DIGITAL ECONOMY FOR AFRICA (DE4A) Country Diagnostic of Senegal WITH SUPPORT FROM: © 2019 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Cover image: Cover design: 3 Contents ACKNOWLEDGMENTS............................................................................................................................. 8 ABBREVIATIONS......................................................................................................................................... 9 EXECUTIVE SUMMARY.......................................................................................................................... 13 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 A. Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 B. Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2. DIAGNOSTIC OF THE DIGITAL ECONOMY IN SENEGAL . . . . . . . . . . . . . . . . . . . . 29 A. Foundational Elements: Regulation, Competition, and Governance . . . . . . . . . . . . . . . . . . . . . . . . . . 30 1. Legal and Regulatory Environment in Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2. Challenge of Competitive Imbalances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 3. Governance Complexity and Limited Stakeholder Coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 B. Access and Digital Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 1. Coverage, Cost, and Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2. Digital Infrastructure Value Chain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 C. Digital Government: Shared Platforms and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 1. Digital Government Readiness Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 2. Two Priority Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 D. Digital Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 1. Context. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 2. Digital Financial Services (DFS) Development in Senegal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 3. Policy and Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 4 DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL E. Digital Skills and Capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 1. Context and Key Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 2. Digital Training in the Senegalese Education System. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3. Private Sector Initiatives for Digital Skills Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 F. Entrepreneurship and Digital Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 1. Context and Key Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 2. Government Priorities and Policies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 3. TOWARDS A THRIVING DIGITAL ECONOMY IN SENEGAL . . . . . . . . . . . . . . . . . . 75 A. Enhancing Digital Economy Governance and Regulatory Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . 76 1. Governance Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 2. Regulation and Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 B. Strengthening Five Building Blocks of the Digital Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 1. Digital infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 2. Digital Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 3. Digital Financial Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 4. Digital Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 5. Entrepreneurship and Digital Innovation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 C. Projects Proposed to Accelerate Senegal’s Digital Economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 1. Digital Identity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 2. Digital Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 3. Digital Port . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 4. Additional Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 4. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 BIBLIOGRAPHY ........................................................................................................................................ 98 5 List of Boxes Box 1 Over-the-Top Regulation in Senegal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Box 2. Effects Expected from a Full Opening of the Telecommunications Sector to Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Box 3. ADIE Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Box 4. Capitalizing on Excess Public Fiber Optic: Case of the Democratic Republic of Congo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Box 5. Excessive Spectrum Usage Costs in Senegal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Box 6. Public Key Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Box 7. ORBUS Single Window: Establishing a One-Stop-Shop . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Box 8. GIM-UEMOA and Interoperability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Box 9. Senegal’s Digital Development Fund: Vision, Strategy, and Expected Results. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Box 10. Afric’innov Program to Strengthen Innovative Entrepreneurship in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 Box 11. Leveraging the Expertise of an IT Industry Leader to Strengthen Digital Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 List of Figures Figure 1. Key Components of the DE Ecosystem. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Figure 2. Contribution of the Digital Economy to GDP in Africa (iGDP1), 2013 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 3. Digitally-enabled Access to Finance, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 4. ICT Contribution to GDP growth in Senegal, 2000-16*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 5. Senegal’s Position on the Digital Adoption Index (DAI), 2016 (left panel) and Electronic Government Development Index (EGDI), 2018 (right panel) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Figure 6. Digital Economy for Africa (DE4A) Framework. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 7. DECA Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 8. Market Share of Mobile Operators in Senegal, 2016 (%). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 9. Comparison of Concentration Index of Mobile Markets, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 10. Current DE Institutional Framework in Senegal (nont exhaustive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Figure 12. Fixed Broadband Prices (left panel) and Usage (right panel), 2009-2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Figure 11. Mobile Broadband Prices, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Figure 13. ITU ICT Development Index (left) and GSMA Mobile Connectivity Index (right), 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 14. Key ICT Indicators Comparison Across ECOWAS, 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 15. SENIX Overview (Left) and Traffic Exchanged in the First Eight Months, 2017-18 (Right) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 16. Access to the Internet: Rural vs. Urban (% of population interviewed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Figure 17. Key Business Environment Constraints in Senegal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Figure 18. Adults with One or More Financial Accounts, 2011–17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Figure 20. Key Players in Digital Financial Services Ecosystem in Senegal, 2006–15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Figure 19. Financial Services Distribution Network in Senegal (%), 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Figure 21. E-Money Market in Senegal: Market Shares 2017 (left) & Subscribers 2016-17 (right). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Figure 23. Senegal Positioning in Global Human Capital Rankings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Figure 24. Early-Stage Entrepreneurial Activity Index by Country, 2017-18 (or latest available year). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Figure 25. Total Early-Stage Entrepreneurial Activity Index, 2017–18 (or latest available year). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Figure 26. Overview of VC Investment Funds Operating in Senegal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Figure 27. Digital Skills Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Figure 28. High-Level Roadmap for the E-Port Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 6 DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL List of Maps Map 1. Connectivity Coverage in Senegal: 2G (left panel) and 3G (right panel), 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Map 2. Deployment of 4G in Africa, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Map 3. Landing Submarine Fiber Optic Cables in Senegal, 2018. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Map 5. 2G and 3G Network Coverage by Three Main Operators in Senegal, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Map 6. Geographic Distribution of Poverty in Senegal, 2011–13 (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 Map 7. Adults with Mobile Money Account Across SSA, 2014-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 List of Tables Table 1. Senegalese Market Access Regime, 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Table 2. Key Statistics on ICT Access in Senegal, 2013 versus 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Table 3. Spectrum Assignment per Operator and Frequency Band, 2017*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Table 4. Benchmarking Legal and Regulatory Frameworks for Data Protection and e-ID in West African Countries, 2017 . . . . . . . . . . . . . . 50 Table 5. Financial Landscape in Senegal, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Table 6. Reasons for Not Having an Account in a Financial Institution, 2017 (% of respondents). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Table 7. Formal vs. Informal Savings and Borrowing, 2017 (% of adults) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Table 8. Financial Services Distribution Network in Senegal, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Table 9. Payments in Senegal (%), 2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Table 10. Types of Services Offered by Different Support Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Table 11. Agenda to Promote the Digital Economy: Eleven Projects for 2018–19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Table 12. E-Tax Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Table 13. Modernizing PAD Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 Table 14. Identifying Assets and the National Digital Land Registry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Table 15. Unique National Digital Address Registry for housing and economic activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Table 16. Leveraging New LPWAN Networks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 SHUTTERSTOCK / ANTON_IVANOV 8 ACKNOWLEDGMENTS This report was prepared by a team led by Jerome Bezzina (Senior Regulatory Economist) and comprising Aneliya Muller (Private Sector Development Specialist), Zaki Khoury (Senior Technology & Strategy Advisor) and Mouhamed Tidiane Seck (Independent Consultant and Associate Director, Performances Group). The contributors to specific sections include the following: Marolla Haddad (Senior ICT Policy Specialist), Arthur Foch (Senior ICT Policy Specialist), Jan Loeprick (Senior Tax Economist), Audrey Ariss (Young Professional), and Georgiana Pop (Senior Economist) for Digital Infrastructure and Digital Platforms; Laurent Gonnet (Lead Financial Sector Specialist) and Maimouna Gueye (Senior Financial Sector Specialist) for Digital Finance; Jean Michel N. Marchat (Lead Economist), Laurent Olivier Corthay (Senior Private Sector Development Specialist), and Simon Duchatelet (Consultant) for Digital Entrepreneurship. Valuable advice has been provided by Samia Melhem (Lead ICT Policy Specialist), Tim Kelly (Lead ICT Policy Specialist) and Carlo Rossotto (Lead ICT Policy Specialist). The work was carried out under the overall guidance and supervision of Boutheina Guermazi (Director of Digital Development Global Practice), Michel Rogy (Practice Manager for Digital Development Africa and Middle East), Consolate Rusagara (Practice Manager of the Finance, Competitiveness, and Innovation Global Practice), Simon Andrews (IFC, Chief Investment Officer), Louise Cord (Country Director for Senegal, Cabo-Verde, The Gambia, Guinea-Bissau and Mauritania) and Paolo Zacchia (Lead Economist and Program Leader for Equitable Growth, Finance and Institutions). Valuable comments and advice were received from the following: Mark Andrew Dutz (Lead Economist), Natasha Beschorner (Senior ICT Policy Specialist), Davide Strusani (IFC Principal Sector Economist), Matthew Saal (IFC Principle Industry Specialist), German Cufre (IFC Principal Investment Officer), Marcio Cruz (Senior Economist), Eva Clemente Miranda (Private Sector Specialist), and Jonathan Daniel Marskell (Operations Officer). The findings and analysis presented in this report would not have been possible without the various consultation op- portunities supported under the Digital Development Partnership (DDP). The team would therefore like to acknowledge the generous support of the DDP. We are especially grateful to the DDP partners who remain engaged throughout the process, including representatives of GSMA and Microsoft. Moreover, the team expresses gratitude to various counterparts in Senegal, who actively participated in multiple consul- tations and interviews and provided their inputs and suggestions that informed this report. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | AC K NOW L ED GMENT S 9 ABBREVIATIONS ACE African Coast to Europe ADEPME Agency for the Development and Supervision of Small and Medium-Sized Enterprises (Agence de Développement et d’Encadrement des Petites et Moyennes Entreprises) ADIE State Informatics Agency (Agence de l’Informatique de l’Etat) ADSL Asymmetric Digital Subscriber Line AfDB African Development Bank AGE Architecture of Government Enterprise AIGF Agence Ivoirienne de Gestion des Fréquences Radioélectriques AML/KYC Anti-Money-Laundering/Countering the Financing of Terrorism Framework (WAEMU) ANAQ-SUP National Quality Assurance Authority for Higher Education (Autorité Nationale d’Assurance Qualité de l’enseignement Supérieur) ANSD National Agency of Statistics and Demography (Agence Nationale de la Statistique et de la Démographie) ARTP Regulatory Authority for Telecommunications and Post (Autorité de Régulation des Télécommunications et des Postes) ASUTIC Senegalese Association of ICT Users ATM Automated Teller Machine BCEAO Central Bank of West African States (Banque Centrale des États de l’Afrique de l’Ouest) BIPEN Information and Digital Economy Promotion Bulletin BPI (France) Public Investment Bank CA Certification Authority CDP/PDC Personal Data Commission CDMA Code-division Multiple Access CERT Computer Emergency Response Team CIA Central Intelligence Agency CII critical information infrastructure CNC National Competition Commission (Commission Nationale de la Concurrence) CNN National Digital Council (Conseil National du Numérique) COPIL-PKI Steering Committee for National Public Key Infrastructure Management (Comité de pilot- age du projet de mise en place d’une Infrastructure nationale de gestion des clefs publiques) CRR06 Regional Radio Communication Conference 2006 CST Special Contribution of the Telecommunications Sector CTIC Center for Technology, Innovation and Competition CUSCAR Customs Cargo Report Message DAF File Automation Directorate, Ministry of Interior (Direction de l’Automatisation des Fichiers) DAI Digital Adoption Index DDP Digital Development Partnership DE4A Digital Economy for Africa DECA Digital Economy Country Assessment D I GI TA L E C O N O M Y F O R A F R I CA C O UNT RY D IAGNO ST IC O F SENEGAL | ABBR EVIAT IO NS 10 DEED Digital Entrepreneurship Ecosystem Diagnostic DER Delegation for Rapid Entrepreneurship (Délégation Générale à l’Entreprenariat Rapide pour les Femmes et les Jeunes) DFS digital financial services DGID Directorate-General of Tax and Estates (Direction Générale des Impôts et des Domaines) DGRA Digital Government Readiness Assessment DNS domain name root server DPENP Digital Economy and Partnership Promotion DSO digital switch-over DTAI Direction du Traitement Automatique de l’Information (Ministry of Finance) DTT Digital Terrestrial Television ECOWAS Economic Community of West African States EGDI United Nations Electronic Government Development Index EIB European Investment Bank e-ID Electronic Identification EMI electronic money issuer EMV Europay, MasterCard and Visa (global standard for chip-based debit and credit card transactions) ENBIC ECOWAS National Biometric Identity Card e-Port digital port ESB enterprise service bus ESP Ecole Supérieure Polytechnique ESPS Senegal Poverty Monitoring Survey (Enquête de Suivi de la Pauvreté au Sénégal) e-Tax digital taxation FCFA CFA frank (currency of African Financial Community (Communauté Financière Africaine) FDN Digital Development Fund (Fonds de Développement Numérique) FONSIS Souvereign Strategic Investment Fund (Fonds Souverain d’Investissements Stratégiques) FSP financial services for the poor FTTB fiber to the building G2P government to people GAFA Google, Apple, Facebook, Amazon GDP gross domestic product GE06 Geneva 2006 Agreement (on frequencies) GEI Global Entrepreneurship Index GHz gigahertz GIM Electronic Money Interbank Group GoS Government of Senegal GSMA Global System for Mobile Communications Association HHI Herfindahl-Hirschman ICTA Turkish Information and Communication Technologies Authority IFC International Finance Corporation IMF International Monetary Fund INFOSEC Institutional Framework of Information Systems Security IPO initial public offering D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | ABBR EVIAT IO NS 11 IoT Internet of Things IPRES Retirement Pension Institution (Institution de Prévoyance Retraite du Sénégal) ISM industrial, scientific, and medical ISP Internet service providers ITU International Telecommunication Union IXP Internet exchange point LL local loop LLO local loop operator LPWAN low-power wide-area networks MCTPEN Ministry of Communications, Telecommunications, Post and Digital Economy (Ministère de la Communication, des Télécommunications, des Postes et de l’Economie numérique) MEFP Ministry of Economy, Finance and Planning (Ministère de l’Économie, des Finances et du Plan) MESR Ministry of Higher Education and Research (Ministère de l’Enseignement Supérieur et de la Recherche) MGI McKinsey Global Institute MHz megahertz MSME micro, small, and medium enterprises MVNO mobile virtual network operators MUX multiplexers NFC near-field communication NTP network time protocol OA open access OECD Organization for Economic Co-operation and Development OGD open government data OPGW optical ground wire OPTIC Organization of Information Technologies Professionals OTT over the top P2G pay to government PAD Dakar Port Authority PAFI electronic payment and financial inclusion PAIPN Program to Support Digital Promotion Initiatives PAP Priority Action Plan (Plan d’Actions Prioritaires) PCH Peering Clearing House PCI DSS Payment Card Industry Data Security Standard PFM public finance management PKI public key infrastructure POP point of presence PPNR Digital Education Promotion Project PPP public-private partnership PSE Emerging Senegal Plan (Plan Sénégal Émergent) PTN Digital Technologies Park (Parc des Technologies Numérique) QoS quality of service RCCM Commerce and Real Estate Credit Registry (Registre du Commerce et du Crédit Mobilier) RTGS real time gross settlement SaaS Software as a Service D I GI TA L E C O N O M Y F O R A F R I CA C O UNT RY D IAGNO ST IC O F SENEGAL | ABBR EVIAT IO NS 12 SAIE Supporting Structures for Innovative Entrepreneurship SAT-3/WASC South Africa Transit 3/West Africa Submarine Cable SDE Senegalese Water Company (Sénégalaise Des Eaux) SENIX Senegal Internet Exchange Point SFD decentralized financial system SIGTAS Integrated Tax Management Software SMEs small and medium enterprises SMP significant market power SMS short message service SNEL National Electricity Company (Société Nationale d’Électricité) SSN2025 Digital Senegal Strategy 2025 (Stratégie Sénégal Numérique) STEM science, technology, engineering, and mathematics STM1 Synchronous Transport Module Level-1 TDS Tele-Diffusion of Senegal TPE Trans-Pacific Express (submarine telecommunications cable) TVET technical and vocational education and training UNDP United Nations Development Programme USSD unstructured supplementary service data UK United Kingdom UNCITRAL United Nations Commission on International Trade Law UNDP United Nations Development Programme UVS Virtual University of Senegal VC venture capital WDR2016 World Development Report 2016 WAEMU West African Economic and Monetary Union WEF World Economic Forum WFP World Food Program WURI West Africa Unique Identification for Regional Integration and Inclusion XML Extensible Markup Language D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | ABBR EVIAT IO NS DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL 13 EXECUTIVE SUMMARY 14 Introduction While Senegal’s digital evolution has been impressive, the country has more to achieve in advancing its digital economy The rapid technological advancement is now disrupt- a comprehensive digital economy diagnostic, presented ing the global economy and creating new business and in this report. The report provides a snapshot of the state development models, offering countries opportunities of DE in Senegal and uses several World Bank tools and to leapfrog over traditional paths for economic growth. international best practices to provide actionable recom- Over the past years, digital technologies have been spread- mendations to the GoS. These recommendations include ing throughout the world at a faster pace than previous specific public sector policy interventions and actions that waves of technological innovation, re-shaping consumer could improve the socio-economic impact of the country’s behavior, social interaction, businesses and governments. digital economy. The digital economy (DE), which encompasses a wide range of new applications of information technology in business models and products, can spur economic growth, produc- tivity and employment and, with appropriate policies to Methodology mitigate inherent risks, has a potential to support inclusive outcomes. While the extent of the exact impact of digital The report leverages the Digital Economy for Africa’s technologies adoption on productivity and inclusion is still (DE4A) integrated diagnostic framework to map current an open empirical question and more systematic data col- strengths and weaknesses of the national DE ecosystem lection and rigorous impact evaluation of these effects and (Figure 1), as well as to identify opportunities for future associated policies are required to maximize DE’s social growth through recommended policies and interven- and economic gains, existing research has been provid- tions. This diagnostic framework that forms the basis of ing positive correlational evidence. For example, a recent this report focuses on five foundational elements of DE: study based on three different datasets that together cover 12 African countries with a combined population of roughly • Digital Infrastructure: the availability of affordable and half a billion people, finds significant positive effects of fast quality Internet, which is instrumental to bringing more Internet on both the share of skilled jobs (with little to no people online. job displacement across space) and average incomes in • Digital Platforms:  the presence and use of digital plat- Africa, and – at least in the Ethiopian context – productivity forms that can support greater digital exchange, trans- and employment in manufacturing1. actions and access to public and private services online. In this global context, digital transformation of • Digital Financial Services: the ability to pay, save, bor- the economy has become a major objective for the row, and invest through digital means, which is key to Government of Senegal (GoS). Over the past decade, accessing digital services and increasing the rate of on- Senegal has embarked on a series of economic reforms line transactions. which were accelerated with the launch in November • Digital Skills:  the development of a tech-savvy work- 2012 of a new development masterplan - Plan Senegal force with both basic and advanced digital skills to sup- Emergent (PSE). PSE aims to boost sustained and inclu- port increased technology adoption and innovation. sive economic growth and make Senegal an emerging • Digital Entrepreneurship: the presence of an ecosystem economy by 2035, making ICT sector, as a core enabler that enables firms to generate new products and ser- for a broader digital economy, a prominent priority. vices, leveraging new technologies and business models. The long-term sectoral vision is further specified in the Digital Senegal Strategy 2025 that was launched in 2016 The report is the first in the series of DE4A Country and specified priority axes. Diagnostics, although the DE4A conceptual framework has been finalized after the start of the project. The tech- In support of Senegal’s aspirations for unleashing the nical assistance to the GoS was initiated as a different study potential of its DE, the World Bank Group (WBG) has that was retroactively reshaped and enriched, when a more launched a technical assistance engagement to conduct 1 Hjort, J. and Poulsen, J. 2019. The Arrival of Fast Internet and Employment in Africa. American Economic Review 2019, 109 (3): 1032-1079. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | EXEC UT IVE SUMMARY 15 Figure 1. Key Components of the DE Ecosystem MACROECONOMIC APPLICATIONS LIKELY TO DEVELOP ONCE THE FOUNDATIONAL ELEMENTS ENABLING ENVIRONMENT ARE IN PLACE: • E-COMMERCE USAGE • Macro-economic stability • OPEN BANKINGnon-banks offer tailored services • Financial sector stability and integrity • Enabling Tax policy • Enabling Trade policy DIGITAL ENTREPRENEURSHIP AND INNOVATION CROSS CUTTING AREAS DIGITAL SKILLS DIGITAL • Data Privacy & Cybersecurity DIGITAL FINANCIAL SERVICES • Competition AND LITERACY PLATFORMS • Gender DIGITAL INFRASTRUCTURE Foundational elements Source: The World Bank 2018. comprehensive DE4A analytical framework was final- reshape sectoral legal and regulatory framework to cope ized. Two additional WB tools were leveraged to conduct with the fast pace of change in technologies and business the stocktaking analysis, including the Digital Economy models. Country Assessment2 (DECA) and the Digital Government Readiness Assessment3 (DGRA), that allowed to reinforce Digital Infrastructure. The report provides careful analy- the analysis as well as identify remaining knowledge gaps. sis of the coverage, cost, and quality of access to digital Finally, the evaluation also benefited from a deep policy infrastructure in Senegal. To date, three existing tele- dialogue and comprehensive consultations4 with the key communications operators (Sonatel, Tigo and Expresso) national stakeholders. held licenses that authorized them to provide services in Senegal. However, the Senegalese telecommunications value chain remains tied up in bottlenecks. The affordabil- ity of access to mobile broadband represents a challenge Key Findings as prices still too high despite their recent decline. Cost of mobile broadband services represents 12 percent of aver- age monthly gross income per capita income in Senegal, The analysis of the digital economy foundational elements compared to 6 percent in Kenya. Moreover, the coverage in Senegal starts with a look at cross-cutting issues. The still needs improvement and digital divide is high with findings illustrate that development of digital economy in limited access in secondary cities6. Furthermore, Senegal Senegal has long been slowed down by inadequate regu- has not yet deployed a complete 4G network despite the latory framework, lack of competition and the complexity existence of an adequate radio spectrum for providing of the governance context with overlapping stakeholders’ connectivity services. While the former legal framework responsibilities. Therefore, after the adoption of the Digital did not contain rules for more efficient allocation and Senegal Strategy (SN2025) in late 2016, the recently adopted assignment of the radio spectrum, the new code is now (December 2018) Code on Electronic Communications5 directing the frequency fees to the public treasury which ends a long period of regulatory uncertainty, marking a removes the conflict interest that affected ARTP who turning point for the sector and demonstrating the inter- was setting the amount of frequency fees and collect- est and willingness of the Government of Senegal (GoS) to ing/perceiving those fees at the same time, with limited 2 The Digital Economy Country assessment tool was developed under the Digital Development Partnership (DDP)’s Digital economy enabling environment pillar which seeks to help countries improve regula- tions, remove bottlenecks to the development of digital ecosystems, and foster competition, addressing the interface between digital or ICT regulations and other sector regulations. 3 The Digital Government Readiness Assessment toolkit (P163466) is intended as a practical hands-on big picture survey of the state of digitization of any government (World Bank, 2018). 4 This includes a consultation workshop entitled “Digital Economy for Inclusive Growth in Senegal” with representatives from the public sector, private sector, academia and consumer agencies in March 2018, Dakar. 5 The new ICT law was adopted, and three key decrees were also adopted; ARTP published two important regulation decisions (on the list of relevant markets and list of dominant players) that are pretty aggres- sive against the incumbent. On the governance side, the Conseil National du Numérique (CNN) was created by decree and its 20 members have been nominated by a Prime Minister arrêté. On the competition side, two improvements would need to be noted: entry of 3 ISPs in 2017/8 with 2 having already launched their services, and attribution of 4g frequencies to TIGO in early 2019 (resulting in introduction of competition on 4G). More recently, the government is finalizing the attribution of an authorization to an infrastructure operator (GUESPA). 6 Data from the 2017 Gallup Survey shows that, between 2016 and 2017, internet broadband access in Senegal deteriorated in both urban and rural areas while the urban-rural Internet divide widened by 4 percentage points during the same year. D I G I TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | EXEC UT IVE SUMMARY 16 incentive to reduce the amount of fees so as to encour- interactions between taxpayers and the tax authority pa- age infrastructure investment. This context also impedes perless by switching to a more transparent and more effi- facilities-based competition not only in large markets cient online filing and payment approach. The emphasis of (international connectivity, backbone national, backbone, current targeted initiatives is on strengthening governance last mile) but also in retail markets7. of revenue administration to properly monitor taxpayers’ observance of the law10. As for data depositories, there is a multiplicity of data centers that mainly serve hosting State data and IT appli- Digital Financial Services -  In Senegal, effective usage of cations8 in key line ministries9. Despite the existence of a Digital Financial Services (DFS) is still limited despite the broadband network that interconnects all the buildings of growth in mobile money account ownership. With only 42% the central administration, these data hosting facilities op- percent of adults reporting to having an account at a finan- erate in silos due to limited integration and sharing strat- cial institution (Findex 2018), DFS offer great potential to egy. The proliferation inevitably leads to non-optimized in- meet the financial needs of poor and unbanked consumers. vestments and operating costs. To address such challenge, In terms of usage, airtime purchase currently represents ADIE has recently initiated an effort to develop a national 40% of the annual volume of transactions, the remainder is cloud for the government, including universities, schools, allocated mainly to person-to-person (P2P) transfers (12%) health pyramid structures, and local governments. and cash withdrawals (12%). To date, mobile payments at the merchant level are still scarce at 6% with only a limited Digital Government Platforms - The results of DGRA show 1,300 service points. that Senegal is making progress in developing its digital government. The country has also secured a government- The expansion of DFS in Senegal is confronted with several wide digital network, a wireless WiMAX network as well challenges including the prevalence of cash. The absence as multiple data centers. However, several reforms and of regulatory framework governing fintech and the lack of activities still are necessary to accelerate a comprehensive interoperability among current digital payment services digital government transformation. The government’ mul- are hindering scalability. The high cost of unstructured tiple platforms and shared services remain autonomous supplementary service data (USSD) is adding another chal- and lack integration. Even though they use common data lenge. on persons or goods, many government platforms are not interlinked to facilitate, or even allow, data-sharing. The Digital Skills - The rise of a vibrant Digital Economy in fact that neither operational reference standards nor a Senegal is hindered by a lack of qualified and competent government-wide enterprise architecture exists makes human resources11. This is mainly due to the status of sharing significantly challenging. Senegal’s public education (i.e., primary and secondary) which is confronted with lack of resources and infrastruc- The report looks at two important digital government plat- ture. Today, only 7.4 percent of the Senegalese population forms: digital identification and digital taxation. Senegal, is also enrolled in tertiary education. On the other hand, and Ghana, pioneered digital identification systems in the the Ministry of Higher Education and Research (MESR) is Economic Community of West African States (ECOWAS) leading an ambitious reform program to promote the digi- with the deployment of National Biometric Identity Card tal agenda and STEM education. A decentralization plan (ENBIC). This e-ID system is mandatory for all citizens for higher education has been adopted with the opening and is used for identification to access several services. of 14 specialized universities and graduate schools and the The unique number generated by the Files Automation launch of the Virtual University of Senegal (UVS), a digital Department (DAF) can serve as a basic identifying refer- educational infrastructure open to more than 20,000 stu- ence. However, 25 percent of Senegal’s population remain dents. not yet registered and do not have any identification. As for the digital taxation, a full deployment can acceler- To cope with the qualitative and quantitative shortage ate the ongoing reform initiatives and transformation of of digital training in the Senegalese ecosystem, private public administration. Senegal aims at making the regular digital training providers are aiming to complement the 7 For example, Sonatel has a dominant position as it owns the country’s largest optical fiber network and is the sole operator to provide asymmetric digital subscriber line (ADSL) Internet connection, 4G license granting. It has access to the main international gateway which effectively gives it de facto monopoly over data transmission, high cost for the portability of telephone numbers dissuades telecommunications operators from transferring numbers, capacity supply (backbone-type leased lines). 8 Applications such as messaging, telecoms services and video conferences, websites, and some national data such as geomatics. 9 Data centers are located in Direction du Traitement Automatique de l’Information (DTAI) in the Ministry of Finance, and Direction de l’Automatisation des Fichiers (DAF) in the Ministry of Interior, and ADIE. 10 In 2016 for instance, approximately 10% of the enterprises of a representative sample declared a turnover representing less than half of the declared volumes of their importations and payroll. 11 The country ranks 128 out of 192 on the Human Capital Index 2017 (WEF) and as 162 out of 194 on the Human Development Index (UNDP). D I G I TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | EXEC UT IVE SUMMARY 17 digital training offered by Senegalese higher education a view to reduce political influence over the regula- institutions. These new private actors sometimes partner tor’s activity. Despite this recent progress, a stronger with major technological firms such as Atos, Facebook, sector leadership is needed to bring a unified stra- and Orange, which already are active or are searching for tegic management for advancing digital economy by means to participate in upgrading digital skills in Senegal. building on the synergies between effective digital The private digital training actors have yielded good results government, digital entrepreneurship dynamic eco- to date, but their impact remains limited and will require system and human capital capacities development. scalability. • Promote private sector competition to advance Digital Economy and maximize financing for development in Digital Entrepreneurship -  Senegal has one of the most Senegal. It is important to improve regulation and pro- dynamic digital entrepreneurship ecosystems in franco- mote the complete opening of the digital sector to com- phone West Africa. Three drivers help this nascent start- petition by making the legal regimes of licenses and up nation to rise including a relatively widespread use of authorizations open and transparent. The report has sug- technologies in West Africa with 36% smartphone adoption gested to foster the private sector’s commitment further rate; a high entrepreneurial activity rate with 39% of the by (a) finalizing the implementation of the new Digital population aged 18 to 64 is either setting up or heading a Economy Code by adopting key implementing decrees new company; and availability of diverse co-working spaces including on frequency management, (b) strengthening including 15 incubators and accelerators, serving the needs the ex-ante asymmetric regulatory framework, (c) eas- of a community of over 2,500 startups and entrepreneurs. ing the regulatory burden for operators who lack signif- icant market power; (d) reinforcing infrastructure-shar- A major challenge for entrepreneurs in Senegal remains ing regulations and access to alternative infrastructure lack of access to finance during their pre-seed and seed (ADIE, the government’s IT network); and (e) restarting phases. The availability of risk capital is one of the low- the process of granting and extending 4G licenses to op- est scored components of Global Entrepreneurship Index erators with global licenses. (GEI) for the country. While a dedicated legal and regula- • Advance the implementation of the SN2025 strate- tory framework tailored to the needs and challenges of en- gy with a focus on the proposed key foundational ele- trepreneurs is being developed, its enforcement requires ments of digital economy. The following is a set of rec- a lacking concerted effort among various governmental ommended actions: entities to stimulate the digital economy. • Digital Infrastructure – The aim is to ensure affordabil- ity and access to quality broadband by promoting infra- structure-sharing, improving spectrum management Recommendations and frequency allocation, awarding 4G licenses in trans- parent and open processes, and authorizing IoT exper- iments. This report recommends key policy actions to unleash  nd achieve the digi- Senegal’s Digital Economy potential a • Digital Government platforms –  There is a need for ac- tal dividends: celerating progress towards government-as-a platform to increase the whole-of-government efficiency and en- • Enforce a single governance framework to address hance the services delivery to citizens and businesses. the lack of coordination and steering and to strength- This will require simplifying processes, ensuring in- en the institutional and governance framework of teroperability, developing shared services, and securing the Digital Economy. For some years, the sector con- the government platforms. Both taxation and unique text was marked by a multiplicity of bodies, each with identification will need further progress as priority plat- specific and sometimes competing, prerogatives. The forms. situation has improved with the creation and imple- • Digital Financial Services –  To expand the adoption of mentation of the Conseil National du Numerique, an digital financial services, the report emphasizes the im- umbrella high-level consultative structure for the ICT portance of three key areas including adoption of a dig- sector, mainly composed of private sector stakehold- ital payment interoperability regulation given the exis- ers. Moreover, and following the recent post-election tence of payment initiatives in closed loops (i.e., Orange, government restructuring, the Ministry of MPIP was YUP, TigoCash, and Wari), update the law on electronic dissolved and the ADIE was put under the Ministry of transactions, and set by decree the cost of access to tele- ICT, as recommended by WB. Furthermore, a change com infrastructure through unstructured supplementa- at the ARTP top management level is being made with ry service data (USSD). D I G I TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | EXEC UT IVE SUMMARY 18 • Digital skills and capacities development –  The report and (b) strengthen the sustainability and security of the highlighted the importance for ensuring digital capacity e-ID system using public key infrastructure (PKI). development for public servants and relevance between • Digital taxation (e-Tax) to (a) generalize the adoption of supply and demand for talents in Senegal. Key recom- e-taxation to improve the quality of service for taxpay- mended actions include integrating digital technology ers and the collection of tax revenues; (b) modernize the in all levels of the education system, promoting the dis- fiscal administration; and (c) increase tax collection and semination of a digital culture, and ensuring the growth reduce tax evasion. of private providers of digital training. • Digital port (e-Port)  to set up an integrated port man- • Digital entrepreneurship – T  o foster a promising digi- agement system to improve land zone utilization, drive tal entrepreneurship ecosystem in Senegal, the govern- insights, ease interoperability of various actors’ data ment can improve the current regulatory framework. systems, and open opportunities to set up a one-stop- Recommendations include adding different forms of tax shop for e-payment transactions. incentives, direct financial support (i.e., operationaliz- ing the Digital Development Fund), and access to pub- Finally, this report identifies the need for future work in lic markets through innovative public procurement ap- further priority areas. While the report did not fully analyze proaches. private platforms, it recognizes some concerns that may arise of market dominance by single privately-owned platform The report also proposed three high-impact projects to providers. This important area of focus will need further accelerate the growth of Senegal’s Digital Economy in- analysis and additional work beyond the current study. Also, cluding: the report represents an opportunity to call for more rigorous evaluation and data collection on the impact of digital on the • Digital identity (e-ID)  to (a) complete the coverage of the economy. This could include a mechanism for multiple min- e-ID beyond the current 70 percent of the population istries to collaborate on setting up an observatory. D I GI TA L E C O N O M Y F O R A F R I C A CO UNT RY D IAGNO ST IC O F SENEGAL | EXEC UT IVE SUMMARY DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL 19 1. INTRODUCTION 20 A. Context asymetries, decreasing informality, limiting uninsured risks, and reducing prices of goods and services as well as the cost of public service delivery. In Kenya, for example, Global Digital Economy on the Rise the impact of mobile money on increasing remittances to rural areas and lowering transaction costs has had a direct The rise of digital technologies and digital economy (DE) impact on reducing poverty rates17, while in Peru mobile offers unique opportunities for accelerated economic phone expansion between 2004 and 2009 increased house- growth, innovation, job creation and access to quality ser- hold real consumption by 11 percent, reduced poverty inci- vices. The accelerating pace of technology diffusion, tech- dence by 8 percentage points (p.p.) and decreased extreme nological convergence, and the emergence of global plat- poverty by 5.4 p. p.18 forms are disrupting traditional development and business models, expanding access to global markets, facilitating The Digital evolution in Africa has been important with services provision, delivering productivity gains, and gen- impressive progress in many areas, however it is yet erating employment. Although more rigorous empirical to become a real revolution. DE in Africa is currently at work to demonstrate causal impact of digital technology an inflection point, whereby the falling cost of technol- adoption on productivity and inclusion outcomes is neces- ogy is allowing scalable innovations. For instance, cel- sary, burgeoning research has been offering positive cor- lular subscriptions are sky-rocketing – with 420 million relational evidence12. Between 2001 and 2011 the employ- unique mobile subscribers in Sub-Saharan Africa (SSA), ment growth in the technology sector in the Middle East reaching 44 percent of the continent’s population at the and North Africa (MENA) region, for instance, was 27 times end of 2017, up from 25 percent in 2010. Mobile Internet higher than in other sectors13. The MIT Sloan Research penetration reached 240 million people (or 26 percent demonstrates how digital technologies can significantly penetration) in 201619, with mobile technologies and boost business productivity by estimating that companies services generating 7.1 percent of GDP or US$110 bil- adopting them are 26 percent more profitable than their lion in 2017. Moreover, mobile money is driving financial sectoral counterparts14. On the national level, a study by inclusion, particularly in SSA, with the number of ac- Deloitte stipulates that bridging the Internet penetration counts doubling to 21 percent between 2014-1720. African rate gap with developed economies could enhance produc- e-commerce is also growing rapidly, at an estimated an- tivity in developing countries by up to 25 percent, gener- nual rate of 40 percent. These dynamics have come on the ating US$2.2 trillion in additional gross domestic product back of a tenfold increase over the past five years in the (GDP), creating more than 140 million new jobs, and lift- supply of new intermediaries and support structures, such ing more than 160 million people out of extreme poverty. as incubators, accelerators and tech hubs, among others, Overall, the global DE, worth estimated US$11.5 trillion or numbering more than 200 across the Africa region today. 