Senegal is located in West Africa bordering the North Atlantic Ocean. It shares borders with Mali to the east, Guinea Bissau to the southwest, Guinea to the southeast, and Mauritania to the north. It gained its independence from France on 4 April 1960. Its capital is Dakar with 14 Administrative regions. It is the Presidential Republic with the President sitting as the Head of State and the Head of Government.
Senegal runs a unicameral legislative system, and its official language is French. It is a predominantly Muslim nation with very few Christians and it practices a civil law legal system based on the French civil code. It has an area size of 196,722 square kilometers. Senegal has a strong track record of political stability and it’s making progress in terms of the business environment and governance.
The country is the second largest economy in Francophone West Africa behind Côte d’Ivoire.
Senegal has an estimated population of 15.74 million comprising mostly of younger population less than 25 years which makes up about 60.7 percent of the population, those in the age bracket of 25 to 64 years makes up about 36.2 percent of the population and above 65 years age group makes up about 3.1 percent of the population. The average population density is estimated at 82.4 inhabitants per square kilometers.
In terms of human development indicators, Senegal has a life expectancy of 65.4 years for Women and 61.1years for Men. It achieved universal primary education with an 82.07 percent Primary enrolment rate in 2019 and overall literacy level of 51.9 percent as at 2017.
Economic Overview Of Senegal
Senegal is dependent on mining, tourism, and agriculture. It is rich in minerals, especially phosphates and iron ore. It is one of the world’s leading phosphate producers and has significant deposits of zirconium, titanium, marble, gold, and limestone, as well as several types of precious stones. As part of the dominant portion of the economy, agriculture is estimated to contribute about 16.6 percent of GDP and employs about 32 percent of the country’s workforce. Fishing is also an important source of revenue. Recent findings of oil and gas could see Senegal’s energy sector enter a new area and impact the structure of Senegal’s economy.
Recoverable reserves of oil are estimated between 350 and 500 million barrels. This corresponds to more than 65 000 barrels of oil per day. Gas reserves are estimated at about 590 billion cubic meters. Real GDP expanded by 6.4 percent and 5.3 percent in 2018 & 2019 respectively having recorded 6.5 percent compounded annual GDP growth in the past 5 years.
Senegal’s currency is CFA franc pegged to Euro. Main export includes phosphate, cotton, peanuts, fish, petroleum products etc. Major imports include Fuel, foodstuffs, and capital equipment.
Investment Opportunities In Senegal
Senegal has put in place a series of economic reforms as part of the Emerging Senegal Plan adopted in 2014 to accelerate progress towards becoming an emerging economy by 2035. The plan which represents more than 7 billion dollars in funding commitments focuses on four key sectors to unlock inclusive growth including energy, agriculture and land, ICT, and transport. The government is focusing on infrastructure projects to reduce transaction costs, setting up the country to become a regional business hub for logistics, services, and industry. Investments in the country’s Sangomar offshore oil field and the Grand Tortue Ahmeyim gas field are expected to boost activities in the oil and gas industry and contribute to the economy.
Investment opportunities are available in the following sectors:
Oil & Gas or and Mining Services : Senegal’s ambition to boost oil exploration and investment has drawn attention of foreign oil, gas and mining companies. Planned exploration has focused on the productive Mauritania-Senegal-Guinea Bissau Basin. OGM companies regard basin as entry point into West Africa and opportunity to build regional presence.
Heavy Industry & Construction : Strong regional demand for construction supplies adds another significant boost investment opportunities in Senegal. “Regional production and supply also provides an opportunity for supplying differing price points”, says Bollore Africa Logistics executive.
Logistics & Warehousing : Poor transport infrastructure is a problem in Senegal but creates emerging opportunities in the logistics sector. local production of certain vehicles in Senegal has carved out a niche through notable marketing and distribution networks. Reliable warehousing is a challenge that opens lots of opportunities and potential for investors in warehousing.
Telecom and ICT
The potential of telecom in Senegal is still unknown. This can be good and bad. The regional nature of business requires the use of mobile services, as indicated by a near 90 percent mobile penetration rate. The potential is hard to ignore when most Senegalese are walking around mobile phone in hand, talking English to one foreigner, French to another, and Wolof to a Senegalese compatriot.
Banking and Finance
Some investors believe that Senegal can position itself as a center for Islamic finance, as a country with an approximate 95 percent Muslim population. About 54 percent of West Africa’s population is Muslim. Hence Senegal is an emerging hub for Islamic banking. The presence of international bankers surveying the local landscape is a very big indication of Banking and Finance prospects in Senegal.
