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Senegal
Ibrahim coly
[email protected]
April 21st, 1999
I.
STATISTICAL OVERVIEW
A. Geography
Land area
Major cities
Climate
B. Demography1
Population
Population growth rate
Fertility rate
Mortality rate
Life Expectancy
C. Political
Type of government
Party or person in power
D. Economic
Currency
Exchange rate (per US$)
Fixed/Floating exchange rate
GDP PPP (US$)
GDP per capita (US$)
GDP growth rate
Inflation rate
Unemployment rate
Major imports
192000 square kilometers
Dakar, Saint-Louis, Thies, Ziguinchor
Tropical: hot and humid, breezy on the coast
9,723,149 (July est.)
2.7
4.2 children born per woman 2
11.05 deaths/1000 population (1998est)
Men:
58.14
Women: 63.2
Republic under multiparty rule
Abdou Diouf
1 Franc CFA = 100 centimes
1 Dollar = 608.36 Francs CFA
Fixed to the French Francs 1 FF = 100 F CFA
15.6 Billions
1850 (1998 est.)
Most recent year over year change
2.5
N/A
Consumer goods, capital goods, petroleum products, food
products
Major trading partners: imports
France, other EU countries, Nigeria, Cameroon
Major exports
Major trading partners: exports
E. Socio-Cultural
Major religions
Literacy rate
Languages spoken
Ethnic groups
Fish, peanut, phosphate, cotton
France, other EU countries, Mali, Ivory Coast
Muslim 85%, Christian 13%, Other beliefs 2%
Total 43%
Male 48 %
Female 38 %
French (official), Mandingo, Arabic, Wolof, Pulaar, Diola
Wolof 28%, Mandigo 24%, Pulaar 20%, Diola26%,Lebanese
1%, French 1%
1
"The World Factbook", http: //www.odci.gov/cia/publications/nsolo/factobook.
2
Fall, Michelle.1999. La Croissance Demographique au Senegal. Amina magazine, 47: 25-27.
This is the story of a small yet relatively stable country in a turbulent continent. Some
see it as a political oasis in Africa, others see it as a country that’s just better off in
terms of social stability. But the truth is that Senegal is still a poor country in a poor
continent, with its own share of the problems.
II.
Economic Environment
With its capital city of Dakar located at the westernmost point of Africa, Senegal has
been the gateway to the continent for centuries. It has some of the best commercial
facilities in West Africa, with relatively good international and domestic transportation
links. Many companies use Senegal as a regional center for West African operations
because of its stability.3
Until 1994, Senegal’s economic performance was mediocre and the overvalued CFA
Franc limited the impact of the adjustment programs of the 1980s4. Senegal’s
comprehensive economic reforms supported by the World Bank and the IMF have
produced some produced positive macroeconomic indicators since the January 1994 CFA
franc devaluation. Annual GDP growth improved from 4.5 % in 1995 to 5.6% in 1996.
The inflation rate is now at 2.5 % down from 7% in 1995 and the fiscal deficit has been
cut to less than 1.5% of GDP. Investment has been steadily rising from 13.8 % of GDP in
1993 to 16.5% in 1997. As a member of the West African Monetary Union (UEMOA),
Senegal is working toward greater regional integration with a unified tariff.
The government has lifted most quantitative restrictions on imports, liberalized the labor
market and took monopolies apart. Privatization of state owned industries to reestablish
the conditions for sustained growth is picking up momentum. Private activities now for
more than 82% of the GDP5.
Senegal is primarily an agricultural country, but industry in the cities, especially Dakar, is
growing6. The Senegalese economy relies heavily on production and transformation of
peanuts, exploration phosphate mines and iron, the fishing industry and finally tourism.
