Banking & Finance 2019 Second Edition

Last Updated September 10, 2019


Law and Practice


Houda Law Firm was founded in 1977 in Dakar (Senegal) and has a staff of 42, half of which are specialised and highly qualified lawyers and legal advisors working to assist clients, including private companies, public entities and individuals, with all their legal needs in Senegal and WAEMU (West African Economic and Monetary Union) member states. The firm has recently opened a branch in Abidjan, Ivory Coast, which will make it the first foreign law firm from the WAEMU region established in the country. The team works on matters related to company incorporation, investment, employment law, taxation, business litigation and arbitration.

Senegal recorded a growth rate of 7% in 2018, slightly lower than the 7.2% in 2017. This strong growth recorded since 2015 is expected to continue in 2019 and 2020, thanks in particular, to public investment under the second phase of the Emerging Senegal Plan (ESP), and an increase in mining, manufacturing and energy production. 

However, the Senegalese economy remains dependent on certain price fluctuations on the international market, particularly those for oil and gas and construction materials. This being said, Senegal could, specifically, become a gas-producing country by 2021. In addition, according to the BCEAO's economic outlook note, WAEMU economies may have to worry about trade tensions between the United States and China (despite the resumption of negotiations), the prospect of a Brexit without an agreement and geopolitical tensions (Iran, Venezuela, etc)

Nevertheless, the increase in domestic demand has been supported by the banking system through project financing integrated into the ESP.

The ESP emphasises a strong impetus in wealth and employment creation, strengthening governance and strategic sectors.

In Senegal, the institution of FONGIP (Fonds de Garanties des Investissements Prioritaires), ADEPME (Agence de développement et d'encadrement des PME) and BNDE (Banque Nationale pour le Développement Economique) also played an important role in the management and orientation of the loan market.

The bond market in Senegal remains dominated by sovereign issuance. Senegal is considered an average country in the bond market. The main purpose of issuing Eurobonds is to finance the budget deficit. In 2018, Senegal raised a total of USD2 billion, including EUR1 billion over ten years at 4.75% and another EUR1 billion in the US dollar segment at 6.75% over 30 years.

Some banking institutions and microfinance or leasing companies have also issued private bonds, which have been approved by the AMF (formerly CREMPF).

However, we are not aware of any studies measuring the impact on funding conditions and structures.

We note a surge in the alternative financing system: approved microfinance institutions, foreign lenders, institutional funds, foreign development agencies, etc.

Competition from these new lenders should encourage "traditional" banks to review their lending rules and offer more attractive offers to their customers.

The Ivorian banking system has seen the growth of financial technology in recent years, with several banks offering mobile electronic systems for carrying out banking transactions. It also brings rural populations closer to the banking sector.

Some banks have also established technical partnerships with money transfer companies and telecommunications operators.

At its meeting on 24 June 2016, the WAMU Council of Ministers adopted a prudential framework based on the Basel II and Basel III rules. This mechanism, which came into force on 1 January 2018, essentially aims to promote the preservation of a strong and resilient banking system that meets the needs of WAMU States' economies and the preservation of bank deposits.

These new prudential rules are applicable to banks, banking financial institutions and financial companies operating in the Union.

Tighter capital requirements and stricter regulatory capital ratio standards could, according to some economists, lead banks to reduce their exposure to the highest risk-weighted assets and therefore the largest consumers of equity, with SMEs at the forefront.

In addition, on 17 December 2018, Senegal launched the Dakar Cluster Finance, whose objective is to develop an ecosystem conducive to innovation in financial services, in the service of investment, growth and employment.

Furthermore, the Board of Directors of the African Development Bank (AfDB) approved, on 24 September 2019, a credit line of EUR22.5 million to the BNDE, including EUR15 million from the AfDB and EUR7.5 million from the Africa Growing Together Fund (AGTF), to support the provision of loans to SMEs and the creation of direct jobs in rural areas.

When a bank or a non-bank wishes to carry out banking operations within WAMU, as a normal profession, it will be subject to a banking licensing procedure. Banking operations include the receipt of funds from the public, credit operations and the provision of customers and the management of means of payment.

The different stages of the application for accreditation are as follows:

  • be incorporated as a company as provided for by the Banking Act;
  • fully pay up the minimum required share capital, which amounts to CFA10 billion since 2015;
  • send the Minister in charge of Finance an application for approval; and
  • submit the file to the National Directorate of the BCEAO for the country of establishment.

The Central Bank examines the file and forwards it to the Banking Commission. The Minister in charge of Finance of the country concerned shall issue the approval order, after a favourable assent from the said Commission.

Approval shall be deemed to have been refused if it is not granted within six months of receipt of the complete file by the BCEAO.

In addition, a foreign bank or company may also finance companies in our jurisdiction, without necessarily wishing to set up and without normally carrying out its financing activities there. In this case, the granting of loans is subject to a declaration for statistical purposes that the Borrower will send to the Ministry of Finance and the National Directorate of the BCEAO indicating: the name and registered office of the lender, the name, registered office and activity of the borrower, the date of the loan (contract to be attached), the currency of the loan, the total amount of the loan expressed in the currency of the account, the duration of the loan and the repayment dates envisaged, interest rates, guarantees, the amount of loans not yet repaid to the same foreign lender, if applicable.

There is no limitation on the granting of loans by a foreign lender, except for to not violate the banking monopoly defined above and to comply with the reporting obligations provided for in the regulations governing the external financial relations of WAEMU Member States. Lending operations from abroad can only be carried out through an approved intermediary (Bank), unless otherwise decided by the Minister of Finance.

