La Fourchette is a central Dakar specialty. The restaurant is full of Dakar’s social class and serves a completely enchanting menu. Many patrons come from all over the world but not just for the tourism. Instead, the restaurant sees a growing group of foreign business people. It is an odd transition for this restaurant, but it is representative of Senegal’s capital, Dakar.
A walk from the ferry station that takes you from Ile de Goree to the Central Market confuses the average Senegalese and foreigner alike. Senegalese traders, Lebanese importers, and Guinea-Bissau businessmen and women crowd different parts of the city, a surreal image of the changing business environment. Days are full of confusion. But confusion is opportunity, says Cheikh, a local clothing vendor in the Central Market. But only if you have patience and determination to learn the market and culture, he adds. That is easier said than done.
Here are my favorite sectors that offer great investment opportunities in Senegal:
Telecom and ICT
The potential of telecom in Senegal is unknown. This can be good and bad. The regional nature of business requires the use of mobile services, as indicated by a near 90 percent mobile penetration rate. The sector has seen some interest in ICT (Information and Communications Technology) for advertising and mobile games, however, not enough to attract any substantial investors. The sector also sporadically battles the government on tax policy and regulation. What it all means is not clear to anyone. But the potential is hard to ignore when most Senegalese are walking around a mobile phone in hand, talking English to one foreigner, French to another, and Wolof to a Senegalese compatriot.
Oil & Gas (and Mining) Services
Senegal’s ambition to boost oil exploration and investment has drawn the attention of foreign oil, gas and mining (OGM) companies. Planned exploration has focused on the productive Mauritania-Senegal-Guinea Bissau Basin. The basin – as its name indicates – covers a few neighboring countries. OGM companies regard the basin as an entry point into West Africa and an opportunity to build a regional presence.
OGM service companies bring the same ambitions to the region, and companies look to foreign investors to aid their expansion. Purchasing additional drilling equipment does not come at a cheap price. But, if the industry’s success matches just half of Senegal’s economic ambitions for it, the returns will be worth substantially more than the cost.
Heavy Industry & Construction
New construction is evident across Senegal’s main cities as authorities look to upgrade existing infrastructure, from ports to roads. This government mandate drives the demand for the heavy industry supplies, particularly in the cement sector. A strong regional demand for construction supplies adds another significant boost to the sector. “Dilapidated transport infrastructure requires capable and competent providers, a reason the strongest companies can earn great returns”, says an executive from transport logistics company Bollore Africa Logistics, especially in cement and steel sectors. “Regional production and supply also provides an opportunity for supplying differing price points”, he adds.
Logistics & Warehousing
Poor transport infrastructure is a common theme in this article But it is this theme that speaks to the emerging opportunities in the aforementioned sectors. Western Africa’s development is very much regional due to the size of countries and the inter-connectivity of commerce. “Regionalizing” your investments drives returns, says the Bollore executive, because the providers and customers are regionalized. Sitting on Ile de Gore in Dakar, traders discuss how they found gems in Mauritania but sold them in Senegal. And travellers discuss the changing dynamics between parts of West Africa. To be Senegalese says a local waiting for a flight to Cape Verde’s capital, Praia, may just mean you hold a Senegalese passport but your parents are from elsewhere. It is true that the diverse nature of business reflects the stories of the people it serves.
Reliable warehousing is a challenge in a country still characterized by sporadic power outages. It is not unusual to spend a couple of hours in the dark. Dakar residents regularly laugh off the outages as the costs of doing business and living in the city. But businesspeople and investors alike know power outages mean a loss of goods and revenue. Addressing these local shortcoming raises margins and grows your customer base. Certain norms, says the Bollore executive, cannot be universal, especially for business.
Transport vehicles can be added to this category. The potential of locally produced vehicles is unexpected but real in this country. Asian imports still come in droves. But the local production of certain vehicles has carved out a niche through notable marketing and distribution networks.
Banking and Finance
Some investors believe that Senegal can position itself as a center for Islamic finance, as a country with an approximate 95 percent Muslim population. About 54 percent of West Africa’s population is Muslim.
The eight-country West African Economic and Monetary Union (established in 1994 promote economic integration among countries that use the same CFA franc currency) is symbolically led by Senegal, a country that rises above the rest for its stability, specifically after Senegal elected a new president in 2012. Former President Abdoulaye Wade’s attempt to remain in office was undercut by protests and the Senegalese wanting to demonstrate the strength of their democracy.
President Macky Sall is reviewing the previous administration and cutting spending to raise investor confidence. Declining yields on Senegalese bonds speaks to the changing image of the country. The presence of international bankers surveying the local landscape also emphasizes the early success of policy changes. Time will tell if this sector (or any other sector) has truly found its way in West Africa. Until then, it is all high potential and risk. But, then again, so is every other investment.