On a good year, Senegal is the world's leading producer of groundnuts, which
historically have been the country's key export commodity. Fishing is important both as a
food source and an export earner, by the mid-1980s it had become the country's largest
single source of external revenue. Exploitable mineral deposits are limited to phosphates
(the chemical industry draws on sizeable deposits of lime phosphate and aluminum
3
Africa Database. Regulations and Standards in Senegal. From http://www.ita.doc.gov/ucs/ccg98/ccgosene.html
4The
World Bank group. Countries: Senegal. From http://www.worldbank.org/html/extdr/offrep/afr/sn2.htm
5Senegal
factbook. From http://www.odci.gov/cia/publications/factbook/sg/html
6Columbia
Encyclopedia. Senegal. From http://infoplease.lycos.com/ce5/CE046961.html
phosphate within Senegal). The main industries involve the processing of agricultural
products and phosphates, milling, textiles, commercial vehicle assembly, food and drink,
farming materials (implements, fertilizers), paint, asbestos, cement, printing and boat
building7.
The fishing sector is one of the most economically important in Senegal. It produces 8.5
% of GDP. In 1997, the sector recorded an increase of 7 % over 1996 in dollar terms.
Senegal and the European Union signed a four-year fisheries agreement, which covers
the period of May 1, 1997 - March 31, 2001. Senegal is expected to update and
modernize its fishing fleet to strengthen the development of the sector8. The government
also accumulates revenues from the sale of fishing licenses to other countries, mostly
from the EU; and fish and fish products have become an important export commodity
(32.6% of export earnings in 1996).
Tourism is a dynamic sector in the Senegalese economy. More than Half a million
tourists visit Senegal every year, which brings a significant amount of revenues to this
baby economy and makes Senegal the most visited country in West Africa. Geographic
location and a somewhat moderate climate are some of the reasons why the country
became a tourist attraction. The government will be seeking to diversify its tourist
services and the devaluation of the local currency could facilitate this diversification.
Mining production currently involves phosphate mining, clinker, and quarry stones for
construction. Mining accounts for less than 2 % of Senegal's GDP, but contributes
significantly to export earnings. Mining output consists mainly of calcium phosphate,
although plans to develop gold and iron ore mineral are underway. Phosphate mining
represents Senegal's third most important foreign earner exchange. In 1996, phosphate
and phosphate products accounted for 16 % of total merchandise export earnings9. Over
the past few years New markets in Asia and Africa have compensated for the reduction in
European demand. The Senegalese government predicts that earnings from phosphates
will keep going up as the result of increased production and favorable world market
prices.7
On the negative side Senegal ‘s high rate of population growth coupled with high
illiteracy rate pose threats to sustainable development.
III.
History
The first political power structure to be established on the northern bank of the Senegal
River is believed to the Soninke kingdom in the 4th century10. Islam reached this country
as early as the end of the 8th century followed by the settling of a Muslim trading
7
Africa Business Network. Senegal Economic Information. From http://ifc.org/abn/cic/senegal/english/senegal.htm
8
Primature Du Senegal. Un Marche D’avenir. From http://www.primature.sn
9
10
Khaled, M. 1998. West African economies. Jeune Afrique., 23: 34-48
Columbia University Department of History. An Abbreviated history of Senegal from Pre-Colonial to present.
From http://WWW.earth2000.com/senegal/ar/history.html
community within the kingdom. Eventually Muslim warriors would destroy its power
from the end of the 11th century. The introduction of Islam led to political fragmentation
in all the empires of the region. Various small political entities began to emerge,
including the first Wolof State.
French colonization
French colonial policy was guided in principal by the theory of assimilation which
ultimate goal was the complete cultural and political integration of the Senegalese
peoples into the French nation.
Schools were opened as early as 1816 to assimilate the Senegalese through education.