The granting of securities and guarantees is governed by the provisions of the OHADA Uniform Act on the organisation of securities. The Act does not provide for any restriction or limitation on the creation of securities for the benefit of foreign lenders.

Regulation No 09/2010 in force in the WAEMU zone on the external financial relations of the Member States contains provisions on exchange controls for certain operations:

  • certain import and export operations;
  • certain payments to foreign countries (outside the WAEMU zone) for capital transactions (examples: repayment of medium and long-term credit) are subject to a request for foreign exchange authorisation, submitted to the Minister of Finance. Each request must be accompanied by supporting documents attesting to the nature and reality of the operation.
  • foreign investment transactions by a resident are subject to prior authorisation by the Minister of Finance;
  • the repayment, by purchase and transfer of foreign currency or by crediting foreign accounts in francs or euros, of any borrowing abroad must be reported for statistical purposes to the Directorate of External Finance and the BCEAO and carried out by an authorised intermediary; and
  • the opening of a foreign currency account in Senegal or the opening by a Senegalese of an account abroad.

We are not aware in our jurisdiction of any measures restricting the use of the proceeds of loans or debt securities.

The Uniform Act organising securities expressly recognises the notion of a security agent who may be a financial or credit institution, national or foreign, and who will act, in his name and as security agent, for the benefit of the creditors of the secured obligation or obligations having designated him for this purpose.

Apart from the Security Agent, Senegalese law does not know the concept of trust within the Common Law.

Provided that the loan agreement does not include provisions limiting the possibility of transferring the receivable, the loan may be transferred by way of assignment of the receivable or assignment of the contract.

The assignment of a receivable is made in writing, without the debtor's consent, but it must be served to the debtor in order to be enforceable against him. The assignee benefits from the rights and securities attached to the claim. In practice, certain formalities in the Trade and Personal Property Credit Register and the Land Register will have to be completed in order to notify the change of creditor.

The assignment of a contract entails the assignment of all the terms of the said contract and requires the agreement of the debtor assigned. It will also be subject to subsequent formalities such as the assignment of a receivable.

Subject to what the parties have agreed in the loan agreement, there is no prohibition on repurchasing debt in Senegal. In principle, the redemption is carried out by way of early repayment. If the lender is abroad, this early repayment must be notified to the approved intermediary.

Public acquisition financing transactions are governed by the provisions relating to takeover bids (takeover bids) by which a natural or legal person publicly announces that it undertakes to acquire at a fixed price a quantity of securities of another listed issuer (General Regulation on the organisation, functioning and supervision of the WAMU regional financial market). A takeover bid is triggered from the moment any person proposes to acquire or strengthen an interest equal to or greater than 25% in the voting capital of a company whose shares are listed on an official stock exchange. The bidder must inform the UEMOA Financial Markets Authority (AMF) by filing an information memorandum, the admissibility of which will be examined by the said Authority. At the Study stage, the offer is not public. When the Authority issues its visa, the information note must be disseminated by publication. The bidder will have to justify the availability of the funds necessary to finance its bid.

Documents are not standardised and therefore their size may vary.

Withholding tax is treated differently, depending on whether or not they are banks or bank establishments. Indeed, fixed-income investment products defined in Article 101 of the General Tax Code (GTC) (interest, arrears and all other mortgage, preferential and unsecured loan products, excluding any commercial transaction that does not have the legal nature of a loan; deposits of sums of money, on sight or with a fixed maturity, regardless of the depositary and regardless of the use of the deposit; cash guarantees; current accounts; savings bonds and other non-bond loans; indexation clauses relating to sums placed or left at the disposal of a company by its shareholders) are subject to withholding tax at the rate of 16% by the person who ensures payment of such income. This rate is 8% for interest, arrears and other income from deposit accounts and current accounts opened in the accounts of a bank, a bank establishment, decentralised financial systems, the Caisse de Depots et Consignations, a holding company, etc.

The withholding of 8% or 16% is, in principle, deducted from corporate income tax in the form of a tax credit.

Withholding is due solely by reason of either the payment of interest in any manner whatsoever or by debiting or crediting it to an account.

However, some lenders do not withhold withholding tax on payments of principal, interest or other payments they receive. Indeed, Article 211 of the GTC states that: "do not bear the withholding tax provided for in Article 208 when collected by and on behalf of banks or banking institutions, decentralised financial systems, the Caisse des Depots et Consignations, investment or securities management companies and companies authorised by the government to carry out mortgage lending transactions, interest, arrears and all other products referred to in Article 101". However, this exemption from withholding tax applies only when these banks and financial institutions are authorised in Senegal.

Lenders who make loans or take sureties and guarantees to locally incorporated entities are subject to a myriad of taxes, duties and obligations. This type of lender may be subject to several types of taxes, depending on the nature of the loan and the lender, including:

The Financial Activities Tax (TAF)

TAF applies to all remuneration received on financial transactions carried out in Senegal, including commissions and interest received on credits, loans, advances, signature commitments and money transfers, excluding postal money orders. It applies to banks and financial institutions authorised in Senegal, natural or legal persons engaged in financial intermediation, natural or legal persons engaged in money transfer operations and foreign exchange operators.

The TAF does not apply to a number of transactions listed in Article 402 of the GTC. Its rate is 17%. The TAF rate is reduced to 7% for interest, commission and fees charged on all transactions financing export sales.

