Senegal is endowed with a very diversified economy, which is generally determined by a large dependence on imports with a low rate of exports and a rather narrow domestic market. Nowadays, more than 60% of its population works in agriculture, which is only contributing less than 17% to GDP. Dakar, like most other West African capitals, is submerged by traders in the informal sector, which strongly dominates the labor market.
Senegal's economic growth has been clearly improved since 2016, despite a steady decline and stagnation in the previous years. Although the country has not always been very popular in terms of investment, thanks to the political stability that has lasted for decades, it is still much more attractive for numerous foreign investors and business opportunities. The majority of Senegalese work in the fisheries and agriculture sector, but other areas such as tourism and industry are starting to develop. In addition, several sectors can be exploited, and the prospects for investing in the country remain positively reliable.
The imports of food products into Senegal are multiplying ; firstly because of the poor conditions of the small-scale agricultural economy (impoverishment and degradation of the soil, inappropriate use of pesticides and fertilizers, lack of education and know-how of the population ...), and secondly because of the insufficiency in the diversification of agriculture, which is characterized by a widespread monoculture of peanuts in the center of the country. Despite the government's recommendations and readjustments to providing domestic products for ensuring food security, a large part of the basic food still has to be imported.
Progression Of Imports Of Senegal
With a trade balance that has been chronically deficient for many years, Senegal's import rate has not stopped rising. Clearly, the state budget is under enormous pressure, as the energy sector also depends on the import of crude oil. According to NASD (National Agency for Statistics and Demography), there was an increase of CFAF 426.8 billion (about $682.880 million) in cumulative imports after the first 11 months of the year, compared to the same period in 2016. In total, the figures amounted to 3,224.4 billion FCFA, against 2,797.6 billion FCFA in the first 11 months of 2016, an increase of 15.3%. On a monthly basis, imports increased by CFAF 296.6 billion in November 2017, compared with CFAF 329.3 billion the previous month – a decrease of 9%.
During the period considered, the most imported products are the machinery and equipment of CFAF 32.9 billion, finished petroleum products of CFAF 31.6 billion, rice of CFAF 20.4 billion, base metals of 14.5 billion FCFA, as well as medicines of 13.5 billion FCFA. The main suppliers during this period were France by 19.9%, China by 12.7%, the Netherlands by 6.6%, India by 6.4%, and Germany by 5.6%. "Source: http://www.ansd.sn/"
A Door Open To West Africa
Senegal has maintained close foreign relations with the Western world, particularly with France. It is represented by several international organizations and pays great attention to good diplomatic relations with many countries. Having a strategic geographical position, it is located on the most western part of the African continent, and is bordered by Guinea, Gambia, Guinea-Bissau, Mali and Mauritania by land, and Cape Verde by sea. Being a member of UEMOA (West African Economic and Monetary Union) and ECOWAS (Economic Community of West Africa), Senegal is a heavyweight in the regional economy. Moreover, it is the fourth largest economy in the region after Nigeria, Côte d'Ivoire and Ghana. In addition to that, it also belongs to the OHADA (Organization for the Harmonization of Business Law in Africa). All those are major assets for the establishment of well-developed regional and global economic cooperation.
Favored by stable economic growth, a relatively good telecommunications infrastructure and an affordable workforce in terms of wages, the country offers very good conditions for the engagement of foreign companies. Emerging gradually as a major supply market in West Africa, Senegal's foreign trade is gradually leaning towards imports. Production is largely dominated by the service sector, and followed by the industrial and agricultural sectors. On the other hand, the agriculture sector employs more than 80% of the Senegalese workforce, but productivity in this sector is very low, as in so many other sectors. This gives access to investment opportunities in various fields such as packaging and feeding equipment, processing of agricultural products and agricultural equipment manufacturing, medical technology, and renewable energies. Moreover, Senegal has to practically import all types of industrial products, as well as food products (rice, wheat flour, dried milk, sugar and vegetables).
Dakar, as a hub for intercontinental air traffic, has the second largest port in West Africa, and also offers very good conditions for committing to the region. Senegal's international trade and import-export market therefore plays a key role in its economic development. Its export products include mainly petroleum, gold, fish and phosphate products. Among its main partners in this field are Mali, Switzerland, the United Arab Emirates, France, Côte d'Ivoire and Guinea.
An Economic Environment For Investment
Senegal's prospects are relatively positive, and its economic policy is moving towards liberalization and privatization. Government and foreign donors are working hard to achieve the goals of sustainable growth and poverty reduction. The first multilateral donors are the World Bank and the European Union, but there are also the African Development Bank, the European Development Bank, the West African Development Bank, and the International Development Bank.
The Emerging Senegal Plan (ESP) includes an investment program prepared by the government for infrastructure, agriculture, social housing, tourism and mining. This plan was designed to encourage private investors and donors to fund a series of projects. In addition, the business climate is currently quite good, particularly because of the country's political stability.
The country's main growth drivers are private projects, but the capital of Dakar brings together a good number of consumer goods manufacturers who invest in the creation or expansion of their production lines. There are a number of sectors in which foreign companies can be considered as suppliers.
The Communication Sector
With the evolution of the telecommunications sector, Senegal has become one of the most important countries of South-North outsourcing. Currently, there are three mobile service providers and thanks to the Telecommunications and Postal Regulatory Agency, the country has had an independent supervisory authority for the sector since 2001. While the expansion of the fixed network is languishing, it is now also accessible in the most remote parts of the country by mobile phone, and Senegal has one of the highest mobile user densities on the African continent.
