- International Monetary Fund. Monetary and Capital Markets Department
- Published Date:
- January 1995
The currency of Senegal is the CFA Franc,1 which is pegged to the French franc, the intervention currency, at the fixed rate of CFAF 1 per F 0.01. The official buying and selling rate is CFAF 100 per F 1. Exchange rates for other currencies are derived from the rate in the Paris exchange market for the currency concerned and the fixed rate between the French franc and the CFA franc. The BCEAO no longer levies a commission on transfers to and from countries outside the West African Monetary Union (WAMU).2 Banks charge an exchange commission of 0.125-1.0 per mil on purchases and sales of foreign exchange, depending on the amount, other than those directly related to external transactions. In addition, they levy a commission of 2.5 per mil on transfers to all countries outside the WAMU, all of which must be surrendered to the treasury. There are no taxes or subsidies on purchases or sales of foreign exchange.
Forward cover against exchange rate risk is available to residents only for imports of a specified category of goods. All forward cover against exchange rate risk must be authorized by the Directorate of Money and Credit in the Ministry of Economy, Finance, and Planning. Forward cover may be provided only in the currency of settlement stipulated in the commercial contract. Maturities must correspond to the due date of foreign exchange settlement stipulated in the commercial contract and must not exceed one month. For some specified products, the maturity of forward cover may be extended one time for up to three months.
With the exception of measures relating to gold and the repatriation of export proceeds, the issuance, publicizing, and tendering of transferable securities and real property, and applications for investment abroad, Senegal’s exchange controls do not apply to (1) France (and its overseas departments and territories) and Monaco; and (2) all other countries whose bank of issue is linked with the French Treasury by an Operations Account (Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Congo, Cote d’Ivoire, Equatorial Guinea, Gabon, Mali, Niger, and Togo). Hence, all payments to these countries may be made freely. All other countries are considered foreign countries.
Arrears are maintained with respect to external payments.
Administration of Control
Exchange control is administered by the Directorate of Money and Credit, which has delegated a part of the approval authority for exchange control to the BCEAO and to authorized banks. The BCEAO is authorized to collect, either directly or through the banks, other financial institutions, the Postal Administration, and notaries public, any information necessary to compile balance of payments statistics. All exchange transactions relating to foreign countries must be effected through authorized banks, the Postal Administration, or the BCEAO. The Ministry of Commerce and Handi-crafts issues export authorizations and prior import authorizations for listed products.
Prescription of Currency
Because Senegal is an Operations Account country, settlements with France (as defined above), Monaco, and the Operations Account countries are made in CFA francs, French francs, or the currency of any other Operations Account country. Current transactions with The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mauritania, Nigeria, and Sierra Leone may be settled through the West African Clearing House arrangement. Settlements with all other countries are usually effected through correspondent banks in France, in any of the currencies of those countries or in French francs.
The regulations pertaining to nonresident accounts are based on those applied in France. The crediting to nonresident accounts of CFA banknotes, French banknotes, or banknotes issued by any other institute of issue that maintains an Operations Account with the French Treasury is not permitted. Nonresident accounts may not be credited with BCEAO banknotes, French franc notes, or banknotes issued by central banks that maintain an Operations Account with the French Treasury. Funds may be transferred freely between nonresident accounts. These accounts may not be overdrawn without prior authorization of the Minister of Finance.
Imports and Import Payments
Imports originating in or transshipped from Israel are prohibited. With respect to other countries, the principle of most-favored-nation treatment of all Senegal’s commercial partners was established in 1981. Moreover, quantitative restrictions and prior authorization requirements for certain imports are being phased out. The requirement for prior authorization for imports of cereals, jewelry, newspapers and documentaries, kola nuts, jute bags, prerecorded tapes, and mineral and chemical fertilizers was abolished in June 1994. Quantitative restrictions may be applied for various reasons, such as agricultural policy, sanitation, or protection of certain products (cement, fertilizers, sugar, wheat flour, and tomatoes).
All import transactions relating to foreign countries must be domiciled with an authorized bank when their value exceeds CFAF 500,000 (delivered at the Senegalese border or c.i.f.). The exchange authorizations entitle importers to purchase the necessary exchange but not earlier than eight days before the goods are shipped to Senegal if a documentary credit is opened, or on the due date for settlement if the commodities have already been imported (if no documentary credit has been opened, on presentation of the bill of lading). Furthermore, payments for imports, with the exception of down payments, are permitted only after the proper documents for customs clearance are submitted. Advance payments for imports require authorization, and importers may not acquire foreign exchange until the contractual date of the payments.