Value Added Tax (VAT)

This type of transaction can also be subject to Value Added Tax (VAT), when the interest is collected by persons other than banks and financial institutions. The loan must be used in Senegal or the person on whose behalf the service is rendered must be established in Senegal. The VAT rate is 18%. With regard to VAT, Article 361 of the GTC also provides for a long list of exemptions.

Tax on Income from Receivables, Deposits and Guarantees

The company receiving the interest must naturally record it in its profits and declare it for corporate income tax purposes. However, it may, in principle, deduct the withholding tax from the corporate income tax paid. For natural persons, withholding tax on interest is in full discharge.

Registration Fees

As far as fees are concerned, they mainly concern registration fees and stamp fees. Registration of the loan contract is not mandatory, but if the parties want to give their deed a certain date for proof purposes, the registration fees on loan transactions are a fixed fee of CFA5,000, and stamp duties amount to CFA2,000 per page. However, if the loan agreement is accompanied by securities such as a pledge, in addition to the previous registration with the tax authorities, registration with the RCCM registry will be required. Rates vary according to the amount of the loan pledged and can range from 0.25% to 5%.

In addition, it should be noted that contracts concluded by leasing companies with lessees are recorded free of charge, as are acts concluded by banks, financial institutions and decentralised financial systems under account opening agreements, which are exempt from stamp duty. The exemption from stamp duty also applies to acts relating to credit facility agreements linking decentralised financial systems to their customers.

Other Tax Considerations

The corporate income tax system for loans is subject to significant legislative supervision because of tax evasion problems. Thus, the deductibility of financial charges for the determination of corporate income tax at the level of the company that owes the loan is subject to a certain number of rate and amount limits when the lender is a shareholder, partner or other person with whom the company does not deal at arm's length or controls. 

Similarly, in order to determine the benefit of a permanent establishment in Senegal of a foreign legal person, no deduction is allowed for sums which would, where applicable, be paid or due, for purposes other than the reimbursement of expenses incurred by a permanent establishment at the central office of the legal person or at any of its offices, as interest on sums lent to the permanent establishment.

Where a tax treaty is applicable, the rate of withholding tax made in Senegal on interest may be reduced in accordance with the provisions of that tax treaty.

The rate of usury is determined by the Council of Ministers of the WAMU. It is published in the Official Gazette or in a newspaper of legal announcements at the initiative of the Minister in charge of Finance.

  • for banks, the rate is set at 15% per year;
  • for economic agents other than banks, the rate is set at 24%.

Lending at a usurious rate is a criminal offence.

Lenders generally grant security rights in the following assets: real estate, tangible movable property (inventories, professional equipment, vehicles) and intangible movable property (shares or partnership shares, bank accounts, receivables, goodwill, intellectual property rights).

Security interests are governed by the OHADA Uniform Act on the organisation of security interests. The security interest in real estate is the mortgage.

A mortgage is defined by Article 190 of the Act as the use of a specific or determinable property belonging to the grantor as security for one or more present or future claims, provided that it is specific or determinable.

The mortgage must be published in the land register and, when it is conventional, is instrumented by a Notary Public.

The notarial deed of mortgage is subject to merged formalities: registration fees are CFA5,000, the land registration tax is 0.8% of the amount of the mortgage and the Registrar's salary is 0.2%. The deed is also subject to the fees set by a presidential decree, the rates of which are currently as follows.


  • from XOF1 to XOF10,000,000, 3%;
  • from XOF10,000,001 to XOF40,000,000, 2%;
  • from XOF40,000,001 to XOF150,000,000, 1%; and
  • above XOF150,000,000, 0.50%.

Mortgage allocation deed

half of the fees below without exceeding 1.50% of the amount of the mortgage.

The time limit for formalising a conventional mortgage is approximately 15 days from the signature of the notarial deed. After the registration of the mortgage, the Registrar issues a statement of real rights and a certificate of registration in the Land Register.

Other forms of security are those relating to tangible and intangible assets. They must be the subject of a written deed, which may be in private or notarial form. These securities must be registered in the Trade and Personal Property Credit Register (RCCM).

The tax registration of the deeds of security is XOF5,000; that of the registration of the security at the RCCM is fixed as follows:

  • from XOF0 to XOF3 million, 5%,
  • more than XOF3 to XOF5 million, 1.5%,
  • from more than XOF5 to XOF500 million, 1%,
  • from more than XOF500 million to XOF1 billion, 0.5%,
  • above XOF1 billion, 0.25%; The total amount of fees payable in this case may not exceed XOF50 million.

In the event of various pledges relating to the same investment project, the total cumulative amount of delivery rights may not exceed XOF50 billion when the total amount of the loan (or loans) covering the investment as a whole exceeds XOF1 billion. However, a reform of these Registry fees is planned very soon.

The Registrar shall issue a pledge slip containing a transfer number to the Security Registry within two days of filing.

Under the Uniform Act, when organising security interests, and depending on the type of pledge, it is possible that the security interest may relate to a combination of present and future assets.

It is possible that subsidiaries may agree to take security interests in assets belonging to them as security for the commitments of their parent company and vice versa.

In this case, they are subject to prior authorisation by the Board of Directors (for SAs with a Board of Directors) or the General Meeting (SAs with a Managing Director, SARL and SAS) under regulated agreements so that the corporate interests of the companies, which could be assessed independently of the general interest of the group, are in any event respected.

In addition, if it is in the subsidiary's corporate interest, the guarantee it grants to its parent company will not be considered as an act concluded free of charge and could therefore not be cancelled if it was made during a suspicious period.