Others include: infrastructure and transport services, agriculture, education, tourism, water and sanitation, and health
Impact Of Foreign Direct Investment In Senegal
Senegal hosts a large stock of Foreign direct investment compared to its region. The government is leading an active policy to encourage foreign direct investments inflows. According to the 2021 United Nations Center For Trade And Development World Investment Report, Senegal was among the few economies on the continent that received more inflows in 2020, up 39 percent to 1.5 billion dollars, compared to 1.1 billion dollars in 2019, despite the global economic crisis triggered by the Covid-19 pandemic. The total stock of Foreign Direct Investment stood at 8.7 billion dollars at the end of 2020. This increase in Foreign Direct Investment is the result of investments in energy, both in the traditional oil and gas and renewable energy sectors. Work on offshore oil and gas fields first began in Senegal in 2020; with production expected to start in 2022, the government expects double-digit economic growth by 2023. The largest of these projects is the SNE Oil Field, which is being developed 100 kilometers south of the capital, Dakar, by a consortium including Woodside Petroleum from Australia, Cairn Energy from UK, FAR from Australia, and Petrosen an indigenous Senegalese company.
Since 2014, Foreign Direct Investment inflows have been linked to the Emerging Senegal Plan for the development of infrastructure, electricity, agriculture, drinking water and health. The Senegalese economy remains highly dependent on European growth. France is the largest investor in Senegal, but recently there have been important investments from China, Turkey and the United Arab Emirates. Some other key investors are Morocco, Indonesia, and the United States. In the 2020 edition of the Doing Business report of the World Bank, Senegal was ranked 123rd worldwide for the ease of doing business. This represents a notable improvement from the 2019 edition when the country was ranked 141st.
Senegal has made progress in giving access to credit information by expanding the coverage of the credit bureau and offering credit scoring as a value-added service. It has also improved its tax collection system by implementing an electronic filing and payment system; it also merged taxes which result in a decrease in tax cost. As part of the program to improve the business climate and implement competitive reforms, visible improvements have been made in the process of business creation and contracts enforcement. The new special economic zone should stimulate investment.
The government welcomes foreign investment. There is no legal discrimination against businesses conducted or owned by foreign investors and there are no barriers to full ownership of businesses by foreign investors in most sectors. Senegal’s strengths include competitive production costs, a skilled workforce, a strategic geographical location, good international and regional political relations, and a competitive economy. Some of the barriers that might impede investment are economic vulnerability, low activity diversity, underdeveloped infrastructure, inefficient regulation, bureaucracy, high factor costs, and lack of security.
Senegal has been pursuing major investment deals with foreign partners. Some projects have been offered via public tenders and some have been negotiated privately. Foreign investors have recently secured contracts to exploit mineral resources, provide garbage services, and manage Dakar’s maritime port.
What to consider if you invest in Senegal are: Strategic geographical location strengthened by good-quality international and regional political relations, allowing privileged access to regional and international markets, Membership in the West African Economic and Monetary Union and the CFA franc zone, guaranteeing monetary stability and access to capital with low-interest rates, Competitive production costs, Low-cost and skilled workforce, Significant offshore natural resources of oil and natural gas , A relatively healthy and competitive economy, Various pro-business reforms have emerged in Senegal in recent years such as the renovation of the legal and fiscal framework Donor support under the Plan Sénégal Émergent, easing the pressure of debt on the economy and reassures the markets A very advantageous business environment in which investors can register a company in 24 hours, set up a limited liability company without the need for share capital or obtain a building permit online in 40 days.
Government Measures to Motivate Foreign Direct Investment are : During 2017, the Senegalese government put in place numerous incentives for investments. Some of these measures are: Greater protection of investments, The definition of priority sectors for investment, The creation of a new company is now cheaper which implies a reduction of notary fees for the registration of a company, and reduction of the mandatory initial investment and business registration is faster. The approval documents are issued in 10 days.
A law has been adopted in Senegal to establish the regime of special economic zones. Tax and customs benefits can be granted to companies approved under the SEZ regime for a maximum of 25 years, including: exemptions from duties and taxes on imports of goods, raw materials and equipment except for community levies; the application of a reduced corporate tax rate of 15 percent and exoneration from some taxes such as business tax and property tax.
There is a great amount of freedom of investing in Senegal in all the sectors: agribusiness, textiles, new technologies, fisheries, tourism mining. Foreign companies and investors have the same possibilities.
Foreigners in Senegal can have a 100% stake in a company.