Financial Sector Overview
Recent Economic Developments
Despite the threat of armed groups in the Sahel zone, Senegal remains a model of stability and democracy in Africa. The 2000 presidential election gave the country its first political change-over since independence. The economy of the second largest power in French-speaking West Africa after Côte d'Ivoire is dominated by the tertiary sector, which accounts for more than 60% of Gross Domestic Product (GDP). Recent oil and gas field discoveries are expected to increase the secondary sector's contribution to GDP in the near future. In 2017, GDP growth was estimated at 7.2% after reaching 6.5% in 2016, its highest level in the last 11 years. Senegal, like Côte d'Ivoire, has developed a programme entitled the Emerging Senegal Plan to implement transformative investments and reforms, especially aimed at improving the business climate.
Recent national accounts renovation projects undertaken by the National Agency of Statistics and Demography (ANSD) resulted in a 30% increase of 2014 GDP value. As a result, the ratio of public debt to GDP has fallen below 50%.
The Senegalese financial sector consists of 28 credit institutions, including 24 commercial banks and 4 financial institutions, 19 insurance companies (including 10 life insurance branches), and 208 Microfinance Institutions (MFIs). Like most African countries, the country’s financial sector is dominated by banks, which account for about 88% of the sector's assets, compared to 7% for MFIs and 4% for insurance companies. These financial institutions operate within a harmonized regulatory framework and are organized around several regional bodies, the most important being the Central Bank of West African States (BCEAO), the Banking Commission of the West African Economic and Monetary Union (WAEMU), the Regional Council for Public Savings and Financial Markets (CREPMF) and the Inter-African Conference on Insurance Markets (CIMA).
The Senegalese financial system remains the region’s second largest in terms number of financial institutions and market share of credit institutions.
There is no national financial market in Senegal, but the country shares a single financial market with the other 7 WAEMU countries, namely, the Regional Stock Exchange (BRVM) headquartered in Abidjan, Côte d'Ivoire. In 2017, 44 companies were listed on the BRVM, including 3 Senegalese companies (Sonatel, Total Senegal, and the Senegalese subsidiary of the Bank of Africa).
The banking sector dominates the Senegalese financial system with nearly 28 banks and financial institutions, 5,150 permanent employees, 412 branches across the country and 1.6 million bank accounts. Access to banking services remains low (18%) and total banking income accounts for one-fifth of all banks’ income in the West African sub-region under BCEAO supervision. Bank credit has steadily increased in recent years, mainly driven by the increase in credit to the private sector. In March 2018, it amounted to CFAF 3,915.7 billion (USD 7.1 billion), compared to CFAF 1,755.3 billion (USD 2.9 billion) in 2009, more than double the 2009 level. The majority of banks' assets are held by international and regional banks.
As mentioned in the latest WAEMU Banking Commission report, the liquidity deficits of the banking system observed in all WAEMU countries have further increased, especially with a significant variation for Senegal (CFAF +311 billion) and Côte d'Ivoire (CFAF +575 billion). High levels of non-performing loans weaken the sector and pose significant risks to the country's economy. In March 2018, the parliament passed a law on credit information bureaus. Other reforms undertaken to establish a commercial court are likely to improve banks’ risk management activities and promote credit growth.
Access to formal financial services remains low in Senegal. In 2017, the proportion of adults (aged 15 and above) with an account at a financial institution was 20.4%, while the average in sub-Saharan Africa was 32.8%. However, significant progress has been made in facilitating access to financial services via mobile phones. According to the latest World Bank's Global Findex survey (2018), about 31.8% of adults aged 15 and above in Senegal own a mobile money account compared to the sub-Saharan average (20.9%).
The informal financial sector, along with microfinance institutions, play a major role in financial inclusion in Senegal. With 208 decentralized financial systems, more than 2.5 million customers/members, outstanding savings above CFAF 285 billion, loans volume greater than CFAF 306 billion and a penetration rate of microfinance services at 18.4% of total population, Senegal is the leader in the WAEMU region in terms of financial services targeting the most vulnerable populations. In 2017, the sector contributed 10.4% to financing the national economy and 3.7% to the GDP. Outstanding loans in decentralized financial systems (DFS) totalled CFAF 359.7 billion (about USD 539.5 million) in the first quarter of 2018. A recent report by UNCDF (United Nations Capital Development Fund) revealed that microfinance institutions in Senegal have a greater presence in areas with high poverty rates compared to commercial banks. According to the report, these institutions provide services and products better aligned with the needs of people in rural areas.
The Senegalese government has drafted a financial inclusion strategy running until 2020, aimed at increasing the sector's performance through targeted actions and addressing constraints or weaknesses hindering the sector's development. These actions include: establishing a national microfinance fund; operationalizing the programme to promote Islamic microfinance; and, promoting digital finance through a renewed mobile banking project.
The Senegalese insurance market grew by 20% in 2017 and the sector achieved a cumulative turnover of CFAF 161.6 billion (about USD 258.6 million), all sectors combined. The insurance sector is made of 19 property and casualty insurance companies, compared to 18 in 2016, and 10 life insurance companies. The latter collected premiums estimated at CFAF 53.3 billion in 2017, a 16% increase year over year, according to data from the Association des Assureurs du Sénégal (AAS), an industry association for all insurance companies in Senegal. Growth is partly due to the use of Taxawuleen, a new joint casualty report enacted by the AAS to ease mobility and traffic. Nevertheless, insurance penetration in Senegal remains extremely low: about 1%, due to low income levels, poor industry reputation and insurers' lack of interest for micro-insurance.
Senegal hosts a branch of the Regional Stock Exchange (BRVM) headquartered in Côte d'Ivoire. Established in 1996, BRVM encompasses all eight member countries of the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Côte d'Ivoire, Guinea Bissau, Mali, Niger, Senegal and Togo. National branches ensure the effectiveness of real-time exchanges on the regional stock market. BRVM is considered to be the 6th largest stock exchange in Africa in terms of capitalization. As at 31 December 2017, only 3 companies incorporated in Senegal were listed on the regional exchange out of a total of 44 listed companies. The telecommunications company, Sonatel, a Senegalese subsidiary of the French Orange Group, has the largest market capitalization.
Social Welfare Scheme
Senegal passed a law in March 2018 establishing a secondary retirement pension scheme for civil servants and military officials. The Caisse de Sécurité Sociale (Social Security Fund - CSS) is the national body that collects premiums for work-related accidents and family benefits. Senegal is a member of CIPRES (Inter-African Conference of Social Welfare), which monitors and provides technical support to African social security funds (Caisses Africaines de Sécurité Sociale), comprising 15 French-speaking African countries.
The health insurance scheme covers only about 17% of the population. New reforms of the compulsory health insurance (AMO) introducing Universal Health Coverage (CMU), which came into force in March 2013, require employers with more than 300 employees to enrol their employees at a health insurance institution (IPM), guaranteeing health coverage. The 2003 law on mutual health insurance was passed to promote community health insurance schemes. Many people have decided to set up small groups with the aim of developing forms of social protection that best meet their needs. As is the case with micro-health insurance initiatives that bring together a wide variety of insurance systems for the poor and improve ease and access to care. Community health insurance are one of the most common forms of micro-insurance schemes. Senegal's objective through these reforms was to increase health coverage in the country from 20% to 65% by 2017.
Senegal’s private equity market is still in its infancy and recent discovery of oil and gas reserves in Senegal should benefit the country which also enjoys political stability and solid economic growth. In 2016, about USD 6.5 million was raised for investments in Senegal by venture capital funds.
Contact Details Information of Banks operating in Senegal