Parent companies may also grant autonomous guarantees to their subsidiaries and vice versa.

Article 639 paragraph 1 of the Uniform Act on Commercial Companies and EIG Law lays down a principle of formal prohibition on the granting of a security interest by a company in the event of the acquisition of its own shares by a third party.

A possible solution to this prohibition would be to have at least one share acquired by the company wishing to acquire a stake in the target company, so that this new company is no longer considered as a third party but a shareholder of the company.

Concerning the SARL and the SAS, no express restrictions have been provided for by the Uniform Act on the law of commercial companies. However, in practice, it is required to obtain an authorisation from the General Meeting or the Board of Directors to fully inform the Directors and partners of the guarantees granted on the company's assets.

With regard to an SA with a board of directors, a restriction is provided for in Article 449 of the Uniform Act. It provides that guarantees, endorsements and autonomous guarantees subscribed by companies other than those operating duly authorised credit, microfinance or surety insurance institutions and for commitments made by third parties are subject to prior authorisation by the Board of Directors.

The Board of Directors may, within the limit of a total amount to be fixed by it, authorise the Chairman and Chief Executive Officer or the Chief Executive Officer, as the case may be, to give guarantees given by third parties.

This authorisation may also set, by commitment, an amount above which the company's guarantee or autonomous counter-guarantee may not be given.

When a commitment exceeds any of the amounts thus fixed, the authorisation of the Board of Directors is required.

The duration of the authorisations provided for in the preceding paragraphs may not exceed one year, regardless of the duration of the commitments guaranteed, endorsed or guaranteed.

Guarantees, endorsements, autonomous guarantees or other guarantees given, without authorisation, for commitments made by third parties are void.

If the guarantees, endorsements, autonomous guarantees and other guarantees given have been given for a total amount exceeding the limit set for the current period, the excess may not be invoked against third parties who have no knowledge of it unless the amount of the commitment invoked exceeds, in itself, one of the limits set by the decision of the Board of Directors taken pursuant to the provisions of this Article. In this case, guarantees, endorsements, autonomous guarantees or other guarantees are void.

Concerning SA with Director

Article 506 of the Uniform Act on Companies provides that sureties, endorsements and guarantees given in companies other than those operating credit, microfinance or surety insurance institutions duly approved by the managing director or deputy managing director are only enforceable against the company if they have been authorised in advance by the ordinary general meeting, either in a general or special manner.

Article 61 of the Uniform Act on Security Interests provides for the procedures for the release of securities that are subject to registration in the Trade and Personal Property Credit Register. In accordance with this article, any natural or legal person against whom one or more registrations have been made may, at any time, bring an application to the competent court or authority in the State Party for the release of the registration.

The competent court or authority in the State Party may, in any event and even before deciding on the merits, discharge the registration in whole or in part if the applicant has serious and legitimate grounds.

It is also possible to discharge the registrations by conventional means by filing an authentic deed (for the mortgage) or under private signature (for pledges and pledges) recording the creditor's agreement to the cancellation of the registrations with the Land Register or the Commercial Register.

For competing security rights in the same asset, required on the same day, the title with the earliest date is deemed to have been registered first, regardless of the order of the above-mentioned registry (see 5.6 Release of Typical Forms of Security).

Securities with the same date are deemed to rank equally with the exception of assignments by way of security and retention of title, which are then deemed to be registered before other security rights whose registration was required on the same day, regardless of the order of the above-mentioned registry (Article 57 al 2et3 of the Uniform Act on Security Interests).

Personal and real estate security interests registered in the RCCM may be assigned prior to their priority. These amendments are only effective if they are registered in the RCCM on the margin of the initial registration.

Similarly, it is possible to modify the rank of conventional mortgages by notarial deed, which must be registered and published as the main mortgage deed.

The secured lender has several means at its disposal to realise its guarantee in the event of default by the debtor.

There are several reasons for the debtor's non-payment: economic difficulties, deliberate refusal to fulfil the obligations of the contract, etc.

Methods and Procedures

Within the meaning of the Uniform Act on the organisation of simplified recovery procedures and enforcement procedures, the secured lender may bring the following actions:

  • a formal notice;
  • a command to pay served extrajudicially;
  • a request for an order for payment submitted to the competent courts;
  • a protective seizure of claims and movable property which would make it possible to make the debtor's assets (bank accounts) and movable, tangible or intangible property unavailable;
  • as soon as an enforceable title is obtained, the lender could also have the debt assigned to them, which would allow the sums claimed to be paid directly to a third party; and
  • through an enforceable title, the lender could also proceed with the sale of the debtor's tangible movable property or even seize the debtor's rights, shares or obligations held in a company.


The defaulting debtor could proceed with an enforcement defence and organise its insolvency by benefiting from insolvency proceedings, tending to suspend proceedings against it or invoking immunity from enforcement.

Under Senegalese law, the parties may freely invoke a foreign law to organise the content of their contract. 

A contract can always be subject to a foreign jurisdiction. As such, the decision rendered by the foreign court is only enforced in Senegal when it is declared enforceable through an exequatur procedure.

In addition, with regard to the waiver of immunity, the executing judge may, in accordance with Article 30 of the Uniform Act on the organisation of simplified recovery procedures and enforcement procedures, invoke immunity from execution and refrain from authorising protective seizures. Indeed, it follows that forced execution and protective measures are not applicable to persons who benefit from immunity from execution.