Those who lived in the self-governing communes of St. Louis, Goree, Dakar and
Rufisque were considered French citizens and a right to appeal to French law. The first
black African Deputy to the French Assembly, Blaise Diagne, came from this urban class
in 1816. Subsequently education was expanded at the same time many Senegalese were
drafted into the Colonial Army and the French Regular Army during World Wars I and
II. During or after these wars, many Senegalese intellectuals went to France to study.
After WW II the French colonial policy reassessed and gave the colonies greater
autonomy in administration and allowed them legislative assembly. They granted labor
the right to organize and the Socialist Party grew. The French Union, established in 1946,
was a grouping of metropolitan France and its overseas possessions11. Lamine Gueye and
Leopold Senghor, both deputies in the French National Assembly acted to grant
additional reforms and more authority to local bodies such as equality of civil service
positions with Europeans, universal suffrage, and provision for an African cabinet to
assist the territorial governors. These reforms evolved later into independence.
IV.
Political Environment
Senegal was the first African country to adopt multipartism twenty-four years ago12.
There are currently more than 20 political parties and 11 of them were able to get seats at
the National Assembly or Assemblee Nationale. The socialist party has the majority with
50.19% of seats.
Recent amendments have been made to the electoral code about the presidency. When
elected by direct universal suffrage the President of the Republic may seek re-election
only once.
Senegal has a high profile in many international organizations and was a member of the
UN Security Council in 1988-89. It was elected to the UN Commission on Human Rights
11
Basley S. 1998 Histoire du Senegal. Edition Guillame
12Gaston
M & Clerk F.1997. Senegal: A Political Example in Africa. Edition Poulain
in 1997. President Diouf was chairman of the Organization of African Unity (OAU) in
1985-86 and again in 1992-93.
French commonwealth Conference in 1989 and host of the Organization of the Islamic
Conference (OIC) summit in 1991. Friendly to the West and to the East, Senegal also is a
vigorous proponent of more assistance from developed countries to the Third World.
Senegal enjoys mostly cordial relations with its neighbors. In spite of clear progress on
other fronts with Mauritania (border security, resource management, economic
integration, etc.), there remains the problem of some 35,000 to 40,000 Mauritania’s
refugees living in Senegal. Senegal practices energetic diplomacy, including the creation
of bilateral and multilateral force, to achieve peaceful resolution to its diplomatic
problems.
Recently Senegalese legislators and local, municipal and regional councilors have voted
for the country's first senate, in a poll boycotted by the majority of the opposition. A total
of 13,000 elected representatives were eligible to vote for 45 seats in the new house of
parliament. The major opposition parties view the creation of the senate at present as
inappropriate. Diouf, who took office in 1981 after the retirement of independence
President Leopold Sedar Senghor, faces a fresh presidential election in 2000. His party
won a landslide victory in disputed May 1998 parliamentary elections.
V.
Important in doing business
Tariffs
Trade is now generally subject to tariffs rather than volume controls. Trade conditions are
affected by membership in the regional free trade areas, the West African Economic and
Monetary Union (UEMOA) and Economic Community of West African States
(ECOWAS), and by association with the European Union. Following the CFA Franc
devaluation, tariffs and imports taxes were reduced and simplified. As a member of the
World Trade Organization, Senegal is expected to take further measures to liberalize its
import system and rationalize its system of effective protection soon.13
General custom duties were reduced to a flat rate of 10% of value except for products
imported from the West African Economic Community (ECOWAS).
The Ad Valorem fiscal duty schedule is also simplified. There is a 10 % duty on goods
like rice, wheat, pharmaceuticals, capital goods and inputs for industry. All imported
goods not produced locally are subject to the ordinary fiscal duty of 20%, while these
competing with local production are subject to the a 30% rate.
Taxation
Senegalese are taxed on the territoriality principles. As a result, companies carrying on a
13
US department of commerce. Trades and Regulations. From http://infoserv2ita.doc.gov/afweb.nsf…/bc/
trade or business outside Senegal are not taxed in Senegal on the related profits. Foreign
companies with activities in Senegal are subject to Senegalese corporate tax on
Senegalese source of profits only.
As of 1994, the corporate income tax is FCFA 5000 000 (CFA 1 million if annual
turnover exceeds CFA 500 million)14.
