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Senegal Enacts 'World's Most Far-Reaching' Small Business Tax Reforms

Pioneering collaborative legislation development said to be proving a clear success for aspirant West African nation.

Photo: Bill builders: Small business-holders get a say in Senegal’s entrepreneurism-enabling legislation. (Shutterstock.com/Vladimir Zhoga)
Bill builders: Small business-holders get a say in Senegal's entrepreneurism-enabling legislation.
Photo: Bill builders: Small business-holders get a say in Senegal’s entrepreneurism-enabling legislation. (Shutterstock.com/Vladimir Zhoga)
Bill builders: Small business-holders get a say in Senegal's entrepreneurism-enabling legislation.

The Tax Authority in Senegal has signed into effect what it claims to be the world's most far-reaching tax-relief programme for small businesses. In line with this, all new small and medium-sized enterprises that register in the West African nation will be entitled to a three-year tax holiday with regard to their minimum payroll and corporate-tax liabilities.

According to government sources, the initiative is intended to "accelerate indigenous innovation and sustainable economic transformation". It also forms part of a raft of measures outlined in Senegal's Startup Act, legislation that was passed with near-unanimous support by the country's National Assembly late last year.

The result of 19 months of public consultation involving more than a thousand citizens, the Startup Act evolved as part of what the country's Dakar-based government terms the Innovation for Policy (i4Policy) process. Essentially, this is an interactive framework for policy reform allowing those directly affected by public policy – as well as analysts and professional policy advisers – to participate in the drafting of new legislation through peer review and widespread consultation.

In order to deliver on this, the government even made use of a Facebook chatbot as a means of soliciting feedback on the proposed legislation from entrepreneurial-minded citizens. In addition, more than 50 directly related co-creation meetings were held as part of the drafting process.

Commentating on the long gestation of the legislation, Ato Malick Ndiaye, Former Director of ICT at Senegal's Digital Economy Ministry and a member of the country's Telecommunications Regulatory College, said: "It's not possible to support a truly innovation-oriented ecosystem without taking an equally innovative approach to drafting enabling frameworks."

Overall, this inclusive law-making process has been championed by a number of influential figures, including Macky Sall, the country's President since 2012, as well as the prime movers in the Delegation of Rapid Entrepreneurship (DER), a public-private funding body dedicated to driving commercial innovations within Senegal. Indeed, the DER undertook much of the heavy lifting with regard to the drafting of the new legislation, including securing the participation of a number of World Bank experts, as well as several domestic legal firms and many of the country's most high-profile entrepreneurs.

Summarising the benefits of the process, Eva Sow Ebion, i4Policy's Director of Community and Communications, said: "This co-creation process has given everyday people the opportunity to take ownership of every government department. At the end of the day, every stakeholder has acknowledged the need to work together in a cohesive, coherent and co-ordinated fashion in order to achieve the desired results."

The collaborative passage of the bill is seen as reflecting a new trend that has already impacted on other legislation drawn up by African nations. Indeed, according to Ebion, the Malian Startup Act, the Nigerian ICT Innovation and Entrepreneurship Vision and Rwanda's Seven-Year Private Sector Development and Youth Employment Strategy all emerged at the end of similar collaborative processes.

Considered one of the most stable nations in West Africa, Senegal has become a key partner in the Belt and Road Initiative, China's ambitious international infrastructure development and trade facilitation programme. In 2018, the two countries signed a number of bilateral deals during the state visit of Xi Jinping, the Chinese President, to Dakar.

In addition to infrastructure development, China is also said to be working closely with the country with regard to security and the maintenance of social stability. While, historically, Senegal's exports have primarily been agricultural, in recent years the expansion of its services sector has seen it emerge as one of West Africa's key financial centres.

William Elliot, Special Correspondent, Dakar

Content provided by Picture: HKTDC Research
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