Please note that judgments or arbitral awards rendered abroad may be enforced in Senegal after the competent judges of these countries have issued a decision ordering the enforcement of these decisions, at the end of the exequatur proceedings.

With regard to the enforcement of judgments, Judgments handed down by foreign courts and acts received by foreign officers are enforceable in Senegal only after they have been granted exequatur by a judgment handed down by a Senegalese court. Decisions in contentious and non-contentious civil, commercial and administrative matters rendered by foreign courts shall automatically have the force of res judicata in the territory of Senegal if they meet the following conditions:

  • the decision emanates from a competent court in accordance with the rules relating to conflicts of jurisdiction accepted in Senegal;
  • the decision applied the law applicable to the dispute under the conflict of laws rules accepted in Senegal;
  • the decision has, according to the law of the State where it was given, become final and enforceable;
  • the parties have been duly summoned, represented or declared defaulting; and
  • the decision does not contain anything contrary to Senegalese public policy and is not contrary to a Senegalese judicial decision which has the authority of res judicata.

With regard to the arbitral award, it is enforceable only by virtue of an exequatur decision rendered by the competent court in the Contracting State.

Recognition and enforcement shall be refused if the arbitral award is manifestly contrary to a rule of international public policy. The State court, seised of a request for recognition or enforcement, shall decide within a period which may not exceed 15 days from the date of its referral. If, on expiry of this period, the competent court has not issued its order, the exequatur shall be deemed to have been granted.

We are not aware of any such matter.

Conciliation is a preventive, consensual and confidential procedure aimed at the financial or operational restructuring of the company. This restructuring takes place through the conclusion of a conciliation agreement negotiated between the debtor and their creditors, or at least their main creditors, with the support of a neutral, impartial and independent third party called a conciliator. Conciliation falls within the competence of the President of the Commercial Court, who is seised of the matter at the request of the debtor.

Preventive settlement is a judicial procedure that takes place before the suspension of payments. The commercial court is seised at the request of the debtor or at the joint request of the debtor and one or more of their creditors. It is subject to the filing of the preventive composition agreement, which is a document containing the measures envisaged for the recovery of the company. As soon as the draft composition appears to them to be serious, the President of the court appoints an expert in preventive settlement to assist the company. The decision to open the preventive regulation suspends all individual proceedings for the payment of claims arising before the opening of the preventive regulation for a period of three months, which may be extended by one month.

The appointed expert must file a report with the president of the commercial court containing the agreement concluded between the debtor and his creditors and the preventive composition agreement. Once the expert's report has been delivered, the president of the commercial court summons the debtor to be heard at a hearing that is not public. If the court finds that the payments have been suspended, it shall automatically rule on the adjustment or liquidation of the property. If, on the contrary, the debtor's situation justifies it, it approves the preventive composition agreement and thus validates the debtor's restructuring proposals.

In addition to the procedures mentioned above, Senegalese companies can opt for technical restructuring such as mergers, demergers or acquisitions or organise internal financial and operational restructuring plans with the collective shareholders.

The impact of the processes depends on the level of difficulty of the debtor company to which the loan was granted.

Thus, before the suspension of payments, the decision to open the preventive regulation suspends all individual proceedings for the payment of claims arising before the opening of the procedure for a period of three months, which may be extended by one month. This means that no action for payment can be brought before the court.

After the suspension of payments, the debtor who has security interests will have to register his claim and will be subject to a payment order, see 7.3 The Order Creditors Are Paid on Insolvency.

As soon as insolvency proceedings are opened, all creditors are grouped together and subject to a legal payment order. 

The order of creditors differs, depending on whether the money to be distributed to creditors comes from the sale of real estate or furniture.

In the event of a sale of real estate, the funds are distributed in the following order:

  • to creditors who have accepted a conciliation agreement; to those whose claim arose before the opening of preventive settlement proceedings; to those who had made a new contribution in the context of the composition for legal redress;
  • to creditors of legal costs incurred to achieve the realisation of the property sold and the distribution of the price;
  • to creditors of super-privileged salaries in proportion to the value of the property in relation to the total assets;
  • to creditors holding a conventional or forced mortgage and to separatist creditors registered within the legal time limit, each according to the rank of their entry in the land register;
  • creditors of the estate, whose debts arose from the debtor's continued activity after the opening;
  • to creditors having a general lien in accordance with the order established by the Uniform Act on the Organisation of Security Interests, namely, to creditors having a general lien subject to publication, each according to the rank of its registration in the Trade and Personal Property Credit Register, and to creditors having a general lien not subject to publication in accordance with the order established by Article 180 of that Uniform Act;
  • unsecured creditors with an enforceable title; and
  • unsecured creditors without an enforceable title.

In the event of a sale of movable property, the funds are distributed in the following order:

  • to creditors who have accepted a conciliation agreement; to those whose claim arose before the opening of preventive settlement proceedings; to those who had made a new contribution in the context of the composition for legal redress;
  • to creditors of legal costs incurred to achieve the realisation of the property sold and the distribution of the price itself;
  • to creditors of costs incurred to preserve the debtor's property in the interest of the creditor whose securities predate;
  • to creditors of super-preferred wages in proportion to the value of the furniture in relation to the total assets;
  • to creditors secured by a general privilege subject to publicity, a pledge, each on the date of its opposability to third parties;
  • to creditors with a special movable lien, each on the furniture supporting the lien;
  • to creditors of the estate as defined by Article 117 of the Uniform Act on Collective Proceedings;
  • to creditors having a general lien in accordance with the order established by the Uniform Act on the Organisation of Securities;
  • unsecured creditors with an enforceable title; and
  • unsecured creditors without an enforceable title.

