Senegal has a long tradition of state ownership. At beginning of the privatization program (in 1987) the State portfolio consisted of 87 enterprises. However, over the past 20 years Senegal has privatized a large proportion of the assets in the SOE portfolio. By the end of 2004, 32 companies (or parts of companies) had been privatized, and 21 had been liquidated (including 8 where liquidation is still on-going).
The current portfolio of public sector companies is presented in Tables 1-3. It includes many important large economic entities in Senegal, including all of the major infrastructure assets. The following discussion reviews both majority owned and minority-owned positions.
The portfolio includes 24 commercial companies with majority state ownership. These companies are governed by Law 90-07 on public enterprises, which defines three types of public enterprises1:
National Companies (Sociétés Nationales). Sociétés Nationales are standard public limited companies (sociétés anonymes), where the State (or other state bodies) holds 100 percent of capital. Statutes are fixed by decree.
There are currently 10 companies with the status of société nationale, representing many of the major infrastructure companies in Senegal.The three largest companies (by capital) in this group are SENELEC (the electricity utility), SONES (the water distribution company, whose assets are managed by a separate company, SDE), and SNCS, the national railway.
Majority state-owned public companies(Sociétés anonymes à participation publique majoritaire). Majority state-owned companies are also public limited companies in which one or several state bodies own directly or indirectly more than 50 percent of capital. There are 14 companies remaining in the State portfolio (see Table 1), although all are relatively small.
As general rule, the corporate governance for sociétés nationales and sociétés anonymes à participation publique majoritaire both follow standard company law.2 Important exceptions will be highlighted below.
Public Establishments (Établissements Publics à Caractère Industriel et Commercial, EPICs). EPICs are “specialized legal entities, with financial autonomy”, with no private founding capital. There are 35 EPICs, including 20 hospitals. They do not fall under the standard governance regime, and their statutes are set by decree. Because they include a variety of non-commercial entities, they are not included in the analysis in this report.3
The State also owns minority ownership positions in as many as 35 companies (Sociétés a Participation Publique Minoritaire). Data for 12 companies (for which data was available) are presented in Table 2. In general these companies are the results of privatization transactions, where the State has opted to keep a minority ownership stake in the company. The minority stake is frequently quite large – in five companies it is larger than 40 percent, and in nine companies it is larger than 20 percent.
This group includes many of the largest enterprises in Senegal, including ICS (Industries Chimiques Du Sénégal, phosphate mining and processing), SONATEL the fixed-line and mobile telephone operator), and SONACOS (agroindustry). These companies are not governed by the public enterprises law (Law 90-07) and are treated as completely private companies.
Banks are an important subset of companies in which the State owns a minority stake (see Table 3). All of the former majority-owned state banks have been privatized over the past several years, through sales to large international banks. No commercial bank is now majority state-owned. However, seven of the banks have at least some State ownership, and two have additional regional government ownership.
The legal framework for SOEs consists of two major laws: Law 90-07 of 26 June 1990, which is the basic law for enterprises from the public sector, and Acte Uniforme de OHADA Relatif au Droit des Sociétés Commerciales et du Groupement d’intérêt économique, or AUSCGIE, which governs all private sector enterprises. AUSGIE applies in the absence of any specific provisions in Law 90-07.
Law 90-07 of 1990 is the fundamental law governing public enterprises. The law reformed the existing governing structure of public enterprises, and was designed to simplify the ownership framework and increase the autonomy of public enterprises. The law was intended to “allow the creation of a team that could provide a new dynamism in public enterprises and to improve their productive potential.” The law:
Defined the three distinct types of SOEs
Restructured the ownership framework for public companies and gave them more “autonomy” by eliminating the former ownership entity, the Center of Public Establishments (Centre des Établissements Publics), and its executing agencies, the Central Accounting Agency (l'Agence Comptable Centrale des Établissements Publics) and Control of Financial Operations (le Contrôle des Opérations Financières).
Changed the board structure of SOEs, by adding two members “chosen for their professional experience, limiting the number of “consulting state representatives”.
Applied private sector company law to majority-owned companies.
Streamlined the control structures. All a priori controls on SOEs were removed, and a new focus was placed on simpler ex-post controls.
Act on Commercial Companies
Senegal’s legal system is based on French civil law. The UEMOA zone has adopted the legal framework OHADA (Organization for Harmonization of Business Laws in Africa). OHADA countries share common commercial laws. As a result, company law is set at the community level, and not at the national level.
In Senegal the main statute that governs companies is the Uniform OHADA Act on company law (Acte Uniforme de OHADA Relatif au Droit des Sociétés Commerciales et du Groupement d’Intérêt Économique, or AUSCGIE), adopted in 1997. There is no regulatory body responsible for enforcement of the company law per se.
Table 1: State-Owned Enterprises in Senegal (excluding banks)