Consumer Market

1. Retail Overview
2. Competitors
3. Access Issues

Dakar, Senegal's capital city is the centre of economic activity and the country's largest consumer market at nearly two million people, or 20% of the total population. With a median age of 19 years, more than 40% of the population is under 15 years of age.

The domestic market is limited, representing roughly 10 million consumers with an average per capita GDP of $1,000. Although a significant portion of the population lives below the poverty line, there is a growing urban middle class. Per capita GDP has increased from US$706 in 2004 to US$1,066 in 2008. Demand for luxury goods, snack foods, breakfast cereals, and other consumer products are increasing. Dakar has a number of store chains and fast food restaurants that cater to the middle and upper income brackets. In addition, many Western companies are using Dakar as part of a larger regional strategy involving the West African region.

The urban population is rapidly expanding with approximately 50% of Senegalese living in three urban areas. Up to a quarter of the population is concentrated in and around Dakar, while Thies and Kaolack, the next largest cities, share an additional 25% of the population. Dakar is also home to the majority of Senegal's consumer base that is capable of purchasing imported foods in quantity, the sizable expatriate community, and the higher-income domestic consumers. Imported food consumers are generally expatriates or affluent Senegalese or Lebanese residents.

Although the modern retail and distribution sector is dominated by French-owned firms, the retail/import sector is shifting. Recently, Chinese and Lebanese merchants and importers have been increasingly prominent. Despite this success, local Senegalese players just as quickly grabbed this market share. Small-scale traders specializing in retail distribution of consumer goods are very competitive in this market.

• High unemployment continues to prompt people to flee Senegal in search of better job opportunities in Europe. This could hinder development of a viable middle class.
• Rice consumption represents 30% of cereal consumption in Senegal, equivalent to per capita annual consumption of 60-70 kg.
• Senegal, next to Nigeria, is the second largest African rice importer. The preference is 100% broken rice originating from Asia, mainly Thailand, Vietnam, and India. Due to its higher price, North American medium quality rice is less popular.
• The population growth has increased the demand for bread and thus wheat flour. To make Canadian wheat competitive, there is the possibility of reducing freight rates by coordinating bulk wheat shipments to Senegal with those to the Ivory Coast, Ghana, and Nigeria. Canadian wheat sales have increased from $766,820 in 2006 to more than $8 million in 2009.
• The decrease of local corn production has led to increased imports.
• A niche market for Western-style snack foods, breakfast cereals, and other consumer products is growing as the urban middle class increases. These products are sold in convenience stores, hotels, and restaurants.
• Senegal's fruit juice, mineral water, and syrup sectors are very dynamic, with sustained growth of 8% since 1998.
• Despite reductions in government procurement due to privatization, the government remains one of the largest customers. Most government purchasing is done through competitive bidding.
• Price seems to be the deciding factor in most food categories.
• Dairy sales were greatly affected by the global recession.

Retail Overview

Senegal's total retail food sales for 2008 reached an estimated $2.8 billion, up 28% from the previous year's record high. Although the United States Department of Agriculture (USDA) is predicting a decline in overall sales for 2009-2010, they also predict the long-term prospects for consumer-oriented imported foods to be promising. This is partially due to Senegal's high rate of urbanization, sizeable expatriate community, relatively high birth rate, and reliance on food imports.

Overall, from a volume perspective, the retail food sector offers few distribution opportunities for imported foods. Modern supermarkets, grocery stores, and convenience stores account for less than 2% of food outlets. Overall, the sector is dominated by small outlets, outdoor markets, and kiosks. Modern/Western style outlets and imported food products are found almost exclusively in Dakar.

Due to the impact of the informal retail sector, the government launched a project in 2009 to establish 10,000 government-sanctioned boutiques nationwide. These boutiques will have majority government ownership and will allow for tighter regulation of pricing and quality.

The rapid expansion of convenience stores in Dakar, Thies, and St. Louis has become a positive sign for imported consumer goods. There has been a sharp increase in "formal" retail space in Dakar with a recent celebration taking place for the opening of Senegal's first large modern shopping mall. Despite the existence of a growing modern retail sector, street markets remain a vital sales channel. Sandaga is a large street market in the centre of Dakar and along with street vendors, remains the capital's principal distribution center for consumer goods.