The profits realized in Senegal by branches of foreign companies, which have not been
reinvested in Senegal, are deemed to be distributed and are therefore subject to a 16 %
withholding tax15. This system is subject to a treaty modification.
Capital gains are generally taxed at regular corporate rate. The tax, however, can be
deferred:
- If the proceeds are used to acquire a new fixed assets in Senegal within three years, or
- In the event of a merger (or other corporate acquisition)
In case of transferred or discontinued business, only one-half of the net capital gain is
taxed if the event occurs less than five years after the start-up or purchase of the business,
and only one third of the gain is taxed if the event five years or more after the business
was begun or purchased.
Capital gains on the sale and transfer of land and buildings are subject to land tax.
Type of business
A business may be conducted by individuals, Senegalese companies or branches of
foreign companies.
A Senegalese company may be a joint stock company, a limited liability company or a
single proprietorship in accordance with the Civil and Commercial Code. Minimum
equity is FCFA 500 000 for joint stock companies and FCFA 2 million for limited
liability companies with a minimum of seven shareholders that may be individuals,
public bodies or companies. Specific regulations apply to public companies.
Limited liability companies or branches of a foreign company are the most common ways
for operating a business in Senegal. Branches of foreign companies or branches as such
and their liabilities are not limited to the extent of their local assets.
All limited liability companies and joint stock companies with equity in excess of FCFA
7 million have to appoint statutory auditors with a mandate renewed every three years.
Statutory audits have to be conducted in accordance with generally accepted auditing
standards.
Customs valuation
The government of Senegal has signed a Pre-Shipment Inspection (PSI) contract with the
Swiss based Societe Generale de surveillance (SGS). The PSI applies to all imported
14
Ernst and Young Africa group. Senegal Investment Profile. From http://mbendi.co.za/ernsty/senegal/investment.htm
15
Ernst and Young Africa group. Investment profile. From http://mbendi.co.za/ernsty/senegal/investment.htm
goods valued at least at CFA 3million (USD 6,000)16. The SGS approved value of such
goods constitutes the basis for customs valuation. Foreign exporters are urged to contact
SGS’ office to obtain the list of goods exempted from PSI.
Business Customs
Senegal has inherited French commercial traditions. Business practices, accounting legal
procedures derive from the French system17. Business correspondence, catalog,
advertising materials should be prepared in French. Local decision making operates at a
slower pace than in the United States and personal contacts are often necessary to
establish a working relationship with businessmen.
A lightweight suit is acceptable for business. French will generally be needed for
meetings. Appointments should be made and punctuality is expected, despite the fact that
a customer may be slightly late. Visiting cards are essential, preferably in French and
English. The period from July to October should be avoided for business visits, as many
people are on holiday.
Standards
Senegal’s standards usually derive from the French norms. Electricity used in the country
is 220 V 50 cycles and the system of measurement is the metric one. France’s Bureau
Veritas is very active in the country and establishes norms. U.S exporters might find the
standards process cumbersome.
Internet connectivity
Political stability has ensured a reliable telecoms network, and Sonatel, the national
operator, has been quick to encourage the potential of the Interment. Sonatel established a
64K MCI satellite connection in 1992 and a T1 line is on the way. As a result the country
has one of the fastest growing Internet in the region. ISPs are actually proliferating and a
low price has been set for nationwide access. Internet access is typically US$ 20 a
month18. With several cybercafes and cyber business centers anyone in the city can get
connected at US$ 3 ($1500) an hour.
While Senegal the number of Internet users in Senegal is increasing exponentially in the
near future, the Net will remain a luxury to a lot of people for a long time to come.
Literacy and basic standard of living remain the sine qua non for the population at large.
16
Country Commercial Guide. Trades and Regulations. From http://infoserv2ita.doc.gov/afweb.nsf…/bc/
17
Country commercial guide. From http://www.dakarcom.com/ccgbusinesstravel
18
Humphreys, S. 1998. Internet connectivity in Senegal. Telecommunications (International Edition). v32n4.
http://venue.galib.uga.edu:4000/QUERY:f….nttityNewArticle=1:next=html
Some Tips
Make sure you know at least a few useful French words before you get to Senegal.
