA (about $9 million)). These include tax incentives, grants for capacity building and 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.

Senegal’s budget and information on debt obligations are generally accessible to the public, including online.  Although Senegal included state-owned enterprise (SOE) debt in its overall debt figures, detailed information on the debt of individual SOEs was not available to the public. The budget was substantially complete and considered generally reliable.  Senegal’s supreme audit institution reviews the government’s accounts, and its reports are published online. However, the GOS has not released an audit report since 2017. Senegal is the first Francophone country in sub-Saharan Africa to submit to a fiscal transparency evaluation (FTE) by the IMF. In its January 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.

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.  Senegal is currently offering new offshore exploration blocks through an open tender process 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. Basic information on natural resource extraction awards is publicly available, and the government participated actively in the Extractive Industries Transparency Initiative.

Outward Investment

The government neither promotes nor restricts outward investment.

UNCTAD  indicates that Senegal has signed 29 bilateral investment treaties (BITs), of which 18 are currently in force. Senegal has had a BIT in force with the United States since 1990. Other BIT partners include the United Kingdom (1984), Kuwait (2009), India (2009), Mauritius (2009), Argentina (2010), France (2010), Spain (2011), Portugal (2011), Turkey (2012), and Canada (2016). Senegal ratified the WTO Trade Facilitation Treaty in February 2017.

Senegal has been a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting since 2014 and is party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax.

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, approved in 1979, has yet to be fully implemented. Senegal adopted and implemented the ECOWAS Common External Tariff 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 via ratification by 24 countries, including Senegal. Trading under the AfCFTA Agreement began on January 1, 2021. As of February 10, 2022, 41 of the 54 signatories have deposited their instruments of ratification with the AfCFTA Secretariat, including Senegal.

Senegal does not have a bilateral taxation treaty with the United States. Senegal has concluded agreements to avoid double taxation with some countries, including Belgium, Canada, France, Italy, Lebanon, Mauritania, Morocco, Norway, Portugal, Qatar, Spain, Tunisia, United Kingdom, and WAEMU states Benin, Burkina-Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, and Togo.

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, necessitating 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. The GOS incentivizes SMEs to formalize their operations, but progress has been slow. By some estimates, the informal sector accounts for up to 90 percent of economic activity. In 2021, the GOS set a goal of increasing tax revenue from the current 17 percent of GDP to 20 percent within 3 years and expanding the corporate tax base from 87,000 to 300,000 companies.

Senegal’s current tax code can be accessed here: Senegal Tax Code . Recent finance regulations added new provisions about corporate taxes in the general tax code. A summary of these provisions can be found here .

Transparency of the Regulatory System

Senegal has made some progress towards establishing independent regulatory institutions, having set up regulators for energy, telecommunications, and finance. While Senegal lacks established procedures for a public comment process for proposed laws and regulations, the GOS sometimes holds public hearings and workshops to discuss drafts. Suggested regulations are not always made available to the public in a timely manner, however. Although Senegalese law requires proposed legislation to be published in advance in the government’s official gazette, the GOS does not consistently update its website. The government does not promote or require companies’ environmental, social, and governance disclosure to facilitate transparency or help investors and consumers distinguish between high- and low-quality investments.

Authority to make and enforce rules rests with the relevant government ministry unless there is a separate regulatory authority. Local government bodies do not have a decisive role in regulatory decisions.

The Commission de Régulation du Secteur de l’Electricité (Electricity Sector Regulatory Commission, CRSE) was established in 1998 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. Under the Millennium Challenge Corporation Senegal Power Compact, the GOS has committed to reforms, including adopting a new electricity code in 2021 and strengthening the CRSE’s capacity and independence.

The Autorité de Régulation des Télécommunications et des Postes (Telecommunications and Postal Regulatory Authority, ARTP) is responsible for licensing and regulating telecommunications and postal services in Senegal. The Dakar-based Central Bank of West African States (known by its French acronym, BCEAO) regulates banking.