Competitors

As a former French colony, the country has strong ties with France and has a large base of French investors that dominate the Senegalese market. However, with investment and trade becoming diversified, new countries are influencing the economy.

• Senegal's top five export markets are Mali 20%, India 11%, France 7.5%, Gambia 5%, and Italy 4.8%.
• Senegal's top import suppliers are France 20%, United Kingdom 15%, Nigeria 11%, China 7%, Thailand 7%, Belgium 4.5%, and the Netherlands 4%.
• Morocco and Dubai are becoming increasingly important players in Senegal's market.

The import market for food and agricultural products remains dominated by European, Asian, and African suppliers. France dominates the market for wheat and high value processed products. Brazil and Argentina are key suppliers of soybean oil. On a product by product basis, the following countries dominate Senegal's import market:

• An increasing number of products are imported from Turkey, Lebanon, the United Arab Emirates, and China.
• Europe dominates the imported dairy segment and France is by far the largest supplier in the milk derivatives sub-category.
• Asian competitors dominate the rice trade while Europe supplies a large amount of Senegal's wheat requirements. Again, France leads this category. The United States dominates wheat exports from a North American perspective.
• European Union countries (particularly France, Spain, and Italy) are once again Senegal's main suppliers of animal and vegetable oils and fats. They are followed closely by stakeholders from Latin America (Brazil and Argentina).
• France and Switzerland are the main suppliers of sugars, consisting mainly of cane and beet sugar.
• Despite considerable local production of fresh fruits and vegetables, Senegal continues to import a high volume of fruits and vegetables primarily from the Netherlands and France. Senegal imports bananas, apples, pears and citrus fruits mainly from France, Spain, Belgium, Morocco, and Côte d'Ivoire.
• France, India, Brazil, Spain, Uruguay, and Paraguay are Canada's primary competitors in the imported meat segment.
• Despite a very large seafood industry which focuses on exporting Senegal products, substantial quantities of fish and seafood from France, Spain, Italy, Mauritania, Gambia, Guinea, Morocco, the Netherlands, and Belgium are imported into the country.

France is overwhelmingly the most important foreign investor for the food industry in Senegal. While on a much smaller scale, investments by Senegalese citizens of Lebanese origin are frequently found in the food industry. Swiss investment is concentrated in food processing, and Taiwan is active in Senegal's fish and canning industry. Germany, Japan, and South Korea have moderate investments in Senegal. India is a traditional investor in Senegal's phosphate industry. Moroccan investment has increased substantially within the airline and banking industry. More recently, China has increased its commercial presence in Senegal, but overall investments remain low. The United States is also a large investor and has involved itself in banking and manufacturing among other industries.

Access Issues

In terms of legislation, Senegal shows a great deal of flexibility. There are no particular restrictions, mainly because of insufficient local supply. To date, protectionist measures have mostly involved the sugar industry and a few actions dictated by health protection requirements. However, products that compete with, or may be deemed detrimental to the viability of a domestic industry, can be subject to significant barriers or restrictions.

• Senegal implemented the World Trade Organization (WTO) Agreement on Customs Valuation in July 2001, which provides for a neutral and uniform system for the valuation of goods for customs purposes. However, Senegal's 2001 designation as an LDC (Less Developed Country) by the United Nations has incited officials to continue to apply minimum reference prices for some imported products that may hurt local industry.
• In January 2000, Senegal put in place an import tariff structure in conjunction with the member states of the West African Economic and Monetary Union (WAEMU or UEMOA).
• Under the new structure, Senegal lowered its highest tariff rate and established four product categories with tariff rates of 0, 5, 10 and 20%.
• From an agriculture perspective, the tariff regime covers the following product categories: 0% - agriculture inputs; 5% - cereals for industries; 10% - semi-finished products intermediate goods, other cereals; and 20% - goods for final consumption.
• Despite its simplified tariff structure, Senegal continues to maintain an array of other import taxes.
• On top of duties, importers are also obliged to pay a unified 18% value added tax (VAT) at the port of entry.
• Special tariffs are also applied to protect selected industries.
• The "taxe degressive de protection" is applied to imports of finished products that compete with local production (examples: tomato paste, candies, powdered milk, etc.)
• A seasonal tax, called the "taxe conjoncturelle a l'importation," protects local production of vegetables, rice, onions, potatoes, etc., with a 10% levy. This is dictated by world commodity prices and is again designed to local producers.