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Key Issues and Policy Recommendations



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Key Issues and Policy Recommendations


SOE governance in Senegal follows many aspects of good practice. Many of the recommendations contained in the OECD Guidelines were implemented during the last public enterprise reform (the passage of Law 90-07 in 1990):

  • The State has largely separated the ownership and regulatory functions for many of the large SOEs. Independent regulatory authorities have been created in a number of areas.

  • SOEs are in general subject to the same laws and regulations as other companies.

  • SOEs do not appear to be provided with special lines of credit (although do appear to be allowed to build up major arrears to social insurance funds).

  • The State is not generally involved in the day-to-day management of SOEs.

  • SOEs are subject to the same accounting and auditing standards as listed companies.

However, there are a number of areas where the SOE governance framework diverges from international good practice, as identified in the review of the OECD Guidelines below.

Lack of a strong ownership entity


As noted in the description of the institutional framework, the nominal body responsible for exercising ownership (the CGCPE) is weak, due to a lack of resources and limited authority. Senegal’s dual ownership structure is quite common worldwide, but is now being supplanted by a move towards more centralization. France employed this ownership model before its recent reform (and the creation of the new Agence de Participation de l’Etat).

The current framework suffers from a number of problems:



  • Responsibility for most ownership functions is relatively diffuse, particularly for the nomination of directors. Nobody appears to be truly responsible for making sure that a high-quality governance framework is in place.

  • The accountability of the board and of each oversight body is relatively low. The CGCPE receives annual reports from majority or wholly-owned companies, and prepares an internal report summarizing the situation of each SOE, but cannot take action.

  • The control bodies report to a variety of entities, notably the office of the President, which has only ad hoc management responsibilities and can draft corrective decrees, but can only indirectly oversee implementation.

  • There is active consultation between Ministers and other senior government officials (on the one hand) and board members – and in fact most board members are senior government officials. As a result, the State’s ability to give direction to the SOE or its board is NOT limited to strategic issues and policies, and is not publicly disclosed. The presence of a contrôleur financière as a (non-voting) member of the board, with a reporting responsibility to the Presidential administration, gives the chief of state the ability (or gives the perception of the ability) to directly intervene as needed in the affairs of the company.

  • There is no standardized public reporting on SOEs, and no aggregate reporting. While some annual reports are publicly available (e.g. SENELEC), obtaining financial and non-financial information about most SOEs is extremely difficult in practice.

  • The role of the Ministry of Finance and Economy also raises some significant issues – as in many countries, representatives of the Ministry are under pressure to maintain / increase tax revenues, which may be in conflict with their ownership role in building valuable companies.

  • Perhaps most important, the resources devoted to the ownership function are very small. The CGCPE has a professional staff of four.

Recommendation 1: Create a strong owner of SOEs. Several options exist to build a strong owner (henceforth the “ownership entity”). These include:

  • Strengthen the authority and autonomy of the CGCPE by giving it the authority and resources to develop a consistent ownership policy, monitor company performance, and prepare a public report on the state portfolio. The Line Ministries would continue to be involved in the board nomination process, and would work with the CGCPE to explicitly set commercial and non-commercial goals for each company in the portfolio.

  • A further step would be to remove the influence of the Line Ministries by removing their formal influence and authority over SOEs and concentrating all ownership functions (including board nominations and goal-setting) in the MOFE/CGCPE.

  • The final step (and the option most consistent with evolving international good practice) is to create a central independent ownership agency reporting directly to parliament, along the lines of the Agence de Participation de l’Etat in France (whose lessons of experience should be carefully studied).

The ownership entity should have authority and responsibility for all types of state ownership shares of commercial companies, including both majority and minority-owned companies.

Lack of any clear ownership policy


There is also no formal ownership policy of the State. For about 20 years the only formal policy of the State vis-à-vis SOEs has been to privatize them. This policy has been successful in that it has resulted in a significant reduction of the public sector. However, the State is likely to own holdings in an important portfolio of companies for many years to come.

The OECD Guidelines place special emphasis on the idea that “active and informed ownership by the State” will result from a clear and transparent ownership strategy, which includes an ownership strategy, a structured board nomination process, and exercise of established ownership rights.

Government intervention in day-to-day management does appear to be relatively limited in Senegal. There were no reports of companies under the direct operational control of Ministries or other government agencies. The Ministry of Economy and Finance does consistently exercise ownership rights.

However, in Senegal, there is no clear and consistent ownership strategy or rationale, and no policy of how the state should exercise its responsibilities. The process for nominating board members is not clear or well-structured. Members are appointed through each Ministry’s internal processes, which are not transparent. Many outside observers commented that many board members (especially those appointed by the line Ministries and to smaller SOEs) were not highly qualified, and some had limited or financial, business or related experience, and that some were appointed for reasons of political connections.



Recommendation 2: The Government should develop and issue an ownership policy that defines the overall objectives of state ownership, and policies for how the State will nominate board members and vote shares. The ownership policy could also clarify government guarantees to large SOEs.

Recommendation 3: The ownership entity should pay equal attention to the oversight of minority-owned companies. Recent problems at large privatized companies in Senegal (and elsewhere) show that risks increase after privatization. The ownership entity should carefully monitor the performance of minority-owned companies, should insist on strong internal controls, high-quality financial reporting, independent audit committees, and disclosures and pre-approvals of related party transactions and other conflicts of interest.

Recommendation 4: The Line Ministries should work with the new ownership entity to formulate measurable high-level commercial and non-commercial goals for each company. These goals will be used to monitor performance.



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