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 SYSCOHADA system, based on generally accepted accounting principles in France.

International Regulatory Considerations

As a member of 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 WTO member 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. In March 2019, Senegal ratified the AfCFTA, which went into effect in January 2021.

Legal System and Judicial Independence

Senegal’s legal system is based on French civil law and has well-developed commercial and investment laws. Although settlement of commercial disputes has historically been cumbersome and slow, Senegal launched a new commercial court system in 2018 with jurisdiction over commercial matters and a mandate to resolve cases within three months.  The business community welcomed the move, and in the past two years, the court has heard 11,054 cases with a combined value of nearly $500 million.

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 binding arbitration in their contracts to avoid prolonged legal entanglements. 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 Berne Copyright Convention, and in 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 investment volume and 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 (Public Procurement Regulatory Authority, ARMP), which publishes annual reviews of public procurement.

In February 2021, Senegal’s National Assembly signed into law the long-awaited update to the law governing public-private partnership (PPP) contracts, followed by the implementing decree in November 2021. The amended law includes several important innovations, including: a unified legal framework for private sector-led, GOS-supported projects; a streamlined institutional framework to simplify procedures and avoid incompatibilities; a strengthened monitoring and control system; and provisions about local content requirements. The GOS has stated that the new law will introduce a more flexible and attractive framework for blended finance projects. Some U.S. companies have raised concerns about the local content requirements included in the law.

BCEAO regulations proscribe the use of offshore accounts in project finance transactions within the WAEMU, except when approved by ministries of finance with the express consent of the BCEAO. According to BCEAO, these restrictions allow visibility over international transactions, deter money laundering, and help it maintain adequate foreign currency reserves. BCEAO emphasizes the importance of these rules in enabling it to fulfill its mandate of maintaining the stability of the CFA franc’s peg to the Euro.

Since 2018, the BCEAO and Senegalese Ministry of Finance and Budget have tightened their approach to the approvals of offshore accounts. Although there is no “maximum” number of accounts permitted, informal guidelines suggest that transactions using one to three accounts have the greatest chance of being approved. According to the BCEAO, the intent is to encourage the minimum number of such accounts necessary to legitimately conduct the transaction. 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” annually.

The Investment Code, the Mining Code, the Petroleum Code, and a government services one-stop can be found at the following:

• Investment Code
• Mining Code
• Petroleum Code
• Senegal Services

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” provided there is “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. The U.S.-Senegal BIT specifies that international legal standards are applicable to any cases of expropriation.

Dispute Settlement

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 (Public Procurement Regulatory Authority or 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 in the arbitration process. Senegal’s BIT 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 mining and telecommunications 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 GOS has commercial courts and uses alternative dispute resolution mechanisms to expedite dispute resolution. 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 SOEs 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.

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. Senegal does not provide incentives for underrepresented investors such as women, nor does it provide specific incentives for clean energy investments.

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 exemption from duties on imports of goods not produced locally for small and medium-sized firms, and three years for all others. Also included is exemption from direct and indirect taxes for the same period.

Exemption 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 exemption 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 relief period. Most incentives are automatically granted to investment projects meeting the above criteria.

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, contribute the hard currency equivalent of at least 100 million CFA ($165,000), 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.

Foreign Trade Zones/Free Ports/Trade Facilitation

In 2017, Senegal passed legislation to create Special Economic Zones (SEZ). 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 business and property taxes. To qualify for these benefits, companies must make a minimum investment of CFA 100 million ($165,000), create at least 150 jobs during their first year, and generate at least 60 percent of their revenue from exports. In November 2018, President Sall inaugurated the country’s first SEZ in the Dakar planned suburb of Diamniadio. The GOS has since launched two additional SEZs; one in Sandiara, 80 kilometers from the capital city Dakar, and the other in Ndiass, in the vicinity of Dakar’s International Airport. According to Senegalese officials responsible for digital economy development, the GOS has installed more than 150 kilometers of high-speed fiberoptic cable throughout Diamniadio to boost access and speeds for investors locating there.

