VZCZCXRO1310
PP RUEHMA RUEHPA
DE RUEHDK #2503/01 2900945
ZNR UUUUU ZZH
P 170945Z OCT 06
FM AMEMBASSY DAKAR
TO RUEHC/SECSTATE WASHDC PRIORITY 6596
INFO RUCPDOC/USDOC WASHDC PRIORITY
RUEHLMC/MCC WASHDC
RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 04 DAKAR 002503 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EB/TPP/BTA, AF/EPS AND AF/W 
STATE PLEASE PASS USTR 
USDOC PLEASE PASS USITC ATTN: L. SCHLITT 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN EINV SG
SUBJECT: SENEGAL: FINANCIAL SERVICES FOR USITC STUDY ON 
U.S-SUB-SAHARAN AFRICA TRADE AND INVESTMENT 
 
REF: STATE 146622 
 
DAKAR 00002503  001.2 OF 004 
 
 
¶1.  SUMMARY: Senegal's financial sector is anchored by the Central 
Bank of West African States (BCEAO), based in Dakar.  The commercial 
banking sector is active, and relatively efficient, with a number of 
international banks using Dakar as their regional headquarters. 
Senegal has one of Africa's most effective and highly capitalized 
network of microfinance institutions.  These institutions have 
spawned the creation of profitable local businesses providing 
financial services, including software systems, which are pursuing 
markets in other African countries.  Senegal also benefits from 
growth in other service-related sectors, including call centers. END 
SUMMARY. 
 
FINANCIAL SERVICES 
------------------ 
¶2.  While the banking sector is over-liquid and stable, it is 
conservative in issuing medium and long term loans.  Mortgage 
markets are underdeveloped and expensive, generally offering only 
short-term funds.  Most banks active in real estate lending express 
the need for additional tools to refinance mortgage loans. 
Senegal's commercial banks have a mixed record on offering 
affordable credit to small and medium-sized enterprises (SMEs) and 
business start-ups.  Many commercial banks maintain their regional 
headquarters in Dakar.  The largest commercial banks, including 
"Societe Generale de Banques au Senegal" (SGBS) and "Banque 
Internationale pour le Commerce et l'Industrie du Senegal" (BICIS) 
are predominantly French.  Citibank, the only U.S. bank present in 
Senegal, is active but only provides corporate and investment 
banking services. 
 
¶3.  There are 800 microfinance institutions (MFIs) in Senegal with a 
total deposit of CFA 60 billion (USD 117.6 million).  Senegal's 
microfinance sector, one of the most dynamic in the West African 
Economic and Monetary Union (WAEMU) is made up of a solid core of 
profitable instittions that compete with banks to finance SMEs. 
(OTE:  WAEMU members countries -- Benin, Burkina Fao, Cote 
d'Ivoire, Guinea-Bissau, Mali, Niger, Too and Senegal -- share a 
common currency, the "Comunaute Financiere d'Afrique Franc" (CFAF). 
 ENDNOTE.)  While the microfinance sector represents oly a small 
part of the system, it has contribute to about one third of the 
increase in the ratioof total assets to GDP.  The dynamism of 
microfinance is also reflected in an expansion of outstanding credit 
by MFIs at a rate of 3.3 percent.  The penetration rate of the MFIs 
rose from 25 percent of all households in 2003 to 41 percent in 
2005, and outstanding credit expanded four times faster than 
commercial bank credit during the same period. 
 
¶4.  The larger Senegalese MFIs, including "Credit Mutuel du Senegal" 
(CMS) and "Agence de Credit pour l'Epargne et la Production" (ACEP), 
are now well positioned to compete with commercial banks to provide 
financing to SMEs.  In addition to effective networks around the 
country, a number of MFIs are exporting their know-how and 
experiences to other countries in Africa.  These service exports 
include business models, accounting systems and locally created 
software. 
 
¶5.  There are also numerous small, independent institutions which 
are structurally weak and pose a real challenge to the consolidation 
of the sector.  They rarely comply with reporting requirements, 
largely escape the attention of the supervisory authorities, and 
often have weak financial structures.  There is a MFI surveillance 
unit under the Ministry of Finance, but it lacks the necessary human 
and financial resources to supervise this quickly expanding sector. 
The BCEAO is working closely with the national authorities and the 
WAEMU Banking Commission to supervise large MFIs. 
 
