Foreign direct investment (FDI) in Senegal

FDI in Figures

Senegal hosts a large stock of FDI compared to its region, and inflows have been dynamic in recent years, even during the global economic crisis triggered by the COVID-19 pandemic, as the government is leading an active policy to encourage FDI inflows. According to UNCTAD’s World Investment Report 2024, Senegal's FDI inflows were stable at USD 2.64 billion in 2023, with the announcement of 335 greenfield investment projects. At the end of the same period, the total stock of FDI stood at USD 16.357 billion, around 52.1% of the country’s GDP. Key projects launched in recent years include the Port de Ndayane deepwater terminal, developed by DP World with a USD 1.2 billion investment to ease Dakar's port capacity. The Niakhar Solar Power Station, a 30MW solar plant with a 15MW/45MWh battery storage, received USD 40 million from the West African Development Bank. Additionally, the Greater Tortue Ahmeyim LNG project, led by BP and Kosmos Energy, plays a central role in Senegal's energy transition. These projects highlight the country’s drive to modernize its infrastructure and energy sectors. France is the largest investor in Senegal (17% of the stock), but recently there have been important investments from China, Turkey, and the United Arab Emirates. Some other key investors are Canada, Mauritius, Morocco, and Côte d'Ivoire (IMF). Sectors attracting substantial investment include petroleum and natural gas, agribusiness, mining, tourism, manufacturing, and fisheries (U.S. Trade Administration).

Senegal's strengths in terms of FDI attraction 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 and non-transparent regulation, bureaucracy, high factor costs, and lack of security. The authorities are working on overhauling the labour market, facilitating access to land, improving the commercial justice system, reducing the regulatory burden through modernizing the administration, and strengthening the competition framework. A Public-private partnership (PPP) framework has also been designed to help accelerate and broaden the implementation of major investments. 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. With strong air connections, a modern airport, growing seaports, improved ground transport, and mobile banking, the country aims to become a regional hub for trade and transportation. Moreover, three Special Economic Zones offer tax exemptions and benefits to investors. While repatriating capital and income is generally easy, the regional central bank occasionally limits offshore accounts for project-financing companies registered in the country. Senegal ranks 92nd among the 133 economies on the Global Innovation Index 2024 and 108th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Senegal

Strong Points

The main assets of the country 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 (UEMOA) 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 that have emerged 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 (LLC) without the need for share capital or obtain a building permit online in 40 days.

Weak Points

The country has many obstacles to FDI. The main weaknesses of the country are:

• Vulnerability of the economy to climatic hazards and changes in the price of commodities
• Low business productivity and low activity diversity
• Infrastructure is still largely underdeveloped, particularly in energy and transport
• Slow and corrupt administration that does not establish quickly the structural reforms expected by markets
• Despite some improvements, the business environment is still disrupted by a strong government bias towards interventionism, partial and slow justice, and generally weak regulations
• Insecurity, especially on the border with Mali
• Significant current account deficits

Government Measures to Motivate or Restrict FDI

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 (reduction of notary fees for the registration of a company and reduction of the mandatory initial investment) and faster. The approval documents are issued in 10 days.

A law has been adopted in Senegal to establish the regime of special economic zones (SEZ). 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%; and exoneration from some taxes such as business tax and property tax. Today there are three SEZs: one in the suburbs of Dakar, one in Sandiara and another in Ndiass.