Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
The capital city, Dakar, is the hub of economic activity and the largest consumer market in Senegal with 90 percent of its manufacturing base and 22 percent of its population.
Almost all goods entering Senegal transit through the Port of Dakar and are distributed mainly by truck to interior areas and the neighboring landlocked country of Mali. The Dakar-Bamako railway link has fallen into disrepair since 2009, but the GOS has plans to renovate the rail line on the Senegal side and renew the rolling stock with World Bank support. Dubai Ports World (DP World) is managing an efficient container terminal under a 25-year concession.
Distribution occurs both by modern and traditional systems. Lebanese, Turkish, and Chinese merchants play an important role in the import-export business, along with local traders specializing in wholesale and retail distribution of consumer goods. Senegalese merchants selling popular consumer goods such as textiles and electronics are increasingly competing with Lebanese traders. A Chinese immigrant community is making headway in Dakar’s street markets, selling cheap consumer goods. More formal distribution channels as shopping centers are beginning to spring up in Dakar.
A dynamic informal sector engages roughly 80 percent of the workforce and carries out a sizable portion of domestic trade.
Using an Agent to Sell U.S. Products and Services
U.S. firms may employ the services of an agent, appoint a distributor or dealer, and/or establish a direct sales branch or subsidiary. The specific type of representation that a U.S. firm establishes in Senegal can be tailored to fit the individual requirements of the product and its potential market. Preferably, the agent or the distributor should be a local business/firm, fluent in French, who is aware of Senegal’s business practices. If the product requires some servicing, the U.S. exporter should make available a reasonable inventory of spare parts to his agent or distributor. U.S. companies also should provide training, brochures, and marketing literature in French.
The U.S. Embassy’s Economic/Commercial Section provides a range of fee-based services to help U.S. companies identify and evaluate suitable partners in the region. Please contact your nearest Export Assistance Center or the U.S. Commercial Service in Johannesburg at www.buyusa.gov/southafrica for further details on these services.
Establishing an Office
Senegal’s Investment Promotion Agency (APIX) maintains a “Bureau d’Appui a la Creation d’Entreprises (BCE)” or one-stop-shop to assist foreign investors interested in establishing a business in Senegal. APIX is host of the “Guichet Unique” providing guidance to foreign investors qualifying for investment incentives. The BCE has merged seven start-up procedures into one, and the time required to register a business has fallen from 58 days to an average of two. APIX has also reached agreements with Senegal’s main utility companies to facilitate power, water and sewage connections for new investment projects.
APIX’s services include assistance with notary services needed to register and incorporate a company and assistance with customs. In French practice, notarial services differ from those of a U.S. notary and can be compared to those of a commercial lawyer. The notary is a specialist in contracts and legal documents. The most common legal forms of incorporation are the branch of a foreign company (“succursale”), a joint venture, a limited liability company (“société à responsabilité limitée – SARL”), and a public corporation (“société anonyme – SA”). Once registered, a branch is regarded as a Senegalese judicial entity. Other types of business structures include sole proprietorship, regional office, local agency, and distributorship.
Home to 22 percent of the population and 80 percent of the country’s economic activity, Dakar’s 550 square kilometer peninsula has become one of the most expensive cities in the region, given the limited space available in the city. Locating suitable office space in downtown Dakar has become a challenge. More and more companies are leaving the crowded downtown Plateau district for less crowded midtown locations. The new city of Diamniadio has sprung up in the outskirts of Dakar and is home for new office space for ministries and government agencies. The concept of serviced office space for rent is making headway in Dakar’s real estate market. International relocating companies such as Regus have opened shop in Dakar.
Senegal has ambitions to become a regional hub for logistics, services, and industry. The country has developed Special Economic Zones (SEZ) in order to attract significant private investment. The Diamniadio International Industrial Platform and the Sandiara Special Economic Zone, respectively 40 and 80 kilometers from Dakar, host foreign companies from Cote d’Ivoire, France, Tunisia, and China. Senegal’s proximity to the U.S. market - an eight-hour direct flight to New York - makes it an attractive destination. Chinese apparel manufacturer C&H garments, active in Rwanda and Ethiopia, has set up shop in the Diamniadio Industrial Zone. The company manufactures t-shirts and casual wear to fulfill contracts for U.S. brands. Chinese tile manufacturing company Twyford Ceramics has recently opened a manufacturing unit in the Sandiara SEZ.
There are no official regulations on franchising in Senegal. Senegal offers excellent potential for franchising due to the emergence of a growing middle-class population mostly concentrated in Dakar. Franchises in food distribution, apparel, dry cleaning, and car servicing - mostly French brand - have opened in Dakar. Until now U.S. franchises have had limited presence in Senegal, except for Hertz and Avis, but major U.S. restaurant franchises have begun to explore opportunities in Senegal as part of a broader expansion in sub-Saharan Africa. KFC has just made its entry and plans to open five outlets in Dakar. High entry costs, limited market size, and supply chain challenges have impeded the full development of the sector. One notable challenge is limited access to finance, which translates into a relatively small pool of entrepreneurs and companies with the ability to absorb the costs of master licenses of popular international brands. Several entrepreneurs have created a franchise association to develop the sector and attract international franchises.
Direct Marketing is a common way for companies and institutions to advertise their products and services. A number of advertising agencies perform direct marketing services.
The Senegalese investment code provides incentives for joint venture business operations. Joint venture partnerships should specify the responsibility of each party, since many local entrepreneurs expect that all costs will be borne by the foreign investor. Although increasingly interested in joint venture activities, Senegalese entrepreneurs often have limited equity to offer. The U.S. Embassy advises all U.S. companies to carefully select a qualified partner and spend resources on conducting extensive due diligence before committing to a joint venture structure.
The local content law for the oil and gas secor has made joint ventures a more attractive approach to market entry.
Senegalese law does not contain any specific provisions for licensing. However, licensing agreements are common in the tobacco, consumer products, and soft drink industries. A primary consideration of these agreements is the formalization of a remittance procedure for any fees and royalties to the licensor, in compliance with local tax laws.
International logistic companies including DHL, FEDEX, and UPS, as well as the local Post Office offer express delivery services. Domestic deliveries are handled by local small firms.
The U.S. Economic and Commercial Section offers several services to assist U.S. companies in conducting due diligence on companies based in Senegal. These services range from verification of the existence and reputation of a local company to a more sophisticated search through the fee-based International Company Profile (ICP) service.
Should a U.S. company wish to commission one of these services, they can contact the economic and commercial section directly or their local U.S. Export Assistance Center.