15.5 percent of global GDP in 2016, is expected to reach 24.3 Overall, the African DE is expected to grow to over US$300 percent in less than a decade (by 2020)15, far outpacing the billion by 2025, yet much more can be achieved and while, growth of the ‘traditional’ economy’. The full rollout of 5G as cited above, global DE accounted for 15.5 percent of technology alone is estimated to unlock US $12.3 trillion in global GDP in 2016, African countries enjoyed only a tiny revenues in various industries by 2035, equivalent to 4.6 fraction of these benefits. This can be holistically explained percent of global production, supporting 22 million new by the fact that in general, the gains of the digital expan- jobs16. If managed well and accompanied with appropriate sion, as evidenced by the 2016 World Development Report risk mitigation strategies and equity-enhancing policies, (WDR 2016), have thus far been “skewed towards the wealthy, these technologies can, in principle, be harnessed for the skilled, and influential, better positioned to take advantage of benefit of the poor by lowering information barriers and new technologies”21. 12 For example, cross-country evidence suggests a positive relation between ICT expansion and economic development, as per Roller and Waverman, 2001. Telecommunications Infrastructure and Economic Development: A Simultaneous Approach; Torero and Von Braun, 2006. Information and Communication Technologies for Development and Poverty Reduction: The Potential of Telecommunications; Djiofack- Zebaze and Keck, 2009. Telecommunications Services in Africa: The Impact of WTO Commitments and Unilateral Reform on Sector Performance and Economic Growth. 13 World Bank. 2018. Middle East and North Africa Economic Monitor, October 2018: A New Economy for Middle East and North Africa. Washington, DC: World Bank. © World Bank. Available here. 14 Bonnet, D., Westerman, G., McAfee, A. 2014. Leading Digital: Turning Technology into Business Transformation. Massachusetts Institute of Technology and Capgemini Consulting. Available here. 15 Oxford Economics, Huawei. 2017. Digital Spillover: Measuring the True Impact of the Digital Economy. Available here. 16 IHS Economics and Technology. 2017. The 5G Economy: How 5G technology Will Contribute to the Global Economy. Available here. 17 World Bank. 2010. Kenya Economic Update, 2010, Edition 3: Kenya at the tipping point, with a special focus on the ICT Revolution and Mobile Money. Available here. 18 Beuermann, D., McKelvey, C., Vakis, R. 2012. Mobile Phones and Economic Development in Rural Peru. Journal of Development Studies 48 (11), November 2012. 19 GSMA intelligence. 2017. The Mobile Economy in Sub-Saharan Africa 2017. Available here. 20 World Bank. 2018. Global Findex. Available here. 21 World Bank. 2016. World Development Report 2016: Digital Dividends. Washington, DC: WB. Available here. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 21 Strategic Assets and Sound Foundations Position Senegal Well to Benefit from DE… In these global and regional contexts of expanding tech- as well as more than 4,000 km of publicly owned national nological innovation, a small, open and politically stable fiber optic network with its information and communica- country like Senegal with historically strong institutions tions technology (ICT) infrastructure ranking among the and a growing young, largely urban, population is well most developed and successful in West Africa. Against this positioned in Africa to take full advantage of the transfor- background, the McKinsey Global Institute (MGI) observed mational potential of digital technologies. The Senegalese in 2013 that Senegal, alongside with Kenya (as per Figure environment is relatively DE favorable and is characterized 1), had “emerged as the continent’s leaders in terms by a young (62 percent of the population is under 25 years of the relative economic contribution of the Internet” to GDP, old) and growing urban population (+3.6 percent per annum) with its Government undertaking concerted efforts to as well as big and active diaspora providing skills, networks stimulate Internet demand and private consumption of in developed markets, and financial support. The favorable digital services, accounting for more than 85 percent of its conditions are amplified by a widespread use of technolo- iGDP.22 Overall, DE in Senegal has a high potential to play a gies (Senegal’s smartphone adoption rate is among the catalytic role in boosting competitiveness and productivity highest in West Africa at 35.6 percent), a high entrepreneur- across all sectors of the economy as well as in improving ial activity rate (39 percent of the population aged 18 to 64 is the country’s inclusion outcomes. At the same time, DE either setting up or heading a new company), and an evolv- presents not only opportunities and new avenues for rapid, ing innovation ecosystem, currently counting more than 15 innovative and job-creating economic growth, but also incubators, accelerators, co-working spaces, serving the strategic challenges and risks. There is also much to lose needs of a community of over 2,500 startups and entrepre- if Senegal is too slow to implement an ambitious and in- neurs. Moreover, Senegal has a bandwidth of 23 Gigabytes/ clusive digital agenda, as a whole generation of Senegalese second (Gb/s) through three submarine cables (South could be excluded from the rapidly unfolding global DE of Atlantic 3 (SAT3), Atlantis 2, ACE) and satellite connections tomorrow. Figure 2. Contribution of the Digital Economy to GDP in Africa (iGDP1), 2013 (%) iGDP % 3.5 Senegal 3.0 Leaders Kenya 2.5 Morocco 2.0 Mozambique Followers 1.5 Nigeria South Africa Tanzania Côte d’Ivoire Emerging Angola Algeria Cameroon Ghana 1.0 Egypt Algeria Nigeria Ethiopia 0.5 Angola Punching below their weight 0 o 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 i5F score % Source: McKinsey Global Institute, 2013. 22 McKinsey Global Institute (MGI). 2013. “Lions Go Digital: The Internet’s Transformative Potential in Africa”. Mickinsey & Company 2013. Available here. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 22 …However, Challenges Persist, and Significant Lags Have Accumulated Despite important assets and relatively favorable en- Moreover, Senegal is burdened by significant spatial vironment, Senegal has been progressively losing its inequities in digital infrastructure provision that di- leading digital position in the region, largely linked to rectly stifle equitable growth, job creation and innova- limited availability of adequate and affordable digital tion across the country. Amid significant variances in infrastructure and reflected in weak development of inter- and peri-urban connectivity, access to digital infra- downstream digital solutions and applications. Over structure and digital services that in turn facilitate access the past 10 years, Senegal has been steadily forfeiting its to labor markets, knowledge, information and economic chance for a regional leadership position in the ICT and and social opportunities has concentrated around a hand- DE domains, as access to the Internet broadband has re- ful of growth poles, particularly Dakar. This has resulted mained quite limited with mere 7 percent of population in uneven spatial economic development, leaving rural enjoying fixed broadband and 19 percent mobile broad- and congested areas of deep poverty, where the expected band in 201723. Coupled with relatively expensive mobile positive externalities of infrastructure provision are the Internet connections, this has inhibited the development highest, either with no or limited coverage (as per Maps 1). of even basic support services, such as back office func- Moreover, the existing public financing mechanisms, such tions, let alone sophisticated digital public and private as the Universal Service Fund, do not focus on bridging the solutions and applications. The number of secure Internet geographic divide in broadband Internet infrastructure. servers per 1 million of people in Senegal is extremely low Rural areas, secondary cities and peripheral districts are at 16.7 in 2018 against 35.9 in Rwanda, 219.1 in Kenya and particularly disadvantaged. Not only do they lack connec- 760.4 on average in SSA24, posing a serious challenge for tivity appropriate to their size and population, but they also a wide adoption of digital technologies and e-commerce. benefit the least from the positive effects of competition. Moreover, despite a relatively solid 2G cell phone coverage For example, the number of districts with adequate com- across Senegal (with the lowest being around 72 percent), petition between three main telecom providers is much the computer usage is much lower, with some regions at lower in Pikine than in Dakar. Even in the capital, many less than 1 percent25, presenting yet another hurdle for urban households and businesses are excluded from the digital solutions dependent on the frequent use of com- benefits of competition, because they live or operate in puters. Largely as a result, the contribution of the ICT neighborhoods covered by only one operator. sector to GDP growth in Senegal has been stagnating over recent years (Figure 3). Likewise, despite a relatively good This comes against the background of a distorted and mobile penetration even for the bottom 40 percent of the highly concentrated market structure, competition on population, Senegalese households are lagging peers in which is stifled by restrictive public regulations and in- the adoption of digital services, such as online payments, adequate regulatory capacity to push back against con- enabled by such infrastructure (Figure 3). straining quasi-monopolistic arrangements. Historic Figure 3. Digitally-enabled Access to Finance, 2014 4.E+06 70 Made or received digital payments (% age 15+) 4.E+06 60 Made or received digital payments, income, poorest 40% (% age 15+) Transactions per 100,00 adults 3.E+06 Percentage of population 50 Made payment using a mobile phone (% age 15+) 3.E+06 40 2.E+06 Made paymen using a mobile phone, income, poorest 40% (% age 15+) 30 2.E+06 Made payment using a the internet (% age 15+) 20 1.E+06 Made payment using the internet, income, poorest 40% (% age 15+) 10 5.E+05 Mobile money transactions per 100,000 adults 0 0.E+00 Côte d’Ivoire Kenya Rwanda Senegal Source: World Bank Staff estimations based on the 2014 G20 Financial Inclusion Indicators from WDI. 23 International Telecommunication Union (ITU). 2017. Statistics. Available here. 24 World Development Indicators (WDI), 2018. Available here. 25 World Bank Staff estimations based on Global Monitoring Database, using the 2011 ESPS household survey. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 23 Figure 4. ICT Contribution to GDP growth in Senegal, 2000-16* 1.6 12.0% 1.4 10.0% 1.2 8.0% 1.0 0.8 6.0% 0.6 4.0% 0.4 0.2 2.0% 0 0.0% 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Contribution to real GDP growth Postes & telecommunications Share in GDP Postes & telecommunications Source: World Bank, 2018. Systematic Country Diagnostic of Senegal. * Although the contribution of the ICT sector (as a stand-alone sector) to GDP growth has stagnated over time, it may be possible that its contribution to economic growth could be increasing over time due to potential indirect effects including production and employment generation in downstream firms that are users of goods and services provided by the ICT sector. Map 1. Connectivity Coverage in Senegal: 2G (left panel) and 3G (right panel), 2017 Source: MCTPEN and Titane Conseil, 2018. «Actualisation de la Stratégie d’Accès au Service Universel des Télécommunications du Sénégal». state-owned telecom operator Sonatel, which owns the Overall, Senegal is still transitioning towards broad country’s largest fiber optic network, is the sole opera- digital technologies dissemination. The Digital Adoption tor to provide asymmetric digital subscriber line (ADSL) Index (DAI) built within the framework of the WDR 2016 to Internet and until recently the only holder of the 4G license measure the worldwide dissemination of digital technolo- acquired on a non-competitive basis. The uneven and non- gies (on a 0-1 scale) demonstrates the status of technol- transparent granting of 3G and 4G licenses have exacer- ogy adoption by Senegal compared to other 179 countries. bated long-lasting imbalances in market competition. The Senegal’s results in 2016 (Figure 4) were higher for the basis used to determine the level of charges is not clear, government (0.43 against 0.59 in Kenya and 0.67 in Rwanda) but the operators consider them high compared to other compared to businesses (0.39 against 0.57 in Kenya and neighboring countries, such as Morocco. As a result, ac- 0.42 in Rwanda) and people (0.23 comparable to Kenyan cording to the product market regulation indicators of the 0.20 and Rwandan 0.19)26, signaling the need for additional Organization of Economic Co-operation and Development incentives to stimulate broad technology adoption by indi- (OECD), the telecommunications regulation in Senegal ap- viduals and enterprises. At the same time, another global pears relatively more restrictive in Senegal than in other indicator, the United Nations Electronic Government African countries. Development Index (EGDI) 2016, illustrates evident gaps 26 World Bank. 2016. Digital Adoption Index Database. Available (in excel) here. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 24 Figure 5. Senegal’s Position on the Digital Adoption Index (DAI), 2016 (left panel) and Electronic Government Development Index (EGDI), 2018 (right panel) DAI, 2016 EGDI, 2018 1.0 TRANSFORMING TRA CHE Bulgaria 47 FIN SGP CAN 0.9 NORR NZL AUS DNK SWE NLD Mauritius 66 IRL BEL USA GBR EST 0.8 CYP SVN ISL FRA DEU LUX Romania 67 LTU LVA PRT JPN KOR MYS MLT AUT BRB 0.7 ZE QAT CHL CZE HL ARE ISR South Africa 68 MUS HUN POL SVK S ESP GEO HRV ROU ITA TTO T GRC G CRI BGR URY Y Philippines 75 0.6 SYC PAN NC J JOR MKDSRB ARM GUY BWA ALB B RUS Complements LKA UKR KAZ ZMB SLV MEX TUN M MNG TUR Ghana 101 GHA RWA KGZ THA ZAF COL SAU BHR 0.5 BEN LSO BLZ PHL UZB MAR PER BRN CHN CH LBR SEN EN TJK VNM IDN DOM ARG KWT Morocco 110 SWZ SW GAB NIC KEN IRN GTM TZANAM ECU BRA 0.4 BDI SLE LAO CMR N NPL BGD GD IND Cape Verde MOZ MO GMB G PAK HND PRY HN BOL EGY 112 MWI WI DZA MRT NGA G 0.3 ETH MLI ZWE YEM Y Rwanda 120 LBY TRANSITIONINGN T I G AGO AG VEN 0.2 KH KHM Kenya 122 HTI Nigeria 143 0.1 Cambodia 145 0 EMERGING 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 Senegal 150 Technology High-income Lower-middle-income Cote d'Ivoire 175 Upper-middle-income Low-income Source: World Bank (2016) World Development Report: Digital Dividends; UN DESA (2018). E-Government Survey. in Senegal’s e-government performance vis-à-vis global Africa in the digital domain”. In this context, key govern- and regional leaders (Figure 5)27, reflecting the need for a ment priorities include digital infrastructure, innovative holistic approach, going beyond technology, in creating an digital technologies and their diffusion across priority enabling governance environment for a thriving DE. economic sectors, ICT/digital skills and entrepreneurship. These commitments build on the Digital Senegal Strategy, To Address These Gaps the Government Stratégie Sénégal Numérique 2025 (SSN2025), aligned with international best practices and focused on improving sec- Has Developed Appropriate toral competition, access and governance. It is structured Strategies and Policies around the slogan “digital for all and for use in everything in Senegal by 2025, enhanced by an efficient enabling ecosystem Recognizing the strategic relevance of the DE potential and a dynamic and innovative private sector”. The four main and persisting challenges in unlocking it, the Government axes of SSN2025 are: (i) enhancing broadband connectivity of Senegal (GoS) is committed to sectoral reforms and for all and promoting high-quality, affordable and reliable reinvigorating the country’s regional digital leadership. telecom services; (ii) digitally connecting public entities Adopted in 2014 national development plan, Plan Senegal to dematerialize and facilitate administrative procedures, Emergent (PSE), that has just entered its second implemen- while ensuring synergies, reduced costs and eliminated tation phase through Plan d’Action Prioritaire II for 2019- transaction delays; (iii) creating an enabling environment 2023 (PAP2), identifies DE as one of the key pillars of strong, for a thriving local digital private sector, promoting invest- inclusive and sustainable growth. PAP2 clearly formulates ment and facilitating exports; and (iv) promoting the in- the GoS commitment to “promote an innovative and value- novative use of digital resources to increase productivity creating digital industry and boost technology transfer oppor- and competitiveness of the overall economy. tunities with the ambition of becoming a reference country in 27 Mathematically, EGDI is a weighted average of three normalized scores on three most important dimensions of e-government, namely: (1) scope and quality of online services (Online Service Index, OSI), (2) development status of telecommunication infrastructure (Telecommunication Infrastructure Index, TII), and (3) inherent human capital (Human Capital Index, HCI), as per United Nations. 2016. E-Government Survey: E-Government in Support of Sustainable Development. UN, New York, 2016. Available here. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 25 Despite these important and well-formulated policy ori- 1. Digital Infrastructurethat brings online people, busi- entations, key stakeholders share a view that the pace of nesses, and governments, and includes, among others, their effective implementation remains slow and uneven. connectivity (high-speed Internet and Internet exchange Difficulties explaining the widely documented and equally points), Internet of things (network of interconnected symptomatic for other sectors “implementation gap”28 are and interacting devices) and data repositories (data linked, among others, to the following factors: (i) the lack of centers and clouds), all of which must be secure, ap- political leadership and institutional alignment in the sec- propriately accessible and capable of supporting high toral strategic governance, (ii) inconsistent policies among bandwidth and transmission speeds; a plethora of various public institutions, resulting in (iii) a 2. Digital Platforms that offer products and services ac- weak quality of public-private dialogue, (iv) the absence of cessible through digital channels, such as digital ID an updated legal and regulatory framework favorable to the systems, digital people-facing government services (civil full opening of the digital infrastructure sector to compe- and business registries, e-taxation and e-customs, etc.), tition exacerbated by (v) the historical operator’s capacity and commercial digital platforms (social media and e- to withstand the political outcomes that would attempt to commerce, ride-sharing and streaming services, data correct its monopolistic status, as well as (vi) regulatory analytics and augmented reality, digital education and gaps in digital finance sector and insufficient support for health, etc.); digital entrepreneurship. 3. Digital Financial Services that enable electronic trans- actions essential for e-commerce and government ser- vices and open a pathway to a range of services beyond B. Methodology payments, including credit, savings, and insurance, stimulating stronger financial inclusion of unbanked households and businesses; This report is based on the WBG Digital Economy for 4. Digital Skills that include basic digital literacy, Africa (DE4A) analytical framework. Recognizing the core digital user skills as well as professional and transformative potential of digital technologies as sources advanced technology skills combined with business of productive and inclusive growth, the WBG, in close acumen and knowledge, necessary to create local partnership with key public and private stakeholders, content and drive made-in-Africa solutions, which launched in April 2018 the DE4A initiative that marks a are needed to ensure that the continent is not only more holistic approach to work with African governments on the consumer side, but also plays a vital role in to boost their still nascent and plagued by challenges DEs. producing technology. The DE4A offers a comprehensive analytical framework that elaborates on five foundational blocks of dynamic, 5. Digital Entrepreneurship t hat creates an ecosystem to inclusive and safe DE. These five critical foundations are bring DE to life with innovative growth-oriented busi- as follows (Figure 6). nesses (both new and transformed existing) contributing Figure 6. Digital Economy for Africa (DE4A) Framework APPLICATIONS LIKELY TO DEVELOP ONCE THE FOUNDATIONAL ELEMENTS ARE IN PLACE: • E-COMMERCE • OPEN BANKINGnon-banks offer tailored services USAGE • DATA LOCKERS to access selected services DIGITAL ENTREPRENEURSHIP AND INNOVATION DIGITAL SKILLS DIGITAL AND LITERACY PLATFORMS DIGITAL FINANCIAL SERVICES DIGITAL INFRASTRUCTURE Foundational elements Source: The World Bank 2018. 28 World Bank. 2018. Systematic Country Diagnostic of Senegal. World Bank, Dakar. © World Bank. Available here. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 26 Figure 7. DECA Methodology A. Assessing Foundations of DE I. 'Analog' Components Grows Jobs Improved services ü National policies and strategies ü Leadership and institutions ü Laws, regulations and standards ü Human capital Impact ü R&D and ICT Innovation ü Business environment ü Trust and security II. Digital Components ü Digital infrastructure ü Shared digital platforms ü New/emerging technologies Digital Digital Digital Public Secgtor Business Citizens/Consumers B. Benchmarking Current DE • Public sector • Business • Citizens/consumers Digital sector of economy • Digital economy sector (ICT, content and media) C. Social and economic impact Digital foundations • Overall assessment • Economic impacts Non-digital foundations • Social impacts Source: World Bank, Digital Development Partnership, 2018. to net employment growth and helping enhance coun- the existing digital government (e-government) develop- tries’ competitiveness and productivity; ment potential using eight key dimensions: (i) leadership and governance; (ii) user focus; (iii) business process To successfully build each of these foundations and accel- change; (iv) capabilities, culture and skills; (v) shared in- erate the growth of various economic sectors dependent frastructure; (vi) data-driven management; (vii) cyberse- on them, enabling policies and a strong regulatory and curity, privacy and resilience; and (viii) enabling national intuitional governance are essential. ecosystem. For each dimension, a status-quo assessment as well as an identification of future development work To deepen the team’s situational analysis of the DE in have been undertaken. Senegal under the DE4A framework, two WB diagnos- tic tools were leveraged to derive main conclusions of The analytical work conducted using these diagnostic this report – the Digital Economy Country Assessment tools helped to identify the level of maturity and a refer- (DECA) and the Digital Government Readiness ence point of the DE development in Senegal as of 2018. Assessment (DGRA). DECA focuses on assessing the The analysis identified major gaps, challenges and oppor- existing level of the DE development (its snapshot, as tunities to determine judicious public-sector interventions per Figure 7) to determine its maturity level based on and high-impact transformative projects. This evaluation quantitative international benchmarking and qualitative has a potential to contribute to the formulation of strate- assessment informed by a series of in-depth expert in- gic guidelines on key areas, which, however, will require terviews and broad consultations with key stakeholders. deeper analysis before decisions are taken on key reforms Core focus areas of the analysis are (i) non-digital founda- and priority investments in enabling digital technologies. tions, including policy and strategic planning, leadership, institutions, regulatory framework, and human capital; The report findings were enriched and validated by in- (ii) digital foundations, including digital infrastructure, puts from key stakeholders in Senegal and within the WB, shared digital platforms, and emerging technologies; and as the analytical work was deeply anchored in the ongo- (iii) digital economic sectors, comprising ICT as well as ing WB policy dialogue with the GoS. In July 2017, the WB content and media sectors. participated in a discussion with the GoS and private sec- tor representatives organized by the Performances Group, The DGRA is a strategic planning tool focused on govern- a private consultancy, concerning the role of the digital mental digital platforms and services. As such, it evaluates sector in the Senegalese economy and Africa in general. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N 27 Subsequently, broad stakeholder consultations were con- 29 transactions and (2) transport sector (particularly the Port) ducted throughout 2018 in the context of the second multi- to leverage enabling digital technologies to facilitate trade sectoral Development Policy Financing (DPF) operation in and improve supply chain management and logistics. support of Senegal’s efforts to enhance governance, private Finally, continuous discussions were held with the WB sector participation and inclusive access in the electricity Task Team Leaders to systematically share with them main and broadband Internet sectors, as well as to boost the de- report findings, on the one hand, and gather from them velopment of a currently nascent DE30. Moreover, a two-day pertinent sectoral comments, on the other hand. consultative workshop co-organized by the report team and MEFP in close collaboration with IFC and Microsoft In this context, the main objectives of this report, which took place in March 2018 focused on “Digital Economy for provides a snapshot of Senegal’s DE today, are three-fold. Inclusive Growth in Senegal”. Convened to deepen the dia- Building on existing national strategy and legal documents, logue on Senegal’s digital transformation and to consult, WB reports, international indicators and good practices as reflect, and share experiences, the workshop was attended well as wide consultations, the study aims to (i) conduct a by relevant decision-makers of various ministries and stocktaking analysis of key issues, achievements, govern- public agencies as well as representatives of the Senegalese ment policies and interventions in each of the five foun- and international private sector. The two main themes dational areas of the DE, (ii) identify key constraints and identified as government priority projects by the MEFP opportunities per area, and (iii) recommend appropriate were (1) digital taxation as a government-enabling plat- reforms, priority actions, and relevant projects to address form to increase the use of electronic payments and digital them and ignite an accelerated DE development. 29 Key public actors included, but are not limited to the following: Ministry of the Economy, Finance and Planning (MEFP); Directorate-General of Tax and Estates (DGID); Minister of Communications, Telecommunications, Post and Digital Economy (MCTPEN); State IT Agency (ADIE); Post and Telecommunications Regulatory Authority (ARTP); TV Broadcasting SA (TDS); Dakar Port Authority (PAD); Organization of Information Technologies Professionals (OPTIC); Association of ICT Users (ASUTIC); Delegation for Rapid Entrepreneurship (DER); Agency for the Development and Supervision of Small and Medium-Sized Enterprises (ADEPME). Key private sector actors included, but are not limited to the following: Telecom operators (Orange, TIGO, Expresso); banks (EcoBank and Société Générale); investment funds (Partech Ventures and Teranga Capital), incubators (CTIC Dakar and Jokkolabs); higher education and digital training institutions (Simplon and l’École Supérieure Polytechnique). 30 World Bank (2018). Senegal – Second Multi-Sectoral Structural Reforms Development Policy Financing. Program Document. World Bank, Washington DC. Available here. D I GI TA L E C O N O M Y F O R A F R I C A C O UNT RY D IAGNO ST IC O F SENEGAL | 1. INT R O D UC T IO N SHUTTERSTOCK / ANTON_IVANOV DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL 29 2. DIAGNOSTIC OF THE DIGITAL ECONOMY IN SENEGAL 30 A. Foundational Elements: The GoS also issued a decree on the creation of the National Digital Consultative Council (Conseil National du Numérique Regulation, Competition, - CNN), hosted under the Prime Minister’s office to facilitate private sector participation in sectoral governance and stra- and Governance tegic initiatives. Additionally, the Code coexists with five other important laws on the information society35 that are currently under revision launched by the Ministry of Communications, This section reviews the main foundational elements laid Telecommunications, Post and Digital Economy (Ministère by Senegal in its legal and regulatory framework, focusing de la Communication, des Télécommunications, des Postes et de specifically on Internet connectivity and broadband access, l’Economie Numérique - MCTPEN).  as digital infrastructure is a core to the success of other di- mensions of digital transformation, including digital finance However, the law is still fraught with several important and entrepreneurship as well as to the development of other limitations, one of which is related to the legal regime of sectors that, together, form the basis of a successful DE. licenses and general authorizations that remains lengthy and constraining. The new Telecommunications Code, 1. Legal and Regulatory which is supposed to add flexibility and adaptability to the Environment in Transition access regime of licenses and authorizations (described in Table 1), stops short of establishing the principle of not An outdated regulatory framework has persistently acted limiting the number of licenses, even though, similar to as a brake on the development of an accessible and af- the ECOWAS sectoral laws, Senegal’s law clearly targets fordable digital infrastructure in Senegal. The country promoting competition. In fact, legal provisions remain too has transposed relevant sector provisions of the Economic restrictive, leaving the whole regime neither completely Community of West African States (ECOWAS) and West open nor transparent for the following main reasons: (i) African Economic and Monetary Union (WAEMU) into the the scope of licenses is still defined excessively broadly national law through the 2011 Telecommunications Code31, (including all types of networks opened to the public, ex- amended belatedly in 201732. However, in effect, the GoS has cept Internet access providers (ISPs), regardless of whether never developed a set of implementation decrees for the scarce resources are used or not); (ii) the attribution pro- 2011 Code, leaving the sector to operate under an incom- cedure remains long (authorizations are granted by the plete legal framework33. The situation has been exacerbated Minister on the advice of the sector regulator (Autorité de by a multiplicity and an instability of decision centers, Régulation des Télécommunications et des Postes – ARTP), rendering the application of law and the sector oversight and delays can be up to five months) and restrictive (in- erratic, and by the ability of the historical operator to resist vitations to tender in all cases); (iii) although exclusive policy outcomes that limit its monopolist status. Overall, rights are definitively prohibited or repealed, the number in a rapidly evolving environment, the lack of a modern of licenses is necessarily limited due to the attribution pro- regulatory framework, compounded by a difficult political cedure; (iv) authorizations are individual (with specifica- economy context, has prevented an effective reform imple- tions) rather than general. mentation to boost sector competition and efficiency. Another important weakness of the new Telecommunications The recently adopted Telecommunications law ends a long pe- Code pertains to provisions, covering market analysis and riod of regulatory uncertainty, marking a turning point for the asymmetrical regulation, that appear relatively excessive. sector. The GoS profoundly reshaped sectoral legal and regula- The market analysis mechanism, regulated by Articles 78 et seq. tory framework by adopting in December 2018 a new Code on of the new Code, establishes a specific procedure. First, ARTP Electronic Communications34 that focuses on accelerating com- determines the list of relevant markets (with the periodicity of petition and improving the efficiency of universal access public market analyses not specified), taking into consideration ob- policy and programs. Concurrently, key accompanying imple- stacles to effective competition, and then designates reputable mentation decrees on critical aspects related to competition, operators with significant market power (SMP). Subsequently, sector regulation, and universal access policy were approved. leading operators are subjected to specific obligations with 31 Law n°2011-01 of 24 February 2011. Available here. 32 Law n° 2017-13 of 20 January 2017. Available here 33 Apart from (i) the guidelines on the interconnection, adopted by the Regulatory Authority for Telecommunications and Post (Autorité de Régulation des Télécommunications et des Postes – ARTP) in 2014, and (ii) the transferability of numbers, no implementing decrees have been adopted. 34 Law n°2018-28 of 12 December 2018. Available here. 35 These laws include the following: (i) Law n° 2008-10 of 25 January 2008 containing guidelines on the Information Society; (ii) Law n° 2008-08 of 25 January 2008 on Electronic Transactions; (iii) Law n° 2008-11 of 25 January 2008 on Cybersecurity; (iv) Law n° 2008-41 of 20 August 2008 on Cryptology; (v) Law n° 2008-12 of 25 January 2008 on Personal Data Protection. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 31 Table 1. Senegalese Market Access Regime, 2017 Type of Activities Condition Financial Competent Body Contribution Licenses • Establish and exploit telecommunica- Yes, all licenses Yes, specified in MCTPEN tions networks or services accessible to are granted through tender documents public, using scarce resources or not tendering Authorizations • Establish and operate independent To date, no infra- Yes, although not ARTP (independent networks); MCTPEN networks as well as structure operator specified in the law (infrastructure operators, Internet • Infrastructure operators authorized access providers, MVNOs) • Internet service providers • Mobile virtual network operators (MVNOs) Free Entry (subject • Provision of value-added services using No No ARTP to prior declaration available capabilities of telecommuni- to ARTP) cations networks accessible to public Source: Report Authors based on Law n°2018-28 of 12 December 2018 (available here). respect to interconnection and access, including the obliga- as the SMP operators and their obligations in these markets tion to publish a technical and interconnection tariff proposal, for 201838, however underlying market analyses justify- approved beforehand by ARTP. The reference offer of leading ing the selection have never been published. Based on the operators should cover a minimum range of services, includ- ARTP decisions adopted in October 2018, the four following ing the collocation and provision of leased lines, while the retail markets were found relevant: mobile Internet access tariffs of the range of services listed in the catalogue should services, high-speed and very-high-speed residential and be cost oriented. Access obligations, such as local loop (LL)36 nonresidential Internet access services, and mobile voice unbundling, national roaming, or access to mobile operator services. Bitstream wholesale offers were limited to the con- network (for MVNOs) and to underwater cables should be sumer market, while LL wholesale offers were segmented implemented, regardless of any market analysis, as is the case into business termination links, urban/interurban operator in many other ECOWAS countries. The Code prequalifies the links, and international links39. Sonatel was found dominant essential infrastructure, to which holders deemed powerful in all markets, whereas Expresso and Tigo were deemed in relevant markets are obliged to provide access, to include: dominant in voice and SMS terminations, access to special underwater cables, landing stations, virtual landing points, services, and LL operations (Expresso only in the last-noted Internet exchange points, national transport networks, LL market). The proposed obligations imposed on dominant and local sub loop. This list, however, appears excessive and operators include (i) an obligation to grant open and non- uncorrelated with a proper market analysis. In fact, if the right discriminatory access to their essential infrastructure and to of access to essential infrastructure is intangible and in line publish a reference offer with cost-oriented tariffs on whole- with international best practices, the qualification of essential sale markets40; and (ii) an obligation of replicability of com- infrastructure itself is likely to evolve over time and henceforth mercial offers and nondiscriminatory tariffs between on-net cannot and should not be fixed by law. and off-net traffic on the retail markets. Unfortunately, the underpinning market analyses substantiating this list and Following this regulation, ARTP has recently determined a the designation of dominant operators have never been pub- new list of relevant markets for a four-year period37 as well lished or scrutinized41. 