To our knowledge, there is no equivalent in Senegalese law to the concept of equitable subordination.

The highest risk in the event of the borrower's or supplier's insolvency is that it may not be able to repay its debt due to insufficient assets at the time of distribution to the various creditors, or if the debt has not been registered in accordance with applicable law.

Nevertheless, the OHADA legislator has provided for different mechanisms (conciliation procedure, preventive settlement, receivership, mergers, internal restructuring, etc), depending on the level of cash flow difficulties in which the debtor company finds itself, to safeguard as far as possible the interests of creditors and to organise their repayment in accordance with the applicable law.

Senegal has assets and opportunities including political stability and solid institutions, the viability of the macroeconomic and budgetary framework, the demographic potential with the youth of the population, the important agricultural, hydro-agricultural and mining resources, the potential of regional service platforms (education, health and finance), the strategic geographical position and image capital coupled with international influence, the openness to major economic blocs (UEMOA, ECOWAS).

Project financing in Senegal can be considered in three distinct aspects: corporate financing, project financing or asset financing.

Project financing is based on the intrinsic profitability of the project and is based on the notion of the project's "bankability" in the eyes of investors and lenders; it is sometimes referred to as "project secured financing" because loans granted by banks to the contract holder are granted without recourse, or with limited recourse, against shareholders.

The legal framework for project financing is not unique. The projects cover several areas of economic life. Each area is governed by either Community or national regulations.

A public-private partnership can be defined as any agreement between the public authority and one or more private partners aimed at using the resources and/or expertise of the latter for the provision and/or management of services and/or infrastructure of public interest or of general interest, with the ultimate objective of achieving a level of extension and quality of public service in accordance with the expectations of public authorities.

Senegal is one of the leading West African countries in terms of PPPs. The country has already implemented important projects for both service management and infrastructure development.

As a result, PPP projects in Senegal are governed by:

  • the law n°2014-09 of 20 February 2014, amended by law n° 2015-03 of 12 February 2015, relating to partnership contracts;
  • the Act No. 65-51, as amended by Act No. 2006-16 of 30 June 2006, relating to Administrative Obligations Code; and
  • Decree 2014-1212 of 22 September 2014, on the Public Procurement Code.

Legal Restrictions

Restrictions on prior evaluation of partnership contracts

Partnership contracts give rise to a prior evaluation, carried out by the contracting authority with the assistance of the National Committee for Support to Public-Private Partnerships, showing the economic, financial, legal and administrative reasons that lead the contracting authority to initiate the procedure for the award of such a contract.

Restrictions related to the conditions for the use of partnership contracts (Article 9)

Partnership contracts may only be concluded if, at the end of the preliminary evaluation, at least one of the following conditions is met:

  • given the complexity of the project, the public entity is not objectively able to define alone and in advance the technical means that meet its needs or to establish the financial or legal structure of the project;
  • the project is of an urgent nature, when it is a matter of making up for a delay prejudicial to the general interest affecting the construction of public facilities or the exercise of a public service mission, whatever the causes of the delay, or to deal with an unforeseeable situation; and/or
  • taking into account either the characteristics of the project, the requirements of the public service for which the public body is responsible, or the shortcomings and difficulties observed in the implementation of comparable projects, the use of such a contract presents a more favourable balance between the advantages and disadvantages than those of other public procurement contracts.

The procedure for awarding partnership contracts may only be initiated after a favourable opinion from the Infrastructure Council, a favourable opinion from the Minister of Finance and authorisation given by the Prime Minister on referral to the National Committee for Support to Public-Private Partnerships if the contracting authority is the State, or by the legislative body of other legal persons.

For certain project financing operations, it is necessary to obtain government approval, particularly for PPP projects, with Decree No. 2019-1156 of 11 July 2019 laying down the rules for the adoption of financing agreements, partnership agreements and State commitments.

The system for the payment of taxes, duties and other charges does not necessarily fall within the scope of the General Tax Code. However, given the broad scope of the concept of a project "financing transaction", certain provisions of the General Tax Code may apply. The fees that may be provided for in this type of operation concern registration and stamp duties. As the applicable law is not unique, it varies according to the project and the formalities required for these documents.

Regulatory framework for the oil and gas sectors:

  • Law n°2019-03 of 1 February 2019 on the Petroleum Code;
  • Law n°2019-04 on content in the hydrocarbon sector; and
  • Decree No. 2019-780 of 17 April 2019, relating to the powers of the Minister of Petroleum and Energy.

Institutional framework for the oil and gas sectors:

  • Ministry of Petroleum and Energy;
  • National Hydrocarbon Committee (NHC);
  • PETROSEN Company;
  • African Refining Society (SAR); and

Regulatory framework for the electricity sectors:

  • Act No. 2010-21 on the Renewable Energy Policy Act;
  • Law No. 98-29 on the Electricity Sector;
  • Law 2002-01 repealing and replacing Article 19, paragraphs 4 and 5, and Chapter IV of Law No. 98-29 of 14 April 1998 on the Electricity Sector;
  • Decree No. 98-333 on the organization and functioning of the Electricity Sector Regulatory Commission; and
  • Decree No. 98-334 establishing the conditions and procedures for the issuance and withdrawal of licences or concessions for the production, distribution and sale of electricity.