Relatively few businessmen can comfortably communicate in English.
Senegalese use a lot of gesture when they communicate and love to debate.
When giving a handshake try to give a soft and gentle handshake because somebody
almost dislocated my shoulders when I first got here. Senegalese do not give firm
handshakes as Americans do.
In Senegal family does not only mean close relatives. It may include friends or distant
family. Generally when somebody mentions the word family, it really goes beyond mom,
dad, wife, kids, Brothers and sisters.
Business opportunities
Although Senegal offers a relatively limited internal market, new emphasis on the use of
market forces to regulate the economy, the liberalization of imports, and considerable
opportunities in telecommunications and power generation could spell increased
opportunities. Other good prospects are mining, tourism, information technology,
agricultural commodities, earth moving and material handling equipment and tobacco.
The resident American business community to facilitate exchange and investment has
recently opened an American Chamber of commerce in Dakar.
Senegal which is a member of the Economic Community of West African State will
cover a potential market of 200 millions consumers. The mission of ECOWAS is to
promote the cooperation and the development of agriculture, transport and
telecommunications, energy, natural resources and commerce in the West African region.
The Senegalese government has a leading role in finding a solution to social and political
problems the region face.
Last minute News
The Senegalese government has recently granted asylum to the family of Niger's slain
head of state Bare Mainassara. Mrs. Mainassara and her children arrived on a plane
chartered by President Diouf. Junior officers seized power in the West African State after
Mainassara was gunned down by members of his presidential guard. At a Senegalese
cabinet meeting, Diouf (the Senegalese president) condemned the assassination as
another blow to the image of Africa.
Conclusion
The economic landscape of Senegal and Africa as a whole had been radically changed
from that of just few years ago. There is a shift towards a private sector-centered
development strategy. Despite the continuing liberalization, some private sector activities
are still limited by structural bottlenecks in infrastructure, skill shortage and weak
supporting institutions.
But an investor can see some of the other constraints as opportunities. Africa’s economic
potential is largely untapped. Its plentiful resources are being slowly enhanced by
political progress made over the last decade. There will be an increased in investment at
least over the next 10 years. Senegal will cover a population of 200 million, which
represent a tremendous market potential. Many products marketed elsewhere have still
not penetrated fully penetrated and that offers a great growth potential.
References
"The World Factbook", http: //www.odci.gov/cia/publications/nsolo/factobook.
Fall, Michelle.1999. La Croissance Demographique au Senegal. Amina magazine, 47: 25-27.
Africa Database. Regulations and Standards in Senegal. From
http://www.ita.doc.gov/ucs/ccg98/ccgosene.html
The World Bank group. Countries: Senegal. From
http://www.worldbank.org/html/extdr/offrep/afr/sn2.htm
Senegal factbook. From http://www.odci.gov/cia/publications/factbook/sg/html
Columbia Encyclopedia. Senegal. From http://infoplease.lycos.com/ce5/CE046961.html
Africa Business Network. Senegal Economic Information. From
http://ifc.org/abn/cic/senegal/english/senegal.htm
Primature Du Senegal. Un Marche D’avenir. From http://www.primature.sn
Basley S. 1998 Histoire du Senegal. Edition Guillame
Gaston M & Clerk F.1997. Senegal: A Political Example in Africa. Edition Poulain
Khaled, M. 1998. West African economies. Jeune Afrique., 23: 34-48
Columbia University Department of History. An Abbreviated history of Senegal from PreColonial to present.
From http://WWW.earth2000.com/senegal/ar/history.html
Humphreys, S. 1998. Internet connectivity in Senegal. Telecommunications (International
Edition). v32n4. http://venue.galib.uga.edu:4000/QUERY:f….nttityNewArticle=1:next=html