Foreign Direct Investment
Senegal hosts a large stock of FDI compared to its region, and FDI inflows have been dynamic in recent years, despite 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 2023, Senegal's FDI inflows were stable at USD 2.58 billion in 2022. In the same year, the total stock of FDI stood at USD 11.7 billion, around 42.7% of the country’s GDP. The announced greenfield project values experienced a surge, reaching over USD 1.4 billion, more than doubling in value. International project finance deals amounted to USD 1.2 billion, with the most significant deal involving the development of a 300,000 m3 per day reverse osmosis plant costing USD 671 million. This project was sponsored by ACWA Power (Saudi Arabia) in collaboration with the National Water Company of Senegal. Additionally, in early 2023, logistics company DP World (United Arab Emirates) pledged USD 1.1 billion for port construction in Senegal. 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).
The authorities are working on overhauling the labor market, facilitating access to land, improving the commercial justice system, reducing the regulatory burden through modernizing the administration, and strengthening the competition framework. A new 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. Senegal's strengths 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. Senegal ranks 93rd among the 132 economies on the Global Innovation Index 2023 and 109th out of 184 countries on the latest Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 1,846 | 2,588 | 2,586 |
FDI Stock (million USD) | 9,066 | 9,670 | 11,729 |
Number of Greenfield Investments* | 10 | 8 | 14 |
Value of Greenfield Investments (million USD) | 606 | 654 | 1,426 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Senegal | Sub-Saharan Africa | United States | Germany |
Index of Transaction Transparency* | 7.0 | 5.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 1.0 | 3.5 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 6.0 | 5.5 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.