All imports, except those in transit and those intended for the free zone of Dakar, are subject to a service fee of 6 percent or 12 percent, depending on their customs classification. All imports valued (f.o.b.) at more than CFAF 1.5 million are subject to inspection by international agencies with respect to quality, quantity, price, and tariff classification.
Payments for Invisibles
Payments for invisibles to France (as defined above), Monaco, and the Operations Account countries are permitted freely; those to other countries are subject to exchange approval. Payments for invisibles related to trade are permitted freely when the basic trade transaction has been approved or does not require authorization. Authorized intermediary banks are empowered to effect abroad payments of up to CFAF 20,000 on behalf of residents without requiring documents. Transfers of income accruing to nonresidents in the form of profits, dividends, and royalties are also permitted when a request for exchange authorization is submitted to the Ministry of Finance.
Limitations on allowances for travelers are administered in a nonrestrictive manner, and all bona fide requests in excess of the established limits are granted. Residents traveling for tourism or business purposes to countries in the franc zone that are not members of the WAMU are allowed to take out banknotes other than CFA franc notes up to the equivalent of CFAF 2 million; amounts in excess of this limit may be taken out in the form of means of payment other than banknotes. The allowances for travel to countries outside the franc zone are subject to the following regulations: (1) for tourist travel, CFAF 500,000 without limit on the number of trips or differentiation by the age of the traveler; (2) for business travel, CFAF 75,000 a day for up to one month, corresponding to a maximum of CFAF 2.25 million (business travel allowances may be combined with tourism allowances); (3) allowances in excess of these limits are subject to the authorization of the respective ministries of finance; and (4) credit cards, which must be issued by resident financial intermediaries and specifically authorized by the respective ministers of finance, may be used up to the ceilings indicated above for tourist and business travel. Upon arrival at customs, returning resident travelers are required to declare all means of payment in their possession and must surrender within eight days all means of payment exceeding the equivalent of CFAF 25,000. All residents traveling to countries that are not members of the WAMU must declare in writing all means of payment at their disposal at the time of departure. Nonresident travelers may re-export means of payment other than banknotes issued abroad and registered in their name. The re-exportation of foreign banknotes is allowed up to the equivalent of CFAF 250,000; the re-exportation of foreign banknotes above these ceilings and other means of payment issued in Senegal requires documentation demonstrating either the importation of foreign banknotes or their purchase against other means of payment registered in the name of the traveler or through the use of nonresident deposits lodged in local banks.
A foreigner working in Senegal may transfer his full net salary upon presenting the appropriate pay voucher, provided that the transfer takes place within three months of the pay period.
Exports and Export Proceeds
All exports to Israel are prohibited. With a few exceptions (e.g., gold, diamonds, fine pearls, precious and similar stones, plated or coated precious metals, articles made of these metals, and precious metal products), exports do not require prior authorization. The requirement for prior authorization for exports of cereals, groundnuts, fresh tomatoes, and jewelry was abolished in June 1994. Certain nontraditional exports are eligible for an export subsidy equivalent to 25 percent based on industrial value added at international prices. Proceeds from exports to foreign countries, including members of the WAMU and the Operations Account countries, must normally be collected within 120 days of the arrival of the goods at their destination and repatriated through BCEAO not later than one month after the due date. All export transactions exceeding CFAF 500,000 must be domiciled with an authorized intermediary bank.
Proceeds from Invisibles
Proceeds from transactions in invisibles with France (as defined above), Monaco, and the Operations Account countries may be retained. All amounts due from residents of other countries for services and all income earned in those countries from foreign assets must be collected and surrendered, if received in foreign currency, within one month of the due date or the date of receipt. Resident and nonresident travelers may bring in any amount of banknotes and coins issued by the BCEAO, the Bank of France, or any bank of issue maintaining an Operations Account with the French Treasury, as well as any amount of foreign banknotes and coins (except gold coins) of countries outside the Operations Account area. Residents bringing in foreign banknotes must declare them to customs upon entry and sell them to an authorized bank within eight days.
Capital movements between Senegal and France (as defined above), Monaco, and the Operations Account countries are free of exchange control; capital transfers to all other countries require the approval of the Ministry of Economy, Finance, and Planning, but capital receipts from such countries are permitted freely.
Controls are maintained over borrowing abroad, over inward direct investment and all outward investment, and over the issuing, advertising, or offering for sale of foreign securities in Senegal. Such operations require the prior authorization of the Minister of Economy, Finance, and Planning. Exempt from authorization, however, are operations in connection with (1) loans backed by a guarantee from the Senegalese Government, and (2) shares that are identical with, or may be substituted for, securities whose issuance or offering for sale in Senegal has previously been authorized. With the exception of controls over foreign securities, these measures do not apply to France, Monaco, member countries of the WAMU, and the Operations Account countries. Special controls are maintained also over imports and exports of gold, over the soliciting of funds for deposit with foreign private persons and foreign firms and institutions, and over publicity aimed at placing funds abroad or at subscribing to real estate and building operations abroad; these special controls also apply to France, Monaco, and the Operations Account countries.