Institutional framework for the electricity sector:

  • Ministry of Petroleum and Energy;
  • the Senegalese Rural Electrification Agency;
  • the Agency for the Economy and Energy Management;
  • the National Agency for Renewable Energies;
  • the Electricity Company (Senelec); and
  • Energy Sector Regulatory Commission.

Regulatory framework for the mining sector:

  • Law n°2016-32 of 8 November 2016 on the mining code;
  • Decree n°2017-459 setting the terms and conditions for the application of Law n°2016-32 of 8 November 2016 on the Mining Code; and
  • Regulation No. 18/2003 / CM / UEMOA of 22 December 2003 on the UEMOA Mining Code.

Institutional framework of the mining sector: Ministry of Mines and Geology

The structuring of projects in Senegal raises several questions about:

  • the definition of the most optimal legal framework for the implementation of the project;
  • the financing of the Project;
  • the incorporation of the project company;
  • the identification of all responsibilities and risks associated with the project that could affect its success; and
  • the possible tax structure of the contract, if any.

Legal Form of the Project Company

Senegal is a member of OHADA. Among the different forms of companies provided for by the OHADA Uniform Act on the law of commercial companies and the Economic Interest Grouping, the most common are:

  • The Société Anonyme (''SA'');
  • The Société à Responsabilité Limitée (''SARL''); and
  • The Société par Actions Simplifiées (''SAS'').

Restriction on foreign investment

Foreign investment in Senegal is encouraged. With a view to ensuring a favourable climate for the development of foreign investment, capital-exporting countries have favoured the conclusion of investment protection agreements with other countries wishing to attract foreign capital to their territory. Also, the conclusion has as its leitmotif to protect investors against the shortcomings of institutions in host countries for their investments. Foreign investments are also protected by the Investment Code, which grants location facilities and tax and customs advantages to foreign investors. Finally, Senegal has double tax treaties with some countries.

Local Restrictions

Senegal is a member of various regional organisations including, in particular, the Organisation for the harmonisation of business law in Africa (OHADA), the inter-African conference of insurance markets (CIMA) and the West African Economic and Monetary Union (WAEMU) since its creation.

These regulations will have an impact on any investment made in Senegal (and consequently on the Project) as they, to some extent, define the form of corporate entity allowed to be used, impose constraints in respect of insurances to be subscribed and regulate and control foreign investments and exchanges as well as protecting them.

Restrictions on Exchange Controls

Obligation of intermediation, notification to the Direction de la Monnaie et du Crédit (Currency and Credit Office) of the Ministry of Finance and to the Central Bank for West Africa States (BCEAO) must be made in relation to other transactions such as loans made abroad, liquidation of investments made by a resident abroad, foreign investments made in a WAEMU member state and the transfer of investments between non-residents of this State, prior approval to payments made abroad other than usual payments, repayment of medium- and long-term loans granted to finance commercial and industrial operations in Senegal, any foreign investment made by a resident (taking into account that an investment must be financed up to 75% by foreign loans), reinvestment of liquidation proceeds, loans of any kind made by Intermediaries to non-residents, including overdrafts and cash advance (either in CFA or in EUR) made to non-residents, the opening of local accounts in currency other than euro or CFA to non-residents requires the prior approval of the Central Bank.

Other Restrictions

Foreign investors are subject to local content requirements in certain sectors (for example, oil) and includes the priority recruitment of staff, training, etc. In the oil sector, the provisional or exclusive exploitation permit is issued only to one or more legal persons governed by Senegalese law.

In Senegal, several sources and structures of project financing are possible.

Equity capital

Equity capital is generally provided to the project company by a consortium that may include the following actors: project promoters, the construction group, specialised investment funds and private counters of development finance institutions (DFIs). Equity investment can be made in the form of share capital or quasi-equity.

The main international donors have created institutions (for example, IFC, Proparco, DEG and FMO) or set up intervention mechanisms (BAD, BEI) for financing the private sector.

Specialised investment funds invest in equity capital in infrastructure projects.

The State sometimes acts as a shareholder of the project company. It may also be involved in financing infrastructure projects by providing an investment grant to the project company.


Debt financing can be arranged with different types of financial institutions. The main ones are development financial institutions (private and public counters), export credit agencies and commercial banks.

The private counters of multi or bilateral donors can intervene in senior or junior debt. Their interventions are conditioned by the "bankability" of the project, which is examined in detail with criteria identical to those of commercial banks.

In order to support its exports, Senegal has set up export credit agencies (ECAs) that provide credit to foreign buyers or credit guarantees to commercial banks to finance the acquisition of goods or services provided by a domestic exporting company.


Apart from loans, guarantees play a crucial role in project financing, reducing the risk taken by lenders and thus increasing the volumes of financing available. Three types of guarantee instruments are regularly used to reduce the risks of commercial banks:

  • guarantees issued by export credit agencies in the countries of origin of the main equipment or services;
  • partial risk guarantees that cover banks in certain well-defined situations. In particular, the PRGs may guarantee the payment of compensation due to commercial banks in the event of early termination of the contract or non-payment of sums due pursuant to a court decision or arbitral award that has become final; and
  • partial credit guarantees covering a portion of the scheduled repayments, regardless of the origin of the borrower's default.

Financing structures using all structured financing techniques: asset financing, leveraged acquisition financing, Islamic financing, real estate financing, securitisation, restructuring, bond issuance, derivatives or capital markets and PPPs.