36 In telephony, a local loop is a wired connection from a telephone company›s central office to its customers› telephones at homes and businesses; this connection is usually on a pair of copper wires called twisted pair. 37 Decision n°2018-004 determining for 2018–21 the relevant markets of the telecommunications sector. 38 Decision n°2018-005 fixing for 2018 the list of powerful operators in the relevant telecommunications markets. 39 At the same time, the national and international fixed voice transit wholesale markets were abolished. 40 The obligation related to wholesale markets to allow access to national and international connectivity to better address broadband needs requires (1) technical reference offers to be adapted in terms of the interfaces and speeds offered, and (2) the capacity-leasing services on submarine cables to be supplemented by terrestrial links to enable access to the cable landing stations, and adapted colocation offers. 41 In particular, in its December 2018 Decisions the ARTP refers to “two studies that should enable it to, on the one hand, obtain all the cost items borne by the operators, and on the other, suggest ways of improving the interconnection, especially with the advent of Internet Access Providers (IAPs), MVNO and infrastructure operators, for the next three years”. These are (1) a Study on the Technical and Economic Criteria of the Interconnection in Senegal, which the Decision 2018-004 openly refers to; and (2) an Audit of Prices charged by leading operators for the 2014–16 period. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 32 Box 1 Over-the-Top Regulation in Senegal The definition of “telecommunications services” adopted by the ECOWAS as well as the 2011 Telecom Code excludes “services consisting in providing contents using telecommunications networks and services”, de facto leaving the over-the-top (OTT) out of the regulatory purview. Based on available public information, Senegal has no specific regulation applicable to OTT, although the issue has been under discussion since late 2017, and ARTP has initiated a study on the “regulatory framework for new digital players/services” with four main components: • Analysis of the OTT’s impact on the telecommunications ecosystem in Senegal; • Benchmarking against international best practices of the treatment of new players; • Evaluation of new digital developments (Internet of Things (IoT), Big Data, mobile financial services) as well as applicable and appropriate supervision, development, and regulatory mechanisms; • Elaboration of criteria for integrating and monitoring the activity of new players. Unfortunately, any information pertaining to the completion of this study is yet to be published by ARTP. In addition, the new Telecom Code clearly establishes the principle of net neutrality through (i) the obligation imposed on operators and ISPs to provide an open Internet and (ii) strict traffic management control. However, there is a significant loophole in this mechanism, as it provides ARTP with the possibility “…to authorize or impose any traffic management measure, which it considers useful to preserve fair competition and ensure the equitable treatment of similar services in electronic communication sector”. (Article 28, last subparagraph, Telecommunications Code of 2018). This provision has triggered heated debate and strong opposition from the Senegalese Association of ICT Users (Association Sénégalaise des Utilisateurs de TIC – ASUTIC) that has raised concerns that the state might use this provision to legitimize Internet outage or block certain communication services.* In this context, for example, Facebook’s Free Basics offer, marketed in Senegal by the Tigo operator, could be prohibit- ed.† Sources: Report Authors based on relevant regulations. * Open Letter to President Macky Sall by ASUTIC on the new Electronic Communications Code. December 2017. Available here. † Facebook’s Free Basics principle, deployed in many African countries by providers holding licenses in partnership with Facebook, is to provide free access to Internet with the possibility of accessing only Facebook and other provider-selected sites, while all other Internet services and sites are blocked. 2. Challenge of Competitive Imbalances Admittedly, rather than stimulating the development of inde- pendent players and competition, the sector authorities have The evolution of the telecom market in Senegal and the ab- systematically strived to consolidate the market around the sence of pro-competition regulatory environment have bred historical operator, eventually granting telecommunications a quasi-monopoly market structure, which negatively affects licenses to only two other global operators, Millicom’s Tigo43 accessibility, affordability and quality of Internet services, (operating in Senegal since 1999) and Sudatel’s Expresso (op- while inhibiting private sector investment and innovation. erating in Senegal since 2009), both of which remain much In a context marked by the need to tighten public spending smaller in the scale of their operations and coverage than and investments, the infrastructure of the Senegalese national Sonatel. Indeed, Sonatel accounts for 58 and 65 percent of telecommunications network and its historical state-owned the mobile telephony and mobile Internet markets by value operator Sonatel (Société Nationale des Télécommunications du respectively, owns the largest fiber optic network and is the Senegal) was privatized in 1997 with Orange/France Telecom only provider of fixed Internet and 4G services, dominating all acquiring a 42.33 percent stake (further increased to 52.2 key market segments (Figure 8), including: percent in 200942). Following this privatization, the State did • Fixed telephony  (call termination on the fixed network, not deem it necessary to significantly change the competitive collection of traffic on the fixed network, national traffic, dynamics of the sector and pursued a controlled liberaliza- and international traffic); tion, or guided deregulation, strategy, as a result of which over 15 ISPs present on the market as of the end of the 1990s • Mobile telephony(call termination on a mobile network have eventually left. These exits took place in the context of and termination of short messages on a mobile tele- absent institutional, legal and regulatory framework suffi- phone network); ciently adapted to their activity, exacerbated by the reluctance • Data transmission(access to broad band and access to of the GoS to authorize access providers to deploy their own the LL); facilities, thuswise compelling them to rent Sonatel’s facilities • Capacity services(capacity leases and access to the inter- at excessive prices, unavoidably causing market shrinkage. national capacity). 42 The Senegalese government has remained Sonatel’s second-largest shareholder with 17.28 percent of the operator’s capital. 43 In May 2018 Swedish mobile telecom giant Millicom completed the sale of TIGO Senegal to Saga Africa Holdings consortium - a special purpose vehicle, whose shareholders include French billionaire Xavier Niel’s private holding company, NJJ; Malagasy millionaire Hassanein Hiridjee’s Sofima and Senegalese tycoon Yerim Sow’s Teyliom Group. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 33 Figure 8. Market Share of Mobile Operators in Senegal, 2016 (%) Sonatel Tigo Expresso 9% 22% 19% 26% 52% 58% 65% 26% 23% HHI: 3864 HHI: 4254 HHI: 4982 Market shares for mobile telephony by subscribers Market shares for mobile telephony by value Market shares for mobile internet based on value Source: ARTP 2016; World Bank Survey. Figure 9. Comparison of Concentration Index of Mobile Markets, 2016 6 000 5 000 5 000 3864 4 500 4 000 3 500 3 000 2 500 2 000 Nigeria Tanzania Ghana Gambia Uganda South Africa Benin Mozambique Jordan Morocco Egypt Cameroon Burkina Faso Tunisia Zambia Rwanda Senegal Botswanda Zimbabwe Mali Kenya Source: ITU 2017. The recent entry of three new ISPs has boosted competi- and IPTV (Internet Protocol TV) services, on top of the lack tion, but the situation remains fragile, as reflected in an of regulation on dominant operators. The 2016 experience unfavorable international benchmarking of Senegal vis- with opaque and ad hoc 4G license allocation via direct bilat- à-vis other countries in the region and beyond. On top of eral negotiations with the incumbent operator in violation of three AIs (Waaw SA, Africa Access, and Arc Informatique), in the Telecom Code and best international practices, also re- June 2017 three MVNO licenses were granted to You Mobile, flects uncompetitive practices and non-transparent sector Sirius Telecoms Africa, and Origines SA. However, restric- regulation that has resulted in the de facto monopoly on the tions continue to exist on the provision of certain highly de- 4G market44. In 2018, the GoS finally decided to proactively manded services, such as VoIP (Voice over Internet Protocol) seek to attribute additional 4G frequencies to interested 44 Contrary to best international practices, GoS allocated the 4G spectrum through direct negotiations after the incumbents appeared to have agreed to jointly boycott an open tender. More specifically, after the initial call for tenders for 4G licenses that was launched in January 2016 (limited to existing companies and thus fraught with a higher risk of collusive behavior), all three mobile operators collectively refused to submit bids. In a joint letter to ARTP, they argued that the price of FCFA 30 billion (equivalent to approximately US $52 million) for a 20-year concession was excessive and offered their own assessment of FCFA 14.5 billion for the 3 licenses (Ecofin Agency, 2016). Despite the common boycott, ARTP did not open a transparent investigation of a violation of the competition rules set out in the 2011 Telecommunications Code (Survey Plus, 2016). Instead its Board of Directors voted to sanction Sonatel for violating public procurement rules but, ultimately, took no action against the company. In the meantime, the GoS seemed to have chosen to sideline ARTP by resorting to direct bilateral negotiations with Sonatel to renew its global license (fixed and mobile), including extending its scope to deploy a 4G network. ARTP does not seem to have participated in this process that resulted in Sonatel acquiring a 17-year 4G license for FCFA 32 billion (equivalent to approximately US $55 million). On top of FCFA 32 billion for 1800MHz (2x10MHz) and 800 MHz bands, the total cost for Sonatel of FCFA 100 billion included FCFA 68 billion to renew its concession for 2G and 3G. Since then two other operators have been negotiating their 4G licenses with TIGO finally acquiring it in December 2018 for FCFA 27 billion. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 34 Map 2. Deployment of 4G in Africa, 2016 competition law by the National Competition Commission (CNC) or the ARTP (at the national level). More specifically, at least six value chain bottlenecks are evident in Senegal 1.  Sonatel’s access to the main international gateway ef- fectively gives it a monopoly over data transmission. The absence of regulatory measures focused on the access to the international gateway further strengthens the domi- nant position of the historical operator and is likely to contribute to the high cost of international calls and data transmission in Senegal. 2.  The fact that mobile network operators have no obliga- tion to host the branded MVNOs – You Mobile (Sonatel network), Sirius Télécoms (Tigo network) and Origins SA (Expresso network) – at an equitable cost endangers the existence of these recently emerged operators. 3.  The high cost (US$10) coupled with the mobile number portability (MNP) dissuades telecom operators from transferring numbers. One year after the launch of the MNP, only 3,243 of 6,337 transferability requests were met45. Functional 4G networks 4.  The capacity supply (backbone-type leased lines) is 4G networks projects/pilots limited in the 2016 Sonatel catalogue to 155 Mbits (1 Non-attributed 4G licenses Synchronous Transport Module Level-1 - STM1), which is extremely low given the growth of uses. Source: Open Signal Database (available here). 5.  The frequency spectrum’s management and price-set- ting modalities are inefficient and should be reviewed, licensed operators, with the aim of allowing for a level play- as shown in the 4G file processing. ing field competition in this important segment. However, the progress is still nascent and the concentration of the Finally, the information published on the ARPT site seems mobile market, as measured by the Herfindahl-Hirschman confusing and incomplete, impeding effective and trans- Index (HHI), is still relatively high in Senegal vis-à-vis most parent sector regulation. Some examples include appear- other countries (Figure 9). And while as many as 32 countries ance of incidental information, non-publication of refer- across the continent had already developed 74 next-gener- ence offers approved in 2016 (and renewed in 2017), and ation 4G networks by 2016 (compared to only one country non-publication of the list of operators and licensed and/ in 2011), including neighboring Benin, Côte d’Ivoire, The or authorized IAPs. Gambia, and Ghana (Map 2), Senegal has still not completed the development of its own 4G network, largely failing to join the global trend, despite the availability of the spectrum that 3. Governance Complexity and can be used for 4G. Limited Stakeholder Coordination Moreover, bottlenecks continue to persist along the entire Persistent issues related to the DE governance in Senegal telecom value chain, impeding facilities-based competi- pose a fundamental challenge of cross-sectoral coordi- tion not only in large markets (international connectivity, nation. By nature, DE issues are cross-cutting and hence national backbone, last mile), but also in retail markets. involve multiple institutional actors. Senegal, like a wide Senegal’s telecommunications regulation is quite burden- range of other countries, has a plethora of public institu- some for the operators without real market power. Until 2017, tions, covering various aspects of DE – each with specific the asymmetrical regulation based on SMP was ineffective obligations and prerogatives, yet all lacking clear leader- (due to the GoS’s limit on IAPs in the market), particularly ship for strategic steering. since the obligations stipulated in the ARTP Guidelines are not legally binding. Moreover, this relative weakness was • N  ominally, MCTPEN is responsible for supporting broad not offset by an effective after-the-fact regulation of the DE development in Senegal with its Department of Digital 45 TeleGeography. 2016. Tigo - Senegal Biggest MNP Beneficiary in First Year. September 2016. Available here. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 35 Box 2. Effects Expected from a Full Opening of the Telecommunications Sector to Competition Achieving the objective of ensuring 100 percent access to high-speed Internet by the population and businesses would invariably generate signif- icant positive effects throughout the entire Senegalese economy. Each 10 percent increase in broadband penetration increases GDP growth rate by 1.38 percentage points as well as significantly boosts the volume and value of exports. Moreover, the spread of high-speed Internet increases labor productivity in services and industry, boosting the development of the Industry 4.0 phenomenon* and virtual manufacturing processes, and acts as a vehicle to modernize public administration by making government services more efficient, transparent and accessible. The experience of some African and Eastern European countries that recently liberalized their telecommunications sectors demonstrates that the increased level of competition generated by the entry of new ISPs and wholesale operators can boost the supply of services, leading to significant price reductions and enabling more people to enjoy access to the Internet. At the same time, the analysis of the sector revenues evidences that, despite reduced prices, overall revenues tend not to fall, being compensated by the increased consumption of digital services. Moreover, in addition broad economic moderniza- tion, increased competition significantly increases the state’s tax revenues (through value-added tax (VAT), corporate income tax, and customs duties). For example, Turkey fully liberalized its telecommunications sector in 2008 with the entry of 87 ISPs and 16 infrastructure operators (Information and Communication Technologies Authority, or ICTA 2017). Subsequently, the turnover of Turkey’s telecommunications sector increased from US$15.5 bil- lion in 2009 to US$16.8 billion in 2013, falling back to US$15.3 billion in 2015. Similarly, Bulgaria allowed as many as 670 ISPs to enter the market (Rood 2010). However, between 2009 and 2015, the sector’s overall turnover hasn’t changed much, remaining at approximately US$1.5 billion. In Kenya and Senegal, the comparative evolution of the sector’s turnover illustrates the favorable impact of Kenya’s structural reforms. Even though in 2011, the sector’s turnover was the same in Kenya and Senegal (US$1.3 billion), by 2014 it had reached US$2.2 billion in Kenya, while stagnating in Senegal at US$1.5 billion (as per Figure on the left). 2,500 Kenya's and Senegal's Revenue from all Telecommunication Services, 2009-14 (US$ mln) 2,256 2,000 1,500 1,380 1,525 1,000 500 - Q33Z Q323 Q322 Q32Q Q32C Q32H Senegal Kenya Total liberalization of the sector may negatively affect the financial performance of the incumbent operator, however, as reflected in the Turkish example, this effect is temporary and stimulates a necessary change in the operator’s business model, rendering it more competitive. Despite its resistance to the complete liberalization of the sector, Turk Télékom (55 percent of which was privatized in 2005) was unable to block the entry of many ISPs and infrastructure operators. As a result, it recorded a significant 25 percent drop in its revenues in the fixed-line market as early as 2008. To maintain its market share, it was forced to diversify its revenue structure (particularly digital media and services) and invest significantly (US$500 million) in broadband infrastructure (fixed and mobile). Consequently, by 2014 Turk Télékom had succeeded in stabilizing its fixed-line revenues and significantly increasing those from broadband and mobile telephony. * Industry 4.0 (also referred to as the ‘fourth industrial revolution’) is a term given to the current trend of automation and data exchange in manufacturing technologies, which includes cyber-physical systems, the Internet of Things (IoT), cloud computing, and cognitive computing. Economy and Partnership Promotion (DPENP) conceived clear regulatory framework for institutional oversight, the to render stronger coherence, effectiveness, and synergy Ministry faces significant difficulties in providing strate- in structuring and managing public DE initiatives, while gic leadership and implementing effective sector coordi- providing technical support and additional visibility to nation across a wide range of other actors. projects and programs of line ministries. However, due to • S  tate IT Agency ADIE, which has the technical mandate insufficient technical capacity, limited financial resourc- for e-government46, is linked to another ministry – the es and relatively weak political capital as well as absent Ministry of Investment Promotion, Partnerships and 46 ADIE is mandated to modernize the Senegalese Administration by making administrative procedures paperless and building a national network infrastructure to interconnect State structures. ADIE also participates in defining Senegal’s E-Government strategy to provide citizens and companies with a decentralized interface to access the Administration. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 36 Development of Teleservices of the State (Ministère de la Promotion of Local Products and SMEs (Ministère du Promotion des Investissements, des Partenariats et du Commerce, du Secteur Informel, de la Consommation, de Développement des Téléservices de l›Etat – MPIPDTE), la Promotion des Produits locaux et des PME - MCSICPP). while the sector regulator ARTP reports to the President’s • A  t the same time, the Ministry of Higher Education and Office under the administrative responsibility of its Innovation is responsible for the digital skills agenda, MEFP General Secretariat and drawing its resources directly coves e-taxation and e-finance issues, while the Ministry from collecting fees from telecom operators. of Interior and Public Security, particularly its Directorate • I  n addition, the Commission for Personal Data Protection of File Automation, manages critical State data, including (Commission de Protection des Donness Personnelles – identity and real estate (cadaster and land registry). CDP), the National Cryptology Commission (Commission • F  inally, large departments in various line ministries have Nationale de Cryptologie – CNC) and the Central strong internal capacity and budgets to develop their Technical Service for Numbers and Information Systems own digital projects that are often conceived and imple- Security (Service Technique Central des Chiffres et de la mented in silos. Sécurité des Systèmes d’Information) are yet three oth- • T  he interface with the private sector and civil society er independent administrative authorities, attached di- is also limited and ad hoc, despite a recent creation of rectly to the Presidency. the yet-to-be-functioning National Digital Consultative • S  o is the recently established Delegation for Rapid Council (Conseil National du Numérique – CNN)47 – an Entrepreneurship (Délégation Générale à l’Entrepreneur- advisory structure under the Prime-Minister’s Office, iat Rapide – DER), charged with providing financial and composed of 20 voluntary members, mostly from the technical support to the entrepreneurship ecosystem, in- private sector, and mandated to focus on facilitating na- cluding digital entrepreneurs, along with the Agency for the tional consensus and stakeholder mobilization for stra- Development and Supervision of Small and Medium-Sized tegic sector initiatives. Enterprises (L’agence de Développement et d’Encadre- ment des Petites et Moyennes Entreprises – ADEPME) and A more detailed (however not exhaustive) outline of main the Ministry of Commerce, Informal Sector, Consumption, sector actors is presented in Figure 10. Figure 10. Current DE Institutional Framework in Senegal (nont exhaustive) Office of the President of the Republic Office ot the Prime General Secretariat National Digital Minister of the Presidency Consultative Council (CNN) Ministry of Telecom Min of Inestments Ministry of Ministry of Commission for Telecom & Post & Digital Economy & Teleservicies Economy, Finance Ministry of Territorial Personal Data Regulatory (MCTPEN) (MPIPDTE) & Planning (MEFP) Interior (MoL) Governance Protection (CDP) Authority (ARTP) General Directorate of Public Central Technical Accounting & Service for Delegation for Rapid Entrepreneurship Treasuyry Numbner & Info Systems Security (DER) *Old tutelage General Directorate of Planning & National Cryptology DE & Partnership State IT Agency Economic Policies Directorate of File Directorate of Department (AIDE) (DGPPE) Automation (DAF) Civil Status Commission (CNC) State IT Agency General Directorate (ADIE) of Taxes & Domains *New Tutelage (DGID) (based on decree 2019-769) General Directorate Other Ministries and public of Customs (DGD) entities <...> Source: WB analysis. 47 The CNN members were appointed by the President in February 2018, but the Council is yet to convene its first meeting (as of April 2019). DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 37 B. Access and Digital Figure 11. Mobile Broadband Prices, 2018 Mobile Broadband Service Prices as % of Average Monthly Income Infrastructure 12 1. Coverage, Cost, and Quality The high cost of mobile broadband services in Senegal is a significant obstacle to their development, although recent 6 dynamics has been positive. Despite their decline, mobile 5 5 broadband prices remain too high for most Senegalese, ac- counting for 12 percent of average monthly incomes, and too elevated compared to other countries (Figure 11). A 2 1 rapid take-off of high-speed Internet is possible only when this proportion is equal to or less than 5 percent. Indeed, South Capo Morocco Ghana Kenya Senegal while in South Africa the price of a monthly fixed broad- Africa Verde band subscription decreased from US$23 to $15 between 2009 and 2014, in Senegal, largely due to the monopolistic Source: World Bank analysis based on ITU data. market structure, the price decrease was marginal – from US$38 to $36 (Figure 12, left panel). Consequently, although (individual) offer dropped from 12,500 FCFA to 5,000 FCFA in 2009 Senegal and South Africa recorded equivalent levels for ADSL, while the corporate (company) offers fell from of Internet use (nearly 10 percent), thereafter a significant 250,000 FCFA to 100,000 FCFA. Moreover, the ISPs entry gap has emerged and widened, with South African use rate has triggered the market launch of FTTx offers (most im- in 2015 being the double of that in Senegal (54 percent ver- portantly, by Sonatel) currently priced at 1,000 FCFA and sus 22 percent, respectively, as per Figure 12, right panel). the improvement of ADSL offer speeds. For example, the Fortunately, since the recent entry of the three ISPs on the 2Mbps ADSL offer was migrated to 4Mbps with a price re- market, Internet retail prices have fallen by more than 50 duction from 29,900 FCFA to 19,900 FCFA. Another positive percent – the average price per megabit for the private impact on the market has been the reduction of the waiting Figure 12. Fixed Broadband Prices (left panel) and Usage (right panel), 2009-2015 Fixed-broadband monthly subscription charge, in USD Percentage of individuals using the Internet 72 71 67 68 38 38 36 36 36 62 64 35 60 33 56 32 31 54 54 51 50 49 52 27 27 45 46 47 46 25 40 43 40 41 23 23 37 40 19 36 34 17 16 17 16 15 14 24 12 12 12 12 11 22 12 11 10 18 7 13 10 10 11 8 8 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 2015 Mauritius Cape Verde South Africa Senegal Turkey Senegal South Africa Turkey Romania Lithuania Source: ITU 2015. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 38 Figure 13. ITU ICT Development Index (left) and GSMA Mobile Connectivity Index (right), 2017 ITU ICT Development Index Ranking (out of 176 countries) GSMA Mobile Connectivity Index Score (100=best) Bulgaria 50 Romania 72.43 Romania 58 Bulgaria 68.61 Mauritius 72 Philippines 67.25 South Africa 92 Mauritius 64.66 Cape Verde 93 South Africa 59.89 Morocco 100 Morocco 58.04 Philippines 101 116 Ghana 52.73 Ghana Cambodia 128 Kenya 50.95 Cote d’Ivoire 131 Cambodia 47.99 Kenya 138 Nigeria 45.91 Senegal 142 Cote d’Ivoire 45.73 Nigeria 143 Rwanda 40.01 Rwanda 153 Senegal 37.3 Sources: UN ITU 2017 (available here) and GSMA 2017 (available here) time for the ADSL installation that has fallen from an aver- bottom of the list of countries in both the International age of one month to approximately five days. Telecommunications Union (ITU) ICT Development Index48, where it ranks 142nd out of 176 analyzed counties, and the Despite these positive developments, international GSMA Mobile Connectivity Index49. This is corroborated by benchmarking demonstrates that Senegal is yet far from the various World Economic Forum (WEF) indicators, which catching up with leading regional and global economies. if combined with the ITU data, clearly evidence Senegal’s As demonstrated in Figure 13, Senegal is closer to the deteriorating position in the ECOWAS region (Figure 14). Figure 14. Key ICT Indicators Comparison Across ECOWAS, 2017 Internet bandwidth Network readiness Number of mobile Retail price voice Number of ISPs* (internatinal)** tracker****** capacities*** teledensity** (domestic)** Teledensly** international indes***** & data**** Retail price Usage level Usage level operators* Broadband per user** Regularity data**** Prices for Mobile Benin 5 9 80% 8% 2 136 30 4 38 184 2,9 61 Burkina Faso 3 3 84% 20% 6 96 32 3 50 221 NA 81 Cape Verde 2 3 113% 68% 21 5 127 15 NA NA 3,8 83 Côte d’Ivoire 3 4 113% 43% 6 60 70 3 28 159 3,4 62 Gambia 4 3 138% 21% 13 55 NA 7 85 NA 3,3 76 Ghana 6 52 139% 71% 10 45 153 4 31 60 3,5 88 Guinea 3 4 85% 15% 1 NA 55 3 12 88 2,6 70 Guinea-Bissau 2 0 77% 8% 5 NA 38 5 50 424 NA 48 Liberia 2 1 71% NA 3 552 37 6 45 325 2,8 57 Mali 3 3 111% 23% 1 300 31 5 45 115 2,9 70 Niger 4 0 48% 2% 6 580 17 3 47 151 NA 23 Nigeria 4 99 84% 54% 11 7 93 2 16 31 3,2 78 Senegal 3 3 97% 26% 5 50 115 5 18 238 3,4 78 Sierra Leone 3 10 98% 23% NA NA NA NA 130 395 NA 49 Togo 2 3 73% 15% 4 130 23 3 27 185 NA 72 Sources: * = ITU Database 2017; ** = WEF 2017. 48 The ITU ICT Development Index is a composite index, combining 11 indicators to monitor and compare developments in the ICT sectors across countries. The three-stage model measures a country’s ICT readiness, usage intensity, and impact. Senegal’s IDI score highlighted its low number of broadband subscriptions (fixed and mobile), which revealed the limited use of the broadband infrastructure and the Internet. 49 The GSMA Mobile Connectivity Index measures the performance of 150 countries based on key mobile Internet connectivity factors: infrastructure, affordability, users’ preparedness, and content relevance. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 39 Table 2. Key Statistics on ICT Access in Senegal, 2013 versus 2016 Usage 2013 2016 CAGR 3 Africa OECD “Rank in years ECOWAS” Mobile teledensity * 92% 97% 2 87% 121% 7 Broadband mobile teledensity 14% 26% 22% 31% 89% 5 Infrastructure Index 2,9 2,5 -4% 2,6 6,0 6 Usage 2013 2016 CAGR 3 Africa OECD “Rank in years ECOWAS” Internet bandwidth per user 12 5 -25% 12 421 8 Voice traffic density - Domestic * 72 115 17% 74 192 3 Voice traffic density - Intl outgoing “ 2,3 1,6 -11% 3,4 7,7 8 Voice traffic density - Intl incoming * 5,9 3,1 -19% 2,4 12,0 4 Individual usage Index “* 2,1 2,6 8% 2,6 5,8 3 Business usage Index ** 3,5 3,8 3% 3,3 4,8 1 Government usage Index *” 3,9 3,8 -1% 3,4 4,7 1 Price 2015 2016 CAGR 1 Africa OECD “Rank in years ECOWAS” Price of 1 GB in USD PPP * 18 12 -11% 34 15 2 Sources: * = ITU Database 2017; ** = WEF 2017. The lag becomes even more evident, when compared to the mid-2016. This has positioned Senegal as a major transit broader Africa region and OECD countries (Table 2), both point in supplying international connectivity to neighbor- in terms of coverage (mobile broadband teledensity at 26 ing countries, as its national backbone stretches all the percent in Senegal against 31 percent in Africa and 89 per- way to the borders with Mauritania, The Gambia, Mali, cent in OECD) and quality (Internet bandwidth per user at 5 and Guinea, enabling these countries to avail themselves in Senegal against 12 in Africa and 421 in OECD). of an international bandwidth through submarine cables reaching Senegal. This favorable for Senegal situation has 2. Digital Infrastructure Value Chain been somewhat mitigated by the launch of the ACE cable, which provides the first direct access to connectivity via A comprehensive way to analyze key digital infrastructure submarine fiber optic to The Gambia, Guinea Conakry, and bottlenecks is to consider the entire value chain –  from Mauritania. the Internet’s point of entry in a country (first mile) to its stretching across the country (intermediate mile), until it However, the country faces serious imbalances in the dis- tribution of its international connectivity infrastructure reaches the final user (last mile), without ruling out hidden among the three main telecom operators, constraining elements of the chain (the invisible mile). the quality of available Internet services. The nonexis- tence of a wholesale market regulation of the Open Access First Mile: Access to International Capacity to the international capacity hinders investment in broad- Taking advantage of its favorable geographic location on band infrastructure and services. In this context, Sonatel the West African coast, Senegal was one of the first coun- is a shareholder in all three of the above-mentioned tries in the region to connect to a submarine fiber optic submarine cables and operates all landing stations in the network. This happened in 2000, when the country con- country. Nevertheless, Expresso has direct access to the nected to the Atlantis-2 cable. Since then, two other cables ACE cable that arrived in Dakar in 2012. Under their global along the West African coast have reached Dakar: SAT-3/ licenses, the two operators that can deploy national and WASC in 2002 and African Coast to Europe (ACE) in 2012. international infrastructure have co-invested and share Each new cable connection has dramatically increased the the landing station. In this respect, they have the right international bandwidth – from 36 Mb/s in 2000 to 310 to conduct international transit activity. Tigo is the only Mb/s in 2003, to 5,200 Mb/s in 2011, and to 25,000 Mb/s in global operator that does not have a direct access to any of DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 40 Map 3. Landing Submarine Fiber Optic Cables in Senegal, 2018 Source: TeleGeography, Submarine Cable Map (available here). the submarine cables. Against this background, despite the Senegal among the group of leading West African countries, landing of three submarine cables in Senegal and relatively such as Côte d’Ivoire, Ghana, and Nigeria, with the most low wholesale prices, since none of them is Open Access, developed telecommunication infrastructure. the quality of Internet services remains low. The reason is that the international Internet capacity purchased by Nevertheless, considerable imbalances also permeate operators is not keeping pace with the significant growth through the national connectivity infrastructure endow- in the number of mobile broadband subscribers. In a re- ment. As mentioned above, Sonatel has a stronger optic cent positive development, in November 2018, candidates fiber network than the other two operators, and access to for general authorizations expressed their interest to the its network is not sufficiently regulated to ensure open and regulator to operate submarine cables and terrestrial fiber nondiscriminatory access, which acts a major obstacle to optic networks as wholesale operators. It remains to be broadband development and the sustainability of the busi- seen how these developments will evolve. ness models of ISPs that have recently entered the market. Sonatel currently leases access to its backbone at prices Intermediate Mile: National Transmission published in an interconnection catalogue approved by Network ARTP and dependent on the bandwidth and the distance51. a. Operational Interurban Cables Keeping ISPs in the market is a critical condition to In addition to proper international connectivity, Senegal, improve network coverage and the quality of Internet has a solid national transmission network. As indicated in services through the use of new technologies and higher the SSN2025, “the main fiber optic infrastructure in Senegal Internet speeds. The regulatory specifications of the three is held by five major stakeholders: three telecom opera- ISPs provide for the coverage obligations targeting 80 tors (Sonatel, Tigo and Expresso), ADIE and the National percent of the population by 2021. To cover remote areas, Electricity Company (SENELEC). Approximately 9,000 applications have been made to ARTP to use modern, low- km of interurban cables are currently operational, and cost technologies, such as very small aperture terminals investments continue every year” (Map 4).50 This positions (VSAT)52 to address the low-creditworthiness demand in these areas. Although other countries in the region have 50 Ministry of Communications, Telecommunications, Postal Services and the Digital Economy of Senegal. 2016. Stratégie Sénégal Numérique 2016-2015. October 2016. Available here. 51 Sonatel currently offers 3 speeds: 2 Mb/s, 34/45 Mb/s, and 155 Mb/s; for 3 distances: <10km, >10 and <50km, and >50km. 52 VSAT is a two-way satellite ground station with a dish antenna that is smaller than 3.8 meters; they are usually used to transmit narrowband data (such as point-of-sale transactions using credit cards), or broadband data (for the provision of satellite Internet access to remote locations, VoIP or video), but can be also used for transportable, on-the-move (utilizing phased array antennas) or mobile maritime communications. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 41 already launched this type of technology, the provisions on network of nearly 4,045 km of fiber optic, covering 14 re- frequency fees are hindering their launch in Senegal. In ad- gions and 31 departments. However, the Agency cannot pro- dition, and in more profitable areas, ISPs have introduced vide access to its fiber-optic backbone, as it does not have a unlimited Fixed Long-Term Evolution (LTE) technology, telecom operator license55. Nor does it have the commercial, differentiating themselves from operators who continue to technical and financial capacity to operate and market its offer limited volume offers. network effectively. By way of illustration, only one of the twelve pairs of installed fibers is used and, despite this b. Digital Terrestrial Television (DTT) Network under-utilization, significant problems of maintenance and service quality are still recorded on this pair. The level of Senegal has not yet completed the process of the digital public administration satisfaction with services provided by switch-over from the analogue to the digital system, by ADIE is relatively low, with a rate varying between 37 per- means of which liberated spectrum could help improve cent and 41 percent. Thus, even if it were authorized to do access to wireless broadband Internet services and ex- so, ADIE would not be in a position to develop on its own pand coverage in rural and remote areas. The impacts of catalog of services that effectively meets the needs of the technological transformation deriving from digitization market players and to market the excess capacity of its fiber have incited ITU member-states to switch to digital radio optic network in a satisfactory manner. broadcasting as part of an international treaty, Regional Agreement (GE06)53, which provides the legal basis for the This situation raises the need for pooling to ensure ef- switchover to digital terrestrial television (DTT) in Senegal. ficient technical and commercial operation of the state- In 2014, the GoS set the terms for a convention to guide the owned physical infrastructure (active, passive, and operation of two multiplexers (MUX) against the construc- frequencies). The GoS is strengthening these assets by tion of the DTT infrastructure for a renewable period of five pooling the active and passive infrastructure throughout years with the EXCAF Company. This DTT project (2014- the national territory. The primary purpose of pooling is 2020) has encountered technical and, more importantly, to interconnect local administrations with the central gov- financial difficulties, keeping the frequencies of the digital ernment through the transport network of ADIE. Pooling dividend continuously occupied by content-producing the fiber backbone calls for a new mechanism to outsource channels - some parts of the 700 and 800 bands are still the management of the excess capacity of the state-owned used for broadcasting, while parts of the 800 band have fiber networks, while ensuring the State’s continued own- been assigned to Code Division Multiple Access (CDMA). ership of these facilities. Thanks to the provision of the As an encouraging recent development, a significant part excess capacity at attractive costs to operators and, more of the 700 band (initially 2x40 MHz, revised to 2x30 MHz) specifically to ISPs, this arrangement could contribute to is expected to be available as part of a request for 4G of- the financial autonomy of ADIE and TDS. The intercon- fers and spectrum auctions, even though the authorization nection of fiber optic networks at the regional and district and availability thereof are not completely certain. In this points of presence (POPs) could also play a major role in context, the functions of multiplexing, transportation, and optimizing the national backbone and transporting the broadcasting programs continue to be handled by the Tele- telecommunications and data flows inside the country at Diffusion Senegal (TDS SA)54, which is a neutral stakeholder, low cost. Finally, pooling is a precondition for the entry of offering the same services and under the same conditions new infrastructure operators. to all TV channels operating in the audiovisual landscape. Marketing excess capacity has become a vital necessity c. Pooling State Infrastructure in Senegal: Access for successful sector development in Senegal. Since the to Unlicensed Operators’ Fiber Optic state-owned fiber-optic infrastructure is heterogeneous, it The usage of the extensive ADIE’s fiber optic network, would be warranted to reorganize these assets within the which constitutes a significant comparative advantage same entity, while organizing their commercial and tech- and a strategic asset for Senegal’s DE, is hampered by the nical operation with a private partner, who would ensure Agency’s legal, technical and financial limitations. After adequate availability, high quality service, and security of considerable public investments, ADIE now possesses a the network. 53 Adopted during the Regional Radio Communication Conference 2006 and ratified by Law n°42/2016, the treaty has marked the beginning of the digital broadcasting era by making major changes in the broadcasting value chain by separating the function of TV channel publishing and the functions of program multiplexing, transmission, and diffusion. 54 TDS SA is a limited company, with majority State-owned shareholding. TDS SA operates in accordance with the provisions of Law n°90-07 of 26 June 1990 relating to the organization and control of companies in the quasi-public sector and the control of private corporate bodies that receive financial support from the public authority. 55 Likewise, SENELEC cannot provide access to its fiber optic assets. However, it is envisaged that public electricity services, including SENELEC, will lease their excess fiber optic capabilities to public telecommunications operators. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 42 Box 3. ADIE Infrastructure In this context, a reform process has been recently ini- tiated with the objective to delegate the exploitation of ADIE’s national backbone includes: surplus ADIE fiber optic network to a private operator under a public-private partnership contract. The private operator would be selected on the basis of an open tender and would be subject to sector regulation. This reform is in line with international and African experiences, where networks have been financed by public funds and put into private use in the context of various contractual arrange- ments depending on the context. In Senegal, the govern- ment’s choice was for a concession contract, formalized by an inter-ministerial decree between MEFP and MPIPDTE adopted in July 2018. In addition to legal and contractual advantages of this model as well as its previous successful application examples in Senegal, this type of contract has been widely practiced in the field of fiber optic infrastruc- tures in Europe and elsewhere. The effective implementa- • National fiber optic infrastructure of 4,045 km; tion of the concession model by signing of a concession contract with a private partner selected on a transparent • 10 Gbps transmission capacity (STM-16) to carry flows nation- and competitive basis is envisaged in 2019. wide; • IT cloud platform of 150 for data-hosting, backup, and storage; d. Internet Exchange Point (IXP) • Coverage and points of presence in the country’s main locali- Senegal’s IXP is a highly valuable digital infrastructure, ties; the utilization of which needs to be closely monitored • Internet protocol/multiprotocol label switching (IP/MPLS) to evaluate its utility and monetization potential. A local network to collect flows, manage quality of service (QoS), and IXP56, SENIX, inaugurated in August 2017 and managed by create level 3 virtual private network (VPN). an association of main sector stakeholders (public authori- Nationwide network of over 4,000 km of fiber optics ties, operators, and ISPs), offers an opportunity for key includes: operators to exchange their local traffic (as per Figure 15, • Backbone of 24 fiber-optic cables left panel). SENIX has recently launched a procedure with the Internet Corporation for Assigned Names and Numbers • DWDM technology with a capacity of: (ICANN) to host a domain name root server (DNS) to enable • 40 wave-length all its participants to benefit from a more efficient domain • 10 Gbits/s per wavelength name resolution with highly reduced latency. This platform • Other available capabilities: has the additional advantage of maintaining the local traffic • Fast Ethernet (100 Mbits/s) in Senegal, while immediately generating substantial sav- ings on the international traffic. Moreover, to improve the • STM-1 (155 Mbits/s) Internet quality SENIX can also offer critical basic services, • STM-4 (622 Mbits/s) such as a Network Time Protocol (NTP) time server, a root • Gigabit Ethernet (1 Gbits/s) server mirror, a routing server, hosting content, unicast • STM-16 (2.5 Gbits/s) and multicast services, and cache servers, which make it a highly valuable infrastructure for Senegal’s DE, requir- • Passive structures: ing high-performing Internet. However, in the first eight • Sites months of the IXP operation, the project team noted a slow • Poles growth in the internal traffic exchange among the con- • Technical rooms nected stakeholders (Figure 15, right panel). In the coming months, the usage is expected to scale up, yet continuous • Server hosting monitoring is judicious to assess future trends and evalu- Source: ADIE 2018. ate opportunities of successful business models around this infrastructure. 56 Internet exchange point refers to the physical infrastructure in the form of a junction point, through which network operators and content suppliers exchange Internet traffic between their networks. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 43 Box 4. Capitalizing on Excess Public Fiber Optic: Case of the Democratic Republic of Congo With WB technical support and funding, the national electricity company (Société Nationale d’électricité – SNEL) of the Democratic Republic of Congo (DRC) has rehabilitated and strengthened its existing high and very high voltage power lines running from the hydropower stations of Inga to Kasumbalesa by installing a telecom optical ground wire system. Since the number of fiber optic lines installed exceeded SNEL’s needs, the company decided to launch an international call for tenders to allow third parties to use part of its excess capacity. More specifically, in 2014 SNEL launched a call for prequalification submissions from private investors interested in operating part of these excess fiber optic lines, as the first step of a two-stage call for proposals. As a regulated telecommunications activity, the project was conducted in full agreement with the Post and Telecommunications Regulation Agency of Congo and in compliance with the Ministerial Order of December 21, 2012*, which set the conditions and modalities of establishing and operating the fiber optic network. At the end of this call for proposals, three investors – Airtel DRC, Vodacom DRC, and Liquid Telecommunications Operations – signed contracts of indefeasible rights of use (IRUs) for a duration of 15 years and an amount of US$7,633,800. To ensure a suitable sizing of the shelters expected to host the active facilities of all contractors for each site, a call for proposals for the shelter construction is to be launched after SNEL awards the fiber optic pairs in collaboration with winning bidders. After the shelters are built, SNEL will rent them to successful tenderers. Financial Gains for SNEL: • Apart from an immediate revenue of approximately US$23 million, the maintenance costs of the entire network will be borne by the IRU con- tractors. • Additional annual income (rentals of shelter space and an annual bonus on maintenance) for the duration of the contract is estimated at $300,000. • SNEL is expecting two other tenders to exceed an additional US $15 million. Additional Benefits: Marketing dark fibers† (US $2,605 per pair and per km) enables SNEL to generate additional income, critical in the context of difficulties in mak- ing necessary investments in generating and distributing electricity to maintain its affordable “political” price. Moreover, marketing dark fibers also enables SNEL to move towards new business activities (such as capacity sales, for example) by providing some of its staff with preliminary experience-based training. This progressive learning procedure has been followed by many telecom operators as well as actors in other sectors (notably railways) in Europe and other emerging economies. * Ministerial Order n°CAB/MIN/PTNTIC/TKKM/PKM/SAP/21/012. † A dark, or unlit, fiber, that originally referred to the potential network capacity of telecommunication infrastructure, is an unused optical fiber available for use in fiber-optic communication and leased from a network service provider. Source: Report Authors. Figure 15. SENIX Overview (Left) and Traffic Exchanged in the First Eight Months, 2017-18 (Right) Source: SENIX website. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 44 e. Data Centers systems, while granting specific access rights to selected entities and users. Senegal has been witnessing an unregulated proliferation of public data centers, rendering the whole system inef- To successfully implement this GoS dedicated cloud, it is ficient with suboptimal investments and elevated operat- imperative to build broad-based consensus and launch ing costs. The State data and IT applications are currently wide consultations with all relevant stakeholders, par- hosted in several server rooms scattered among several ticularly heads of IT centers of ministries and agencies. ministries57 with financial means and human resources to Apart from political leadership at the highest level, joint ensure their daily operation. Apart from the main data cen- engagement and shared responsibility would be required ter at DTAI, MEFP has four additional data centers, hosted of key public institutions. It is equally warranted to si- by the following entities: General Directorate of Taxes and multaneously integrate the consensus from these joint Domains (Direction Générale des Impôts et des Domaines – deliberations into the establishment of an Architecture DGID); General Directorate of Customs (Direction Générale of Government Enterprise (AGE) with the government’s des Douanes – DGD); Treasury; and National Agency of dedicated cloud serving as the essential component of the Statistics and Demography (Agence Nationale de la Statistique AGE’s digital infrastructure. et de la Démographie – ANSD). On top of this, ADIE has an- other data center, hosting IT systems of some ministries as well as the common data and applications of the State Last Mile: Access Networks Intranet (messaging, telecom services, video conferences, As mentioned above, access to the Internet broadband in government websites, and some national data, such as Senegal remains quite limited. Against the background of geomatics). Despite the existence of a broadband network substantive mobile penetration (at 103.3 percent as of 31 interconnecting all buildings of the central administration, December 2017), Internet penetration lags behind, reach- due to the lack of integrated and shared vision of the state ing only 62.97 percent58. At the same time, the use of wired IT system, these hosting facilities operate in silos, requiring broadband Internet is weak at 111,795 fixed broadband sub- separate organizational structures and human resources. scriptions, or 1.2 subscriptions per 100 people. These sub- scriptions are all ADSL, provided by the historical operator, Cloud computing (public, private or hybrid) and related Sonatel. Although fiber optic connections are available and technologies (concentration, virtualization, and simplifi- offered by all operators, they have so far been primarily cation of the servers’ administration tasks) could offer an intended for large companies or government institutions efficient integration solution. Small isolated data centers with little effort undertaken to extend connection to the cannot ensure the requirements of high-speed connectiv- building construction (fiber to the building, or FTTB) mar- ity, security, and resilience (all of a higher order priority ket, with leased lines standing at only 21,114. Even mobile that the equipment geolocation) at a reasonable cost. The broadband subscriptions, although considerably exceeding advent of cloud computing offers a solution and ADIE has fixed ones, reach 4.3 million (as reported by GSMA), which recently launched a construction of a government cloud in is still insufficient for a take-off of large-scale digital ser- Diamniadio, a new urban pole under development around vices, such as e-commerce or digital finance. 40 kilometers away from Dakar. This cloud is intended to serve as the core of the Government’s broadband adminis- Moreover, broadband coverage remains persistently un- trative network by interconnecting all relevant administra- even across the country with three levels of important tive buildings, including local governments and agencies, digital divides. First, rural and urban areas demonstrate a universities, schools, health centers, etc. This is a timely significant gap in 3G coverage (introduced in 2007), which opportunity to integrate, in size and project structure, all tends to be concentrated around main urban centers, of the state IT storage needs, including those of ministe- such as Dakar, leaving rural zones and the most vulner- rial data centers. Far from systematically dismantling the able groups of the population largely disconnected, even existing sites, they will need to be audited. Subsequently, in terms of access to 2G (Maps 6). This is corroborated by those featuring adequate characteristics and a fair level of the data from the 2017 Gallup Survey, evidencing a stronger compliance can potentially be selected and integrated as Internet access deterioration in rural rather than urban components of the government’s dedicated cloud. The gov- areas, with the urban-rural Internet divide widened by 4 ernment entities in charge of data-generating professional p.p. between 2016 and 2017. A second, inter-urban, digital applications can then maintain overall control over their IT divide is reflected in significant inequalities in connectivity 57 These include datacenters of the Directorate of Automatic Processing of Information (Direction du Traitement Automatique de l’Information ‒ DTAI) of the MEFP and of the Directorate of File Automation (Direction de l’Automatisation des Fichiers ‒ DAF) of the Ministry of Interior – among others. 58 This rate is based on the Internet subscribers declared by the operators relative to the population, as reported by ARTP. All the following statistics is based on ARTP data as of end 2017, unless stated otherwise. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 45 Map 5. 2G and 3G Network Coverage by Three Main Operators in Senegal, 2017 Source: Operators and ARTP 2017. between Dakar and secondary cities (such as Pikine, Touba, authorities in case of inadequate or incomplete regula- Saint Louis, Thiès). Finally, even within Dakar different tions59 or by dominant operators through market fore- neighborhoods have different quality of connectivity, sig- closure strategies aimed at limiting access of current or naling an intra-urban digital divide. potential competitors to the available spectrum. This has largely been the case in Senegal, where the 2018 Telecom Invisible mile: Frequency spectrum Code was silent with respect to efficient allocation and as- signment of the radio spectrum, containing no provisions The invisible mile is largely dependent on frequency for a secondary market of wireless mobile radio licenses spectrum, which, as discussed above, is not optimally (such as transfer and lease) or mechanisms to limit incen- allocated in Senegal. Spectrum is a scare resource with tives for spectrum hoarding (for example, spectrum cap limited availability, which can be further constrained by 59 In case regulators fail to issue additional spectrum licenses or consider spectrum caps or other mechanisms for future assignments to preserve or encourage market competition. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 46 Map 6. Geographic Distribution of Poverty in Senegal, 2011–13 (%) Poverty Incidence by Region, 2011-2013 Cellphone Coverage by Region, 2011 Proportion (%) Cellphone <25 95% Saint-Louis 25 - 30 30 - 40 40 - 45 Louga 45 - 60 60 - 65 Dakar Thiès Diourbel Matam 65 - 70 72% 70 - 75 Fatick >75 Kaffrine No data Kaolack Tambacounda Ziguinchor Sédhiou Kolda Kédougou Source: World Bank Staff estimates based on small area estimation using the ESPS 2011 and RGP 2013 (ESPS refers to Senegal Poverty Monitoring Survey [Enquête de Suivi de la Pauvreté au Sénégal), while RGP refers to the National Report of Presentation of the General Census of Population (Rapport National de Présentation du Recensement Général de la Population]). Figure 16. Access to the Internet: Rural its fixed and mobile infrastructure. Moreover, by unneces- vs. Urban (% of population interviewed) sarily allocating low spectrum assignments, as is the case in Senegal (Table 3), where operators have more spectrum 43% than in many other countries in the region, regulations 41% can inadvertently result in low coverage in rural areas, as operators continue to focus on urban markets. Overall, such inefficient regulatory framework restricted market 23% entry, further strengthening Sonatel’s dominant position 17% (and its ability to consolidate the 4G network through the bandwidth effects and distorted rules of the game) and contributing to the situation, when despite the existence of an adequate radio spectrum, the 4G network is yet to be fully deployed across the country. 2016 2017 Access to internet in RURAL area The method of calculating radio spectrum charges should (% or pop. Interviewed: 1,000 people) seek to ensure optimal use of this scarce resource and Access to internet in URBAN area compensate the State for administrative costs arising (% or pop. Interviewed: 1,000 people) from management tasks. However, in Senegal, spectrum charges appear to be outdated, too high and misaligned with optimal spectrum pricing mechanisms61, accounting Source: Gallup Survey 2017. in some cases for 10 percent of operators’ revenues and being generally much higher than in other countries in the and user charge) or administrative procedures to follow in region, such as Morocco. Importantly, by treating radio case of spectrum assignment for the right of use60. Neither spectrum charges as a taxation mechanism rather than an does it include safeguards against concentrating spectrum instrument to ensure the effective use of spectrum, the GoS in the hands of a small number of actors, leaving Sonatel increases the operators’ incentives to pass on associated free of any obligation to provide third parties with access to costs to consumers through higher tariffs. 60 As elaborated above, the new Telecom Code determines the licensing system applicable to telecommunications networks and services that are open to the public based on scarce resources or using the public domain. The Telecom Code states that the use of spectrum frequencies is subject to authorizations (Article 71), implying that the assignment of radio frequencies will not be tendered, even though radio spectrum authorizations are granted under objective, transparent, and nondiscriminatory conditions (Article 72). The code’s lack of clarity has persisted because the decree laying down the conditions to apply in the chapter on radio spectrum has not yet been approved. 61 The principles of spectrum pricing that encourage its efficient use include (i) separating management costs (based on administrative costs) from user charges (based on the economic value determined by the market or calculated administratively); (ii) setting separate royalty amounts to favor new or smaller operators or operators investing in remote areas (to reduce urban-rural digital divide); (iii) including the possibility of spectrum trading and secondary markets to enable efficient spectrum use over time. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 47 Table 3. Spectrum Assignment per Operator and Frequency Band, 2017* 700 Band 800 Band 900 Band 1800 2100 2300 Orange 2x10 (4G) 2x12.4 "2x16 2x10 (4G)" 2x15 Tigo 2x10 2x9 2x 1 0 700 Band+A1:H9 2x6.25 2x12 2x16 "2x15 (1,- 5 TDD i" CSU SA* 10 TDD Allocated 4G** (12x30***] [2x5] [2x20] * As per Table 3, the mobile operators have been allocated variable amounts of spectrum on three bands: 900, 1800, and 2100. After aggregation, Orange has access to 2x43.4 MHz, Tigo to 2x29 MHz, and Sudatel/Expresso to 2x43 MHz. Sudatel/Expresso has subsequently added an assignment of 5 MHz at 2100 MHz and 2x6.25 MHz at 800 MHz for fixed broadband, while Orange now has 2x10 MHz at 800 and 1800 MHz for 4G use. Overall, Orange, whose subscriber base is much bigger than that of its competitors, is likely to have learned to use its spectrum more effectively by densifying its network in urban areas. At the same time, Tigo, whose level of spectrum use is the lowest, has had to invest disproportionately to continue to increase its market share. Sources: Kalba International, Inc., 2017 based on ARTP it *Universal service operator * *In addition to 4G assignments to date to Orange *** Available once band is cleared of CDMA and TV use Box 5. Excessive Spectrum Usage Costs in Senegal A frequency management and pricing mode in Senegal is much criticized by the operators, who consider prices to be too high vis-à-vis practices across the sub region. Indeed, compared to other African countries, Senegal demonstrates significantly higher frequency costs as percentage of turnover. Moreover, radio-relay costs are excessively high in Senegal, largely due to the calculation method used, in which fees are paid on the use, rather than on the allocation, of the band. In other words, the higher the number of transmission links, the higher the fees, resulting in two major nega- tive implications: • These fees will continue to put pressure on investment capacity and will grow exponentially as the number of transport links increase; • Such high fees delay expanding broadband coverage across the population. Radio-relay costs in selected African countries, 2016 Country Freq. Charges Senegal vs. Freq. Charges 8,496 / Sub / year Country as % of (XOF) Revenue Chad 487 4.5 x 1.6% DRC 528 4.1 x 2.9% Ghana 526 4.2 x 2.8% Rwanda 45 48.2 x 0.3% 1,426 1,249 1,065 936 686 295 26 Senegal 2,187 n.a. 10.2% Senegal Côte Moroco Egypt Mali Tunisia Guinea Mauritania Tanzania 197 11.1 x 1.0% d’Ivoire Source: Orange Sonatel. While the former legal framework did not contain rules for affected ARTP who was setting the amount of frequency more efficient allocation and assignment of the radio spec- fees and collecting/perceiving those fees at the same time, trum, the new code is now directing the frequency fees to with limited incentive to reduce the amount of fees so as to the public treasury which removes the conflict interest that encourage infrastructure investment. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 48 C. Digital Government: Shared Senegal; extending its services to SMEs and citizens is a priority for the GoS. More importantly, for the last two Platforms and Services years, MEFP has been overhauling the entire financial management infrastructure to shift to a new integrated public finance management (PFM) system. This section first presents main findings of the Digital • T  he MERI has developed the CAMPUSEN application, Government Readiness Assessment (DGRA), conducted which fully automates (entirely excluding manual or hu- to illustrate the current Digital Government development man interventions/manipulations) the placement of high potential in Senegal, and then proceeds to analyze two school graduates in national universities by evaluating specific public platforms – digital identification (e-ID) all the grades of the last three years of secondary school and digital taxation (e-taxation) – identified by the GoS62 and the grades of the high school diploma; due to its as foundational digital public services capable to acceler- mandatory nature, it is now one of the most used online ate a broad DE development in the country. platforms in Senegal, providing an excellent example of using digital means to increase transparency, equity and 1. Digital Government Readiness Assessment efficiency in public services provision. As outlined in the Introduction, DGRA focuses on eight DGRA’s results demonstrate that transformation towards key foundational elements of the Digital Government to Digital Government in Senegal is proceeding at various evaluate its potential. These eight dimensions include: (i) speeds across various dimensions, however, several criti- leadership and governance; (ii) user focus; (iii) business cal reforms are still pending for the country to accelerate process change; (iv) capabilities, culture and skills; (v) its march towards fully digitalized public services and shared infrastructure; (vi) data-driven management; (vii) its transformation to become West Africa’s DE leader. A cybersecurity, privacy and resilience; and (viii) enabling summary of main assessment findings is presented below, national ecosystem. For each dimension, a status-quo while more detailed background notes and scoring are assessment as well as an identification of prospective de- available upon request. velopment work have been undertaken, based on infor- mation provided by relevant government entities, such as Senegal has a secure government-wide digital network. ADIE, Ministry of Interior (MoI), MEFP, and Ministry of Thanks to funding by the People’s Republic of China, Higher Education, Research and Innovation (Ministère de Senegal has implemented a major digital infrastructure l’Enseignement Supérieur, de la Recherche et de l’Innovation program with over 6,000 km of fiber optic cable deployed – MERI). across the country. In addition, with South Korean financ- ing a wireless WiMAX network in Dakar and in 10 regional • ADIE manages a cross-cutting platform, hosting official capitals has been rolled out. As mentioned in the previous messaging, websites of several ministries, and the portal section, the GoS is also establishing two data centers (one that documents approximately 700 administrative pro- already operational, and the other under construction). cedures for citizens; it also hosts several public-sector This digital infrastructure has facilitated the interconnec- business applications63. With the advance of digital tech- tion of ministries and other government entities, while nologies, ADIE is planning to set up a new three-tier data enabling the country to ensure its digital sovereignty in center to enhance the country’s digital sovereignty. national data management and personal data protection. • T  he MoI offers a platform to manage passports as well as identification and voting cards; this database has opened While ADIE has developed major government platforms new services to enhance the authentication of users in and shared services using Senegal’s secured digital net- applications that require ID control, however more than work, further upgrading the work of the Agency is a pre- 30 percent of the population are yet to be covered by this requisite for establishing an adequate technical platform application. to support the paperless state service policy. To improve • T  he MEFP operates several platforms that manage the availability and quality of public network infrastruc- Treasury operations, customs, taxes, public property in- ture services, it would be judicious to integrate in ADIE’s formation, and public expenditures. Currently, e-tax is performance contract a Service-Level Agreement (SLA) a corporate tax system for the biggest 100 companies in between ADIE and MEFP. The agreement could introduce 62 Prioritization discussion took place in preparation to and during a consultation workshop “Digital Economy for Inclusive Growth in Senegal”, held in Dakar in March 2018. 63 ADIE’s intranet administrative project also offers web-based services for government ministries and entities, based on Microsoft Office 365 platform and providing storage, video conferencing, voice, and a collaboration portal. According to ADIE, 60 percent of the civil service is on the intranet, covering as many as 40,000 civil servants. Important to note, that health and education sectors are not included in ADIE’s scope and are hence not covered by this platform. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 49 four standards: (i) service standards for supervising and personal and merchandise data, multiple GoS platforms administering the network; (ii) levels of required service; are not interlinked to facilitate, or even allow, data-sharing. (iii) sharing roles and responsibilities between the MEFP In fact, the lack of operational reference standards65 makes and ADIE teams; (iv) and the tools, periodicity, and meth- sharing impossible. In this context, the government’s main odologies of measurement and reporting. This would en- objective is to facilitate integration and interoperability sure higher degree of accountability and increased quality among the different platforms that manage public services of service provision. based on a common reference architecture (also referred to as a government-wide enterprise architecture) and en- Overall, the project team noted the lack of a whole-of- abling norms and standards. Until there is such a common government approach, which acts as one of the big- technology reference created for all government ministries gest constraints to a conducive environment for the DE and entities to follow, modernization and automation proj- growth in Senegal. Across government, multiple public ects will remain siloed in their individual ministries, block- platforms and applications are active (on top of the core ing Senegal’s digital transformation. ones operated by ADIE, MoI, MEFP, and MERI mentioned above). The Ministry of Justice has its own platform to DGRA also evaluated three additional dimensions of manage applications for criminal, civil, and commercial Digital Government: (i) user focus, (ii) operational pro- procedures. The ANSD hosts an autonomous platform cesses, and (iii) cybersecurity standards. that integrates several databases of statistical surveys that collect demographic, economic, and social data. The • User focus. User-centered design of digital services Retirement Pension Institution (IPRES) and the Social seems to be on the margins in the lifecycle of transform- Security Fund operate separate platforms to manage the ing services. A conceivable reason is the lack of a clear retirement pensions and social welfare coverage of public strategy for Digital Government and its implementation. and private sector workers. The GoS also has a portal64 that No process or mechanism is in place to aggregate and hosts information on the administration services, consul- act upon users’ feedback to improve the online user-in- ates, and foreign-based representations, as well as visa terface or the online services delivery. The government information services for nationals of foreign countries. To rarely consults with civil society or the private sector on harmonize all the government-run websites, ADIE has a the matters of digital transformation. project that integrates them by means of unified standards. • Business processes modernization. The public admin- The difficulties are many, but not insurmountable. To date, istration modernization plan (Programme d’Appui à la the project team has not been able to collect clear infor- Modernisation de l’Administration – PAMA) was devel- mation on the number of governmental entities that have oped in 2017 under the leadership of the Minister of Civil completed this standardization. The current websites of Service, Workforce Rationalization and Public Service certain ministries, such as Health and Finance, do not have Renewal, supported by the United Nations Development the same layout. Meanwhile, others, such as the Ministries Programme (UNDP). The plan requires improving us- of Interior and Foreign Affairs, are often inaccessible due ers’ access to the civil service; streamlining State enti- to performance problems caused by heavy traffic. Finally, ties; promoting a merit-based recruitment system; and some of the government portals can be consulted through modernizing human resource management and capaci- smartphones, but interfaces are not adaptive, which makes ty building to formulate, implement, evaluate, and mon- browsing less intuitive. itor public policies. The plan also calls for establishing an efficient administration through automating admin- Despite these standardization efforts, multiple govern- istrative procedures and internalizing the results-based ment platforms and shared services remain autonomous management culture. and siloed, making integration and interoperability key • Cybersecurity, privacy, and resilience. Developed by e-government priorities. To facilitate online administra- MCTPEN, the National Cybersecurity Strategy for Senegal tive services for users, it is essential to be able to share (SNC2022) supports the third pillar of the SSN2025 – dig- reference data, which is an absolute administrative neces- ital trust66. To implement this strategy, the GoS is work- sity even for internal purposes. Although they use common ing to achieve five strategic objectives: (i) strengthen the 64 The portal (https://www.sec.gouv.sn/) also contains information on the GoS and its various organs (executive and legislative). 65 Currently, GoS has no cross-country design for an Enterprise Service Bus (ESB), which is a set of rules and principles for integrating numerous applications together over a bus-like infrastructure (in other words, a communication system between mutually interacting software applications in a service-oriented architecture). The lack of ESB in Senegal explains the case-by-case integration of governmental services with no standards or common protocol. 66 Digital trust is mirrored through four key elements: evaluation of the strategic context and future threats; vision of cyber-security and targeted strategic objectives; set of general principles, roles, and responsibilities that can sustain this strategy; and a logical framework for its implementation. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 50 Table 4. Benchmarking Legal and Regulatory Frameworks for Data Protection and e-ID in West African Countries, 2017 Data Protection Legislation Data Protection Agency National ID Legislation National ID Agency Cote d’Ivoire Y Y Y Y Ghana Y Y Y Y Mali N N N N Niger N N N N Senegal Y Y N N Source: World Bank analysis. legal and institutional cybersecurity framework; (ii) pro- Despite its political will and major investments, Senegal tect critical information infrastructure (CII) and govern- has not achieved universal proof of identification cov- ment information systems; (iii) promote a cybersecurity erage. Approximately 25 percent of Senegal’s population culture; (iv) enhance technical know-how and resourc- (approximately 4 million people) are not registered and es; and (v) engage in regional and international cyber- do not have any identification document (I4D 2017)67. A security cooperation work. A new national Computer universal basic identification system makes it possible Emergency Response Team (CERT) will also be estab- to obtain ID documents that are recognized by the gov- lished. ernment and can be used by both the public and private sectors in transactions and service delivery. The basic 2. Two Priority Sectors identification systems can be combined with the State civil registry and are interoperable with sectoral systems Digital Identification (e-ID) (health, education, financial services, subregional move- ment of people and goods), regardless of an individual’s The GoS has been a pioneer of digital identification sys- legal status68. Reliable basic identification systems con- tems in the region. Only Ghana and Senegal have taken ini- sider a set of key features (such as biometric data, which tiatives to deploy the ECOWAS National Biometric Identity are unique to a given individual) to generate a random Card (ENBIC), which was approved by Heads of State in unique intelligible number. It is essential for basic iden- 2014 to be used as a regional travel document. Today, this tification systems to be founded on a solid legal and in- card covers approximately 70 percent of Senegal’s popu- stitutional framework. lation. Despite its limitations, this system has the major advantage of being fundamental for three reasons: it is In this context, there is a need for Senegal to bring to the mandatory for all citizens; it is used for identification to fore the importance of establishing a coherent institu- access several services; and the unique number generated tional framework to coordinate digital initiatives under by the Department of Files Automation (DAF) can serve as a the guidance of MCTPEN. The Ministry can act as an ef- basic identifying reference. fective coordinator of important digital initiatives, notably digital identification. Other actions and recommendations The GoS has invested considerably in the system to detailed below can help establish a legal and technical identify Senegalese citizens through distributing these environment conducive to digital identification systems, biometric ID cards compliant with ECOWAS standards. notably the provisions on personal data protection, and A robust identification system facilitates access to public the links between the civil registry and digitized birth cer- and private sector services. Establishing a reliable database tificates. They will help identify and bridge the gaps noted of the entire population will facilitate better governance of in the existing legal, regulatory, and institutional frame- public services and create substantial savings for the GoS works for digital identification, notably access to services, by limiting the unnecessary multiplication of ID systems. and place them on par with international best practices Finally, adopting this card has greatly enhanced Senegal’s for personal data protection and public key infrastructure integration in the region. (PKI). 67 Global Data Collection. Available here. 68 Some legal identification systems, such as the ID programs in Pakistan, Peru, and many other countries, are related to national status. Programs in some other countries are not. For example, the Indian Aadhaar system has separated the concept of nationality from identification to establish the Unicity of 1.2 billion residents in the country and establish a platform for the secured authentication of third parties providing services. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 51 Box 6. Public Key Infrastructure A public key infrastructure (PKI) is a formal system that uses public key cryptography (asymmetric) tools to create, store, distribute, and manage digital identities called digital certificates. A digital certificate is a standard identity e-document that electronically identifies the holder, which can be a physical person, a company, a server, a smartphone, or a website. Digital certificates are issued by a relatively limited number of trusted third parties called Certification Authorities (CA). The CA and the PKI associate, or collectively link, an electronic certificate to its owner. The CA must ensure an appropriate level of due diligence to verify the identity of the electronic certificate’s owner (identification and authentication). The use of public key cryptography and PKI makes it possible to secure electronic exchanges and transactions among third parties by ensuring several basic functions. These are: • Confidentiality: A message encrypted with a public key of a sender and transmitted via Internet cannot be read by an intruder in the transmis- sion tunnel. The message can be decrypted only by the addressee through the corresponding private key (even the sender cannot decrypt it). • Integrity of underlying data: A message can be signed digitally by its sender. By e-signing, some information derived from the message is encrypted with the sender’s private key. The addressee can check this digital signature by decrypting it with the sender’s public key. Any modi- fication or alteration of the message along the way thus will be known immediately by the addressee. • Authentication: The sender’s electronic signature can be generated only with his or her private key. Since the private key will be known only to the sender, this electronic signature enables the addressee to precisely authenticate the sender. • Nonrepudiation: The digital signature proves that the sender has carried out the specific operation (transmitted an email, purchased, signed a mortgage document). As a result, the sender can not deny (or repudiate) the transaction thereafter. Source: Report Authors. E-Taxation Several factors are decisive in determining the informal economic activity. However, the fiscal policy and result- Following major political reforms in 2012–13, Senegal has ing administrative procedures are often considered as consistently strengthened its revenue mobilization ca- essential levers of action. The weakness of Senegal’s busi- pacity. Reforms have improved the clarity and simplicity of ness environment and regulatory framework are de facto rules and procedures, personal income tax adjustments, the incentives for companies to opt for the informal sector. institutional reorganization of the administration of social Thus, it is important for the micro and small businesses to contributions, and the adoption of measures to streamline reduce compliance costs as well as the direct interactions tax expenditures. Nevertheless, tax administration and with tax authorities. At the same time, the administrative rates are still widely perceived as major obstacles to the data suggest that a sizeable part of the Senegalese informal development of a vibrant private sector in Senegal69. In fact, sector comprises major enterprises that resemble formal paying taxes emerges as a top constraint in the analysis of businesses in sales volume and other measures of activity71. the average scores of Senegal over the past five years in the World Bank Doing Business (DB) reports (Figure 17). On Taxes represent one of the main regular interactions top of high rates and inefficient administration, the sheer between citizens and the State and are a key element number of taxes can be overwhelming – 58 taxes currently defining the social contract. One of the main objectives existing in Senegal for an average company, substantially of the digital transformation of public services is to make exceed the regional and the global averages of 37 and 25, the regular interactions between taxpayers and the tax respectively70. Various digital solutions exist to simplify the authority paperless by switching to a more transparent obligations of taxpayers and to reduce, as much as possible, and more efficient online filing and payment approach. the number of low-yield minor taxes as well as the obliga- Leveraging digital technologies can accelerate ongoing tions of tax declarations and related payments. reforms and broad transformation of public administra- tion. Targeted initiatives could also strengthen governance The informal sector in Senegal is very heterogeneous – of revenue administration to properly monitor taxpayers’ although it is composed primarily of micro and small en- observance of the law. This observation applies to both the terprises, it also includes major competitive companies. increased probability of voluntary compliance, by reducing 69 From 2007 to 2014, the proportion of companies perceiving tax rates and the tax administration as hindering economic activity decreased. However, the total number of companies indicating that taxation is a moderate to serious obstacle has risen, as reported in the World Bank. 2007 & 2014. Senegal Enterprise Surveys. Available here. 70 World Bank. 2016. Doing Business 2017: Equal Opportunity for All. Available here. 71 According to a recent World Bank review based on tax administration data and customs statistics, many Senegalese companies under-declare their turnover. Notably, in 2016 approximately 10 percent of companies chosen from a representative sample (of more than 5,000 enterprises) declared to tax authorities a turnover of less than half the value of imported volumes and the registered payroll – as reported in Cantens, T., Ireland, R., Raballand, G., 2013. “Reform by Numbers: Measurement Applied to Customs and Tax Administrations in Developing Countries”. Washington, DC: World Bank. Available here. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 52 Figure 17. Key Business Environment Constraints in Senegal Senegal's Doing Business Five-Year Average Constraints to Growth and Operations, 2014 Scores over 2014-2018 (% of firms rating as major or severe) Paying taxes 180 Informality 57.5% Acess to finance 55.4% Getting electricity 163 Electricity 49.1% Registering property 151 Access to land 43.5% Tax rates 30.2% Dealing with construction permits 150 Tax administration 26.5% Corruption 22.0% Enforcing contracts 148 Transport 20.0% Protecting minority investors 145 Telecommunications 13.5% Customs and trade regulations 10.8% Getting credit 135 Crime 10.5% Inadequately educated workforce 9.4% Trading across borders 108 Political instability 9.2% Resolcing insolvency 100 Courts 9.0% Business licensing and permts 8.3% Starting a business 88 Labor regulations 5.0% Source: World Bank, Doing Business 2014-2018; World Bank, 2014 Senegal Enterprise Survey. compliance obstacles and costs, and to the use of data potential of the regular and automatic reconciliation of the analyses to improve the efficiency of administrative appli- data with information collected from third parties. DGID cation efforts. has also recently launched the development of a standard risk management tool. Concerning the availability of cus- One of the major recent achievements in improving the toms information for DGID inspection services, the techni- efficiency of revenue administration include the launch cal development of the TANDEM platform has progressed, of an online filing module – e-Tax. Launched by the but there is need to invest in acquiring the host infrastruc- DGID, this application is currently limited to major en- ture and extending the sources of integrated information to terprises. To extend the advantages of online filing and the common data center. In the medium term, the program e-payment72 to all taxpayers, in the short term, the cover- seeks to fully implement the selection of tax verifications age of the e-Tax module for all corporate bodies could based on a transparent and automated risk analysis. In ad- be envisaged. In the medium term, a bespoke (custom- dition, the integration of an algorithm to identify the risks made) mobile solution (m-Tax) intended for individuals and the application of an automated risk selection module and micro and small enterprises could be developed, and should facilitate steady monitoring of SIGTAS verification work in ongoing to advance this. The starting point for a performance within DGID. mobile solution for individuals is the implementation of a project that will facilitate online interactions between Overall, the short-term needs include  (i) establishing a taxpayers and administration, and the management of more robust load-balancing solution to support online pro- taxpayers’ specific accounts (“Mon Espace Perso,” or My cedures in the context of higher data flow; (ii) implement- Personal Space). Funding for this project has been mobi- ing the m-Tax solution; (iii) digitizing by batches for more lized through the State budget. However, the integration data availability as part of the tax base extension strategy at of payment options in the module calls for the adoption DGID; (iv) establishing a Tele-service center (call center); of a decree regulating online payment options for all in- and (v) ensuring the establishment of the one-stop-shop dividual taxpayers. for filing financial statements. In the short term, the formalization of major informal Extending digital processing to State payments is envis- economic activities should be pursued through a re- aged by the Treasury Department. Fulfilling Treasury’s vi- vamped legislation and tax administration based on digi- sion to connect to the electronic banking network through tal technologies. DGID operates an integrated tax manage- GIM (Electronic Money Interbank Group) depends on ment software (SIGTAS), but has not yet explored the full several technical and regulatory requirements. However, 72 In South Africa, on average, using electronic filing reduces the costs of tax compliance by 22.4 percent. However, the efficacy of the implementation of the policy plays a key role in the potential efficiency of e-filing to reduce compliance costs. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 53 Box 7. ORBUS Single Window: Establishing a One-Stop-Shop The computerized customs service, ORBUS Single Window, is a joint initiative by the customs authorities and port operators. Its management committee is a public-private partnership (PPP) formed to upgrade customs formalities. The economic interest group GAINDE 2000 was set up to design and run the ORBUS Single Window and to interconnect it with the customs’ IT system. Single Window was intended to modernize preclear- ance formalities in Senegal and reduce the associated costs and delays. In July 2004, the ORBUS Single Window was launched to automate data collection and submit customs declarations through a network. The Window enabled the main foreign trade operators to electronically process applications for mandatory import, export, or transit authorizations and certificates. Following the 2008 adoption and enactment of laws on the information society, in 2011 the Single Window formalities became paperless. ORBUS covers the following four areas of the logistics value chain: • (1) Vessel Arrival. Paperless formalities of the summary declaration with the loading and sharing of the electronic manifest in CUSCAR or XML format is shared in real time with customs, Port Authority, and handling companies (by 30 shipping agents registered on the platform). • (2) Preclearance. Paperless formalities of the collection of preclearance documents with the interconnection of 71 public and private bodies involved in processing them. These were (i) 9 public bodies with access points at the head office, at the Port, and the airport; (ii) 23 commer- cial banks; (iii) 38 insurance companies and brokers; and (iv) the inspection body licensed under the import verification program. • (3) Clearance. Paperless customs declaration formalities with the interconnection between ORBUS and the customs management system, enabling the online processing of customs declarations and issuing the release order. • (4) Goods Release. Finalizing the paperless goods release process with the integration of shipping agents, the Port, handling companies, and road transporters. The system has been technically finalized, but it has yet to become operational due to the reluctance of some stakeholders of the Port community. Actions are planned to facilitate its appropriation by all stakeholders of the goods release process. Evolution of average processing duration, 2004–17 Number of connected and active bodies, 2004–17 4.05 71 71 52 47 37 1.94 29 1.2 25 26 0.9 20 23 23 23 0.7 16 0.63 0.49 0.35 0.5 0.89 0.46 0.24 0.51 0.51 10 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 The poles connected to ORBUS have increased regularly over the period, to progressively integrate all the administrative entities involved in processing pre-clearance formalities in Senegal (as per Figure on the right). As a result, ORBUS has made it possible to drastically reduce the time spent on the collection of preclearance documents in Senegal: from 4 days in 2004 to 1 day in 2017 (as per Figure on the left). The performance of Senegal’s facilitation solutions has attracted the attention of other countries, some of which have subsequently adopted them – Burkina Faso (SYLVIE) and Kenya (SIMBA). Source: GAINDE 2000. in the interim, it is important that actions are taken to e-transaction costs and the modalities of contracting with manage pensions and collect taxes hitherto collected in the private sector by considering the need to refrain from cash. Implementing this recommendation will require a skewing the market structure towards a monopoly. This secure digital ID framework using a PKI, a specific regula- measure could fit into a two-year roadmap, after which 100 tory framework for public e-payments. A PKI would fix the percent of public payments would be digitized. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 54 D. Digital Finance important to consider when developing appropriate sector regulations. 1. Context The power of financial technology to expand access to and use of accounts is demonstrated most persuasively in SSA, Rapid advances in digital technology are transform- where digital technologies have helped to significantly ing the economic and financial landscapes around the boost financial inclusion in recent years. The percentage world. Financial technology, or fintech, digitize paper- of adults (15 years and older) with an account at a financial based transactional data to identify potential demand for institution in SSA, albeit still behind the global average of financial services, such as credit, savings, and insurance, 68.5 percent, rose from 34 percent in 2011 to 43 percent thus creating new opportunities and challenges for the in 201774. Mobile money services provided by fintechs and financial sector: from consumers, to financial institutions telecom operators are increasingly filling the gaps left by and regulators. Digital financial services (DFS)73 can offer traditional banks. Indeed, 21 percent of adults in SSA now great potential to meet the financial needs of poor and have a mobile money account – nearly twice the share in unbanked consumers by providing them with convenient 2014 and easily the highest of any region in the world. And and affordable channels to make and receive payments, while mobile money has been traditionally centered in East as well as to save and borrow. Firms can leverage DFS to Africa, the 2017 data reveal that it has spread to West Africa more easily transact with their customers and suppliers, and beyond. At the same time, half of unbanked adults in as well as to build digital credit histories and seek financ- SSA (representing around 160 million people) own a mobile ing, while governments can use DFS to increase efficiency phone, signaling considerable potential for further growth and accountability in various payment streams, including of mobile accounts and financial inclusion. for disbursement of social transfers, and receipt of tax payments. However, apart from opportunities, fintech can Senegal has witnessed a significant diversification in the also pose potential risks to consumers and investors and, supply of financial services over the past decade, but ac- more broadly, to financial stability and integrity, which is cess to and use of financial services remain low. With the recent entry into force of laws relating to microfinance and Map 7. Adults with Mobile Money Account Across SSA, 2014-2017 2014 2017 0.9 10.-19 20-29 30-39 40-100 No data Source: World Bank 2018. Global Findex Database. 73 As defined by the G-20 High-Level Principles for Digital Financial Inclusion, the term “digital financial services” (DFS) covers financial products and services, including payments, transfers, savings, credit, insurance, securities, financial planning, and account statements. 74 Demirgüç-Kunt, A., Klapper, L., Singer, D., Ansar, S. and Hess, J. 2018. Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. Washington, DC: World Bank. Available here. All the following data quoted in the section is from Global Findex Database 2017, unless otherwise stated. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 55 Table 5. Financial Landscape in Senegal, 2017 Mobile money active users Active mobile money agents Access to bank accounts Providers Mobile penetration 2,240,315 30,787 20.4% 448 110% or 18% adult population formal financial institutions Source: WB analysis based on BCEAO and ARTP data. electronic money (e-money), which allow non-bank players 2. Digital Financial Services (DFS) to offer financial services, the sector has expanded to serve Development in Senegal about 5.3 million people, who hold an account with an elec- tronic money institution. However, more than 50 percent Senegal’s financial landscape is quite diverse. A total of of the population is still excluded from financial services, 448 active formal institutions include 24 banks, 3 finan- and only 42.3 percent of adults report having an account at cial institutions, 387 microfinance institutions that are a financial institution. More importantly, the actual use of also referred to decentralized financial systems (systèmes digital means of payment is still low, as mere 10.4 percent financiers décentralisés – SFD), 29 insurance companies, of adults admit having effectuated a payment online over two electronic money institutions (EMI) and the National the past 12 months at end 2017. Post Corporation. Two major money transfer operators are also present in the market, essentially offering OTC ser- In this context, building on the DE4A assessment tool, this vices. Moreover, several fintech companies have recently section of the report will focus on an overview of the DFS appeared in Senegal. market development in Senegal as well as a description of its regulatory and policy framework. Specific recommen- Mobile money drives financial inclusion in Senegal, as dations to improve the usage of DFS in a broader context of elsewhere in SSA. Recent Findex data indicates that ac- the country’s DE are provided in Section 3.B. count ownership in Senegal almost tripled between 2011 Figure 18. Adults with One or More Financial Accounts, 2011–17 2011 2014 2017 FI account ONLY Both FI & Mobile Mobile account only 45% 45.3 43.2 42.3 42.6 40% 38.5 35% 35.4 34.2 30% 25% 23.5 23.2 20% 20.1 18.3 16.6 20% 15.4 14.4 13.4 15% 10.2 10.5 8.2 10% 7 5.8 3.7 0% 2014 2017 2014 2017 2014 2017 2014 2017 2014 2017 2014 2017 2014 2017 Togo SSA Benin Burkina Mali Guinee Senegal Benin Burkina Côte Mali Niger Senegal Togo Faso Faso d’Ivoire Source: WB Global Findex Database 2017. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 56 Table 6. Reasons for Not Having an Account in a Financial Institution, 2017 (% of respondents) Reasons for not having an account Senegal Burkina Faso Cote d’Ivoire Mali Niger Togo Insufficient funds 55 56 64 64 69 50 Lack of necessary documentation 13 14 24 22 30 30 Financial institutions too far away 19 20 18 18 28 17 Financial services too expensive 27 18 32 20 28 17 Lack of trust in financial institutions 13 10 18 15 10 Family member has an account 8 6 9 7 3 7 Religious reasons 5 1 3 10 20 10 Source: WB Global Findex Database 2017. and 2017, increasing by 27 p.p. from 15.4 to 42.3 percent Table 7. Formal vs. Informal Savings (Figure 18, left panel). As is the case in most SSA countries, and Borrowing, 2017 (% of adults) the increase was driven by mobile money accounts. In Indicator Senegal SSA Benin absolute terms, account holders at e-money institutions reached 5.3 million, up from approximately 2.0 million in Adults saved formally 7.3 14.9 10.0 2011. Meanwhile, the banking sector accounts for only 1.62 Adults saved informally 23.8 25.8 28.2 million account holders and microfinance institutions rep- Adults borrowed formally 7.8 8.4 11.4 resent 2.6 million adherents. Adults borrowed informally 29.9 31.0 24.0 One of the main reasons for having no account in any Source: WB Global Findex Database 2017. financial institution, which affects five million adults, is insufficient financial capacity. The lack of sufficient funds were serving 2.6 million adults with deposits amounting to and the elevated cost of financial services were the two 310 billion FCFA (or US $536.53 million) and loans reaching reasons for not having an account most frequently cited by 337 billion FCFA (or US $582 million). This share of deposits Senegalese adults. Indeed, 55 percent of Senegal’s adults represents 26 percent of the regional value and 29 percent cited insufficient funds as the reason for not having an ac- of regional loans. Nevertheless, other countries in the re- count, the most frequently cited reason in most developing gion, including Burkina Faso, Côte d’Ivoire, and Togo rank countries (Table 5). higher than Senegal in formal account ownership (Figure 18, right panel). Although 45 percent of adults in Senegal report having a loan, only 7.8 percent declared borrowing through a for- The GoS has been quite proactive in fostering an inclusive mal financial institution. Access to credit and savings is and decentralized financial sector. The first microfinance dominated by informal methods (Table 6) – more people institutions emerged in Senegal around the late 1980s report having recoursed to saving and borrowing outside thanks to the support of the international donor com- of the formal financial system. Nonetheless, Senegal ranks munity and technical partners. The GoS aims to create an slightly better than the SSA average in informal savings environment conducive to the sector by establishing ac- (23.8 percent versus 25.8 percent) and informal borrowing creditation, monitoring, and control structures as well as (29.9 percent versus 31 percent). structures that support institutional and professional pro- viders. Companies, such as Microcred Sénégal75, ventured Holding the highest number of microfinance accounts into digital transformation and now offer digital savings within the region does not propel Senegal to the ranks of and digital credit products. This microfinance institution countries that have the highest financial inclusion rates. (MFI) intends to set up a network of agents to service rural According to the latest report of the Central Bank of West areas. Despite the high number of service points in urban African States (Banque Centrale des États de l’Afrique de and rural regions (Table 8), approximately half of the finan- l’Ouest – BCEAO), the Senegalese microfinance industry is cial sector’s activity is concentrated in the greater Dakar the most dynamic in the WAEMU region. In 2018, 210 SFD area (Figure 19). 75 Known as BAOBAB, a new entity offering financial digital services. For further information, refer to the Microcred website. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 57 Table 8. Financial Services Distribution Figure 19. Financial Services Distribution Network in Senegal, 2016 Network in Senegal (%), 2016 ATM Bank MFI Mobile POS 39 branches Service Money Points 600 900 902 67,315 1,700 Source: BCEAO 2016. 23 Cash remains the most common form of payment in 19 Senegal, with transactions through financial and elec- 17 17 tronic money institutions playing, albeit an increasingly more important, still a secondary role. Cash remains a 12 11 popular means of paying electricity bills, wages, and agri- 9 9 9 8 8 cultural transactions, of which close 60 percent are report- 6 ed as cash-only (Table 9). However, the use of scriptural and electronic instruments, such as bank wires or mobile payments, have expanded in recent years. The majority of Dakar Thies Ziguinchor Saint-Louis Tambacounda Kaolack Matam Louga Diorbel Kolda Sedhiou Kedougou Fatick recipients of government payments report receiving these funds through a financial institution (41 percent) or a mo- bile phone (20 percent), while 19 percent report receiving Source: BCEAO 2016. cash payments. Senegal follows the mobile money adoption trend in West inclusion trend in West Africa, now registered at 21 percent Africa, in which the number of deployments exploded to (as measured by the spread of mobile money and e-wallet 57, surpassing that of East Africa for the first time in 2017. accounts), with Senegal being a leading market with 42 per- Tremendous growth is tied generally to broader digital cent76. Figure 20. Key Players in Digital Financial Services Ecosystem in Senegal, 2006–15 Source: WB analysis. 76 GSMA data for 2017. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 58 Table 9. Payments in Senegal (%), 2017 Indicator Senegal Togo Burkina Cote Mali Niger SSA Faso d’Ivoire Paid utility bills in past year 23 30 17 23 18 15 28 Using a financial institution account (% paying utility bills) 15 10 7 7 15 4 16 Using an account (% paying utility bills) 38 24 22 44 29 16 31 Using a mobile phone (% paying utility bills) 34 17 20 42 23 13 23 Using cash only (% paying utility bills) 39 58 59 48 50 64 59 Received wages in past year 15 16 18 15 17 10 20 Into a financial institution account (% wage recipients) 23 25 30 20 20 24 36 Into an account (% wage recipients) 39 36 51 39 36 37 45 Through a mobile phone (% wage recipients) 21 20 28 24 22 17 19 In cash only (% wage recipients) 39 47 43 55 53 52 49 Received government payments in past year 13 11 16 6 13 10 13 Into a financial institution account (% payment recipients) 41 49 37 n/a 27 n/a 50 Through a mobile phone (% payment recipients) 20 22 18 n/a 23 n/a 16 In cash only (% payment recipients) 19 25 24 n/a 33 n/a 29 First account opened to receive government payments (% 7 17 13 n/a 15 n/a 19 receiving payments into an account) Received payments for agricultural products in past year 19 21 38 21 29 32 n/a Into a financial institution account (% payment recipients) 9 8 6 5 8 4 n/a Into an account (% payment recipients) 27 22 19 9 17 14 n/a Through a mobile phone (% payment recipients) 21 14 15 6 12 10 n/a In cash only (% payment recipients) 58 67 73 83 72 73 n/a Source: Global Findex 2017. Mobile money adoption in Senegal jumped from 6 per- and Joni Joni, which have stifled the mobile money industry cent in 2014 to 31.8 percent in 2017 with the licensing of for several years. To date, mobile payments at the mer- 4 institutions competing in a monopolistic market led by chant level are still scarce (6 percent) with only 1,338 service Orange Mobile Finances Senegal (OMFS), a subsidiary of points of which only half are active (Figure 22, left panel). Orange licensed as an e-money institution. According to At the same time, recent trends are encouraging, as dur- BCEAO, OMFS dominates the market with more than 4.1 ing the past five years, usage patterns have evolved towards million subscribers of the total 5.3 million. The rest sub- progressively cashless transactions. For example, the share scribe to Tigo Cash, Yup, and VITFE (Figure 21, left panel). of merchant payments and bulk disbursements have grown Overall, the market continues to rapidly expand – in one in volume and the share of both cash out and cash in have year (2016–17), more than 1 million adults subscribed to e- decreased, signaling that the average consumer uses less money services (Figure 21, right panel). cash. In Senegal, despite a spurt in mobile money account Data show approximately 150 million mobile money ownership, the effective use of DFS is still limited. In us- transactions valued at 1,261 billion FCFA (US $2.2 billion). age, airtime purchase represents 40 percent of the annual Each Senegalese active account holder processed on aver- volume of transactions, while cashing in accounts for 30 age 67 transactions in 2017. The number of mobile money percent. The rest is allocated mainly between person-to- agents is close to 67,315, or 22 percent of the total number person (P2P) transfers (12 percent) and cash withdrawals of agents in WAEMU, placing Senegal just behind Côte (12 percent). Slow growth in P2P transactions is due to the d’Ivoire (30 percent), the largest and most decentralized prevalence of OTC, cash-to-cash services, such as Wari mobile money market in WAEMU. There are approximately DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 59 Figure 21. E-Money Market in Senegal: Market Shares 2017 (left) & Subscribers 2016-17 (right) Market Share of Mobile Money Providers in Senegal, 2017 Number of Mobile Money Subscribers in Senegal, 2016–17 2 1 4,100,811 2016 2017 3,500,000 21 76 1,128,369 892,217 110,474 Orange Money Tigo Cash 97,000 0 46,095 Bimao/Vitfe SGBS/Yup Orange Money Tigo Cash Bimao/Vitfe SGBS/Yups Source: BCEAO 2017. Figure 22. Mobile Money Use in Senegal, 2017 (%) and Account Holders in WAEMU, 2018 (%) Market Share of Mobile Money Providers in Senegal, 2017 Mobile Money Account Holders in WAEMU, 2018 (%) 0 43 6 12 12 40 13 12 12 10 5 4 30 1 Benin Togo Guinea Bissau Cote d'Ivoire Burkina Faso Mali Senegal Airtime purchase Cash out P2P Niger Cash in Merchant payments Cross-border remittances Source: BCEAO 2017. 40 subscribers for 1 mobile money agent in Senegal and who own a bank account have a bank card (360,042). The only half of these agents are active. Overall, Senegal ac- regional switch, operated by the GIM-UEMOA77, provides counts for a mere 10 percent of regional account holders card services in an interbank and interoperable network. behind Côte d’Ivoire, Burkina Faso, Benin and Mali (Figure The switch enables the issuance, acceptance, and acquisi- 22, right panel). Annual volume of transactions reached 150 tion of national, regional, and international payment cards, million FCFA at end December 2017 for an estimated value including VISA and MasterCard. The banks share a com- of 1262 billion FCFA (US $2.1 million). mon network of ATM machines and point of sale (POS) devices, numbering 600 and 1700, respectively at end-2017. The interbank card system has been operational in All banks in Senegal are connected to the GIM platform. Senegal for approximately 15 years, but mainly targets Some microfinance institutions, also called decentralized already banked population. Only 22 percent of those financial systems (SFD), participate in an indirect mode, as 77 GIM-UEMOA refers to WAEMU Monetary Interbank Grouping (Groupement Interbancaire Monetique de l’UEMOA). DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 60 Box 8. GIM-UEMOA and Interoperability The Inter-banks monetary group (GIM-UEMOA) was established in 2003 to address the interoperability of digital payments It is legally consbtuled as an electronic money agency with a capital of more than 9 Nihon FCFA, some 53% of which is held by the BCEAO and the 135 credit institutions of UEMOA including about 24 in Senegal. The network has a total of 3000 ATMs. of which around 600 in Senegal and 4000 Electronic Payment Terminals (EPT), including 1700 in Senegal Any institution that is authorized by the EICEA0 and can issue digital means of payment can be a member of GI M.-UE11,10A and connect to this regional inter-banking platform The Group’s policy allow various structures to connect to the GIM-UEMOA platform including entities such as the Treasury, the Post Office and microfinance institutions. In Senegal. all banks are members of GIM-UEMOA at this point. The Network of ATMs and EPTs are interoperatde. which allowed in 2008, a reduction of withdrawal fees per card from 3500 FCFA to 500 FCFA throughout the Union In 2016, the BCEAO launched with GIM-UEMOA, a project to extend interoperability to mobile payments to promote integration between all types of digital payments in UEMOA West African region Clearing Switch Global Star-UEMOA, BCEAO (Regrement) Membres du GIM-UEMOA Systemes de paiement Gros accepteurs Services financiers mobile Societes de transfert d’argent Master Card Org. Publics Tigocash Western Union VISA VISA BIO Orange Money RIA Hotes MTN Money Moneygram Union Pay Carburants Mobicash Little Word CEDEAO Supermarche Flooz Joni-joni JCB Ad. voyages Airtel Money Money Express AMEX Facturers BANQUES, EME, SFD, etc GMAC Aeroports Source: BCEAO and ARTP. they are not authorized by the regulations to directly issue system attached to the TOTAL Company’s service sta- means of payment. The most important payment acceptors tions79, SENTOOL Company of BBS Invest, and ATPS are are in the gas and tourism industries. enterprises that provide smart, multifunctional platforms, integrating money transfer and electronic money services A growing number of fintechs recently emerged in in a single interface. Using a variety of payment terminals Senegal and are stimulating investors’ interest. After the and interfaces, users can perform usual transactions, such 2013 McKinsey study78 revealed that Internet-based compa- as paying water and electricity bills, buying telephone nies accounted for 3.3 percent of Senegal’s GDP, investors credit, paying TV subscriptions, and transferring money. have increasingly shown interest in Senegal’s ecosystem MaTontine is another mobile “peer-to-peer’’ savings plat- of “start-ups”. For example, in 2017 off-grid solar start- form with an integrated credit scoring system. To access up Oolu-solar mobilized funding of over US $3.2 million. loans and other financial services in Senegal, users can In 2018 it raised an additional undisclosed amount from resort to their credit rating. Within less than one year of the Gaia Impact Fund. The small advertisement platform, its launch, the start-up had 475 active users and had made CoinAfrique, also mobilized funding of up to US $3.5 million loans totaling US $12,000 with a 0 percent default rate. in 2018. As if to give more credibility to the fintech ecosys- PayDunya is an online payment solution that enables in- tem, in January 2018 the investment firm, Partech Ventures, dividuals and businesses to collect and make payments, opened its Africa Office in Dakar and announced a fund of regardless of whether they have a bank account. Merchants US $122 million for African fintech start-ups. receive a commission of 4 percent on every 18 US cents paid (100 FCFA). After two years since its launch, PayDunya has Many innovative fintech start-ups in Senegal have secured some 30 merchants in Senegal. demonstrated a relatively strong technical and com- mercial viability. Intouch, which manages the payment 78 McKinsey Global Institute (MGI). 2013. “Lions Go Digital: The Internet’s Transformative Potential in Africa”. Mickinsey & Company 2013. Available here. 79 InTouch is a fintech start-up that provides traders and consumers with payment options. In its initial year, it generated $1.2 million in turnover. In 2017 it reached monthly transactions of $17.6 million with 30,000 daily transactions. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 61 Additional fintechs are on a growth path. SudPay focuses banking services under specific conditions, setting the on digital bank notes and tax collection solutions. VoLo stage for more delegated, branchless financial services provides a credit information platform to financial institu- through banks. Microfinance and telecom operators are tions through its product, VTIP Finance. It has received a provided with clear requirements on how to provide DFS grant of US $284,500 from the African Development Bank under the purview of credit institutions, who act as part- (AfDB) to facilitate entrepreneurs’ access to loans. There are ners and guarantors. also LemonWay (mobile money provider) and Weebi (POS, solutions for SME). Moreover, more data-driven disruptive However, fintech start-ups involved in the provision technologies, including Internet of Things (IoT) and Artificial of financial services suffer from the lack of a clear legal Intelligence (AI), have recently fueled several nascent start- category. In fact, the regulator classifies some fintechs ups, such as Seedstars-dakar-2018 and Big Booster. as “technical  operator”, which so far are not regulated by BCEAO. The only existing option is for fintechs to change 3. Policy and Regulation their status to electronic money institutions (EMIs). However, the high entry fee and capital requirement for Overarching policy and strategy directions for financial EMIs (of US $550,000) disincentives fintechs from adjust- inclusion across WAEMU countries, including Senegal, ing their status. Hence, many such entities are faced with are set by BCEAO through a framework document adopt- the obligation to give up the majority of their sharehold- ed in June 2016 by its Council of Ministers. This strategy ing to investors in exchange for receiving cash injections defines the vision and the main axes for financial inclusion required to raise sufficient capital to meet the requirement in member-countries. For BCEAO, the overarching goal is of a financial institution. to achieve a financial inclusion rate of 75 percent by 2025 with the following five sub-objectives: At the national level, Senegalese authorities are in favor of enhancing access to financial services, as evidenced by • P  romoting an effective legal, regulatory, and supervisory the Government’s commitment to the Maya Declaration framework; in 2012, in which Senegal vowed to increase financial in- clusion. In this regard, the Alliance for Financial Inclusion •  Consolidating and strengthening the microfinance sector; (AFI) and MEFP have carried out a national survey to estab- •  Improving financial education and consumer protection; lish a diagnostic of financial inclusion in Senegal, with the • P  romoting innovations that permit the inclusion of ex- goal of developing a national strategy. Other concrete com- cluded populations (youth, women, SMEs, rural popula- mitments are embedded in PSE and a new national strat- tions, people with low literacy); egy to develop an inclusive finance sector. This strategy, • E  stablishing a financial framework and policies that are coupled with SSN2025, sets the scene for an increasingly conducive to inclusion. digitized financial sector in Senegal, in particular through digitizing payments of public administrations, which is an Market Entry essential part of the vision for a cashless government. Access to the DFS market is supported by an enabling In 2008, Senegal adopted the Law on Electronic regulatory framework, also established by BCEAO. This Transactions81 to enhance the use of digital technology in framework is essentially grounded in (i) Regulation 15, financial transactions, particularly by public entities. The dated 19 September 2002, covering payment systems and Law built on the 2002 WAEMU Directive82 that encourages instruments; and (ii) more recent Directive on e-money digitization of all government expenses and receipts above activity and e-money issuers, dated May 201580. Both legal the threshold of 100,000 FCFA (US$180) and was accompa- texts aim to provide conditions, under which non-bank nied by the application decree on e-commerce83. Recently entities can provide financial services to the unbanked and (in November 2018), Senegal signed a new Decree to digitize underbanked. The Banking Law of 2010 also allows credit all government transactions processed by its public admin- institutions to hire third-party agents to conduct selected istrations84. This innovative legal framework clarifies the 80 Directive N° 008-05-2015 Governing the Conditions and Procedures for the Activities of Electronic Money Issuers in WAEMU Member States (Instruction N°008-05-2015 Regissant les Conditions et Modalites d’exercice des Activités des Emetteurs de Monnaie Electronique dans les Etats Membres de l’union Monetaire Ouest Africaine) available here. 81 The Law on Electronic Transactions (Loi n° 2008-08 sur les Transactions Electroniques) adopted on 25 January 2008 and available here. 82 WAEMU Directive on the Measures to Promote the Banking System and the Use of Non-Cash Means of Payment (Directive n°08/2002/CM/UEMOA du 19 septembre 2002 sur les Mesures de promotion de la Bancarisation et de l’Utilisation des Moyens de Paiement Scripturaux) available here. 83 The Presidential Decree (Decret n° 2008-718 Relatif au Commerce Electronique) adopted on 30 June 2008 and available here. 84 Decree of MEFP regulating payments by electronic means of public expenses and receipts (L’arrêté portant règlement par voie électronique des depenses et recettes de l’administration publique) adopted on 6 November 2018. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 62 conditions under which payment service providers can bid The AML/KYC framework85 is set per level of risk but ex- and win a digitization contract with the GoS. It is expected cludes thousands of rural farmers. The legal framework to open the financial industry to more digitization. for DFS, adopted by most FSPs, allows for simplified know- your-customer (KYC) rules for a wallet size smaller than Delivery Channels 200,000 FCFA. Orange, for instance, offers a “light’’ type of wallet available for those who lack appropriate documenta- Despite the presence of GIM-UEMOA, Senegal has limited tion to open an account. To a certain degree, the limit of US interoperability of digital financial services. The various $3,000 as a AML/CFT rule for mobile money wallet size is payment points are interoperable only through the card an impediment to financial inclusion with respect to spe- payment network, whether transactions are processed via cific rural farmers who carry large amounts of cash after the regional label (GIM-UEMOA) or international (VISA crop sales. Mobile money wallets are convenient due to and MasterCard). BCEAO has taken steps to establish full the lack of bank branches in rural areas. However, the low account-to-account interoperability by 2020 through the limit of the wallet prevents these categories of customers to GIM-UEMOA platform. The objectives are to (i) enable open accounts and fully participate in the financial system. transactions between any digital devices (such as mobile wallets, online accounts, bank and prepaid cards) to be in- The GoS makes little use of digital payments to process teroperable; and (ii) enhance mobile-to-mobile interoper- its retail expenditures and small tax collection. In 2017, ability within the region and across borders. only 13 percent of adults received an electronic payment from the state (Findex 2017). The Treasury has embarked The playing field is not leveled with respect to the use of on modernizing its internal information system and is now agents. Senegal’s legal framework for contracting agents is connected to the BCEAO’s two regional payment systems: slated per category of financial services for the poor (FSPs). Real Time Gross Settlement System (STAR-UEMOA) and an In the microfinance sector, rules for contracting agents/ Automated Clearing house (SICA-WAEMU). The challenge retailers are lacking. In contrast, EMIs got clear condi- for the GoS today is to digitize payments for its unbanked tions for the distribution of services, pursuant May 2015 counterparts (G2P) and automate the collection of small e-money regulation, which was one of the key additions to taxes (P2G). the prior version of 2006. As a result, the mobile agent net- work skyrocketed to somewhat 67,315 agents, whereas MFIs are required to establish branches to be allowed to deliver Managing Risks of Digital Finance services. As for banks, even though the 2010 Banking Law Senegal has been very proactive in addressing risks posed permits agent banking, the conditions set forth are deemed by cyber-crime and the challenges of cybersecurity in gen- too stringent; hence in the past eight years, only one agent eral. As early as 2008, the country had an almost complete (MANKO) has been licensed in Senegal. legal framework for cyber-criminality that covered not only cybercrime, but all other digital dimensions of security. Overall, DFS spread and innovation are significantly As referenced earlier, in January 2008, Senegal adopted a stifled by current regulation. Although MFIs can provide package of five laws that included laws on (i) the informa- credit and saving services, they are not yet permitted to tion society86; (ii) electronic transactions, covering security contract agents, hence the slow uptake of second genera- of transactions among other provisions87; (iii) the protection tion DFS (such as loans and savings). Mobile money agents of personal data88; (iv) copyright89; and (v) cybercrime90 that are only allowed to open accounts and process payments, provides for the incrimination of all cyber-criminal acts. cash-in and cash-out transactions, on behalf of their is- This package was completed six months later by the adop- suer. MFIs fall under the responsibility and control of their tion of a separate law on cryptology in August 200891. issuer and are permitted neither to provide credit services nor to pay interest to the benefit of clients. In addition, ex- Based on a National Cybersecurity Strategy of 202292, clusivity clauses are banned for all FSPs, even those that the GoS proceeded to evaluate the strategic context of provide non-digital financial services. cybersecurity, including current and future threats. The 85 Regional anti-money-laundering/countering the financing of terrorism framework used by WAEMU member states. 86 Law n° 2008-10 of 25 January 2008 on the Information Society, available here. 87 Law n° 2008-08 of 25 January 2008 on Electronic Transactions, available here. 88 Law n° 2008-12 of 25 January 2008 on Personal Data Protection, available here. 89 Law n° 2008-09 of 20 August 2008 on Copyright, available here. 90 Law n° 2008-11 of 25 January 2008 on Cybersecurity available here. 91 Law n° 2008-41 of 20 August 2008 on Cryptology, available here. 92 The National Cybersecurity Strategy is available here. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 63 GoS recognizes the roles and responsibilities of various comply with international standards and best practices. stakeholders in the protection of Senegalese interests in They are run by the BCEAO, which is an ISO-certified in- cyberspace and is committed to broad collaboration with stitution. GIM-UEMOA (as elaborated in Box 8) is the retail the internal cybersecurity ecosystem (including public ad- payment switch platform, which also abides by EMV93 and ministration, businesses and other organizations and in- Payment Card Industry Data Security Standard (PCI DSS). dividuals) as well as with external organizations. Financial Non-bank service providers, such as MFIs and EMIs, can firms are under the obligation to report to the regulator have indirect access to STAR-UEMOA and GIM-UEMOA, all cybersecurity incidents and carry out regular tests and whereas only check-issuing institutions can participate in simulations. Firms must monitor, analyze, and continu- SICA-UEMOA. In future, all mobile money providers are ously manage threats and risks as well as mitigate, prepare expected to join the GIM-UEMOA platform directly to ac- for, intervene during incidents. The strategy aims to design cess interoperability. and implement cybersecurity incident simulation scenari- os for the use in national exercises. At the telecom level, operations are stifled by high un- structured supplementary service data (USSD) access The financial consumer protection framework on DFS cost. Recently liberalized by ARTP, USSD is an innovation contains several guidelines to protect customers’ funds. that is expected to be a game-changer in the payment in- The 2015 e-money Directive requires customers’ funds to dustry by enabling more financial and fintech providers to be safeguarded in at least one escrow account. However, the reach new customers. However, the cost of access to USSD funds should not be placed in risky assets, but rather liquid in Senegal is estimated at 20 FCFA per session, which could ones. The regulation clearly forbids payment of interest on increase the final cost of services. For Safaricom in Kenya e-money accounts but is silent on the possibility of sharing and MTN in South Africa, the cost of access to a USSD profits with e-money account holders. Disclosures on funds transaction is 5 FCFA and 8 FCFA, respectively. It would be reimbursement, transparency of fees, and customer claim extremely useful for ARTP to launch a comparative study of support numbers must be provided by the e-money issuers costs charged for USSD throughout the world. The findings on the contract agreement with the consumer. Moreover, could lead to a reduction in the bill for financial transac- the GoS has established an Observatory on the Quality of tions via USSD. Financial Services (OQSF), tasked to mediate between FSPs and consumers and to ensure that price transparency rules b. Credit Infrastructure are complied with. With the support of WB, the OQSF man- date is being revised to include digital innovation. Creditinfo Volo (CIV), the regional credit bureau, was approved in 2015 by BCEAO on behalf of the 8 WAEMU Absence of a digital contract system is another important member countries. The credit bureau’s activities are issue requiring policy action. The 2008 Law on Electronic regulated by the law adopted and ratified by each member Transactions is silent on the process leading to digitization. country. It is clear from this legal and regulatory frame- Many payment service providers need a digital signature, work that the Bureau can coherently gather and share but the electronic certification framework is still not op- information on lenders based in eight member-countries, erational. Electronic money institutions are obliged to an indispensable condition given the level of cross-border store physical versions of contracts signed with customers. economic activities and regional integration. All financial This requirement generates real challenges, particularly in intermediaries (FIs) regulated by the BCEAO are required rural areas. Digital contracts, secured by PKI, would allevi- to exchange information with the credit bureau and to co- ate this process, warranting ADIE to finalize establishing ordinate closely with it. the PKI infrastructure to facilitate the issuance of digital certificates in Senegal. DFS providers in Senegal are not able to offer credit ser- vices. However, scoring models have been individually de- Financial infrastructure veloped by providers, such as Microcred, that do leverage some digital data rather than solely traditional methods, a. Retail Payments Infrastructure such as repayment history. For instance, it has launched The GoS participates in BCEAO’s two regional payment a nano credit product and does participate in the credit systems. They comprise, as mentioned above, a Real Time bureau, even though for now this credit bureau does not Gross Settlement System (STAR-UEMOA) and an Automated build on alternative sources of credit information, such as Clearing house (SICA-UEMOA) for checks. The systems utilities and mobile airtime purchases. 93 “EMV is a global standard for credit and debit payment cards based on chip card technology”. It takes its name from the card schemes Europay, MasterCard, and Visa, which developed EMV. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 64 E. Digital Skills and the system continued to be stifled by multiple shortcom- ings. The development of new, demand-driven programs Capabilities is rare. Tertiary level training has expanded at the expense of lower skill levels and is characterized by an upsurge of private institutions in Dakar and Thies and a focus on 1. Context and Key Challenges lower-cost training in business and administration. The lack of equipment for training poses a significant challenge Despite recent progress and improved access, Senegal to quality TVET, as does the decline of training centers for still displays underwhelming results in key education TVET teachers. Failure rates in certification exams are indicators and the overall level of skills of the workforce high, pointing to low internal efficiency, notably for senior is low. Both gross (GER) and net enrollment rates (NER) technician certificate (brevet de technicien supérieur – BTS). in Senegal remain low, with GER standing at 84 percent Finally, the sector is underscored by missing mechanisms for primary education, 45 percent for secondary educa- for setting and complying with standards, assessing quality tion, and a mere 11 percent for the tertiary level (against indicators, delivering training, and conducting transparent 106, 70 and 24 percent in LMIC, respectively)94. As much accreditation and certification98. In the context, in which as one third of school-aged children is out of the formal Senegal spends only 0.5 percent of its GDP on research education system with the ratio increasing to two thirds for and development (R&D)99 versus 0.7 in Morocco, 0.8 in the poorest quintile (many attending traditional Koranic Kenya and South Africa and more than 2 percent in ad- schools – “Daaras”). Overall learning outcomes remain vanced countries, such as France, Singapore, and Israel, poor, even by SSA standards, as barely one third of children such limitations of technical and scientific education act as complete primary school with sufficient competencies a serious brake on the development of sophisticated and (only 20 percent of sixth graders meet the desired profi- technologies-enabled sectors of the economy. ciency in French and mere 10 percent in mathematics95). A Senegalese four-year-old can expect to complete 7.2 years Consequently, Senegal scores low in all major interna- of school by his 18th birthday against 8.1 in SSA and 10.2 in tional rankings that reflect the country’s lack of qualified, LMIC, however, when years of schooling are adjusted for competent, and sufficient human resources. This conclu- the quality of learning, this drops further to 4.8 years, as sion is corroborated by the country’s rather modest posi- reported by the World Bank Human Capital Index96. As a re- tions in the 2018 UNDP Human Development Index, 2017 sult, both adult and youth literacy rates in Senegal are well WEF100 and 2018 WB’s Human Capitax Indices (Figure 23) below SSA and LMIC averages with only half of Senegalese that measure various aspects of human capital develop- adults (15 years old and above) considered literate vis-à-vis ment, including economic, health, and education indica- 64 and 76 percent in SSA and LMIC, respectively97. tors as well as more specific components focused on em- ployement shares, skills diversity and staff training. Such More specifically, the current technical and vocational low rankings are indicative of why enterprises in Senegal, education and training (TVET) system in Senegal serves particularly those operating in the digital sector, face dif- only a small portion of the eligible cohort and is plagued ficulties in recruiting local talent and why foreign investors with numerous deficiencies, including a low supply of wishing to develop off-shore activities do not find diversi- training and some obsolete courses. Despite some impor- fied skills. As reflected in WB Enterprise Surveys, limited tant recent progress, still only 7 percent of students com- education of the workforce is a serious constraint for some pleting basic education are enrolled in TVET in 2016, with of the most productive firms of the country101. In fact, weak 94 World Development Indicators (WDI), 2017. Available here. 95 World Bank. 2016. SABER Country Report: Engaging Private Sector in Education. Washington, DC: WB. Available here. 96 HCI measures the amount of human capital that a child born today can expect to attain by age 18, given the risks of poor health and poor education prevailing in a country (i.e. reflecting the productivity of the next generation of workers relative to the benchmark of complete education and full health). The Index ranges between 0 and 1 and is made up of five indicators: the probability of survival to age five, a child’s expected years of schooling, harmonized test scores as a measure of quality of learning, adult survival rate (fraction of 15-year olds that will survive to age 60), and the proportion of children who are not stunted. Overall, an economy in which the average worker achieves both full health and full education potential will score a value of 1 on the index. For further details refer to World Bank (2018). Human Capital Index. Washington, DC: WB. Available here. 97 The adult literacy rate for Senegal is reported for 2017, while for SSA and LMIC it is based on 2016 data, as reported by WDI. 98 World Bank. 2018. Systematic Country Diagnostic of Senegal. World Bank, Dakar. © World Bank. Available here. 99 UNESCO Institute for Statistics. Available here. 100 The WEF Global Human Capital Index 2017 ranks 130 countries on how well they are developing their human capital on a scale from 0 (worst) to 100 (best) across four thematic dimensions — capacity, deployment, development and know-how— and five distinct age groups or generations — 0–14 years; 15–24 years; 25–54 years; 55–64 years; and 65 years and over — to capture the full human capital potential profile of a country. For further details refer to World Economic Forum. 2017. The Global Human Capital Report: Preparing People for the Future of Work. Available here. 101 According to the latest Enterprise Survey of 2016, 24 percent of exporting firms and 16 percent of mid-sized manufacturing firms perceive significant hurdles in finding adequate skills. World Bank. 2016. Enterprise Surveys – Senegal dataset. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 65 Figure 23. Senegal Positioning in Global Human Capital Rankings UNDP Human Development Index Ranking, 2018 WEF Human Capital Index Ranking, 2017 Bulgaria 51 Bulgaria 32 Romania 52 Romania 42 Mauritius 65 Philippines 50 Philippines 113 Rwanda 71 South Africa 113 Ghana 72 Morocco 123 Mauritius 74 Cabo Verde 125 Kenya 78 Ghana 140 South Africa 87 Kenya 142 Cambodia 92 Cambodia 146 Nigeria 157 Cote d’Ivoire 113 Rwanda 158 Nigeria 114 Senegal 164 Morocco 118 Cote d’Ivoire 170 Senegal 128 0.68 WB Human Capital Index (HCI) Scores, 2018 (1=best) 0.63 0.6 0.55 0.52 0.5 0.49 0.44 LMIC average - 0.48 0.42 0.41 0.37 SSA average - 0.4 0.35 0.34 Bulgaria Mauritius Kenya Morocco Cambodia Senegal Rwanda Cote d'Ivoire Romania Philippines Ghana South Africa Nigeria Sources: UNDP Human Development Report: 2018 Statistical Update (available here), WEF Global Human Capital Report 2017 (available here), World Bank Human Capital Index Database (available here). employability of young graduates from technical and digi- and propel Senegal into the next stage of its development tal fields has been systematically highlighted by all surveys amidst global trends of the fourth industrial revolution. conducted among digitally-specialized companies and ICT professional organizations (Organisation des Professionnels 2. Digital Training in the des TIC - OPTIC), which underscore that students’ profiles are not adapted to the actual needs in the digital market. Senegalese Education System To make the new recruits employable, these companies are Modern education must prepare students for a labor systematically obliged to complete graduates’ skills by offer- market that requires cognitive skills (such as problem- ing specialized training lasting as long as six months to one solving and creativity), sociobehavioural skills (such as year102. This issue is further compounded by the fact that the teamwork) and adaptability (reflected in self-efficacy and public administration does not have the required digitally- reasoning). As evidenced by the WDR 2019 on the Changing skilled human resources in all the ministries to efficiently Nature of Work, in the context of rapid technological accomplish the country’s digital transformation ambition progress and new production patterns, digitalization 102 Based on the interviews conducted by the Performances Group for this study. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 66 and automation raise the premium on high-order cogni- At the tertiary level, the Ministry of Higher Education and tive skills in advanced and emerging economies alike103. Research (MESR) is leading an ambitious reform program Investing in human capital has thuswise become a priority to promote the digital agenda. Since 2012, a reform process to make the most of these evolving economic opportunities has been unfolding within public and private universities and governments are undertaking measures in this direc- to prioritize digital technologies. MESR has geared this tion. For example, Singapore is working to transform its reform to achieve an ambitious national vision of making education system from an efficiency model, which seeks to higher education the key driver of the country’s economic maximize the benefits of its inputs (teachers and financial and cultural development. Various advances have included resources), into a skills-based model, which emphasizes adopting a decentralization plan for higher education; project-based work and reduces the frequency of evalu- opening 14 specialized universities and graduate schools ations. Finland, one of the most digitally interconnected throughout the country105; and launching the Virtual countries in the world that displays some of the best results University of Senegal (UVS), which represents a digital edu- in learning outcomes, banks on continuously improving cational infrastructure open to more than 20,000 students. the quality of teachers. Taking another route, the United Senegal’s labor market registers a very low inflow of techni- States, France, and many other countries with advanced cians and engineers every year. Hence, the strategic options digital economies, introduced the generalized learning adopted also include reorienting the education system to of computer coding from an early age on top of activities science, technology, engineering and mathematics (STEM) stimulating cognitive and creative skills to adequately pre- and short vocational training (TVET). To harmonize qual- pare its workforce for the forth industrial revolution. ity of programs and diplomas, in August 2012 the State also established the National Quality Assurance Authority for Even though digital technology should be introduced from Higher Education (Autorité Nationale d’Assurance Qualité the earliest school years in its primary and secondary de l’enseignement Supérieur – ANAQSUP) to evaluate and schools, Senegal’s public education system is confronted accredit public and private higher education institutions. by a significant lack of resources and infrastructure. The Four additional ambitious initiatives to improve the quality Ministry of national education has achieved significant and level of expertise of trained students have also been progress in using digital technologies to improve manage- launched: ment and quality through better statistical data, stronger monitoring and evaluation as well as more appropriate • C  reation of fields of excellence including the Africa tools for communication, collaboration and information Center of Excellence in mathematics, informatics, and sharing. For example, National Education Information and ICT; Management System project (Système d’Information et de • L  aunch in late 2018, in cooperation with the ATOS Management de l’Education Nationale - SIMEN) launched by Group, of the project High Performance Computing for the Ministry in July 2016 in close partnership with Google Research; and Microsoft has integrated all previously siloed and dis- • I  nauguration of three new bachelor of science degrees in connected educational applications on one platform that robotics, molecular genetics, and digital simulation and has allowed for simplification and dematerialization of pro- modeling; cesses, increased transparency and traceability (rendering relevant information available live to students, teachers and • I  nitiation of master’s degrees in big data, cybersecurity, parents)104, enhanced monitoring and evaluation of teach- robotics, molecular genetics, bioinformatics, and digital ing practices. At the same time, despite this progress, the simulation and modeling. national education system is still unable to include digital learning among its priorities, mainstreaming it throughout 3. Private Sector Initiatives for primary and secondary levels, which is largely due to the Digital Skills Development lack of resources. Against this background, Senegal’s pri- vate schools have been filling the gap and have launched To cope with the qualitative and quantitative shortage many initiatives of various degrees of quality, effectiveness of digital training in the Senegalese ecosystem, private and equity (with some of their digital courses and practical digital training providers also are stepping up to comple- activities becoming an easy marketing element to attract ment programs offered by public education institutions. students from affluent families). These new private actors sometimes partner with major 103 World Bank. 2019. World Development Report 2019: The Changing Nature of Work. Washington, DC: World Bank. 104 Under the SIMEN project, every student is assigned a unique identification number associated with an automatically created email address that allows students to access all relevant information aggregated on an integrated portal. 105 Senegal has nine universities and three schools of engineering that offer digital training from higher technician to doctoral levels. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 67 technological firms, such as Atos, Facebook or Orange, that envisage new training modalities that would effectively ad- are already active in upgrading digital skills in Senegal. One dress the shortcomings of the current higher education sys- of such examples is the network of Simplon international tem. This vision calls for creating an ecosystem capable of code schools that partnered with Sonatel (Orange) to open introducing new forms of teaching and learning that would the Sonatel Academy in 2017, drawing 12,000 applicants for target both young graduates, who are not directly employ- 50 available places and evidencing strong interest of the able and young people with neither skills nor diploma, who Senegalese young people in digital technologies. Different form the bulk of the potential workforce. models have been adopted by other private providers, such as Edacy, which collaborates with existing higher education Regarding on-the-job training in the private sector, the institutions, including Higher Polytechnic School (École GoS has not undertaken any initiatives to encourage or Supérieure Polytechnique, ESP) on the one hand, and with oversee such programs. This requirement is left to the dis- future employers, on the other hand, to provide custom- cretion of companies or to both companies and new work- ized programs focused on market skills and geared towards ers (for self-learning). Employees, especially technological practical applications. companies, are not encouraged to provide more advanced and specialized training, even though the evolution of the While the programs of these private sector actors tend to digital sector makes it imperative for workers to seek con- yield good results, their impact remains limited to train- tinuous training throughout their careers. ing a few hundred people per year. Providers interviewed in Senegal underline that the rate of integrating their young graduates in the labor market (including through the creation of new enterprises) ranges from 80 to 100 F. Entrepreneurship and percent after six months of training, largely thanks to a strong emphasis placed on market-relevant skills and pro- Digital Innovation fessional integration throughout their courses106. However, these structures still do not have a viable economic and financial model. With limited student and institutional fi- 1. Context and Key Challenges nancing facilities, private providers have achieved relative Senegal is witnessing the rise of a small but vibrant digital success in the premium market, but only at a smaller scale entrepreneurship ecosystem108, widely considered to be (3,000 students at most) and are unlikely to expand into the mid-range market without incentives. In light of them one of the most dynamic in francophone West Africa. The performing a mission of general interest – complementing Senegalese environment is relatively favorable to entrepre- public services that are not necessarily able to efficiently neurship and is characterized by a young (62 percent of the meet the expectations of technology companies – it might population is under 25 years old) and growing urban popu- be warranted for the government to consider supporting lation (+3.6 percent per annum) as well as a large and active them (through financial incentives, such as risk sharing or diaspora that provides skills, networks in developed mar- guarantees, for example). kets, and financial support. These favorable conditions are amplified by three important factors. First is a widespread The rest of the private training market in Senegal is not use of technologies – at 35.6 percent, Senegal’s smartphone performing satisfactorily. As evidenced by the interviews adoption rate is among the highest in West Africa (with the conducted for this study, the private training market offers regional average standing at 28 percent)109. Second is a high programs that, on the one hand, are too general, compelling entrepreneurial activity rate - 39 percent of the Senegalese companies to take responsibility to provide the needed spe- population aged 18 to 64 is either setting up or heading a cialized training to new recruits; and, on the other hand, are new company (Figure 24). The third factor is a recently ac- limited to content that does not keep pace with technologi- celerated speed of the innovation ecosystem development, cal advances107. To meet the requirement of satisfying com- as it now comprises more than 15 incubators, accelerators, panies’ needs, established training providers must learn to and co-working spaces that serve the needs of a community draw inspiration from newcomers in the digital sector and of over 2,500 start-ups and entrepreneurs. In 2015, Senegal 106 Based on the interviews conducted by the Performances Group for this study. 107 Ibid. 108 The country’s entrepreneurship ecosystem is constituted by a set of interconnected entrepreneurial actors, organizations, institutions, and processes that formally and informally coalesce to connect, medi- ate, and govern the performance within a local entrepreneurial environment, as defined by OECD (2013) Entrepreneurial Ecosystems and Growth Oriented Entrepreneurship: Background paper prepared for the workshop organized by the OECD LEED Programme and the Dutch Ministry of Economic Affairs (available here). This ecosystem is one of the foundational pillars of a dynamic digital economy. It enables ideas and innovation to materialize into start-ups, which in turn mature into businesses, while creating jobs, facilitating access to goods and services, and fostering the development of other economic sectors. 109 Jumia Senegal. 2018. Mobile Report 2018: Trends of the Mobile Market and Their Impact on the Senegalese Economy. Available here. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 68 Figure 24. Early-Stage Entrepreneurial Activity Index by Country, 2017-18 (or latest available year) 38.6 39.9 25.8 17.2 9.9 10.8 10.9 8.8 9.3 3.7 3.9 Bulgaria France Morocco India China Romania South Africa Philippines Ghana Senegal Nigeria Source: World Bank (2018). Global Entrepreneurship Monitor. Youth Business International. Note: No data is available on Cambodia, Cote d’Ivoire, Mauritius. counted 63 start-ups per million inhabitants, ranking 13th Although this field remains relatively new, good interna- of 107 classified countries versus 43 in France and 7 in India. tional practices suggest that a dedicated legal and regu- Over the past two years, this number in Senegal has been latory framework tailored to the needs and challenges of steadily increasing further, largely coming on the back of entrepreneurs plays a foundational role for the digital recent significant business climate improvements. Indeed, economy. Countries as diverse as Brazil, India, Israel, Italy, the country moved up seven places in the 2018 Doing India, and the United States are widely recognized as having Business Index (DB) and is currently ranked among the top environments conducive to developing start-ups. All these five SSA reformers, having implemented 19 reforms in the countries have adopted if not specific legislation, then at last four years110. The reforms that particularly eased doing least dedicated programs and institutions to support the business for start-ups range from reducing the fees to start development of innovative entrepreneurs. In Senegal, such a business and expediting electricity connection to short- a regulatory framework is under development and will re- ening deadlines for the tax credit refund on the VAT. quire concerted efforts to facilitate effective and efficient implementation and impactful results on the ground. Nevertheless, the Senegalese start-up ecosystem remains Additional and complementary initiatives are necessary to fragile and embryonic and its further development is ensure the government acts as an anchor client and stimu- inhibited by several critical constraints, particularly by lator of the digital economy, through the widespread use of insufficient support at the regulatory level.111 Despite im- government e-payments and facilitated access of startups portant incipient progress, Senegal still ranks 140th of 190 to public procurement that is currently very limited. economies in DB 2018 and 103rd of 137 countries in the 2018 Global Entrepreneurship Index (Error! Reference source Moreover, ensuring that entrepreneurs have better access not found., left panel), suggesting that deeper reforms and to finance as well as to adequate and competent support additional investments are warranted to fully transform from accompanying structures, such as incubators and the country’s business environment and entrepreneurship accelerators, is critical to boost start-ups’ survival rates ecosystem. Specific measures are necessary to support and address the classical “valley of death” problem.112 In start-ups that face significant and, in many ways, unique fact, almost 40 percent of Senegalese entrepreneurs con- challenges that limit scale-up opportunities. These chal- sider lack of access to finance as the main factor limiting lenges include high initial investments, long development their growth113. The availability of risk capital is one of the periods to break even, the necessity to protect intellectual lowest scored components of GEI for Senegal (Figure 25, property, insufficient material assets, impediments to ac- right panel). This lack of financing is starkly reflected in the cess finance, and weak access to markets. fact that only US$10.7 million was mobilized by Senegalese 110 World Bank. 2018. Doing Business in Senegal. Washington, DC: WB. Available here. 111 The insufficient regulatory support comes on top of the other constraints related to digital infrastructure, public digital platforms, personal data protection, and digital skills that are elaborated in other sections of this report. 112 The term describes the time lapse between the initial pre-seed phase, when a start-up typically is using its own resources or “love money” from family and friends and the period of relative maturity and viability to attract investment and financing available on the market. The funding shortage on the market typically starts at the seed stage (in the range of 10 million FCFA) and ends at the Series A stage (US$1 million). 113 World Bank. 2014. Senegal Enterprise Survey. World Bank, Washington DC. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 69 Figure 25. Total Early-Stage Entrepreneurial Activity Index, 2017–18 (or latest available year) Global Entrepreneurship Index (GEI), 2018 (1-best) Component Scores for Senegal, 2018 (100-best) France 10 Production Innovation 6 China 43 Risk Capital 6 Romania 46 Internationalization 8 South Africa 57 Human Capital 9 Opportunity Startup 9 Morocco 65 Technology Absorption 13 India 68 Startup Skills 15 Bulgaria 69 Competition 25 Philippines 84 Networking 29 Ghana 93 Process Innovation 38 Nigeria 101 Opportunity Perception 41 Senegal 103 High Growth 41 Kenya 109 Cultural Support 55 Source: World Bank 2018. start-ups in 2017 versus US$147 million by Kenya (14 times including DER, MCTPEN, MEFP, and DGID, with the help of more for a population only 3 times larger) and US$247 mil- development partners, such as the World Bank, and legal lion in Malaysia (23 times more for a population only twice consultants have formed a task force to assess the feasibil- Senegal’s size)114. ity of proposed measures and identify appropriate vehicles to integrate them in existing legal and regulatory frame- 2. Government Priorities and Policies works. Legal and Regulatory Environment for Start-ups Market for Innovation in Government Services Cognizant of these constraints and opportunities, the (GovTech) government has demonstrated strong commitment to Due to a small market size, which limits the demand for make Senegal an emerging start-up nation and has re- start-ups’ solutions, and insufficient financing options to cently launched several critical initiatives to create an sustain start-ups outside the protected incubators’ en- enabling regulatory and policy framework for start-ups. vironment, government action to more proactively open Seizing the momentum and capitalizing on support from up public procurement systems is important to make the relevant public institutions, in July 2018 key ecosystem start-up ecosystem more resilient. One effective approach players including start-ups, hubs, and investors launched a to engage with start-ups through adjusting public procure- Policy Hackathon115 to draft in a participatory, bottom-up- ment regulations is letting them develop solutions to spe- driven manner a Senegal Start-up Act, which covers areas, cific public services challenges through business reverse such as financing mechanisms, fiscality, access to digital pitches or hackathons. International examples include the infrastructure, and skills and training opportunities. The 2011 United Nations Commission on International Trade draft was submitted to the authorities, who are strongly Law (UNCITRAL) Model Law on Public Procurement116, committed to follow the examples of other economies, no- which provides for new procurement procedures to facili- tably Israel (1991), United States (2011), France (2013), India tate dialogue between procuring entities and suppliers to (2016), and Tunisia (2018), in adopting specific start-up- enable procuring innovative products. Another example is focused regulations. Subsequently, key public institutions, the 2014 EU public procurement directives117, which make 114 Partech Ventures. 2018. Annual Funding Report - as quoted by Quartz Africa. 2018. Startup Venture Funding Jumped More than 50 Percent in Africa Last Year to a Record High by Yomi Kazeem. Available here. 115 Policy hackathons borrow from the hacker and start-up community’s proven dynamic and collaborative problem-solving format, which uses the brain power of an invested group of people over limited time (typically 1 day) to collectively and creatively tackle issues of common interest or concern. The participants normally adopt the format of interactive policy workshops, which requires them to become policy-makers for a day with a mandate to create legislation that can break through the barriers to innovative entrepreneurship. Dakar Policy Hackathon united 60 players of the start-up ecosystem to develop a Start-up Act. The hackathon was followed by a week-long online consultation (facilitated by social media and dedicated web portal) that reached nearly 500 entrepreneurs and collected more than 100 comments on specific legal provisions. 116 UNCITRAL. 2011. Model Law on Public Procurement. @United Nations, January 2014. Available here. 117 These Directives are EU Procurement Directive 2014/24/EU on Public Contracts; EU Procurement Directive 2014/23/EU on the Award of Concession Contracts; and EU Procurement Directive 2014/25/EU on Procurement by Entities Operating in the Water, Energy, Transport and Postal Services Sectors. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 70 Table 10. Types of Services Offered by Different Support Structures ‘Couveuse” Incubator Accelerator “Nursery” Co-working Enterprises FabLab Start-up Hotel Studio Space rental ü ü ü ü ü ü ü Advisory ü ü ü ü ü ü Trainings ü ü ü ü ü ü Prototyping ü ü ü ü ü Events ü ü ü ü ü ü ü ü Networking ü ü ü ü ü ü ü Financial support ü ü ü ü Source: Afric’Innov (available here). Notes: ü - core services; ü- optional services. extensive provisions for procuring innovation and establish Senegalese to participate. The following are illustrative an online platform to facilitate this method118. To develop examples of some of these hubs in Senegal120. the market for competitive and innovative start-ups, the GoS is considering to adopt regulatory measures request- • CTIC (Center for Technology, Innovation and ing key ministries to hold annual Business Reverse Pitches Competition): First digital business incubator of fran- or Hackathons to leverage digital solutions to improve cophone Africa; established in Dakar in 2011 under service delivery. These measures build on Senegal’s prior the joint leadership of the Senegalese private sector experience in partnering with the private sector through (such as Organization of Information Technologies Business Reverse Pitches (2016 and 2018) and a number of Professionals, or OPTIC), multinationals (Orange/ hackathons held by various departments (most recently, Sonatel), government (such as MCPTEN, ADIE), and de- DGID in 2016). velopment partners (World Bank, German Development Agency, or GIZ). Since its establishment, CTIC has trained Support Programs and Structures over 1,300 entrepreneurs, supported over 64 companies that have a cumulated turnover of US$5 million and 34 In line with global trends, Africa is experiencing rapid percent average annual revenue growth. growth in start-up support structures. In 2018 more than 440 structures emerged on the continent, showing an ex- • Jokkolabs Dakar:  Shared professional work space oper- ceptional growth of 40 percent compared to 2016. The most ating in 9 other countries and established in Dakar in dynamic African economies also are the most favorable to 2010 for entrepreneurs, start-ups, self-employed, digital the emergence of such structures. These trends apply to economy workers, and other new media or digital arts West Africa, which has over 100 support structures dedi- professionals. Jokkolabs has developed strong regional cated to growth entrepreneurs, whereas 15 years ago, none and Paris networks through several events dedicated to could be found. entrepreneurship and innovation and has an open inno- vation contract with Société Générale, offering 2-month Senegal follows the same trend with more than 15 start-up incubation for selected entrepreneurs. support structures (technology hubs, co-working spaces, • Impact Hub Dakar: Newly created business hub in part- or incubators) currently operating here. Apart from nership with Dalberg Consulting, operating since 2018 physical space, they usually offer programs to strengthen and providing high-quality work space, coaching, and entrepreneurs’ technical and managerial skills, provide mentoring; and organizes advocacy events with a strong mentorship and networking opportunities, and organize international network thanks to its membership in the advocacy events to attract other stakeholders and inves- international Impact Hub network operating in over 90 tors119. The recent events dedicated to digital entrepreneur- countries. ship in these hubs drew in thousands of young, passionate 118 For further details refer to www.innovation-procurement.org. 119 World Bank. 2016. How Tech Hubs Are Helping to Drive Economic Growth in Africa. World Development Report 2016 Background Paper. World Bank, Washington, DC. 120 Based on the Diagnostic work conducted as part of the West Africa Digital Entrepreneurship Program (WADEP) World Bank, 2019 (Program Document forthcoming). DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 71 Figure 26. Overview of VC Investment Funds Operating in Senegal VC Sectors Investment Stage Key characteristics Terangs Capital • Startups and SMEs • Early Stage • Local; Based in Dakar • Growth • Created by I8,P and the former manager of CTIC Hybrid VC/SME fund of $6m • 3 investments so far Ticket size: $75k-400k Partech Ventures • No specialization • Early stage • Regional; Based in Dakar Africa • Growth • $100m fund dedicated to Africa launched in 2018 • Ticket size: $500k-5m • Supported by IFC, EIB, Averroes Finance III • (Bpifrance-Proparco) and Orange Orange Digital • Digital ventures • Early stage • Regional; Based in Dakar Ventures Africa • Growth • $50m fund • Ticket size: $500k-3m Proparco • No specialization • Seed to Expansion • Regional: Based in Abidjan • More focused on SMEs (tickets $10M+) but getting interested in startups, ex. invested in Afrimarket M&A • All sectors • Seed • Local; Based in Dakar Ventures • Ticket size: less than $100k • More focused on SMEs but also getting interested in startups, ex. invested in the startup Paps Brightmore Capital • All sectors • Early-stage • Regional; Based in Dakar • Ticket size: $500k-3m • More focused on SMEs but also getting inter- ested in startups on an opportunistic basis Source: World Bank 2019. Africa Digital Entrepreneurship Program. • Yeesal AgriHub:  Launched in January 2017 and based • Sekou: Regional platform that provides support to en- in Thies, first agriculture and agribusiness tech hub trepreneurs in rural areas, particularly on behalf of in- in Senegal supporting (through coaching, mentoring, ternational institutions, with strong media presence to training, and networking) famers, local technology in- promote innovative entrepreneurship. novation community and young entrepreneurs to stim- • MakeSense:  Global pre-incubation structure with pres- ulate innovative projects at the intersection of agricul- ence in Dakar (as well as 120 other cities around the ture and ICT. world) established in 2010 for students wishing to launch • Jiggen Tech Hub:  First platform supporting female en- social enterprises and for open innovative programs trepreneurship in Senegal’s technological ecosystem with international institutions, such as the World Food through networking, training, mentoring, and knowl- Program (WFP) and the International Monetary Fund edge-sharing. (IMF). • Orange Fab: A 12-week intensive acceleration program offering a workspace, workshops with mentors, and a The level of professionalization and specialization of these US$10,000 grant to facilitate contracting with Orange often-nascent structures varies widely. Only a few of them business units. are yet able to provide real value-adding business services • Expresso Innovation Hub:  Hosted and financed by to start-ups, signaling the need for renewed momentum Expresso telecom operator, eight-week pre-incubation in enhancing their capacity. These organizations often are program for entrepreneurs aimed at enabling contrac- isolated, lack appropriate and sustainable means to de- tualization with Expresso’s business units as well as with velop, and may face governance challenges. Some of their other corporations and public administrations. key constraints are related to identifying and committing a DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 72 sufficient pool of quality and experienced mentors (knowl- potential investors. However, for this type of funding to edgeable serial entrepreneurs) able to give value/insights exist, there must be grants to cover processing and sup- to start-ups; limited connections and partnerships with port costs and to disburse the funds. investors; personnel who lack critical corporate finance • Crowdfunding121  takes the form of grants and can cov- skills; weak pipeline and selection process; and difficul- er the need for working capital and pre-seed funds ties in securing financing. Even CTIC –– often cited as an for Senegalese start-ups. This type of participatory fi- example of success across West Africa –– has been losing nancing, often referred to as “crowd-equity”, also can traction over the past years due largely to its outdated, cover more substantial capital requirements –– from insufficiently inclusive, and non-transparent governance $US200,000 to $1 million – if it is in the form of equi- structure, which is biased toward the public sector and ty participation. In Europe, crowdfunding generated lacks representation from start-ups themselves. Overall, € 5.3 billion in 2015 and has doubled every year since. even when taken together, these support structures and However, the emergence of such platforms in Senegal122 hubs still face difficulties in providing access to the skills, is hampered by the nonexistence of a legal and regulato- tools, trainings, and contacts necessary for the growth and ry framework. maturation of entrepreneurial projects. These structures • Business angels have the potential to meet seed funding also have yet to find an economic model that will guarantee needs as well as to provide precious mentoring. Recent the projects’ viability beyond the grants. research shows that start-ups supported by business angels are at least 14 percent more likely to survive for Access to Early Stage Financing 18 months or more after funding and to hire 40 percent Senegalese entrepreneurs lack financing options tailored more employees than those without support123. However, to their specific circumstances, particularly during their in Senegal, although informal deals have been made, no pre-seed and seed phases. The traditional financiers often network has been formally structured among local in- are not equipped to meet entrepreneurs’ short- and long- dividuals who possess the capacity to invest up to tens term investment needs. Commercial bank financing is of US$ thousands in start-ups. The one exception is the almost entirely inaccessible to start-ups and digital SMEs, Women Investment Club, created in 2018 to structure a given their characteristics elaborated earlier, including business angels’ network dedicated to support female the lack of tangible assets and different cost structures. entrepreneurship. Facilitating the long-lasting emer- Consequently, due to high real and perceived risks and gence of such clubs would require technical assistance substantial transaction costs, commercial banks impose comprising awareness-raising and training programs, very strict and almost insurmountable conditions on start- such as through exchanges with peer countries in simi- ups. Examples of these conditions are physical and cash lar contexts. collateral higher than the credit amount, substantial equity funds, high interest rates, and tight credit conditions. On Seed and venture capital (VC). Funds that usually take the other hand, the microfinance sector rarely fills the gap start-ups’ minority shares in the range of US$100,000 to because it, too, has standardized procedures: high interest $500,000 have been few in Africa and to date have focused rates, short-term maturities, small loans rarely exceeding on only a handful of countries124. Even though some capital- hundreds or thousands of dollars; and fails to fully meet the risk investment funds have begun to emerge in Senegal, needs of innovative start-ups or to enable them to make none yet has been able to finance a significant number of long-term investments. start-ups at the seeding stage. The key obstacle is the in- adequate incentives (such as management fee subsidies or In this context, to address the shortage of capital required subscription to capital) to attract these funds to this type of by start-ups, for Senegal to develop a new category of fi- very risky tickets. The only existing investment fund likely nancial instruments is essential. to take investment tickets that are low enough to meet the expectations of start-ups is Teranga Capital, which is more • Funds from loans for example, can be a solution to the oriented towards SMEs in traditional sectors and digital provision of pre-seed capital in two ways: (i) by grant- finance. International funds, such as Partech Ventures ing non collateral, interest-free loans of US$15,000 to and Orange Digital Ventures, have started investing at the $20,000 to entrepreneurs at the ideation stage; and Series A level, but remain focused on Anglophone countries (ii) by facilitating contact between entrepreneurs and 121 Crowdfunding is the use of online platforms to collect funds from many persons. 