The Banking Sector
There are about 20 banks resident in Senegal, however, they finance only 25% of the economic activity. With an annual turnover of 2.65 billion FCFA (about 4 billion euros), it is the second largest banking market of the West African Economic and Monetary Union after Côte d'Ivoire. The headquarters of the West African Central Bank is also located in Dakar. The microfinance sector also holds a place with about 30 accredited organizations.
The Construction Industry
Several public and private construction projects in the Greater Dakar region bring complete delivered orders to construction companies and their suppliers. This situation should continue for some time, as the capital is growing fast enough and many actions will be taken to ensure that the infrastructure adapts to the growth of the city.
Tourism is the country's second source of currency. Although it has encountered some difficulties before, it is moving in the right direction. So if the situation remains stable, the number of tourists should continue to increase.
The Agribusiness Sector
Costs are constantly high for imported food products in Senegal, so the government is trying to reduce this dependence by attracting the private sector investment with many opportunities.
The Energy Sector
On one hand, the poor supply of energy represents a major obstacle to Senegal's economic growth. About half of the inhabitants of rural areas still do not have electricity. The country plans to promote the integration of alternative energy sources, especially from solar energy. On the other hand, hydropower plants and water treatment plants also need to be built to meet the needs of the entire population.
Dakar is the first health center for the wealthy in West Africa, and the public sector and private clinics are investing in new and better equipment. Thus, suppliers of pharmaceutical products and medical equipment will have the chance to access this very promising market.
Basically, there are more than 600,000 people who live from fishing, and this sector records more than 455,000 tonnes of catch per year, of which about 85,000 tonnes are exported and account for one third of the volume of exports. Fishing is the main source of foreign currency for Senegal. For this reason, cooling and packaging machines have good prospects for foreign manufacturers. This should also be of interest to engineering and project development companies.
In a way, this economic progress, no matter how small, will accentuate the preparation for local investment. Even if French companies exercise their rights in different markets of the country, the relations and trusts that have been established in Senegal's foreign trade will enable Senegalese companies to flourish on a national and international level. For companies pursuing an active strategy in West Africa, Dakar could match their expectations.
The Foreign Investment Process In Senegal
With a healthy and competitive economy, Senegal has a proportionally small market, but not only because of its bridge function for the West African market, which is much more accessible compared to other African countries. Although France is the first FDI (direct investor abroad), this should not be an obstacle, because the market offers a wide choice for others.
In view of the potential of the import-export market, many entrepreneurs are wondering how to import to Senegal. This is perfectly normal, since the country grants great freedom of establishment for investors in the textile, fishing, agri-food, tourism, mining and new technologies sectors. As a result, foreign companies and investors have the same opportunities in their activities. Foreigners can therefore benefit from 100% share in a company, provided that the required legal procedures are followed.
The security situation in the country is pretty good in general, and you can move freely and without worries. It is still useful to consider the basic safety precautions, but in any case, citizens of other countries must register on the crisis prevention list of their country of origin.
For exporting or importing goods to Senegal, the company will have to go through several stages, including securing the status of importer / exporter, registering in the commercial register, and obtaining the merchant card.
Goods imported into Senegal must be subject to a prior import declaration or IPR, unless their FOB value is less than 1,000,000 FCFA ; it is necessary to know whether they are subject to the Import Inspection Program (PVI). A written report in French is prepared and then provided for inspection in order to be certified. The original report will be provided to the importer and will be one of the required documents for the declaration to be receivable by Customs. The format of the report is that of the Verification Certificate (AV) or the Notice of Refusal of Inspection (ARA), otherwise, the customs declaration is not receivable. Foreign invoices for imports, the payment of which is due by means of a credit (L / C), are drafted by the COTECNA offices in the exporting country. Goods are cleared at the 23 Senegalese customs offices.
For goods intended to export and re-export, a good quality written declaration with all attached documents is required. When the FOB value of the goods exceeds the amount of two hundred thousand francs (200,000 FCFA), an approved customs broker is also required. The export of Senegalese products or Senegalese products, products exported after a certain period, with or without treatment and in the course of suspension, is free of duties and exit taxes. For non-commercial goods, the exit declaration is verbal (i.e. for holiday memories). Detailed information on the procedures for importing and exporting merchandise is available on the Senegalese Customs website : https://www.douanes.sn/.
How Will Aizen Consulting Help You Integrate The Senegal Market ?
The import-export market in Senegal is already dominated by French and Chinese companies, operating in various key sectors. As a result, competition can be tough for new entrants who want to enter this market. AIZEN CONSULTING will simplify your task by connecting you with suppliers, manufacturers, wholesalers, exporters, importers, buyers, forwarders, and even professionals with experience in the field. The commercial culture and agricultural subsistence are not diversified enough, and this gives you the opportunity to invest in new products. In addition, this platform allows you to both adopt products already on the market for an affordable price, but also to introduce completely new articles that have already been successful for other African businesses. Since this is an online community of experienced traders and entrepreneurs, the barriers between the various middlemen will be quickly broken, so you probably will not need to travel several kilometers to study the market and find Commercial Partners. In short, AIZEN CONSULTING will save you time and money on your research and travel expenses.
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By Aliou Diaw
Business Developer at Aizen Senegal
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