In the natural resources sector, Senegal is committed to integrating the principles of sustainable development into country policies and reversing the trend noted with regard to the loss of environmental resources. In particular, it pursues the objective of reducing biodiversity loss. Moreover, in Senegal, natural resources belong to the people and are used to improve their living conditions. The exploitation and management of natural resources must be transparent and carried out in such a way as to generate economic growth, promote the well-being of the population in general and be environmentally sustainable.

To this end, Senegal intends to pursue the following three strategic objectives in this sector:

  • improve the knowledge base of the environment and natural resources;
  • intensify the fight against environmental and natural resource degradation in accordance with the relevant conventions; and
  • strengthen the institutional and technical capacities of the actors in the implementation of actions for the conservation of the environment and natural resources as a challenge, there is the preservation of the environment and the guarantee of a sustainable management of natural resources.
  • Law No. 2001 - 01 of 15 January 2001 on the Environmental Code;
  • Law n°83-71 of 5 July 1983 on the hygiene code;
  • Law n°97-17 of 1 December 1997 on the Labour Code;
  • Ordinance No. 9468/MJEHP/DEEC regulating public participation in environmental impact assessment;
  • Decree No. 2001 - 282 of 12 April 2001 implementing the Environmental Code; and
  • Decree No. 2006-1261 of 15 November 2006 laying down general health and safety measures in establishments of all kinds.

Institutional framework for environment, health and safety:

  • Ministry of Environment and Sustainable Development;
  • Ministry of Health and Social Action; and
  • Ministry of Labour, Social Dialogue and Relations with Institutions.

Islamic finance products currently only marginally represented in Senegal, but the number of banks interested in such products is increasing. The African continent, and Senegal in particular, geographically represents, by virtue of its population and investment needs, a very favourable space for the establishment of this type of structure and could allow for their expansion.

The surplus liquidity of the Middle East countries could be a source of growth and investment and would make it possible to expand a range of financial services more in line with population profiles.

While Senegal has not yet developed a legal framework for the development of an Islamic financial industry, and suffers from a shortage of human resources in this sector, the country has already issued Islamic bonds and sought to attract Islamic microfinance players.

Senegal is a member of the West African Monetary Union (WAMU), which is characterised by the recognition of the same monetary unit, the Franc of the African Financial Community (F.CFA or XOF), whose issue is entrusted to the Central Bank of West African States (BCEAO).

BCEAO issued Instruction No. 002-03-2018 on the special provisions applicable to credit institutions engaged in Islamic finance. This instruction, which is directly applicable in Senegal, aims to define the conditions for carrying out Islamic finance activities in WAMU. It applies to all credit institutions that fully or partially comply in their operations with the principles and rules of Islamic finance and operate in the territory of a WAMU Member State.

Credit institutions may exclusively or partially carry out Islamic finance operations through a dedicated branch. An application for authorisation is required for credit institutions wishing to carry out Islamic finance operations on an exclusive basis.

Credit institutions wishing to open an Islamic branch must specify this intention in their application for authorisation as a credit institution or apply for an extension if they already have an authorisation.

Each credit institution engaged in Islamic finance must have an Internal Compliance Board or "Internal Shari'a Board" to ensure that transactions comply with the principles and rules of Islamic finance.

At the BCEAO level, the Central Compliance Council or Central Shari'a Board should be established and will be responsible for ensuring the compliance of Islamic financial practices within WAMU with the principles of Shari'a law.

Instruction No. 003-03-03-2018 defines the conditions for carrying out Islamic finance activities in the West African Monetary Union applicable to decentralised financial systems (DFS).

Senegal issued its first "Sukuk" issue in 2014 for XOF100 billion and a second issue in 2016 for XOF150 billion. Operation Sukuk "Senegal State 6.25% 2014-2018" contributed to the financing of projects under the Emerging Senegal Plan - a strategy implemented by the Senegalese State to help the country on its way to development.

At tax level, Senegal had decided to take Islamic finance products into account in its January 2013 tax reform and to include favourable provisions.

Instruction No. 004-05-2018 on the technical characteristics of Islamic finance operations carried out by WAMU institutions contains in its annex a list of banking operations and contracts in accordance with the principles and rules of Islamic finance and Instruction No. 005-05-2018, the equivalent for decentralised financial systems.

Are mainly listed are:

  • Qardh;
  • Mourabaha funding;
  • Moussawama funding;
  • Ijara funding,
  • Istisna;
  • Salam;
  • Arboun;
  • Waad;
  • Filing in good faith;
  • Moudaraba funding;
  • Moucharaka; and
  • Tawarruq.

Collective proceedings in Senegal are governed by the Uniform Act on the organisation of collective proceedings for the settlement of liabilities adopted on 10 September 2015.

That Act does not yet provide for any provision applicable to insolvency or restructuring proceedings for the claims of sukuk holders.

We are not aware of any regulatory provision on the classification of sukuk.

We are not aware of any such cases.

Houda Law Firm

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+ 221 33 821 47 22, + 221 33 821 47 35

+ 221 33 821 45 43
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Houda Law Firm was founded in 1977 in Dakar (Senegal) and has a staff of 42, half of which are specialised and highly qualified lawyers and legal advisors working to assist clients, including private companies, public entities and individuals, with all their legal needs in Senegal and WAEMU (West African Economic and Monetary Union) member states. The firm has recently opened a branch in Abidjan, Ivory Coast, which will make it the first foreign law firm from the WAEMU region established in the country. The team works on matters related to company incorporation, investment, employment law, taxation, business litigation and arbitration.

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