Performance and Data Localization Requirements

Senegal’s Data Protection Act was passed in 2008. Senegal has mandatory requirements to register mobile device SIM cards and is a signatory to the Economic Community of West African States Supplementary Act on Personal Data Protection from 2010. There is no requirement for foreign IT providers to turn over source code and/or provide access to encryption, nor are there measures that prevent or restrict companies from freely transmitting customer or other business-related data outside Senegal.

President Macky Sall inaugurated a 1,000 terabyte government data center in June 2021 with the intent to migrate all Senegalese government data and applications there and host them in the future. In March 2022, President Sall announced that national digital agency ADIE would become Société National Senegal Numerique (National Company for Digital Senegal, SEMUM) to accelerate Senegal’s digitalization.

Real Property

The Senegalese Civil Code provides a framework, based on French law, for enforcing private property rights. The code provides for equality 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 GOS 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 and 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 GOS and donors expect they will facilitate land acquisition and investment in the agricultural sector while providing benefits to traditional landowners in local communities.

The GOS generally pays compensation when it takes private property through eminent domain. 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. According to the World Bank, registering property requires an average of 41 days, compared to an average of 51.6 days in sub-Saharan Africa and 23.6 days in OECD countries. Five separate procedures are required.

Intellectual Property Rights

Senegal maintains an adequate legal framework for protecting intellectual property rights (IPR), but the country has limited institutional capacity to enforce IPR laws. 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, 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 (Senegalese Agency for Industrial Property and Technical Innovation, 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 a source of concern for the local music industry. The Copyright Office has taken actions to combat media piracy, including seizure of counterfeit cassettes, CDs, and DVDs. In 2008, the government established a special police unit to improve enforcement of the country’s anti-piracy and counterfeit laws. 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 GOS has raised 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 WIPO country profiles .

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. In June 2021, the authorities issued a 775-million-Euro Eurobond’ its first Euro-denominated obligation. Some observers, including the IMF, have expressed concern over the continued rise in Senegal’s public debt, which has more than doubled over the last decade, in part due to the country’s significant investments associated with the PSE. With the ongoing effects of COVID-19 and the consequences of the political turmoil of March 2021, Senegal’s 2021 debt-to-GDP ratio rose to 73 percent, compared to 52 percent in 2018. In late 2020, Senegal took advantage of the G20’s Debt Service Suspension Initiative, receiving relief from $163 million in debt service payments (0.6 percent of GDP) through the end of 2021. The GOS aims to mitigate concerns about its public debt by containing energy subsidies, prioritizing concessional borrowing, and taking steps to increase government revenues.

Senegal does not have its own stock market. A handful of Senegalese companies are listed on the West African Regional Stock Exchange (BRVM), headquartered in Abidjan, Cote d’Ivoire. The BRVM 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, 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 underdeveloped. Senegal’s 26 commercial banks, primarily based in France, Nigeria, Morocco, and Togo, follow 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 2016 government survey, about 17 percent of enterprises in the formal sector receive financing from commercial banks, compared to 6 percent for informal enterprises. Authorities have committed to implement the national financial inclusion strategy (2021-25) and achieve a financial inclusion rate of 65 percent of adults and 90 percent of SMEs. Senegal’s banking sector is regulated by the BCEAO 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 BIT 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. According to the IMF, remittances remain a significant component of the current account but are expected to decline as a percentage of GDP over the medium term. After a sharp fall in 2020 due to COVID-19, remittances have increased by 25 percent year-on-year as of June 2021.

Sovereign Wealth Funds

In 2012, Senegal established a sovereign wealth fund (Fonds Souverain d’Investissements Strategiques, 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 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 SOEs during the last three decades. However, the GOS still owns full or majority interests in 24 SOEs, including the national electricity company (Senelec), Dakar’s public bus service, the Port of Dakar, National Post, the national rail company, and the national water utility. Senelec retains control over power transmission and distribution, but it relies increasingly on independent producers to generate power. The GOS 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 GOS has modest and declining ownership of agricultural enterprises, including one involved in rice production. In 2018, the government revived the state-owned airline, Air Senegal. The GOS also 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 SOEs. The GOS’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.

