SENEGAL: An Introduction to General Business Law

Located in the westernmost part of the African continent, Senegal has a population of 16.7 million people and is bordered by Mauritania, Mali, Guinea, and Guinea-Bissau.

Political Context 

Senegal is one of the most stable countries in Africa, with three peaceful political transitions since independence in 1960. In power since 2012, President Macky Sall was elected to a five-year term in office in February 2019.

On 31 July 2022, legislative elections created an unprecedented situation in Senegal with a national assembly without an absolute majority.

Economic Overview 

Senegal has enjoyed one of the highest GDP growth rates in the 15-member Economic Community of West African States (ECOWAS) over the last decade, with sustained economic growth rates averaging 6.5% from 2014 through 2019.

After slowing to 4.8% in 2022, with COVID-19 causing a severe downturn, growth is projected to jump to 8.0% in 2023 and 10.5% in 2024. Next year’s growth will surpass the country’s historical high of 8.9% recorded in 1976. Senegal’s rise is attributable to a stronger export portfolio due to a pick-up in private investment in the mining and energy industries, with the first gas project coming onstream by the end of 2023.

The entry point for business registration is Senegal’s Investment Promotion Agency (APIX), which provides a range of services to foreign investors. Senegal has signed and ratified the African Continental Free Trade Area (AfCFTA), which entered into force on 30 May 2019. The AfCFTA is the most significant free trade pact after the World Trade Organization and promises to cover over 1.2 billion people with more than USD3 trillion in GDP.

Trends and Developments 

Under its “Emerging Senegal Plan” (known by its French acronym PSE), the government of Senegal (GOS) aims to boost sustained and inclusive growth through economic reforms and private sector-driven investment projects. With this private sector-based investment plan, the GOS hopes to structurally transform the economy, improve Senegal’s already strong macroeconomic performance, and achieve emerging market status by 2035.

The most important sectors of the Senegalese economy are outlined below.

Agriculture 

Agriculture is an essential barometer of the economy, accounting for about 15% of GDP and occupying about 77% of the workforce. The agricultural plan calls for massive investments in irrigation and rural roads, access to finance through the creation of a guarantee fund, the construction of storage facilities, the development of the fishing sector, and the creation of an agricultural stock exchange market. 

Energy (oil and gas)  

Significant offshore oil and gas discoveries will soon put Senegal on the world map of oil and gas-producing countries. The first gas is expected in 2023 from the Grand Tortue Anaheim (GTA) offshore gas field straddling the border with Mauritania. The GTA field, operated by BP, contains an estimated 25 trillion cubic feet of natural gas, and Senegal has plans to become a significant LNG hub. The Sangomar oil field near Dakar, operated by Woodside (Australia), is also expected to produce its first oil in 2023.

The GOS recently approved a new Petroleum Code updating Senegal’s oil and gas legal framework. The Senegalese Parliament has also voted on the local content requirement law.

Senegal seeks to replace existing heavy fuel oil (HFO) and diesel-run plants with natural gas-powered plants (initially from imported LNG but eventually from local sources) and renewable sources. Senegal’s installed capacity is presently 1,300 MW, including 141 MW of solar power and 50 MW of wind. 

Construction 

Building infrastructure is one of the foundations of the PSE. The first phase, completed in 2018, planned for public investment-led growth. The second phase calls for private investment to boost growth, requiring private sector participation through public-private partnerships (PPPs) to ease the debt burden on the GOS. Under the PSE, Senegal’s large-scale infrastructure projects include the completion of a new international airport, improving the road network, the development of a toll highway and other inter-departmental roads, and the construction of a rapid train (TER). The TER links the capital Dakar to the new city Diamniadio and, in a second phase, Diamniadio to the new airport. Another upcoming project is the long-awaited construction of the bus rapid transit (BRT) project aimed at improving public commuter services and easing congestion. To reduce the housing deficit, the GOS has a programme to build 100,000 affordable housing units for low and middle-income families within five years.

To encourage investors, a new PPP law was passed in 2020. 

Mining 

The mining sector is a core component of Senegal’s export industry and contributes strongly towards national revenue and foreign exchange. The country enjoys notable reserves of iron, precious metals like gold and platinum, copper, chromium, nickel, zircon, and titanium.

Senegal also possesses significant phosphate reserves, estimated at between 500 million 1 billion tonnes, placing the country among the world’s top ten phosphate producers. These phosphates are a crucial ingredient for manufacturing fertiliser, an essential input for the agriculture sector, which employs the bulk of the Senegal population.

Current Economic Conditions Affecting Clients and the Legal Profession

Senegal belongs to two major regional entities: ECOWAS and WAEMU.

ECOWAS is an association of 15 West African entities aiming at having one economic and monetary zone with uniform legislation on the main sectors regarding the economy, trade, natural resources, and diplomacy, to mention a few.

WAEMU is an entity of eight West African countries with the same currency, reserve bank, and business law.

The legal system is based on OHADA, a civil law system shared by 17 Sub-Saharan African countries (Benin, Burkina Faso, Cameroon, Central Africa Republic, Chad, Congo, Comoros, Cote d’Ivoire, D.R. Congo, Equatorial Guinea, Gabon, Guinea, Guinea Bissau, Mali, Niger, Senegal and Togo)

These countries share the same business law regulated through the following Uniform Acts:

• Company Act;

• General Commercial Law Act;

• Contracts of Carriage of Goods by Road Act;

 • Co-operative Companies Act;

 • Securities Act;

 • Arbitration Act;

 • Mediation Act;

 • Insolvency Act;

 • Debt Recovery and Enforcement Act; and

 • Accounting Act

These countries have a common Court of Justice, which has jurisdiction as a last resort on all disputes related to the Uniform Acts. The Court has its seat in Abidjan, Ivory Coast. So, the advantage when doing business with Senegal is that the legal environment is more than merely local; it is regional.

Judicial Sector Reforms 

The efficiency of a judicial system providing for suitable dispute resolution is among the top priorities of Senegal. Various indicators emphasise the judicial system’s slow process, making the enforcement of contracts both difficult and slow.

To address this challenge, several measures have been implemented.

New commercial divisions have been set up in courts; these new divisions will only deal with commercial matters. The aim is to improve efficiency and get faster and less costly contract enforcement, mainly where the commercial case load is large.

The other meaningful reform is the amendment of the Civil Procedure Code, aimed at making the process of enforcing contracts easier. The new provisions impose individual deadlines on the parties at different stages of the proceedings.

New rules for case management have also been set up, allowing for more efficient monitoring of cases in the court docket throughout the judicial process, from filing the claim until the judgment is issued.