122 COFINA and Kisskiss bankbank. 2017. Bilan et recommandations pour le développement du financement participatif en Afrique de l’Ouest.  123 Third Way. 2017. The Rise of the Angel Investor: A Challenge to Public Policy. 124 Partech Ventures. 2018. Annual Funding Report ‒ as quoted by Quartz Africa. 2018. Startup Venture Funding Jumped More than 50 Percent in Africa Last Year to a Record High by Yomi Kazeem. Available here. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL 73 Box 9. Senegal’s Digital Development Fund: Vision, Strategy, and Expected Results In line with the Emerging Senegal Plan (PSE) and its second implementation plan (PAP2), the Government of Senegal intends to promote an inno- vative and value-creating digital industry by establishing a Digital Development Fund (Fonds de Développement Numérique, or FDN). Besoins non porvus on très peu pourvus Besoins insuffisamment pourvus Besoins relativement pourvus • Structuration du BP • Conseil • Conseil Besoins • Réseautage • Equipement • Accès aux marches d’accompagnement • Recherche de subventions • Bureaux • Incubation Enviroonnement Introduction et cadre des Idée Prototype Amorçage Développement Maturité en bourse affaires Besoins • Bourses, subventions • Business Angels • Capital-risque • Crowdfunding • Capital-risque • Fusions et acquisitions de financement • Prêts snas intérêts (famille et amis) • Crowfunding • Partenariats stratégiques Vente Besoin < 10 millions Besoin entre 10 et Besoins > 50 FCFA 50 millions FCFA MILLIONS FCFA Benchmarking six funds in other countries generated several lessons for the FDN: • Interest in covering all stages of digital SMEs’ development; • Possibility of expressing strong ambitions, if the anticipated public investments are substantial; • Importance of choosing the fund governance method. Key FDN objectives are: • Promote the development of a culture of innovation and entrepreneurship; • Facilitate the creation and development of innovative enterprises; • Strengthen the technical and managerial capabilities of digital SMEs; • Strengthen the digital SME financing ecosystem; • Promote an incentive environment for digital SMEs and for investments in the digital sector. This strategic framework establishing FDN makes it possible to address the needs of digital SMEs at different stages of their existence, from ideation to maturity. The FDN funding strategy based on a combination of institutional funding sources and an implementation roadmap already have been developed. An assessment of expected impacts also has been conducted, showing that, for an envelope of 100 billion FCFA over 5 years (investment and operating costs), the FDN would: • Attract up to 47.5 billion FCFA from the private sector in the digital ecosystem; • Generate a turnover of 166 billion FCFA from the companies benefiting from the funds; • Generate a turnover of 59 billion FCFA in the national economy; • Create 5,400 jobs throughout the country; • Generate 58.1 billion FCFA in tax revenues for the State. Source: Performances Group, 2018. Source: Performances Group, 2018. (Kenya, Nigeria, and South Africa, all of which have a prov- Overall, to promote the rise of such alternative financing en track record of successful digital transformation). Other mechanisms, some degree of public intervention is es- capital investment funds in Senegal are more focused on sential. Recognizing this challenge, GoS has already taken mature companies in traditional sectors. important catalytic steps in this direction. Public instru- ments dedicated to seed financing, under which the State does not substitute for private capital but paves the way DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SEN EG AL 74 for it, have been recognized as one keystone of the econo- Presidency. In less than 1 year, DER already has invested mies that have been able to foster the emergence of a 17 billion FCFA (approximately US$29 million), reaching critical number of successful start-ups. Such was the case nearly 22,000 beneficiaries and impacting more than 500 in Israel and its Yozma Fund, and France and its Public communes. One of its key priority areas is digital entre- Investment Bank. In the case of Senegal, in 2016, through preneurship. Its annual financing envelope was recently the Sovereign Fund of Strategic Investment (Fonds announced to increase from 1 billion FCFA to 3 billion Souverain d’Investissements Stratégiques, or FONSIS), GoS FCFA. or approximately US$5 million. Moreover, Digital provided significant support to the emergence of the Senegal Strategy 2025 provides for the creation of a Digital country’s first seed fund, Teranga Capital, by becoming Development Fund (Fonds de Développement Numérique, one of its first shareholders. In early 2018, a new strategic or FDN) to be “the catalyst of a high value-added digital initiative to enhance entrepreneurs’ access to financing ecosystem in Senegal” by providing early stage financing was launched though a special Entrepreneurship Fund, (from the ideation to maturity phase). However, the op- Délégation Générale à l’Entreprenariat Rapide pour les erating and financial models for FDN are yet to be imple- Femmes et les Jeunes (DER), which reported directly to the mented. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 2. D IAGNO ST IC O F T HE D IGITAL EC O NO MY IN SENEG AL DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL 75 3. TOWARDS A THRIVING DIGITAL ECONOMY IN SENEGAL 76 A. Enhancing Digital institutional and governance framework of the digital economy in Senegal: Economy Governance and • Approve a decree establishing an improved strate- Regulatory Framework gic and institutional framework for the sector a at enhancing coordination, monitoring and synergies  imed of public digital development projects and at strength- The focus of this section is on how to reinforce the foun- ening the role MCTPEN plays in promoting and imple- dations of a vibrant and successful digital economy in menting this coherent digital vision of the government. Senegal through improved governance and strengthened More specifically, the GoS should consider implement- regulation and competition. ing the SSN2025 recommendation (Articles 189-196) to establish an Interministerial Committee presided by 1. Governance Framework the Prime Minister or the President to provide strate- gic direction to government’s digital initiatives (similar It is necessary to stimulate the right conditions to strengthen to the institutional models adopted by some advanced the institutional framework that enables effective coordina- countries, such as Estonia125, France126 or Singapore127). As tion and strategic steering of the government’s policy on per SSN2025 Article 193, this high-level interministeri- the digital economy. The multiple delays in implementing al entity could be supported by a Technical Committee the recommendations of the Digital Strategy SSN2025 can be (and/or its Permanent Secretariat) anchored at MCTPEN partly explained by the complexity of Senegal’s institutional to offer technical and operational support to the imple- architecture and governance of its digital sector. As elaborated mentation of key projects and initiatives (as is the case in in Section 2.A and as diagnosed by the SSN2025 itself (Articles Israel128 or Singapore). 55 and 57), the sector is burdened by a multiplicity of entities, • Stimulate the effective functioning of the National each with specific, and sometimes competing, prerogatives Digital Council  (CNN) that has de jure been established, and a lack of leadership in strategic management. These ob- but de facto is yet to start operating; CNN comprises pri- stacles are primarily political and appear to seek to consolidate vate sector and civil society actors, whose advisory role the Internet market around existing operators by slowing and will facilitate national consensus and mobilization of all complicating the entry of new players. While some of these to give the digital sector a driving role in the transforma- difficulties have been partially overcome, most persist and are tion of other socioeconomic sectors. a matter of great concern for the sector’s future. It is imperative for MCTPEN to take a more proactive role 2. Regulation and Competition in driving broad digital transformation of the government by (a) effectively taking charge of the government policy in Since the broadband infrastructure is the foundational the digital arena; (b) closely coordinating with key impli- element of the digital economy and will remain a criti- cated line ministries and agencies; and (c) taking proactive cal driver of its growth in the coming years due to the steps to address the institutional fragmentation and lack of saturation of mobile telephony, it is paramount to fur- a clear regulatory framework for steering and coordination ther strengthen the broadband regulatory framework in as well as capacity shortage within the Ministry itself. Senegal. Within the context of the SSN 2025, the GoS has initiated strategic legal and regulatory projects to open up Two initiatives are recommended to address the lack of the broadband sector, boost competition and attract private sectoral coordination and steering and to strengthen the investment, adopting an action plan and an implementation 125 Strategic steering of digital initiatives and e-governance agenda in Estonia as well as implementation coordination of the National Digital Agenda 2020 is led by a strong and technocratic E-Estonia Council chaired by the Prime Minister and comprising three ministers (Minister of Entrepreneurship, Minister of Education and Research, and Minister of Public Administration) and five independent experts and private sector representatives. Other public institutions and experts get involved in the work upon need. The Council can also set up expert committees and task-based working groups (such as expert group on interoperability or records management, etc.) or commission specific studies. 126 In France, the DE governance model is anchored in the Prime Minister’s Office with close support from the Secretary/Minister of State for the Digital Sector, charged with coordinating all work on the mod- ernization and simplification of the State. Following 2017 institutional reorganization, strategic and operational cross-sectoral coordination of public digital initiatives is led by two inter-ministerial entities: Interministerial Directorate of Public Transformation (DITP) charged with strategic coordination and Interministerial Directorate for Digital Affairs and State Information and Communication System (DINSIC), responsible largely for implementation steering and support. 127 In Singapore, state digital agenda is also overseen by an Interministerial committee placed under the Prime Minister Office and comprising Minister in charge of the Smart Nation, Minister in charge of GovTech, Minister of Communications and Information and Minister of Trade and Industry. This committee oversees the work of the Smart Nation and Digital Government Group that is charged with implement- ing a recently (June 2018) adopted Digital Government Blueprint. 128 In Israel’s model, strategic coordination and effective integration of various digital transformation activities under the 2013 Digital Israel National Initiative and its 2017 National Digital Program is led by the Digital Israel Bureau, a central coordination unit with a strong mandate, agile and technocratic workforce (team of 40) and a sizeable budget. Further details can be found in the National Digital Program of the Government of Israel, June 2017 (available here). DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 77 Table 11. Agenda to Promote the Digital Economy: Eleven Projects for 2018–19 Activities Objectives Expected Results 1. Campaign to promote Digital • Promote SSN 2025 among stakeholders, deci- • All actors, decision-makers, and partners of the Senegal Strategy 2025 sion-makers, and technical and financial partners sector have taken ownership of SSN 2025 and pledged to implement it 2. Launch and publish Infor- • Provide actors with timely information and com- • Visibility of MCTPEN activities, achievements, and mation and Digital Economy munication on activities, achievements, and major projects improved Promotion Bulletin (BIPEN) projects of MCTPEN and the entire digital economy • Attractiveness and influence of the digital economy sector sector increased • Communication between the Ministry and other sectoral actors enhanced 3. Update and share project • Ensure the steering, implementation and monitor- • SSN2025 project portfolio updated portfolio of Digital Senegal ing/evaluation of SSN2025 projects • Dashboard to pilot SSN2025 set up Strategy 2025 • Mechanisms to implement and monitor/evaluate SSN2025 defined 4. Organize digital promotion • Overcome isolation and digital exclusion of the re- • Digital isolation of remote rural areas mitigated caravans mote populations and socio-professional categories • Remote and disadvantaged populations digitally of target areas by promoting digital access and dis- included tribution everywhere and for all, building capacity, • Digital culture more effectively popularized and promoting uses 5. Establish an overarching • Overcome duplication, silos and mismanagement of • New lean and effective institutional framework coordination structure, such strategic digital initiatives of the government, while created based on best international practices as Digital Economy Perma- maximizing synergies in pursuing comprehensive and • Coordination, alignment and strong ownership of nent Secretariat, to ensure cohesive joint digital economy agenda programs, projects and activities reinforced effective coordination and • Clarity of public initiatives for private sector and strategic steering of the gov- international partners/donors achieved ernment’s digital initiatives • Ease in securing funding established 6. Ensure the adoption of digital • Promote economic and social transformation • Strong synergies created among digital ecosystem strategies in priority sectors through digital distribution in the priority sectors actors, decision-makers, and stakeholders in based on strong cross-sec- identified in the PSE second implementation plan, sectors concerned toral coordination and align- such as Agriculture, Education, Health, Transport • Penetration of digital solutions and services in- ment of these initiatives and Infrastructure, Security & Governance, etc. creased in targeted sector activities • Volume of digital contributions to productivity and growth of national economy strengthened 7. Establish framework for syner- • Synergize different digital promotion initiatives • Draft order validated and signed gy and development of digital • Establish a platform for consultations and dialogue • Project portfolio updated promotion initiatives among stakeholders • Support program shared and validated • Set up institutional, technical, and financial sup- port mechanism for these initiatives 8. Organize national forum on • Identify and synergize all digital entrepreneurship • Good digital entrepreneurship employment practices employment and digital entre- promotion initiatives identified and shared preneurship • Set up system of institutional, technical, and finan- • Digital entrepreneurship training program defined cial support for these initiatives and validated • Mechanisms to set up and operationalize entrepre- neurship and digital promotion support fund shared 9. Launch President’s Award for • Stimulate creativity and innovation in the digital • Senegalese digital know-how promoted Digital Innovation economy sector • Innovation support fund operationalized • Support and promote digital innovation activities DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 78 Activities Objectives Expected Results 10. Establish a Permanent Con- • Establish climate of exchange and constructive • Hold two biannual meetings between ministry and sultation Framework between dialogue between decision-makers and actors in the ecosystem actors State and actors in the digital digital economy sector • Hold annual meeting between the government and ecosystem ecosystem actors 11. Evaluate and reactivate • Create new momentum for partnerships and fruitful, • Partnership actions assessed, and prospects international cooperation sustainable cooperation in the digital economy identified and partnerships in digital sector • New partnership framework established economy • Platform drawn up for consultations, dialogue, and exchanges with partners • Key projects of Digital Senegal 2025 strategy shared 12. Hold international conference • Adapt current fiscal framework to the realities of the • Characteristics and specificities of the digital on digital economy taxation digital economy to counter erosion of tax bases gen- economy reviewed erated by specificities of digital enterprise business • Business models of digital enterprises shared models and tax optimization strategies • Tax optimization strategies presented • Adapted tax rules proposed Source: DPENP/MCTPEN. schedule. The first five projects include (i) revision of the a major disruption from the non-transparent and non- Telecom Code (accomplished), (ii) elaboration of the text competitive process of awarding a 4G license, which has to set up the CNN (accomplished), (iii) study evaluating resulted in market distortions and significant delays in 4G options for a digital development (accomplished), (iv) fi- deployment across the country. Other operators are still nancing start-ups in the digital domain (in process), and negotiating with the State to obtain their 4G licenses, with (v) launching a tender to manage and market the surplus this limitation of broadband access being particularly sti- capacity of the state optic network infrastructure currently fling for smaller operators, preventing them from partici- managed by ADIE (in process). It is necessary to cement pating in the market. The democratization of the Internet early achievements and finalize main implementing decrees and its increased penetration will be only possible with of the new Telecom Code, while strengthening the ex-ante an appropriate strategy of the acceleration of 4G coverage asymmetric regulations. Completing the adoption of a new throughout the country, including the granting of 4G to legal framework governing the digital economy sector will all operators and the experimentation with 5G. Thus, it is expedite the coherent development of broadband Internet. critical for MCTPEN to extend 4G throughout the country, promote universal access and competition, and take mea- In this context and in view of the need for asymmetric reg- sures to reduce mobile broadband prices. ulation to address high current concentration of the tele- com market and related market segments, this assessment To achieve these objectives, key recommendations are as recommends that MCTPEN take the following measures: follows: • E  nsure that sufficient obligations are assigned to actors • A  ppoint an independent Negotiations Committee to ex- with significant market power, particularly specify es- tend 4G licenses to operators that hold a Global System sential facilities, correct the bottlenecks (such as the in- for Mobile Communications (GSM) license; launch, con- ternational gateway), and increase the equity of access duct, and conclude transactions with them and thus en- conditions, specifically for MVNOs; able access to the spectrum in the bands of 1800, 700, and • R  educe the regulatory burden for operators that lack 800 MHz at transparent and nondiscriminatory prices; significant market power; • C  onsider anchoring this committee in MEFP (presid- • S  trengthen regulation and opportunities to share infra- ed by the SG MEFP) and including among its members a structure and to access alternative infrastructure (such Technical Advisor (MEFP), Cabinet Director (MCTPEN), as the ADIE fiber optic network). ARTP representative, and President’s Office (Special Advisor to the President) or Prime Minister’s Office rep- It also is essential to restart the process of granting and resentative; extending 4G licenses to global operators as well as start- • E  nsure that the committee is backed by an independent ing to experiment with 5G. As elaborated earlier, the devel- Board (investment bank or individual transaction advi- opment of the mobile network in Senegal has experienced sor supported by a 4G technical expert). DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 79 B. Strengthening Five Building for non-dominant operators) and reduce the demand for new frequencies. Blocks of the Digital Economy The following actions are henceforth recommended on spectrum management and allocation: 1. Digital infrastructure •  Spectrum management Fiber-Optic Network • R  eview the cost calculation structure and adapt the The main objective is to pool national public alternative frequency fee calculation method linked to the growth infrastructure within a patrimonial company and entrust of high-speed data services; its management, maintenance, and marketing to a com- • A  pply a use or sharing policy, under which a licensed petent private operator. The completion of these reforms spectrum not used by the main spectrum holder is made is critical to enable Senegal to optimize the use of consid- available (availability could be accomplished through erable digital infrastructure assets at its disposal that can frequency leasing and/or a secondary use policy). only be fully leveraged through real competition resulting in lower prices, improved quality, and diversified innova- tive offers by new digital actors. To foster this competi- •  Spectrum allocation tion, the national broadband network could be completely shared between public and private operators, becoming • A  ssign additional spectrum for 4G services, possibly more dense and capable of accommodating new entrants. in conjunction with existing license renewals and for fixed wireless broadband (800 bands); To achieve this, it is recommended to undertake the fol- • F  acilitate the reorganization of frequencies, the re- lowing measures: allocation of mobile bands among services, and auc- tioning; • E  ffectively implement the new management and pub- • A  ssign unlicensed spectrum for public Wi-Fi use and lic-private partnership (PPP) model to optimize the use grant on-demand authorizations to facilitate the ex- of ADIE’s public digital network; perimentation and launch of expected innovations • I  dentify and establish an appropriate governance struc- (industrial, scientific, and medical, or ISM through ture (creation of a patrimonial company mandated to frequencies 868 and 433 MHz used for IoT). hold the public fiber optic infrastructure on behalf of the State); Digital Switch-over (DSO) • R  ecruit, through an international tender, a private part- To propel Senegal into the era of digital broadcasting, the ner to manage, market, and maintain this infrastructure government should undertake measures to complete the on transparent, nondiscriminatory, and competitive delayed transition to digital terrestrial television. This conditions. digital switch-over transition will significantly change the audiovisual value chain, while ensuring the satisfaction of Frequencies the increasing demands of actors in the audiovisual land- It is important for MCTPEN to launch a reconfiguration scape, whose services are geared towards multimedia and of the management and pricing of the frequency spec- mobile or interactive uses. trum, considered as another major prerequisite of the successful development of the mobile broadband market. In this context, it is recommended to accomplish the fol- The growth of IoT and other advanced digital technologies lowing: in Senegal depends on the adequate allocation and pric- ing rules of the frequency spectrum, both of which are also • A  udit and develop the frequency spectrum of the digital critical to competitively develop 4G as well as to reduce the dividend and its use (4G deployment, rural high speed/ digital divide. Since current frequency pricing rules do not broadband, or HD) with the operators; encourage an efficient use of the spectrum (due to high • C  onduct an inventory of the national frequency plan; fees and not taking into account the type of actors and geo- take proactive strategic decisions for its optimal, and graphic areas in which these scarce resources are used), long-term management; and prioritize the allocation it is consequential for MCTPEN to adopt a more liberal of spectrum corresponding to the digital dividend, thus regime of spectrum trade and/or refarming. Freer trade deploying an affordable broadband service offer in rural would offer greater flexibility in spectrum use (especially areas; DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 80 • E  ngage a technical working committee to study and well as to orchestrate the integration of services on a com- oversee the transfer on neutral, transparent, and non- mon or similar government service bus, following the cer- discriminatory conditions of the DTT infrastructure tifications (ISO) and other related standards. Moreover, it is built by Groupe EXCAF TELECOM under its conces- highly recommended to use of a unique national ID identi- sion contract, but also the transfer of infrastructure and fier based on biometric digital identity cards to facilitate technical personnel in charge of broadcasting, to the na- single sign-on during online services transactions. Finally, tional public channel (Radio Television of Senegal). given the breadth and depth of the work accomplished on the enabling legislation of the digital government, it is 2. Digital Government warranted to promptly review and update all statutory acts governing the activities on the ground. User Focus To achieve tangible progress in dematerialization, it is The first step in the direction of a secure and efficient essential to complete the government’s interoperability digital government is to ensure that, in consultation with framework with a law and/or set of decrees for all digital various user groups, a user-centric vision is defined in government services based on a single-point-of-contact the Government Digital Transformation Plan. The shared concept, which informs a national interoperability aggre- infrastructure must be better exploited and secured based gator. To operationalize this concept, a government-wide on the architecture of a reference enterprise. There is need ESB and open application programming interfaces (API) for a well-designed governmental interoperability frame- are recommended to ensure seamless integration of ser- work, activated by a government digital orchestrator or an vices. Extending the secure government network to rural enterprise service bus (ESB). municipalities and other government entities is important and will enable the underserved population to benefit from Overall, the digital government must be developed based decentralized government services, possibly through one- on a user-centric electronic service design –– whether stop-shops connected to ministries and central entities in citizen or enterprise. With a clear service transformation Dakar. plan, user group participation must be a requirement at all stages of the design, implementation, and deployment of MCTPEN needs to develop a government data manage- all digital government services, as this will guarantee their ment plan. The plan could cover data operations, data higher use rate. The government entities should offer then management and storage, data governance, enabling ar- their sectoral services through the digital Government’s chitecture, and appropriate technology as well as integra- common portal (gouv.sn) to harmonize the interfaces with tion in the GoS interoperability framework. To develop an a unified and coherent design bearing the trademark of the optimized view of these registers with the interoperability GoS online sites. database interface, master data registers should be evalu- ated to determine how they are structured, developed, and More structured and participatory sessions with repre- managed to identify overlaps and gaps. This evaluation sentatives of the user categories should be planned with would result in an incremental improvement in the nation- a precise timetable. Various actors including civil society, al public data system, including future links to new data academia, and the private sector must be consulted to en- generation nodes and information flows from connected rich the application-building process with their respective objects (IoT). The use of smart card technology in the e-ID experiences and expertise. Finally, a robust government- system also would enable government entities to validate wide Omni channel access strategy must be developed with the authenticity of the master data. In the era of open and established standards and guidelines to facilitate broad ac- big data, it is in the mutual interest of the State and the us- cess to all digital services in the public administration. ers to establish and respect data-sharing protocols. Business Process Change Related laws governing access to government information The simplification of government procedures should be must be promulgated and their implementing decrees improved through digitalization, thus contributing to an prepared. With these decrees, associated government overall administrative reform program. Building on this open data policies or open government data (OGD) must be reform program and on the current infrastructure of infor- developed and published, giving government entities the mation services developed by ADIE (TeleDAC and others), necessary framework to make data publicly available. The a service transformation toolkit could be developed. This mandate and the associated roles and responsibilities of toolkit could encompass the standards, guidelines, and government entities, such as ANSD, must be subsequently procedures to simplify, optimize, and redesign services as reviewed and to adhere to OGD principles. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SEN EG AL 81 Cybersecurity • E  nsure the transformation of the Digital Government by adequate human resources; At this stage, it is essential to accelerate the implementa- tion of the cybersecurity strategy (SNC2022). Numerous • E  stablish a national cybersecurity authority as a perma- actions (49 were planned for implementation only in 2018) nent entity to effectively implement the cybersecurity and priority projects of the strategy should be reconsid- strategy; ered and streamlined to avoid accumulating delays and • S  trengthen the contribution of digital ecosystem actors backlogs. The prioritization criteria could include the fol- in Senegal (academia, civil society, private sector) to pro- lowing four axes: mote a wide adoption of digital government services by users. 1.  Strengthening the legal and institutional framework of information systems security (INFOSEC)129; 3. Digital Financial Services 2.  Protecting the State’s critical information infrastructure (CII); The uptake of DFS in Senegal depends highly on regula- 3.  Strengthening cybersecurity capabilities and knowledge, tory reforms at the national and regional levels. For in- including by the creation of higher education facilities stance, adopting a regulation for fintechs (regional level) is for cybersecurity; important in light of the market development dynamics de- scribed in Section 2.D. Moreover, given an increasing num- 4.  Participating in regional and international cybersecurity ber of fintech initiatives in Senegal and the WAEMU region efforts. and a growing number of e-money users, it is relevant to define the conditions for the exercise of fintech activity. With this new implementation schedule, a more effec- tive monitoring and evaluation (M&E) function needs to Another required regulatory measure relates to reducing be institutionalized to ensure the strategy’s completion the threshold amount set by the BCEAO Regulation on by target dates, its alignment with international instru- the promotion of banking and the use of non-cash pay- ments and its adequacy in the face of new technological ment methods from CFA 100,000 (US$160) to CFA 50,000 advancements. It is recommended to establish a national (US$80) on the national and regional levels, respectively. cybersecurity authority as a permanent entity (under the This ceiling, introduced by BCEAO in 2002 and derived tutelage of the Prime Minister), while also setting up centers from the broader 2002 Directive on the same subject, aims for emergency response to computer attacks or incidents. to encourage public administrations to further digitize Moreover, regional and international cybersecurity coordi- government payments. This measure enabled the digiti- nating instruments, such as the Malabo Convention, must zation of wages of all civil servants in the WAEMU region be compelled to benefit the national security of Senegal that are greater than or equal to 100,000 FCFA (US$160). and other member countries. Finally, with the rapid devel- More than 15 years after the adoption of this (once effec- opment of new digital technologies, it is recommended that tive) regulation, amid the surge of various digital payment MCTPEN and relevant actors periodically review cyberse- instruments, this threshold should be revised downwards curity-related laws and implementing decrees. to increase the number of eligible digitized transactions. Thus, key recommendations on the digital government Moreover, the “Agent Banking” business model requires are as follows: a reform at the regional level of the regulatory framework for agents in the banking and microfinance sector. The • D  evelop a progressive digital government implementa- World Bank has suggested key possible revisions on the reg- tion plan with measurable key performance indicators; ulation of agents, in particular concerning the banking law • I  n consultation with user groups, ensure that a user-cen- that would imply simplifying the licensing requirements tric pan-government vision is defined in a Government and setting rules for the microfinance sector. It is proposed Digital Transformation Strategy; to reform the regulation and supervision of intermediaries • P  rovide a shared and secure infrastructure based on the in banking operations in two phases. The first phase would architecture of a reference enterprise; involve aligning the bank agent regime with that of e-mon- • A  dopt a well-designed governmental interoperability ey distributors by integrating the specificity of a complete framework, activated by a government digital orchestra- banking service offering. The second phase would modify tor or ESB connector; the current Banking Law of Senegal130 (specifically, Articles 129 Based on Presidential Instruction N.003/PR of January 2017, the government wants to define the organizational structure for steering and implementing Senegal’s cybersecurity program. 130 Senegal Banking Law N° 2008-26 of 28 July 2008 is available here. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 82 38 and 105) to establish a proportionate regime by creating a provider of financial services authorized according to model that would allow the existence of “super agents” and the regulations can enter a competitive bidding process. “simple agents” with proportionate requirements through a This Decree also defines the technical specifications as risk-based approach. The requirements for “simple agents” well as the security, interoperability, and personal data could be consistent with those set out in BCEAO Instruction protection requirements necessary to successfully com- 008-05-2015 on Electronic Money Issuers131. plete digital transactions. It would therefore be import- ant for the GoS to ensure its effective enforcement. Four additional reforms could be envisaged at the national level in Senegal: 4. Digital Skills • Adopting a Digital Payment Interoperability Regulation. The government needs to adopt a life-cycle approach to Given the existence of payment initiatives in closed loops the development of digital skills in Senegal, undertaking (Orange, YUP, TigoCash, Wari), it is advisable for Senegal measures ranging from the development of basic digital to promptly join the regional interoperability project led competencies and literacy among small children and the by BCEAO and GIM-UEMOA by adopting a regulation on out-of-school youth to setting ambitious targets for gradu- the interoperability of platforms that could later evolve ates with advanced technical digital degrees ready to pur- into a regional regulation. This measure would encour- sue technology-intensive professions. The ambition and age a better organization of interoperability in Senegal the challenge would then consist in ensuring the inclusion and in the long term would increase the volume of finan- of digitally-focused programs and courses throughout the cial transactions. entire school and vocational training system. Digital classes • Finalizing and updating the law on electronic transac- and practical work on computers or tablets should be gen- tions to account for digital signature. It is recommend- eralized from the earliest years in primary school, exposing ed that the GoS proceed to update the 2008 Law of 25 children to basic digital skills. In high schools, the focus January 2008 to include a clear and functioning digital would be on developing students’ creativity and self-reliance signature framework in Senegal. This update would al- by introducing more sophisticated courses in computer low electronic certification providers to issue certifi- coding and knowledge-seeking techniques on the Internet, cates to financial institutions, such as Orange Money while tertiary education would provide programs developing Mobile Finance for smart contracts. sophisticated professional digital skills, including e-busi- • Setting requirements for the cost of access to the tele- ness competencies, and preparing students for technology- com infrastructure through USSD for financial ser- intensive occupations. At the same time, the Ministry of vices. Despite the liberalized access to USSD codes, the Higher Education and Research (MESR) should pursue the cost, as previously indicated, remains largely unafford- reforms planned to improve technical and vocational digital able to most providers. The GoS should thus push this training, including by creating new courses that target both USSD reform a little further to ensure that telecom infra- technicians and engineers. Efforts should also focus on an structure access tariffs are reduced or capped, particu- improved professionalization of training in relation to the larly for financial services. This measure could resemble needs of employers, particularly technology companies. the BCEAO provision on free banking for selected digi- talized services adopted in October 2014132. To ensure the relevance of digital knowledge and skills • Enforcing the Ministerial Decree on the Digitization targeted by the education system and the supply-demand of Public Administration Revenue and Expenditures, confluence, it is essential to involve technology companies supported by the World Bank Second Multi-Sectoral in defining the digital training content and in mentoring Structural Reform Development Policy Financing133. future graduates. The education system could only be fully In view of the omnipresent use of cash by the GoS and successful if all actors involved in the digital domain –– generally an important role of governments in nation- major technological firms, business incubators, and start- al financial operations, the Senegalese Treasury would ups –– make significant contributions of their respective benefit from the application of the Ministerial Decree expertises. The Ministry of Higher Education and Research relative to digitization of the revenue and expenditure of should regularly update a list of adapted training profiles. the Public Administration. This text, signed on November It would also be beneficial to address the current (almost 6, 2018, defines the conditions, according to which any complete) absence of M&E mechanisms for trainings and 131 BCEAO Instruction N° 008-05-2015 Governing the Terms and Conditions for the Activities of Electronic Money Transmitters in the Member States of the West African Monetary Union is available here. 132 BCEAO. 