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.

Senegal’s 2016 Mining Code specifies the criteria and procedures by which the government awards natural resource extraction contracts or licenses. The code requires mining companies to participate in transparency reporting following the guidelines of the Extractive Industries Transparency Initiative (EITI). The GOS appears 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, which clarifies mechanisms for reserving revenues from oil and gas projects to the government. Senegal has been an active member of the 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 2019, 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.

Climate Issues

Senegal’s long-term national economic development policy – the Plan Senegal Emergent (PSE) – includes a green growth program known as “Green PSE” (PSE Vert). Launched in December 2021, the Green PSE is structured around six priority sectors: agriculture, energy, industry, water and sanitation, forestry, and construction. The Green PSE aims to build Senegal’s capacity to access financial resources from the Green Climate Fund (GCF) and private sector investment. According to the PSE Operational Bureau within the Office of the President, the GOS will convene representatives from the six priority sectors in May 2022 to identify specific projects and a roadmap for their implementation.

In December 2020, the GOS published its Nationally Determined Contribution (NDC) to the 2015 Paris Agreement. Senegal’s NDC contains a greenhouse gas mitigation plan for transport, waste, energy, industry, forestry and agriculture and an adaptation plan for key climate impacts affecting Senegal, such as coastal erosion, declining agriculture, fishing, and livestock, risks to public health/biodiversity, and urban flooding. The NDC forecasts two emissions reduction scenarios: one accomplished with domestic resources (unconditional) and the other accomplished with a combination of domestic resources and foreign assistance (conditional). The unconditional scenario calls for a 5 percent reduction by 2025 and 7 percent by 2030, compared to business as usual. The conditional scenario calls for a 23 percent reduction by 2025 and a 29 percent reduction by 2030, compared to business as usual. Biodiversity is included in the adaptation plan of the NDC. The GOS has not formally instituted a net-zero carbon emissions policy. Senegal does not provide regulatory incentives or other policies to achieve policy outcomes that preserve biodiversity, clean air, or other desirable ecological benefits.

Senegal’s NDC addresses economy-wide greenhouse gas emissions, including private sector emissions. However, the NDC does not disaggregate public and private sector emissions. Senior GOS climate officials in associated with the National Climate Change Committee have told Post that during the first half of 2022 an inter-ministerial committee will meet to validate a monitoring, reporting, and verification mechanism for emissions. Senegal’s NDC states that the country will meet either its unconditional or conditional emissions reduction targets primarily through four principal means: i) increasing carbon sequestration through improved agroforestry and forest management; ii) transitioning from highly polluting fuel oil to cleaner burning fuels in the energy sector, as well as energy efficiency improvements; iii) improving the management of solid and liquid wastes; and iv) improving industrial processes. Each of these activities involves private sector participation. However, the NDC does not include specific sectoral emissions reductions targets attributable to private sector actors.

Bloomberg Markets ranks Senegal as the 13th most attractive market for energy transition investment among emerging markets and 40th globally: Climate Scope .

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 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 more than one billion CFA francs (approximately $1.8 million) to disclose their assets to OFNAC. In 2020, all but one of these government officials complied with these disclosure requirements.

The GOS has made 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 GOS has also taken steps to increase budget transparency in line with regional standards. Senegal ranked 73 out of 180 countries in Transparency International’s 2021 Corruption Perception Index. Notwithstanding Senegal’s positive reputation for corruption relative to regional peers, the government often did not enforce the law effectively, and some 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. Allegations of corruption against President Sall and his brother related to the development of oil and gas emerged in the press in 2019. While a subsequent investigation did not uncover wrong-doing, suspicions of high-level government corruption remain among many in civil society and the political opposition.