¶6.  Senegal's Post Office has expanded financial services available 
in underserved areas by offering secure savings and money transfer 
services throughout the country and abroad.  Deposit balances 
managed by the Post Office represent about two percent of bank 
deposits, with 510,000 clients.  The Post Office is planning to 
create a subsidiary to take over its financial services and it has 
prepared an action plan that includes creating a bank, privatizing 
75 percent of its capital, and offering retail lending and 
refinancing of MFIs. 
 
¶7.  Other financial institutions, such as insurance companies, a 
French-based venture capital firm, and a leasing company, are also 
present here.  However, there remains a strong demand for non-bank 
investment opportunities.  The Abidjan-based West African regional 
stock exchange, Bourse Regionale de Valeurs Mobilieres (BRVM), was 
created in September 1998 and has local branches in each WAEMU 
member country.  The BRVM was expected to help alleviate the lack of 
long-term resources to finance capital goods investment, but has yet 
to have a significant impact in Senegal. 
 
DAKAR 00002503  002.2 OF 004 
 
 
 
EXPORTING OF NON-FINANCIAL SERVICES 
----------------------------------- 
¶8.  In addition to its strong position as a regional financial 
center, Senegal is also improving its position on non-financial 
services, particularly in the Information Communication and 
Technology (ICT) sector.  Senegal has one of Sub-Saharan Africa's 
(SSA) deepest penetrations of Internet that provides both sufficient 
bandwidth and reasonable prices.  Telephone landlines and cellular 
telephones provide good service and pricing.  Senegal offers some of 
the most up-to-date and applicable ICT education and training in 
SSA.  Out of this ICT base, Senegal has a growing computer software 
sector.  Dakar is also becoming a significant location for 
international call centers (mainly French) and has the possibility 
to provide additional outsourcing of customer service operations. 
 
RECENT STATISTICAL TRENDS 
------------------------- 
¶9.  2005 witnessed few major developments or changes in Senegal's 
economic, trade and investment policies.  Senegal maintained a 
relatively stable macroeconomic performance in 2005 despite higher 
world oil prices, with a real GDP growth rate of 6.1 percent, 
inflation at 2.5 percent, and an external current account deficit 
(excluding official transfers) of 7.1 percent of GDP.  Senegal 
depends heavily on foreign assistance, which in 2005 represented 
about 2.7 percent of overall government budget (including both 
current expenditures and capital investments), or CFAF 314.8 billion 
(USD 572.3 million).  For 2006, official statistics will likely show 
GDP growth falling below 4 percent and inflation increasing to over 
3 percent. 
 
¶10.  Overall, Senegal's efforts at economic reform have met, though 
sometimes barely, their commitments to the international financial 
institutions.  Senegal responded favorably to many of the Heavily 
Indebted Poor Countries (HIPC) benchmarks under the IMF/World Bank 
Poverty Reduction Growth Facility (PRGF) programs.  On April 19, 
2004, the IMF and the World Bank acknowledged Senegal's 
accomplishments by agreeing to a comprehensive debt reduction 
package under the enhanced HIPC initiative.  Senegal achieved its 
HIPC completion point, in April 2004, permitting Paris Club debt 
reduction totaling USD 488 million in net present value for the 
period of 2004-2010.  Senegal has also finalized a debt-relief 
agreement through the G-8 process.  Senegal's PRGF ended in April 
2006, and the Government is now in discussions on the possibility of 
a new non-borrowing arrangement with the IMF, such as a Policy 
Monitoring Arrangement. 
 
RECENT SIGNIFICANT FOREIGN INVESTMENT 
------------------------------------- 
¶11.  There is no change in Senegal's foreign direct investment 
profile.  France remains the largest trading partner and controls 
many sectors in the economy.  Approximately 235 subsidiaries of 
French companies are present in Senegal and, while official 
statistics are not available, reportedly account for 25 percent of 
all formal enterprises in Senegal.  French investors are present in 
the major multinational import-export firms, shipping companies, 
banking, food production, mechanical engineering, tobacco, 
agribusiness, petroleum distribution, industrial equipment, 
vehicles, chemicals and pharmaceuticals, tourism, insurance, 
telecommunications and water bottling. 
 
