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Assessment of the Corporate Governance of

State – Owned Enterprises in Senegal

September 15, 2006

Corporate Governance Policy Practice

Financial and Private Sector Development Vice Presidency

World Bank


AUSCGIE: Acte Uniforme de OHADA relatif au droit des sociétés commerciales et du Groupement d’intérêt économique, or Uniform OHADA Act on the company law.

BCEAO: Banque Centrale des Etats de l'Afrique de l'Ouest, or the West African Central Bank

BRVM: La Bourse Régionale des Valeurs Mobilières, the regional stock exchange based in Abidjan.

CF : Contrôle Financier

CVCCEP : Commission de Vérification des Comptes et de Contrôle des Entreprises Publiques

CREPMF: Conseil Régional de l’Epargne Publique et des Marchés Financiers, the regional securities regulator based in Abidjan.

GIE: Groupements d’Intérêt Économique, or Economic Interest Groups

IGE : Inspection Générale d’Etat

IFRS / IAS: International Financial Reporting Standards (before: International Accounting Standards)

ISA: International Standards on Auditing

OHADA: Organisation d’Harmonisation de Droit Africain

ROSC: Report on Observance of Standards and Codes

SA: Société Anonyme, or public limited company

SARL: Société à Responsabilité Limitée, or Limited Liability Company

SOE: State-owned enterprise

SYSCOA: Système Comptable Ouest Africain, or the West African Accounting Standards.

UEMOA: Etats Membres de l’Union Economique et Monétaire de l’Afrique de l’Ouest, or West African Monetary and Economic Union.

Table of Contents


Table of Contents 3

Background and Introduction 1

Overview of the SOE Governance Framework in Senegal 2

The Portfolio of State-Owned Enterprises 2

Majority-Owned Companies 2

Minority-Owned Companies 2

Privatized Banks 3

Legal Framework 3

Law 90-07 3

Act on Commercial Companies 3

Institutional Framework for Ownership and Control 6

Ownership Entities 6

Control bodies 6

Ownership Functions 7

Key Issues and Policy Recommendations 9

Lack of a strong ownership entity 9

Lack of any clear ownership policy 10

Insufficient SOE boards of directors 11

Low levels of transparency 12

A Country Action Plan 13

Guideline - By - Guideline Review of Corporate Governance of State-Owned Enterprises 14

Section I: Ensuring an Effective Legal and Regulatory Framework for SOEs 14

Section II: The state Acting As Owner 16

Section III: Equitable treatment of Shareholders 18

Section IV: Relations with Stakeholders 19

Section V: Transparency and Disclosure 20

Section VI: The responsibilities of the boards of state-Owned Enterprises 21

Background and Introduction

Corporate governance refers to the structures and processes for the direction and control of companies. Corporate governance concerns the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders. Good corporate governance contributes to sustainable economic development by enhancing the company performance and increasing access to outside capital.

For many countries and governments, corporate governance has not been seen as a high priority reform issue, because of the relatively few local companies held by many shareholders, or listed on a stock exchange. However, there is considerable interest in the corporate governance of state owned enterprises (SOEs). In SOEs, state ownership and government control present inherent governance challenges that contribute to poor performance, and efforts to improve their governance have lagged that of the private sector. The focus of SOE reform has been on privatization, which remains the most direct solution to the problems of state ownership. However it has become clear that for both political and economic reasons the state will remain a major owner of productive assets in a number of economies for years to come. Extensive experience with privatization has also confirmed the important role that corporate governance can play before, during and after the state divests its assets.

The OECD Guidelines on the Corporate Governance of State Owned-Enterprises outlines this framework and what SOEs and governments need to do to ensure good corporate governance. Current thinking on SOE corporate governance reform incorporates lessons on how to improve corporate governance in the private sector, and the international consensus that has developed regarding corporate governance reform. It also builds on reforms to SOE administration and management in the 1970s and 1980s, and later efforts to prepare SOEs for privatization. Better corporate governance should result in companies operating on a more commercial basis, with improved profitability, increased transparency, more accountable boards and management, improved internal controls, and sustainable employment. Overall, corporate governance provides a coherent and tested framework for addressing key weaknesses of SOEs.

This assessment follows the OECD Guidelines and defines an SOE as any enterprises with state ownership, a distinct legal form (separate from the public administration) and having commercial sales and revenues. This definition includes banks and financial institutions, as well as industrial companies and utilities. It also includes privatized companies with minority state ownership.

This assessment was carried out at the invitation of the Ministry of Economy and Finance, at the same time as the Corporate Governance ROSC. The report was drafted by Alex Berg of the World Bank’s Corporate Governance Policy Practice, and is based on a questionnaire completed by Africa Investment and Business Advisers (AfIBA). The due diligence mission was carried out in May 2006. The project received significant support from the IFC representative office in Dakar (Ms. Aida der Hovanessian), and the Global Corporate Governance Forum. Peer reviewers included Mr. Mazen Bouri (AFTPS, World Bank), Ghita Alderman (Global Corporate Governance Forum, IFC), and Fily Sissoko (AFTFM, World Bank).

The assessment contains the following sections:

  • An overview of the SOE governance framework in Senegal, including the legal framework, a description of the current SOE portfolio, and the institutional framework for ownership and control;

  • A detailed review of the key SOE governance issues, including detailed policy recommendations;

  • A detailed review of SOE governance in Senegal relative to the OECD Guidelines on SOE Governance.

This report should be read in concert with two highly related studies: the Accounting and Auditing ROSC for Senegal (published May 2005) and the Corporate Governance ROSC (forthcoming). These reports review many of the basic corporate governance issues in Senegal, many of which are not repeated here.

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