Foreign Direct Investment
Foreign direct investment in Senegal has to meet a certain condition of investing at least 5 million dollars and it has to employ at least three Senegalese and keep the accounts in a Senegalese format. FDI data on Senegal’s balance-of-payments statistics is provided by the International Monetary Fund (UNICTAD, 2006). The Senegalese investment code makes it possible to have equitable treatment of foreign companies and gives incentives encouraging companies to be located outside Dakar. The investment code also includes tax-free export processing zone, tax holidays, and stops foreign investment from the business licence and personal income tax. The country has a wide market access. It is a member of different organisations like the West African Economic and Monetary Union, and Economic Community of West African States.
The global FDIs have been on a rise since 2013. According to the United Nations Conference on Trade and Development, the FDI should have reached 1.7 trillion dollars in 2015 (Quam-Dessou, 2013). However, the policy uncertainties and macroeconomic fragility tend to make investors more cautious. Senegal has a bold policy towards FDI. The country had FDI inflow booms at the end of the 1990s. Historically, France has been the main investor in the country. Although, the financial crisis of 2008-2009 led to a 20 percent drop in FDI inflows. The country’s economy remains dependent on European economic growth. The country’s FDI inward flow was 276 million dollars in 2012, 311 million in 2013 and 343 million in 2014. The key sectors for FDI flow are agriculture, mining, fisheries, energy and construction, transportation and infrastructure (Banco Santander, 2016).
The Senegal investment code has incentives which companies must invest at least 165,000 dollars for the company to enjoy these incentives. The eligible sectors include fishing, agriculture, manufacturing, tourism, mining and others. All the investments benefit from getting exonerated from duties on imports and direct and indirect taxes. Businesses are also exonerated from business licence tax and minimum personal income tax for those who use at least 65 percent of local resources as inputs. Businesses that are located in the industrialised areas of the country usually benefit from exempting the payroll tax and can also be exonerated from running from about five to 12 years depending on where the investment is located. Companies that request an extension of the incentives given are required to be 20 percent self-financed (US Department of State, 2015). Large companies, especially those with an equity capital of at least 200 million are required to have at least 50 positions for Senegalese. Companies are also required to contribute hard currency of 100 million and ensure the accounts records conform to the Senegalese standards. Additionally, companies have to provide details on employment, production, company products and consumption of raw materials. Despite France being a great source of foreign investment in Senegal, the country’s share of investment has reduced since companies from India, Morocco, United States and Togo have invested projects in Senegal as well. United States companies have invested more in pharmaceutical, power generation, natural gas, agribusiness, oil exploration and information technology sectors. A United States entity with the responsibility of delivering development grants, the Millennium Challenge Corporation, has shown its commitment to reform scorecards for countries with a gross national income of 4,125 dollars.
There are procedures relative to foreign investment in Senegal. In Senegal, freedom of establishment is the great amount of investment freedom in sectors like textiles, new technologies, agribusiness, mining, and fisheries. The acquisition of holdings can have foreigners having 100 percent stake in a company. The obligation to declare is provided by the World Association of Investment Promotion Agencies that gives information on the necessary authorisation to set up an establishment. The specific authorisation in Senegal is given by the Agency that promotes foreign investments.
Investment Opportunities
The country has different sectors that attract investors. Agriculture is one of the key investment sectors. Senegal is an agricultural country that produces fruits and vegetables mainly. The agri-business sector offers various opportunities and a specific focus on conservation of production equipment. Senegal’s agricultural production has depended a lot on the performance of the groundnut sector and it has implemented successful initiatives to increase agricultural exports. Other agricultural opportunities include fruit cultivation, floriculture, market gardening and diversifying the industrial processing of groundnut. The country’s government has a plan to set up an integrated programme for developing agricultural markets in the next 5 years (Embassy of Senegal in Ankara, 2016). The aim is to accelerate the growth of the agricultural sector and to contribute to poverty alleviation. The plan should create an enabling environment for investment through developing private irrigation activities, improving conditions of operating the market, and supporting the development of exports in the horticultural sector. There are investment opportunities in the transportation services, processing industry, research and development, packaging industry and marketing of agricultural equipment (Embassy of Senegal in Ankara, 2016).
In addition, there are investment opportunities in technology. The country has had a great development in the telecommunications field. SONATEL is a telecommunications company that is also a subsidiary of a France Telecom group (Embassy of Senegal in Ankara, 2016). The network covers almost the entire territory in optic fibres. The country has satellite transmission, telephone connections, and transmission using submarine cables. The breakthrough in the telecommunications field follows after the privatisation of SONATEL and liberalisation of the sector, which has created a better investment environment. The country provides investment opportunities in the field in services like e-commerce, software development, remote data entry, creating call centres and manufacturing and assembling computers.
Tourism is another investment opportunity in the country. The country has over 700 kilometres of sandy beaches, a mild climate, and it is accessible to people from European capitals and cities like New York. Tourism is one of the largest sectors in the country and it is ranked second after the fishing sector. The sector offers great investment opportunities and it is seen as a sector providing regional development, job creation, and land management. The goal is to make the country a known tourist destination and cultural centre. There are different development centres that include the region of Thies, the Saloum islands, the Route des Niayes, and the Niokolo-Koba national park. The opportunities include leisure, thalassotherapy, and care (Embassy of Senegal in Ankara, 2016).
The textile industry is also an investment opportunity in the country. It has a textile culture from cotton cultivation, weaving, manufacturing, knitting and ginning. The country has a large supply of cotton and there are opportunities to create spinning companies. The Senegalese textile industry has a history of offering different products. The country is also located near the largest cotton producing zone in Africa. The country’s annual capacity is approximately 8,000 tonnes for spinning, 8 million metres for knitting, and 20 million metres for weaving (Embassy of Senegal in Ankara, 2016). The African woven fabric is getting more renowned in the American and European markets.
There is also an investment opportunity in the fishing aquaculture sector. The sector contributes largely to the food supply, job creation, and development policy. The fishing sector contributes 12 percent of the country’s GDP. Also, there is an opportunity is mining and geology. The country’s WAEMU mining law aims to develop the mining sector. The sector has investment opportunities in building mining infrastructures and building modern facilities for iron reduction (Davis, 2016).
References
Banco Santander. (2016). Senegal: Foreign Investment. Retrieved from https://en.santandertrade.com/establish-overseas/senegal/investing
Davis, K. (2016). Set Your Sights on Senegal: Top Investment Opportunities. Africa.com. Retrieved from www.africa.com/set-your-sights-on-senegal-top-investment-opportunities/
Quam-Dessou, Y. C. (2013). Senegal: Opportunities & Outlook. EcoBank. Retrieved from http://www.developingmarkets.com/sites/default/files/3.%20Yves%20Coffi-Ecobank%20Final%20Senegal%20Power%20Point.pdf
Embassy of Senegal in Ankara. (2016). Invest in Senegal: The Priority Sectors. Retrieved from http://embassysenegalankara.over-blog.com/article-the-priority-sectors-for-investing-67937179.html
UNCTAD. (2006). UNCTAD WID Country Profile: Senegal. Retrieved from http://unctad.org/Sections/dite_fdistat/docs/wid_cp_sn_en.pdf
U.S. Department of State. (2015). Senegal Investment Climate Statement 2015. Retrieved from http://www.state.gov/documents/organization/241941.pdf