GOVERNMENT PROMOTION EFFORTS 
---------------------------- 
¶12.  GOS efforts at export promotion have not been effective despite 
positive actions by the GOS.  The National Investment Agency (APIX), 
has taken part in a number of road shows to tout Senegal's assets to 
foreign investors.  A public procurement code was approved and a 
Presidential Investors Council (PIC) composed of foreign and local 
investors was established.  The PIC is designed to provide President 
Wade with useful feedback and recommendations to improve the 
business environment and attract investors.  During 2003 and 2004, 
the National Assembly passed a series of bills to enable the 
implementation of some of the regulatory changes suggested by the 
PIC.  The National Assembly also passed a Build-Operate-Transfer 
project code and established the infrastructure Council to ensure 
transparent procurement practices for large projects. 
 
¶13.  Senegal is currently eligible for African Growth and 
Opportunity Act (AGOA) benefits.  The USG approved Senegal's apparel 
visa control system in April 2002, and the country is vying for 
foreign investors in the apparel sector in particular.  Senegal's 
AGOA-facilitated exports remain low, due in part to a 
non-competitive textile sector and the overall lack of production 
capacity.  (NOTE:  Last week Stafford, a Canadian company, signed a 
partnership agreement with INDOSEN, a Senegalese garment producer, 
for a significant expansion and modernization of a local textile 
 
DAKAR 00002503  003.2 OF 004 
 
 
factory.  The goal is to export significant quantities of "work" 
shirts and trousers to the U.S. under AGOA.  The first exports from 
this partnership could begin in late October.  END NOTE.) 
 
REGIONAL INTEGRATION DEVELOPMENTS 
--------------------------------- 
¶14.  Senegal is a signatory member of various free trade agreements 
such as the Economic Community of West African States (ECOWAS), the 
West African Economic and Monetary Union (WAEMU or UEMOA), the Lome 
Convention and the World Trade Organization. 
 
CONTACT INFORMATION 
------------------- 
¶15.  Mission Senegal's primary point of contact for further 
information is: 
 
Wallace R. Bain 
Economic Counselor 
E-mail: BainWR@state.gov. 
 
U.S. agencies should also copy: 
 
Ms. Aminata Wilane Dabo 
Admin Assistant, Economic Section 
WilaneA@state.gov. 
 
¶16.  Priority Senegal contacts are: 
 
Ms. Aminata Niane 
Director 
APIX 
52-54 Rue Mohamed V 
Immeuble Lawar 
Dakar, Senegal 
Tel: +221 849 05 55 
Fax: +221 823 17 02 
E-mail: apix@sentoo.sn 
 
Ms. NDeye Khady Sy 
Coordinator, Bourses Regionale des Valeurs Mobilieres (BRVM) 
1, Place de l'independence 
B.P. 22500 
Dakar, Senegal 
Tel: +221 821 1518 
Fax: +221 821 1506 
E-mail: khadyrace2@yahoo.fr 
 
Mr. Gabriel Fall, Director 
Compagnie de Gestion Financiere et de Bourse (CGF-Finance) 
12, rue Dr. Theze 
Immeuble Cumba Castel 
B.P. 1516 
Dakar, Senegal 
Tel: +221 822 61 34/821 0317 
Fax: +221 822 6135/823 3899 
e-mail: cgfbrvm@telecomplus.sn 
 
Mr. Bounama Signate 
Managing Director 
Western Union 
Immeuble Sokhna Anta 
5, rue Dr. Theze 
B.P. 129 
Dakar, Senegal 
Tel: +221 839 96 
Fax: +221 823 2005 
 
Mr. Souleymane Soumare 
Managing Director 
Money Gram 
97, avenue Andre Peytavin 
Dakar, Senegal 
Tel: +221 849 60 
Fax: +221 823 82 38 
e-mail: bst@bst.sn 
 
Mr. Mamadou Toure 
Managing Director 
Credit Mutuel du Senegal 
Rue 16, Malick Sy 
Dakar, Senegal 
Tel: +221 869 48 48 
 
Mr. Mayoro Loum 
Managing Director 
ACEP 
 
DAKAR 00002503  004.2 OF 004 
 
 
Amitie 1, villa 5077 
Dakar, Sngal 
Tel: +221 825 29 32 
Fax: +221 825 29 35 
 
JACKSON