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Country Commercial Guides for FY 2000: Senegal Report prepared by U.S. Embassy Dakar, released July 1999    Note*

CHAPTER IV. MARKETING U.S. PRODUCTS AND SERVICES

Distribution and Sales Channels

The capital city Dakar is the hub of economic activity and the largest consumer market in Senegal. About 38 % of Senegal's population live in urban areas and 25 % alone is concentrated in Dakar.

Distribution occurs both by modern and by traditional systems. The modern sector is dominated by a few large French-owned import-export firms that cover all aspects of trade from importing to retailing, but their number is decreasing. Lebanese merchants play an important role in the import-export business. Existing alongside these companies are extremely competitive small-scale traders specializing in the wholesale and retail distribution of various consumer goods. Senegalese merchants selling popular consumer goods, such as textiles and electronics, are gradually replacing them. A limited number of larger retail stores, such as supermarkets, deal mostly in imported goods.

The traditional or informal sector, in vibrant expansion in Senegal, engages roughly 80% of the workforce. Informal traders in municipal and street markets carry out a sizable portion of domestic trade. Sandaga, a sprawling unregulated market in the heart of Dakar, is the capital's principal distribution center for manufactured goods ranging from textiles, footwear, and cosmetics to high-tech stereo equipment. Street vendors make up a dynamic, if somewhat marginalized, sub-component of the informal sector.

Agents and Distributors

The specific type of representation that a U.S. firm establishes in Senegal must be tailored to fit the individual requirements of the product and its potential market. U.S. firms may employ the services of an agent, appoint a distributor or dealer, and/or establish a direct sales branch or subsidiary. Preferably, the agent or the distributor should be a local business/firm, fluent in French and aware of Senegal's business practices. If the product requires some servicing, the U.S. exporter should make a reasonable inventory of spare parts available to his agent or distributor. U.S. companies are also advised to provide brochures and marketing literature in French.

U.S. businesses may approach the U.S. Embassy in Dakar through the Department of Commerce and its district offices in the United States to request an agent/distributor search. The cost of the report is USD 250. The Embassy also offers Gold Key service for U.S. companies that wish to gain first-hand knowledge of the country before appointing an agent or a distributor. Information regarding the Gold Key is available through our web page at www.dakarcom.com.

Franchising

Limited to international car rental agencies until a recent time, the franchising market is starting to raise the interest of local entrepreneurs. A fast food franchise that recently in Dakar has been a success. A U.S. company specialized in the supply of office products has entered into a master franchise agreement with a Senegalese firm and, the first store should be operational in September. A delegation of Senegalese businesspersons visited the Franchise Expo in Orlando in May 2000.

Direct Marketing

The difficulty of identifying markets by companies largely unfamiliar with Senegalese culture and the local business environment hampers direct marketing efforts.

Joint Ventures/Licensing

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 typically have little equity to offer. Joint venture partnership can take any of the forms listed in the next section.

Senegalese law does not contain any specific provision for licensing. The primary consideration is the formalization of a remittance procedure for any fees and royalties to the licenser, in compliance with local fiscal laws. In Senegal, licensing agreements are common in the tobacco, food and soft drink industries. For instance, Philip Morris manufactures products under license, as does Nestle (for some products) and Coca-Cola.

Steps to Establishing an Office

The "Guichet Unique, " or one-stop-shop at the Ministry of Finance is the first step for foreign investors towards establishing a business in Senegal and qualifying for investment incentives. As a one-stop-shop, the "Guichet Unique" was originally created to centralize all the paperwork and reduce the amount of time required for registration to the Investment Code. However, bureaucratic obstacles still exist and have somewhat lengthened the process. The Investor Road Map study commissioned by USAID and the World Bank indicates that the foreign investor has to navigate through 31 different offices from 9 to 24 months to establish his company. Committed to rationalizing the registration process and to regaining an investor friendly image, the newly elected government of Senegal has announced the imminent creation of the Agency for the Promotion of Investments and Infrastructure in place of the "Guichet Unique".

Foreign investors need also the assistance of a "notaire" in order to register and incorporate their company under the newly created OHADA initiative to harmonize commercial codes in Francophone Africa. The most common legal forms of incorporation are as the branch of a foreign company ("succursale"), the Limited Liability Company ("Société à Responsabilité Limitée - SARL") and the Public Corporation ("Société Anonyme - SA"). Once registered, a Branch is regarded as a Senegalese judicial entity.

All SARLs must have a minimum capital of CFA 1,000,000 (approx. USD 1,400) and at least one shareholder. The minimum capital required to create a public corporation is CFA 10 million (approx. USD 14,000) with a minimum of one shareholder.

Other business forms include sole proprietorship, regional office, local agency and distributorship.

Selling Factors/Techniques

Most local distributors of imported merchandise expect their suppliers to provide advertising and promotional support, particularly when introducing a new product or brand name. Sales promotion material and technical documentation should be in French. There is no mail order marketing.

