Senegal’s stable democracy, strong economic growth, and open economy offer attractive opportunities for foreign investment. Senegal’s macroeconomic profile remains generally stable, although aggressive measures to counter the economic impact of COVID-19, spending on public infrastructure projects, and rising commodity costs due to the conflict in Ukraine pushed public debt to 75 percent of GDP, above the debt distress threshold of the Economic Community of West African States (ECOWAS). The currency – the CFA franc used in eight West African countries – is pegged to the Euro and remains stable.
The Government of Senegal (GOS) welcomes foreign investment and has prioritized efforts to improve the business climate, and many companies choose Senegal as a base for operations in Francophone Africa. Since 2012, Senegal has pursued an ambitious development program, the Plan Senegal Emergent (Plan for an Emerging Senegal or “PSE”), to improve infrastructure, achieve economic reforms, increase investment in strategic sectors, and strengthen private sector competitiveness. The GOS expanded the “single window” system to provide services to companies, opening new service centers across the country, harmonizing more than 60 GOS websites, and digitizing dozens of government services and payment mechanisms. The national state-owned digital company, Sénégal Numérique (SENUM), plans to lay 4,500 kilometers of additional fiberoptic cable to increase internet access. Senegal has plans to transition power plants from heavy fuel oil to domestic natural gas after the recent discoveries of two significant oil and gas fields. One is expected to come online in late 2023. A Public-Private Partnership (PPP) law entered into force in November 2021 to modernize finance mechanisms, attract private sector participation, and expand local content requirements in public procurements.
With relatively good air transportation links, a modern airport, expanding seaports, improving ground transportation, and availability of mobile money and other banking technologies, Senegal aims to become a regional hub for passenger and cargo transportation and trade in goods and services. Three Special Economic Zones offer investors tax exemptions and other benefits. Repatriation of capital and income is generally straightforward, although the regional central bank sometimes limits the number offshore bank accounts for companies registered in Senegal and engaged in project finance. Although some companies report problems, Senegal scores favorably on corruption indicators compared to other countries in the region.
Despite Senegal’s many advantages, significant challenges remain. Investors at times cite burdensome and unpredictable tax administration, complex customs procedures, bureaucratic hurdles, opaque public procurement practices, an inefficient judicial system, inadequate access to financing, and a rigid labor market as obstacles. High real estate and energy costs, as well as high costs of inputs for manufacturing also constrain Senegal’s competitiveness. High levels of unemployment and underemployment, especially among the country’s large youth population, represent a long-term social and economic challenge.
A U.S.-Senegal Bilateral Investment Treaty went into effect in 1990. U.S. investment in Senegal has expanded since 2014, including investments in power generation, renewable energy, industry, and offshore oil and gas. The IMF reports that U.S. FDI stock in Senegal was approximately $114 million in 2019 (Table 1; up from $91 million in 2018). Although France is historically Senegal’s largest source of FDI, China overtook France as Senegal’s largest bilateral trade partner in 2019. Turkish economic influence is also rising, particularly in construction. Other important investment partners include Morocco, Saudi Arabia, other Gulf States, and France. Sectors attracting substantial investment include petroleum and natural gas, agribusiness, mining, tourism, manufacturing, and fisheries.
Investors can consult Senegal’s investment promotion agency (APIX) at www.investinsenegal.com for information on opportunities, incentives, and procedures for foreign investment, including a copy of Senegal’s investment code.
|TI Corruption Perceptions Index||2021||73 of 180||Transparency International|
|Global Innovation Index||2021||105 of 131||Global Innovation Index|
|U.S. FDI in partner country ($M USD, stock positions)||2019||$114.0 million||U.S. Foreign Direct Investment|
|World Bank GNI per capita||2020||$1,430||World Bank Gross National Income|