Senegal’s financial intelligence unit, Cellule Nationale de Traitement des Informations Financières (National Financial Information Processing Unit, 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 – the Inter-Governmental Action Group against Money Laundering (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 AML/CTF legal standards. Senegal also received ten low ratings and one moderate rating on the FATF’s 11 indicators measuring efforts to combat money laundering, terrorist financing, and weapons of mass destruction proliferation financing. Key weaknesses included: lack of domestic legislation implementing BCEAO AML/CTF directives; inadequate monitoring of nonprofits and non-financial professions, such as lawyers and accountants, who engage in financial transactions; inadequate inspections and sanctions of financial institutions; weak interagency cooperation; and poor AML/CTF capacity among police, judiciary, and customs. As a result, and in the absence of improvements, in February 2021, FATF added Senegal to its “gray list.” The GOS has committed to an action plan to address its deficiencies.

It is important for U.S. companies to assess corruption risks and develop an effective compliance program to prevent corruption, including bribery. U.S. firms operating in Senegal can underscore to partners that they are subject to the Foreign Corrupt Practices Act and may seek legal counsel to ensure full compliance with anti-corruption laws. 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 corruption, including bribery of officials, and requiring governments to uphold their obligations under relevant international conventions. A U.S. firm that believes a competitor is using bribery to secure a contract may convey this to U.S. officials.

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

Resources to Report Corruption

Contact at the government agencies responsible for combating 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 

Mr. Birahim Seck
President
Forum Civil40 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 politically unstable West Africa. It is the only regional country that has never had a coup d’état. International observers assessed the February 2019 presidential election, in which President Sall won a second term, as free and fair, despite 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.

The March 2021 arrest of opposition figure Ousmane Sonko on alleged rape charges led to several days of intense protests that spiraled into widespread riots and looting. The unrest, Senegal’s worst in decades, was fueled by pandemic-related hardship, particularly among the youth. According to press reports, 14 people died, hundreds were injured, and private businesses across the country were damaged. While a few local businesses were damaged, firms associated with France – historically targeted by some groups as relics of the colonial past — bore the brunt of the looting and property damage. Despite this bout of unrest, foreign investors largely remained confident in Senegal’s stability and economic rebound. Most observers agreed that strong private sector investment, facilitated by improvements to the business climate and better mobilization of capital, is needed to address youth employment.

Years of declining violence in the Casamance region, home of a four-decade-old separatist conflict, ignited into a full military conflict between Senegal’s army and elements of the Movement of Democratic Forces in Casamance (MFDC) in March 2022. The Senegalese government indicated that the military operation would continue until MFDC resistance is eradicated, putting an end to the armed separatist movement.

Security is a top priority for the government, which increased its defense and security budget by 92 percent between 2012 and 2017. The Armed Forces Ministry noted a 32 percent budget increase for the fiscal year 2021.

Senegal’s Labor Code, based on the French system, was last updated in 1997. The code retains a rigid approach that, according to some observers, favors social over economic goals. Rules relating to employment contracts, layoffs, and redundancy protections are some of the most stringent in the world, imposing high costs on businesses. However, labor law is not well-enforced, especially in the dominant informal sector.

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

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 emigrate.

Relations between employees and employers are governed by the Labor Code, industry-wide collective bargaining agreements, company regulations, and individual employment contracts. The Code provides legal protection for women and children and prohibits forced or compulsory labor. It 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 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 and the National Employers’ Association. The principal labor unions are the National Confederation of Senegalese Workers and the National Association of Senegalese Union Workers, 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 struggles with 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, a corruption of the intended lesson in humility. The GOS has made some progress in combatting these practices, but more progress is needed.

The U.S. 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, healthcare, and tourism sectors are under consideration. Senegal is a member of the Multilateral Investment Guarantee Agency, an arm of the World Bank.

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

Data 

Aichatou Fall
Economic Specialist
U.S. Embassy, Route des Almadies, B.P. 49, Dakar, Senegal
+221 33 879 4000
FallAX@state.gov