All investments abroad by residents of Senegal require prior authorization from the Minister of Economy, Finance, and Planning;3 75 percent of such investments must be financed with borrowing from abroad. Foreign direct investments in Senegal4 must be declared to the Minister of Economy, Finance, and Planning before they are made. The Minister has two months from receiving the declaration to request postponement of the project. Both the making and the liquidating of direct and other investments, whether Senegalese investments abroad or foreign investments in Senegal, must be reported to the Minister of Economy, Finance, and Planning and the BCEAO within 20 days of each operation. Direct investments constitute investments implying control of a company or enterprise. Mere participation is not considered direct investment, provided that it does not exceed 20 percent of the capital of a company whose shares are quoted on a stock exchange. Lending abroad requires prior authorization from the Minister of Economy, Finance, and Planning.
Borrowing by residents from nonresidents requires prior authorization from the Minister of Economy, Finance, and Planning. The following are, however, exempt from this authorization: (1) loans constituting a direct investment, which are subject to prior declaration, as indicated above; and (2) loans contracted by authorized banks. The repayment of loans not constituting a direct investment requires the authorization of the Minister of Economy, Finance, and Planning if the loan itself was subject to such approval but is exempt because it did not require authorization.
The Investment Code provides various facilities and benefits for approved foreign investments in Senegal. Special facilities for export industries are established in the Dakar export processing zone.
Residents are free to hold, acquire, and dispose of gold in any form in Senegal. Imports and exports of gold (gold jewelry and gold materials) from or to any other country require prior authorization from the Minister of Economy, Finance, and Planning. Exempt from this requirement are (1) imports and exports by the Treasury or the BCEAO; (2) imports and exports of manufactured articles containing a minor quantity of gold (such as gold-filled or gold-plated articles); and (3) imports and exports by travelers of gold articles up to a combined weight of 200 grams. Brokers in precious metals require authorization from the Minister of Economy, Finance, and Planning to conduct their business. Imports of gold are subject to customs declaration. Purchases abroad of nonmonetary gold by brokers are subject to a 25 percent ad valorem tax. Commercial imports of gold jewelry require prior import authorization from the Minister of Commerce and Handicrafts; imports of ornaments require the prior approval of the Directorate of Handicrafts and the Directorate of Foreign Trade of the Ministry of Commerce and Handicrafts.
Changes During 1994
January 12. The CFA franc was devalued to CFAF 100 per F 1 from CFAF 50 per F 1.
Administration of Control
February 28. Ordinance Nos. 94–28 and 94–29, relating to financial relations with foreign entities and disputes pertaining to exchange control violations, respectively, were promulgated in order to standardize regulations within the WAMU.
Imports and Import Payments
January 10. The maximum import duty rate was reduced to 45 percent from 75 percent and a minimum duty of 5 percent was established. The duty on petroleum was reduced to 35 percent from 45 percent.
February 15. Ordinance No. 94–25 reduced the customs stamp tax applicable to all imported goods to a uniform rate of 5 percent.
June 1. Prior import authorization was abolished for the following products: cereals, gold jewelry and other jewelry, newspapers, kola nuts, jute bags, prerecorded tapes, and mineral and chemical fertilizers. The COSEC levy on imports used in the manufacture of goods for export was abolished.
September 1. Prior authorization for imports of tomato paste and polypropylene bags was abolished.
November 5. Prior authorization for imports of cement was abolished.
December 10. Restrictions on the import of vegetable oils were abolished.
Payments from Invisibles
June 10. The monopoly of the COSENAM in maritime transportation was abolished.
Exports and Export Proceeds
January 31. Following the devaluation of the CFA franc on January 12, 1994, Ordinance No. 94–19 eliminated export tax measures.
June 1. Prior authorization for exports of cereals, groundnuts, fresh tomatoes, and jewelry was abolished. The COSEC levy on exports was eliminated.
September 10. Prior authorization for exports of tomato concentrate was abolished.
The CFA franc is issued by the Central Bank of West African States (BCEAO) and is the common currency in Benin, Burkina Faso, Cote d’Ivoire, Mali, Niger, Senegal, and Togo.
Transfers between member countries of the WAMU are free of commission.
Including investments made through foreign companies that are directly or indirectly controlled by persons in Senegal and those made by overseas branches or subsidiaries of companies in Senegal.
Including those made by companies in Senegal that are directly or indirectly under foreign control and those made by branches or subsidiaries of foreign companies in Senegal.