Advertising and Trade Promotion

Although advertising has not yet achieved the sophistication typical of European and North American markets, the U.S. exporter is offered a wide choice of media (e.g., television, newspapers, radio and billboards) for promoting products to potential customers.

Television is an effective medium of advertising, and the costs are relatively modest. Advertising on billboards has become very popular and it is not unusual to witness a marketing war between competing companies/brands via billboards. Sponsoring a sports team, local bands, and music stars are also effective tactics. The advice of local market research organizations should be sought before embarking on a publicity campaign. Contact information for Senegalese media is listed in appendix E. There are half a dozen newspapers published regularly in Senegal, but the reading public is relatively limited and confined to Dakar. The quasi-official "Le Soleil" is a daily. The major popular independent newspapers include "Sud Quotidien," "Wal Fadjri," the satirical "Cafard Libéré," "Le Témoin," and "Le Matin." National newspapers are in French with an occasional insert in ethnic languages.

Various trade organizations publish bulletins and newsletters such as those of the Dakar Chamber of Commerce, and the periodical "Entreprendre" issued by the National Council of Business Leaders.

Several Europe-based magazines enjoy a wide circulation, including "Jeune Afrique," "L'Autre Afrique," "Paris Match," "L'Express," "Le Point," "L'Evènement Du Jeudi," as well as the European editions of "Time Magazine", "Newsweek" and "The Economist."

Better economic performance has prompted a resurgence of trade fairs and exhibitions, an excellent opportunity for U.S. companies to advertise their products.

Pricing Products

U.S. exporters should price their products on a CIF basis. Liberal credit terms and a vast array of financing packages (e.g., supplier credit) made available by European competitors - especially French - has always constituted a disadvantage for U.S. firms. It is recommended that new-to-the market U.S. exporters request an irrevocable confirmed letter of credit. In some cases, large Senegalese importers have sources of foreign exchange outside Senegal and can offer credit documents issued by non-Senegalese banks.

To help U.S. exporters formulate sound credit policies applicable to local markets, credit information on individual Senegalese firms is available through the U.S. Department of Commerce's International Company Profile, available from any district office in the United States. Cost of such a report is USD 125.

Sales Service/Customer Support

After-sales support and service is critical for sophisticated and heavy industrial equipment such as telecommunications big-ticket items, industrial machinery, computer hardware and photocopiers. Product recalls are virtually unknown in Senegal.

Selling To the Government

Although government procurement is being reduced due to privatizations of key parastatals, it remains a significant factor in the domestic market. Nearly all such purchasing is done through competitive bidding. This includes major infrastructure projects financed by multilateral lending organizations such as the World Bank and its affiliate the International Finance Corporation (IFC), the African Development Bank (AFDB) and the Islamic Development Bank (IDB). Calls for bids are published in the local newspapers, and occasionally internationally.

Prospective bidders may learn of upcoming World Bank projects by subscribing to the World Bank's monthly operational summary. Descriptions of newly approved AFDB projects are also available on a subscription basis. For further information on AFDB projects, U.S. companies may contact Ms. Barbara White, Project Manager AFDB, Office of Finance, U.S. Department of Commerce, Washington, DC 20230.

The U.S. Embassy in Dakar monitors requests for tenders and reports to the U.S. Department of Commerce those that may be of interest to U.S. suppliers. To help achieve a wide distribution of these bids, the embassy also makes them available on its web site at http://www.dakarcom.com. Bid specifications are usually in French with bidders also required to submit proposals in French.

Protecting Your Product from IPR Infringement

Senegal maintains standard intellectual property protection safeguards, and is a signatory to the Bern Copyright Convention. Senegal is a member of the African Organization of Intellectual Property (OAPI), a grouping of thirteen Francophone African countries, which has established among its member states a common system for obtaining and maintaining protection for patents, trademarks and industrial designs. Therefore, rights registered in one member country are valid in all. Patent validity is twenty years. Registered trademarks are protected for twenty years at each registration, renewable without limit.

U.S. businesses may contact OAPI Dakar's headquarters at:

Ministère des Mines et de l'Industrie
Mr. Doudou Sagna, Chef Service Propriété Intellectuelle
  et de la Technologie
122 Bis Avenue André Peytavin
Dakar, Senegal
Tel: 221-822-0443
Fax: 221-823-1404

Redress for infringement of intellectual property rights can be sought through the Senegalese court system.

Need for a Local Attorney

Once the decision to open a business in Senegal is made, the U.S. businessman will require legal counsel and a "notaire" (a notary -- in French practice, a specialist in contracts and legal documents) for all the legal formalities that lead to the incorporation of the company. The Embassy has available a list of lawyers and notaries. It is advisable that U.S. firms approach firms specializing in financial and tax advisory services. Well-qualified representatives of major U.S. and international auditing and business consulting firms are located in Senegal.