SENEGAL: INPUT FOR 2006 PRESIDENT'S REPORT ON

UNCLAS SECTION 01 OF 03 DAKAR 000604 SIPDIS SIPDIS STATE FOR AF/EPS, EB/TPP/BTA, DRL/PHD, INR/AA AND AF/W STATE PLS PASS USTR AID/W FOR AFR/WA TREASURY FOR SONIA RENANDO USDOC FOR 4510/OA/PMICHELINI, AROBINSON-MORGAN/KBOYD USDOC FOR 3131/CS/ANESA/OIO/BORR/GLITMAN/MSTAUNTON ACCRA FOR USAID/WARP PARIS FOR POL - D'ELIA PARIS OPLS PASS USOECD E.O. 12958: N/A TAGS: ETRD EAGR ECON PHUM SG SUBJECT: SENEGAL: INPUT FOR 2006 PRESIDENT'S REPORT ON AGOA REF: STATE 026707 ¶1. Embassy Dakar's submission for the 2006 President's Report on the African Growth and Opportunity Act (AGOA) for Senegal follows. MARKET ECONOMY /ECONOMIC REFORM/TRADE LIBERALIZATION -------------- -------------- ¶2. Senegal's market-based economy is heavily dependent on agriculture, with over 60 percent of the population depending on it. Principal foreign earnings derive from remittances, fish, phosphates, tourism, peanuts and services. The economy grew by 5.1 percent in 2005. During the year, Senegal finalized the privatization of SONACOS, the national peanut-processing parastatal. Privatization of the electricity parastatal, Senelec, remains halted pending improvements to its balance sheet. The GOS is in negotiations with an Indian syndicate and with Chinese investors on divesting the government's majority interest in Industries Chimiques du Senegal (ICS),a phosphate processor and the country's largest industrial concern. ¶3. Senegal developed an Accelerated Growth (AG) Strategy aimed at achieving at least a 7.5 percent growth rate for 2006-2015. Coordinated by Senegal's Investment Promotion Agency (APIX),the AG strategy encourages public-private partnerships in the agro-industry, fishery, tourism, textile and information technology sectors. In 2005, the GOS also established Senegal's Agency for Export Promotion ASEPEX); however, as of March 2006, it is not yet fully operational. Foreign investors still face an unstable regulatory environment and weak commercial law enforcement due to a lack of resources and specialized judicial expertise. ¶4. In July 2005, Dakar hosted the Fourth AGOA Forum to promote diversified and expanded trade between Africa and the U.S. Public and private sector representatives of the 37 AGOA eligible countries attended the three-day Forum. Discussion topics included U.S. market access for high- value specialty products, energy development and oil exploration in Sub-Saharan Africa and AGOA customs requirements. �00A;¶5. The Animal, Plant and Health Inspection Service (APHIS) continued to assist West Africa's agriculturalists to address Sanitary and Phyto-Sanitary (SPS) issues and to organize regional harmonization of SPS measures. At the regional level, Senegal participated in the submission of two Pest Risk Assessments (PRAs) for papayas and mangos to APHIS in Accra. At the national level, three PRAs for cherry tomatoes, asparagus and melons were submitted to APHIS in Dakar and are still waiting approval. The waiting time for approval is estimated to be from 18 months up to five years. In order to decrease the approval waiting time, APHIS will send an expert from Senegal's DPV (Plant Health Service) to APHIS' Center for Plant Health Science and Technology (CPHST) in Raleigh, North Carolina in 2006 as a Cochran Fellow. ¶6. In November 2005, USAID launched the West African Trade Hub (WATH) - Dakar: a resource center that provides assistance to West African businesses, government, and regional organizations to improve trade systems, boost exports and manage 15 regionally embedded AGOA resource centers. In February 2006, WATH organized a business/HACCP training session for regional seafood exporters from The Gambia, Senegal, Cape Verde, and Mauritania; organized a private showing in Boston, New York, and Miami of fish and seafood produced by seven different West African companies; managed a booth presentation at the International Boston Seafood show in March; and is facilitating negotiations between a Senegalese tuna processing company and a potential American distributor. ¶7. In early 2006, USAID launched the Support for Accelerated Growth and Increased Competitiveness (SAGIC) DAKAR 00000604 002 OF 003 program to increase trade with North America under AGOA, Europe and Africa. SAGIC will increase exports in priority sectors, develop public-private partnerships (PPPs,) and support policy reforms to improve the business environment. ¶8. Senegal continues to work within the West Afriacn Economic and Monetary Union (WAEMU or UEMOA),upholding the Common External Tariff (CET) for regional trade of goods and services. OPENNESS TO FOREIGN INVESTMENT/COMMERCIAL DISPUTES -------------- -------------- ¶9. Senegal's investment code provides basic guarantees for the repatriation of profit and capital and equality of treatment. It also specifies tax and customs exemptions according to the size of the investment, classification of the investor, and location. In recent history, there have been no major expropriations. Senegal is a member of the International Center for the Settlement of Investment Disputes under the Washington Convention. The GOS accepts binding foreign arbitration of investment disputes and foreign creditors receive equal treatment under Senegalese bankruptcy law in making claims against liquidated assets. The Senegalese Civil Code provides national treatment and non-discrimination against foreign-owned business' property rights. ¶10. The U.S. Chief of Mission, with strong support from USAID/Senegal, chairs the Private Sector Working Group, which worked intensively this year to strengthen the business enabling environment in Senegal. This group elaborated a set of common policy messages that donors are communicating in their dialogue with the GOS. USAID also carried out important preliminary work to assess the business environment by conducting a survey of the American business community and an analysis of economic growth stakeholders. ¶11. The Millennium Challenge Corporation (MCC) is reviewing Senegal's USD 1.2 billion proposal to build an industrial platform 25 miles east of Dakar to promote economic growth and alleviate congestion in the capital, where 80 percent of Senegal's industry is based. RULE OF LAW/POLITICAL PLURALISM/ANTI-CORRUPTION -------------- -- ¶12. Senegalese authorities have initiated reforms to strengthen rule-of-law, transparency, and anti-corruption programs. With Support form the U.S. Department of Homeland Security, Senegalese Customs has initiated an action plan to combat fraud. Senegal is also taking steps to improve the legal and judicial environment, including enhanced training for magistrates and commercial law practitioners, establishment of an arbitration court, and new recovery and enforcement procedures consistent with OHADA. Senegal is a signatory to the UN Anti-Corruption Convention. POVERTY REDUCTION -------------- ¶13. Having received debt forgiveness status in 2004 for completing the Heavily Indebted Poor Countries (HIPC) program and debt-forgiveness from the international financial institutions in 2005, Senegal has developed a post-HIPC plan to generate poverty reduction priorities over the next five years. Of the CFA 43.1 billion (USD 78.4 million) collected from HIPC savings, the GOS allocated CFA 4.1 billion (USD 7.5 million) and CFA 4.4 billion (USD 8 million) to improve operating expenditures for education and health, respectively. The remaining CFA 34.5 billion (USD 62.7 million) will be invested in the construction of schools and health centers, infrastructure and agriculture projects, and credit programs targeting women in rural areas. HUMAN RIGHTS/LABOR/CHILD LABOR -------------- ¶14. Senegal is a vibrant democracy with no history of DAKAR 00000604 003 OF 003 coup d'etats or military government. Separatist activity in the southern Casamance region has declined, with the signing of a truce on December 30, 2004. Human rights organizations expressed concern about the July 2005 arrest of former Prime Minister Idrissa Seck arrest on state security and embezzlement charges. Seck released in February 2006 but may yet face illegal enrichment charges. JACKSON