2014. Banking Services to be Offered Free of Charge by WAEMU Credit Institutions. Press Release of October 1, 2014. Available here. 133 World Bank (2018). Senegal – Second Multi-Sectoral Structural Reforms Development Policy Financing. Program Document. World Bank, Washington DC. Available here. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 83 Figure 27. Digital Skills Overview Digital skills pyramid e-Business Skills Business skill + technology skills: being able to identify how digital technologies can create new business opportunities, new business models or new ways of doing exisisting business Digital Specialist Skills Skill required for researching, developing, disigning, producing, installing, managing, and maintaining ICT tools and systems Digital UserSkills Skills required for the effective use of ICT tools, systems, and devices to support non-ICT functions, incl. the use of internet, applications, and software Skills for the Digital Economy Tech n olog y int ensi ve oc cupa Advance Digital tions Skills Professional Tech (AI, Dig Data...) n olog Theoretical Digital Skills y bas Post-graduates, ed in Knowledge Scientists Energineers, Doctors, form & Analytical Skilled technicians al se ctor Skills Core Digital Skills occu patio Secondary School ns Leavers/Undergraduates Basic Digital Literacy School students/out-of school youth Technological Skills & Competencies Source: WB (2017). Entrepreneurship in the Digital Economy Report. educational programs to ensure they correspond to actual many of which are obliged to recruit engineers, who they demands of each sector of the economy, including the digi- subsequently have to reorient and assign to specialized tal economy. M&E is essential to provide decision-makers technicians’ tasks. Hiring at a higher level than necessary with reliable and updated data that would help define the generates costs that could have been avoided. At the same appropriate policies for the development and provision of time, however, it is also vital for the Ministry in charge of necessary skills and capabilities to sustainably implement the state employees (Ministère de la Fonction Publique, de Senegal’s digital transformation. la Rationalisation des Effectifs et du Renouveau du Service Public) to strengthen and create new training targeting ex- A regular analysis of market demand could provide an op- cellence. Such intense training programs would foster the portunity to predict which new digital training courses are emergence of talented employees, whom the country needs required. Such evaluation and planning would increase the to contribute to technological innovation and create new chances for fresh graduates to promptly find employment products adapted to local needs. opportunities, when they enter the job market. It would, above all, involve preparing and training technicians to en- There is also a significant need for relevant ministries134 sure an adequate flow of employees to digital companies, to focus on entrepreneurship training. The digital courses 134 Such as the Ministry of Employment, Professional Integration and Workforce Intensification; the Ministry of Vocational Training, Apprenticeship and Craft; the Ministry of Higher Education and Research; and the Ministry of Civil Service, Workforce Rationalization and Public Service Renewal. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 84 should be designed to offer training in the use of software in enforcing contracts, which has consistently been one for human resources management, accounting, finance, of the worst sub-indicators in Senegal’s DB scores; and project management, especially for young gradu- • C  ontinuing dematerialization of administrative proce- ates wishing to embark on start-up projects. The higher dures could greatly benefit start-ups, which continue to education and training ecosystem should also be provided waste much time in traditional administrative circuits, with an adequate infrastructure that could (a) host experi- for example, to access the Trade and Personal Property mentation and incubation activities; (b) foster the emer- Credit Register; obtain authorizations, including build- gence of new projects, tools, and technologies; and (c) test ing or occupancy permits; or prepare administrative emerging concepts and applications. This infrastructure is documents, such as police clearance or conformity cer- important in secondary cities and rural areas, where sup- tificates. port structures are generally less available or developed than in Dakar. Several universities in Senegal, such as the Legal and Regulatory Environment for Start-ups University of Saint-Louis, are creating their own integrated incubators, while others have expressed their desire to do Finalization and effective implementation of a dedicated so, which is a promising development. regulatory framework conducive to the development of start-ups with the help of participatory consultative ap- It is also judicious for the MESR to consider creating an proaches is required to increase their success opportuni- incentive and dialogue framework to enhance the capacity ties. Various countries have adopted a broad range of policy of private digital training providers to complement train- models to establish an enabling regulatory environment ing programs offered by public education institutions. that promotes start-up entry and growth through direct The private digital training providers perform a mission and indirect support mechanisms. Widespread measures of general interest by complementing public services that include different forms of tax incentives (including corpo- are not necessarily able to meet the needs and expectations rate income tax exemptions and tax incentives for start- of market players, particularly technology companies. up investors), public support/sponsorship of incubators, Thus, the government could consider letting these private direct financial support (grants, investments, wage reim- centers access the same benefits (such as VAT exemption bursement), and even facilitated access to special visas and dedicated lines of subsidies, for example), as classical for entrepreneurs135. Despite certain recurring provisions, training structures. these and other support mechanisms vary significantly among countries. The diversity of support mechanisms 5. Entrepreneurship and Digital Innovation ranges from special access to patents (India) to simplified customs procedures (Tunisia), to innovation-focused tax The GoS should continue to improve the overall busi- incentives (Brazil). ness climate and pursue dematerialization initiatives that inevitably facilitate the ease of doing business for all en- In this context, the GoS should maintain the strong mo- terprises, including start-ups. Key areas, where continued mentum to adopt an appropriate legislative and regula- reform efforts are warranted and the impact on start-ups tory framework for start-ups in Senegal. The government might be more tangible, include the following: should carefully analyze the advantages and drawbacks of various options before defining and legislating a model • M  odernizing tax administration by generalizing elec- best suited to the local context. Doing so by using innova- tronic payments to all users (digitizing tax collection tive consultative approaches can ensure broad-based con- would be particularly beneficial for digital start-ups, sensus among relevant stakeholders, thorough and com- whose operations are, by definition, conducted online); prehensive quality review of proposed measures, and their subsequent effective implementation. Adopting participa- • S  trengthening imports control should enhance the for- tory methods, such as Policy Hackathons, which involve malization of companies in a country, where more than ecosystem actors in jointly formulating regulatory texts, 90 percent of businesses are considered informal and would help ensure that the regulations adequately reflect are perceived as unfair competition by young and inno- start-ups’ current and projected future needs. In fact, vative enterprises; enforcement of start-up laws in many start-up friendly • E  nsuring effective, unbiased, and transparent opera- nations, such as France, India, Israel, Tunisia, and the US, tions of commercial courts could help the country ad- has resulted largely from several months of consultations dress persistent governance ineffectiveness, particularly 135 Peter Cook (2019). Comparative Analysis of Start-up Regulations. World Bank, Washington DC (forthcoming). DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 85 among legislators, entrepreneurs, civil society, and inves- or financial resources to consulting them on shaping the tors. entrepreneurship policy agenda and partnering with them to innovate in government services provision. More Market for Innovation in Government Services specifically, Senegal can revitalize its support to further (GovTech) strengthen existing structures, such as CTIC Dakar, and invest in new infrastructure, such as the proposed Dakar In view of the challenges peculiar to digital start-ups, Innovation Hub and the Digital Technologies Park (Parc des the government could take specific measures to ensure Technologies Numérique, or PTN) planned in Diamniadio. their access to public markets by deploying innovative approaches to public procurement. A traditional chal- • Being a critical asset for the country’s digital entrepre- lenge with public procurement is that it is based on the neurial ecosystem, CTIC Dakar needs to find new dy- premise that the administration, as the client or procur- namism. CTIC’s suboptimal performance is a concern ing party, can specify the details of the solution it needs for the State, which has a high stake in this historic incu- based on terms of reference and technical specifications. bator via four public entities138 that sit on the incubator’s However, this ex ante definition of the solution may not be Board of Governors. For the structure to recover its na- conducive to transformative innovation. An alternate ap- tional and regional leadership in digital entrepreneur- proach consists in the client or procuring party defining its ship, it would need to streamline its governance frame- problem or challenge and pitching this challenge to start- work, invest in the professionalization and skills of its ups or innovators for them to conceive a solution through staff, and strengthen reporting mechanisms to ensure a range of innovative approaches, such as business reverse more transparency in its use of public resources. pitches136 and hackathons. Such innovation in government • Developing a new Dakar Innovation Hub is an import- procurement can open potential new markets to start-ups, ant new initiative. Under the leadership of DER, the while stimulating the development of efficient solutions Dakar Innovation Hub (currently in the development tailored to the new needs of public administrations and phase) could play a leading role in creating a successful stimulating domestic innovation by increasing the demand digital cluster in Dakar. The hub is expected to regroup for innovative products and services. Apart from the 2011 main ecosystem actors by locating digital start-ups close UNCITRAL Model Law on Public Procurement and the 2014 to major technology companies and offering them qual- European Union public procurement directives mentioned ity technical support. The hub also can assist existing above, other examples of similar regulations include those hubs and accelerators by providing them with access to in the United Kingdom, which has been very proactive in well-connected offices and availing financial resources introducing a “start-up mentality” to the government using for their professionalization and services diversification. GovTech accelerators and PPP funds, and in France, which • Digital Technologies Park  is another project under launched the “beta.gouv” initiative137 to help public admin- SSN2025, aimed at ensuring closer linkages among re- istrations become more entrepreneurial and build their search, industrial development and innovation. Under own incubators to generate new ideas about public ser- the tutelage of MCTPEN, PTN has been conceived as part vices innovations. The GoS is aware of these developments of the digital city project in new Diamniadio urban pole and has launched its own hackathons. This approach would meant to serve as an innovation and knowledge hub in the have to be systematized and institutionalized to bring tan- West Africa region and boost manufacturing and logistics gible results and reach its twin objectives of modernizing services development in Senegal. PTN will include an in- public administrations and public service delivery, while cubation program and will boost the development of the supporting local entrepreneurs. digital activity cluster close to, on the one hand, new sci- entific and research facilities (such as Amadou-Mahtar- Support Programs and Structures Mbow University specializing in STEM and National Strengthening entrepreneurship support structures Center for Scientific Computing) and, on the other hand, needs to become an area of continuous government fo- the industrial park and private sector companies. cus in Senegal. The role of the State may vary from simply facilitating the creation and operation of such structures Generally, for all support structures, a key focus should and supporting them with in-kind (land and buildings) be their professionalization through strengthening the 136 “A reverse pitch is an event during which organizations pitch a business plan to entrepreneurs. If done right, a reverse pitch is a win-win for both sides. Entrepreneurs get funding and partnership opportunities, while organizations/larger companies get help with creatively and innovatively solving some of their pressing problems”. https://quickbooks.intuit.com/ca/resources/pitching/reverse-pitch/. 137 For further details about the UK and French examples refer to http://www.public.io/ and to https://beta.gouv.fr/apropos/, respectively. 138 Ministry of Finance, the Economy and Planning (administrative supervision); Ministry of Communication, Telecommunications, Post and Digital Economy (technical supervision); National Authority for the Regulation of Post and Telecommunications (ARTP); and the government’s IT Agency (ADIE). DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 86 Box 10. Afric’innov Program to Strengthen Innovative Entrepreneurship in Africa Afric’innov is a program launched by the French Development Agency (Agence Française de Développement – AFD) together with a consortium of African incubators and French structures involved in innovation and supported by WBG. The program came to existence, as a result of a dual observation: • The development of entrepreneurship requires an ecosystem, in which the structures (incubators, accelerators, fablabs) supporting the entre- preneurs must play a central role; • The success of supported entrepreneurs depends on the quality of services offered by these structures. Thus, the mission of Afric’innov is to strengthen and further professionalize innovative entrepreneurship in Africa. To achieve this objective, Afric’innov has developed four main areas of intervention: 1. Training support teams. The professionalization of structures requires training teams who are entrusted with support. The specially designed e-program meets this need by organizing in-person training sessions and/or by providing training contents online. 2. Developing digital tools and a resource center dedicated to entrepreneurship. Several tools will be used to support entrepreneurs. For exam- ple, Afric’innov deploys a software dubbed “Software as a Service” (SaaS) with all the features required to monitor an incubate. This software will be accessible through the Africinnov.com platform, which seeks to be the professional network of support structures in Africa. 3. Establishing the innovative mechanism for seed financing. Afric’innov provides entrepreneurs assisted by certain support structures that are members of the network with advances that are refundable without interest. These advances are meant to finance or subscribe to the seed funding mechanism(s) implemented by each Supporting Structure for Innovative Entrepreneurship (SAEI) locally. 4. Providing a labeling mechanism for support structures based on a benchmark. The main objective of the Afric’innov label is to place at the disposal of structures that support entrepreneurship in Africa and to all ecosystem stakeholders a “seal of approval” on their activities. The Afric’innov label will facilitate the identification of the structures that provide quality support. Source: Afric’innov. skills of their personnel and their capacity to provide ade- in the form of grants, subsidies, or access to free resources quate services. As the success of entrepreneurship support (building, office space, connectivity), it is essential for these structures depends largely on the quality of their human support structures to establish a sustainable income- resources and services, it is critical for them to develop ad generation model going forward. Traditionally, revenues hoc training curricula for all team-members. A good ref- can come from client start-ups and entrepreneurs in the erence can be the toolbox designed by the World Bank InfoDev in the form of (i) rental payments for accommodation or use of Afric’Innov program. Members of the management team premises/resources; (ii) remuneration for provided ser- should have excellent knowledge of business, finance, and vices; or (iii) sales of other value-added services to third innovations, and be comfortable with economic, financial parties (expertise, advice, training, event organization and marketing modeling as well as with legal aspects and and management). Another form of remuneration that has digital communication concepts. Moreover, to enhance and begun to develop across West Africa is the acquisition of optimize developers’ support, it is necessary to improve or equity in the capital of incubated start-ups, or a success design complementary tools and services beyond those fee as a percentage of an income increase of the supported already existing in each structure. An example would be to start-up. These are win-win partnerships. If the start-up establish contacts with mentors as sources of high value company improves its economic performance, the incuba- added advice. tor receives part of the growth benefits. To perform effectively, support structures must have Finally, coordination among actors of the entrepreneur- sustainable business and financial models and ensure an ial ecosystem in Senegal will need to be strengthened. increasing share of self-financing. Support structures are Combining energies and mutualizing the costs and accom- constantly seeking financial balance to ensure their devel- plishments of existing support structures would provide opment, growth, and sustainability. The main challenge is more comprehensive support to start-ups, when they face that their direct customers –– start-ups –– are also gen- serious difficulties. In the Senegalese ecosystem, most sup- erally short of financing. As for any business, generating port structures are still in their early stages. They are strug- profit takes time. Hence, at least in the initial phases, pub- gling to mobilize sufficient resources to ensure effective- lic or donor funding may be effectual to support the early ness by assembling a competent multifield team, equipped years of operation of such accelerators and incubators. and attractive working premises, and a network of com- Whether they benefit from public or philanthropic support mitted partners. Such necessary coordination should also DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 87 improve the capacity of these support structures to conduct model of the publicly-owned BPI-France (Banque Publique advocacy initiatives by mobilizing and pooling their skills d’Investissement) Fund139, which has already facilitated the and networks. Incubators and accelerators can champion emergence of 80 seed funds (from 0 active seed funds this action by lobbying or by finding necessary relays with prior to BPI’s intervention). At the same time, FDN’s own state authorities, technical and financial partners, profes- operationalization and financial model should be estab- sional organizations, and civil society. All in all, coordi- lished through relevant implementation decrees. One nation can be best achieved by establishing a network of financing option could be to allocate part of the revenue entrepreneurship support structures in Senegal, as well as from the government’s new Special Contribution of the more broadly across West Africa, and internationally. Telecommunications Sector (CST). Access to Early Stage Financing The growing importance of alternative financing mecha- nisms warrants targeted technical assistance and appro- In attracting private capital, the stumbling block lies in priate regulatory measures. Facilitating the emergence the regulatory framework of capital investment funds. of viable business angels’ clubs calls for tax incentives Senegal is one of the few countries in the region that has specific to this type of investment as well as thoroughly integrated in its domestic law the provisions of the WAEMU designed technical assistance to potential angels consist- Uniform Act on Investment Companies with Closed- ing of awareness and training programs. Peer exchanges end Capital (Uniform Law n°2007  15: 19/02/2007) and the for learning purposes could, for example, be based on the Directive for Preferential Tax Treatment (New Uniform Act: Lagos Angel Network model, which was set up thanks to 05/05/2014). However, the latter never came into force be- exchanges of good practices with European business an- cause it is the responsibility of BCEAO to issue instructions gels’ clubs. For crowdfunding, the main unblocking factor to enforce both the Law and the Act. As a result, in the ab- is establishing a legal and regulatory framework dedicated sence of an effectively implemented national legislation on to this mechanism based on the French and North African the equity industry, the funds intended to be established in models, which were devised in close collaboration with Senegal must be set up under the regional common corpo- crowdfunding platforms themselves. rate law but are not subject to the control of any regulation agency. Furthermore, even if the WAEMU Uniform Act were to be applied, it would not provide an appropriate legal framework for the equity industry, as it does not follow best international examples. C. Projects Proposed to In this context, a new legal and regulatory framework at Accelerate Senegal’s the national level is required to ensure the legal certainty and to properly regulate equity funds in accordance with Digital Economy international best practices. This framework should stip- Based on the conducted analysis and extended consul- ulate clearly the conditions of approval and supervision of tations with key stakeholders, primarily MEFP, several equity fund administrators and should be backed by a re- strategic projects have emerged as critical in accelerating vised tax regime. For example, going public through initial digital transformation of the entire economy and some public offerings (IPOs) should be subject to a more favor- selected sectors. They thus require close attention and able tax regime that would encourage companies to list on concerted efforts of public authorities and are described the regional stock market. The GoS therefore could take the below. initiative to propose revisions to the WAEMU Uniform Law. Equity funds on the seed investment ticket (less than 1. Digital Identity US$500,000) should be offered additional incentives. They could include, for example, subsidizing the man- Maximizing e-ID Potential agement fees of fund administrators, providing support The digital identity potential of extending access to basic services (through experts) alongside the investment, or services to vulnerable and excluded population and foster- subsidizing capital contributions. These incentives could ing the development of a broad digital economy is yet to be be implemented, for instance, by the FDN based on the fully unleashed. As elaborated in Section 2.C, the use of the 139 BPI-France Investissement is a private equity and venture capital firm, owned by the State of France, specializing in fund of funds and direct investments. For direct investments, the firm specializes in seed, startup, growth capital, emerging growth, early to late venture, middle market to mature stage, and buyout transactions in small and medium-sized companies. For fund of fund investments, it seeks to invest in private equity funds, venture capital funds, growth capital funds, mezzanine funds, and turnaround funds, national funds, regional funds of France or in international funds with a link with France. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 88 biometric identifier in Senegal is currently limited. Some National Cryptology Commission is licensing some service public administration gateways use the biometric ID card, providers and suppliers of cryptology services (GAINDE but more often many basic data with multiple identifiers 2000, SenTrust, GIM/WAEMU, and others) and coordinat- end up being created for one individual (tax, medical insur- ing the work of the Steering Committee to establish a PKI. ance, family allowance register). In the private sector, while COPIL-PKI was set up under Presidential Decree n°01038 some operators (such as telecom providers) have access to on January 29, 2016 to design and implement a national the ID card database to perform verifications, these are not PKI in Senegal. ADIE has been designated Project Manager. based on the biometric data and overall little use is made of COPIL-PKI is expected to finalize soon a Unified Document the digital identity for economic and business applications. defining its work program. The commission’s legal sub- committee is working on the outline of the PKI governance In this context, it is important to facilitate establishing an and administration – a work that is expected to culminate appropriate legal, institutional and technical environment with the adoption of legislative and statutory instruments conducive to a unified digital identification system with a necessary to make the system operational. However, it has focus on personal data protection and linkages with the been noted that COPIL-PKI is facing difficulties in mobi- digitization of civil registry inputs. Preceding in-depth lizing the budget required to develop and implement the analytical work is warranted to help identify and fill the PKI-related capabilities and skills needed by ADIE, which gaps in the legal, statutory, and institutional frameworks issues electronic certificates. existing in the digital identity field. Following a review of existing texts, the adoption of new laws that accord with key To summarize, the critical issues for the generalized use of findings and best international practices of personal data digital signatures in Senegal are: protection and database management (including PKI) would create an enhanced legal and regulatory environment. Other • Address the lack of clarity on PKI governance, n otably, recommendations include (i) adopting the architecture and regarding the institutional mandates of stakeholders ex- governance of operational mechanisms of the biometric pected to develop and manage PKI; identification system as part of services to the population on • Ensure further investment in PKI t  o take advantage of a par with health, social welfare, and finance; and (ii) har- the first achievements and extend the system; monizing standards and protocols to enable interoperability • Improve the performance of ADIE,the legal issuer of of the national digital identification systems. electronic certificates; Leveraging E-Signature and PKI • Urgently set up operational bodies by the COPIL-PKI  to deploy PKI among stakeholders and users to facilitate Another important element essential for a variety of digi- the establishment and popularization of the digital sig- tal economy applications in Senegal is commissioning nature. PKI. PKIs ensure security for a wide range of digital ap- plications because they provide a technological layer that Proposed Intervention Framework confers probative value on data and business transactions. For example: Several areas of reform could be envisaged by the GoS to improve the coverage of the biometric e-ID, enhance the • Decentralization: PKIs ensure that the various levels of sustainability and security of the underlying system, and the government communicate reliably by eliminating all maximize its uses. fraudulent activities due to the traceability of all inter- ventions. • Extend the e-ID coverage to ensure universal inclusion and improve the robustness and reliability of the sys- • Financial inclusion: Individuals can open a paperless tem to enable all citizens to access a unique ID number account with a guarantee of uniqueness, thus facilitating and to create special solutions for those without birth secured access for rural populations certificates. It also involves enhancing the sustainability • Confidence and corruption control:  Digitization con- of the system by investing in digitizing the civil regis- trols corruption, including among levels of a decentral- try to capture the population flow, and informing, in real ized government, by creating confidence in the financial time, the national identification system. messages and instructions for bank transfers. • Establish the legal and institutional framework to de- fine the architecture and governance of the digital GoS is working on establishing a national PKI, the absence identification system. This framework would help cap- of which acts as a major impediment for the government italize on e-ID potential by developing synergies among and businesses and also explains the delays in generaliz- public services and the private sector. This framework ing the use of digital signatures in Senegal. Currently, the DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 89 would also clarify institutional roles and facilitate coor- taxes online. All taxpayers subject to tax under the General dination to achieve the following objectives: Tax Code can use the e-tax system. For taxpayers under the jurisdiction of the Department of Large Businesses • P  roperly manage the foundational identity140 and keep (Direction des Grandes Entreprises – DGE) of MEFP, the use it technologically linked to other functional identity of e-tax is already mandatory, while the roll out to SMEs, references; microenterprises and the public is under preparation. To • I  nitiate the harmonization of standards and protocols to facilitate this process it would be necessary to update the enable interoperability of the national digital identifica- regulatory provisions, adopt a change management plan tion systems (health, social welfare, finance, others); and a public communication campaign, • D  evelop action plans for the private sector to effec- A summary of the actions necessary to implement the e- tively integrate the digital identity system; Tax project is presented in Table 12. • K  eep strengthening the legal and regulatory frame- works to ensure the protection of data and privacy. 3. Digital Port • Update the legal and regulatory framework of the PKI Located at the westernmost point of Africa, the autono- system to facilitate establishing a national PKI man- mous Port of Dakar (Port autonome de Dakar – PAD) is agement policy. To bolster the use of e-signatures by perfectly positioned at the crossroads of the major mari- the private sector, one option could be to integrate elec- time routes of the Atlantic Ocean. Senegal benefits from tronic certificates in the chip of the national ID card. It a strategic coastal location, which places it close to the would also be judicious to set ambitious objectives in the European and American markets (at the intersection of all renewed performance contract for ADIE’s issuance of main sea-lanes between them) and makes it a gateway for electronic certificates. some of the landlocked countries in West Africa sub-re- gion, such as Mali. The PAD is one of the largest deep-water 2. Digital Taxation seaports along the West African coast with its deep-draft structure and 200-meter-wide access channel allowing Electronic Taxation (e-Tax) Project round-the-clock access to the facilities. It is now the third largest port in the region (after Abidjan and Lagos) and the The e-Tax project, which is among the first initiatives of 9 th largest port on the continent. For Senegal, it serves as Senegal’s public administration for a “cashless” economy, an economic lifeblood, accounting for 95 percent of the to- has proven feasible for large businesses and is currently tal tonnage of the country’s imported and exported goods. being extended to SMEs and the public. In its current for- mat, this web application was initiated by the DGID as a However, the PAD is facing multiple challenges, includ- service to taxpayers to enable them to declare and pay their ing congestion, largely related to the lack of coordination Table 12. E-Tax Project Description Objectives Project Leaders/ Prerequisites Stakeholders The e-Tax project has proven its fea- Extend the scope of e-taxation to • MEFP Regulatory acts to apply the 2012 sibility for large businesses, it can SMEs; then set up an application to • MCTPEN Law to extend online filing obliga- now be extended to all taxpayers. generalize pre-filed declarations • Electronic payment stakeholders tions to SMEs, microenterprises, (banks and EMEs) and the public Synchronize and cross-check public The administration operates data produced by other administra- several databases on companies Long-term public communication tive bodies and taxpayers. It thus is possible to campaign crosscheck and synchronize these Oversee algorithmic management of data and apply algorithmic methods tax inspections; to step up fiscal controls. Apply algorithmic management of tax inspections in 2019–20 Source: Report authors. 140 “Foundational identity” provides information to one unique and centralized identifier (ID) and biometric data relating to a registered person (fingerprints, eye iris, face image). Several functional identities can be derived from this foundational identity, all of which relate to the same ID and each having specific attributes relating to the functional domain concerned. DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 90 Box 11. Leveraging the Expertise of an IT Industry Leader to Strengthen Digital Taxation In the context of maximizing finance for development (MFD)*, the World Bank has invited Microsoft, a founding partner of the Digital Development Partnership (DDP), to share the firm’s expertise on the options for strengthening digital taxation in Senegal. Microsoft conducted a digital maturity assessment and prepared a report with recommendations aimed at reinforcing Senegal’s digital taxation vision, thus improving tax collection efficiency, increasing citizens’ satisfaction, and boosting the overall efficiency of the whole tax system. Key extracts and findings are presented below (with further details available upon request). DGID already has been credited with multiple digitization initiatives: • E-tax: An operational solution consisting of online tax submission, currently reserved for major taxpayers. DGID is examining the possibility of opening this service to SMEs. • M-Tax: A mobile application (under development) to extend tax operations to the majority of taxpayers familiar with the unstructured supple- mentary service data (USSD) and SMS services. • My Personal Space: A web interface that will help the taxpayer to make her/his tax declaration, pay taxes, and monitor the processing of contentious petitions. • Digitization per batch: Mass digitization of physical documents to extract financial information. In this context, Microsoft resorted to the digital maturity model for taxation to evaluate Senegal’s current tax system in relation to international best practices of digital transformation for tax services. The model measures the status of the three main pillars over a diverse set of enablers, scored on a scale of 1 to 4 (with 1 = lagging and 4 = best practice): 1. Engage taxpayers pillar focuses on improving taxpayers’ experience through new dematerialized services and is measured over 3 capabilities and 18 enablers; 2. Optimize operations pillar rationalizes internal processes with the new process controlled by the data and is measured over 3 capabilities and 11 enablers; 3. Empower tax officials, through which employees have the tools required to make the right decisions and provide the best service, is measured over 3 capabilities and 7 enablers. Based on the initial results of the maturity assessment and consultations, a roadmap has emerged to empower DGID with a plan to address the gaps and advance the transformation to e-Taxation. Seven key initiatives have been highlighted as essential to build the foundation for the trans- formation. These are as follows: 1. Digital identity: One of the key unified registers to identify and authenticate taxpayers (individuals or businesses); 2. Gateway to integration: Integration between the internal systems of DGID and other government entities 3. Electronic deposit integration and scale-up: Integration and scalability of various electronic deposit initiatives to meet the scheduled and future workloads; DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 91 4. Electronic billing: Major initiative that may create new opportunities to improve compliance through the electronic declaration of bills by taxpayers; 5. Cybersecurity: Prerequisite to extend access to dematerialized services; 6. Productivity and mobility of tax services staff; 7. Advanced analytics of statistics. High-Level Roadmap for e-Taxation Wave 3: Transforming Taxation • Expand e-filing to citizens • Introduce taxation chatbot helper • Leverage Advanced predictive analytics for fraud detection and incompliance • launch smart phone taxation Wave 2: Expanding Reach • Expand e-filing to small enterprises • Introduce e-Invoicing for TVA Value • Setup improved tax payer contact center with taxpayer relatinship mgmt • Enable employee unified communication • Enable integrated tax business intelligence Wave 1: Laying the Foundation • Integrate and scale the e-tax architecture • Build digital identity platform • Implement Integration Gateway for internal and external integration • Implement e-Payment • Estrablish tax data warehouse with consolidated data • Draft Cyversecurity policy and initiate cyversecurity measures • Enable employee mobility Time Source: Microsoft. * Under the MFD approach, the WBG helps countries maximize their development resources by drawing on private sector solutions, expertise and financing to address and fund development challenges, thereby reserving scarce public financing for those areas, where private sector engagement is either suboptimal or unavailable. between its key stakeholders. The PAD is located within the • Land zones use and control:  These are clear revenue city of Dakar, causing serious difficulties of access and move- opportunities for the PAD. Regulations and laws must ment. Any container traffic increase would adversely impact enable free and dynamic pricing based on supply and the whole city and the port. The congestion within the port demand. An integrated, data-driven management sys- space hinders the performance of some terminals and leads tem can monitor and manage land zones and drive in- to isolated behaviors of stakeholders seeking to take advan- sights to take decisions based on rental prices else- tage of the situation to the detriment of the PAD. For exam- where, transportation costs, and storage costs. ple, because the monthly rent for a square meter of storage is • Drive insights to management:  Interconnections be- much lower than the rent in town, the available areas within tween systems and databases are highly needed to pro- the PAD are overused, resulting in port premises being trans- vide real-time data and insights for the overall manage- formed into warehouses, reducing movement areas, and ment, accelerating decision-making on critical business contributing to the congestion of the port itself. Moreover, issues, reducing manual interventions and minimizing the congestion can be also explained by a mismanagement of risks of mistakes. This initiative would also tackle fake usage zoning and delayed investment in productivity tools, weights and optimize the processes, using a solution which have slowed handling services, configuring the space, such as “data warehouse” and “machine learning” to and addressing the lack of land reserves. drive insights from trends and patterns. • Technology tie:  A win-win situation is to be reached with Against this background, establishing an integrated Port Dubai Ports (DP) to drive faster processing. It is there- Management System is necessary to address these chal- fore recommended to leverage IoT solutions to capture lenges through five areas of intervention: DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 92 Figure 28. High-Level Roadmap for the E-Port Project The roadmap to achieve the Senegal Digital Port visin that consists of three waves: • Wave 1 - Laying the Foundation: ensuring that the essential building blocks are in place for digital transformation Wave 3: Transforming Port Management • Wave 2 - Expanding control and management capabilities: building • Route Optimization using AI upong the foundation to start expanding the features and empower manage- • Container optimization using AI ment and decision makers • Digitization of processes using IOT • Wave 3 - Transforming Port Management: Capitalize on latest technologies • Operational efficiency using AI like AI and IOT to drive operational efficiency Wave 2: Expanding control and management • Introduce an integrated asset management and pricing platform Value • Enable integrated intelligence • Mobility solutions Wave 1: Laying the Foundation & driving insights • Provide DAta Modelling & governance • Establish Port data warehouse with consolidated data • Drive insights for decision makers Time Source: Microsoft 2018. Table 13. Modernizing PAD Management Description Objectives Project Leaders/ Prerequisites Stakeholders Digitizing and orchestrating port processes to Ministry of Fisheries and Adopt regulatory and insti- PAD, economic lifeblood of Senegal, become a one-stop-shop system to manage goods Maritime Economy/Depart- tutional measures enabling is facing multiple challenges related with a platform that integrates interoperable inter- ment of Ports and Inland PAD to take a leading role to poor governance and lack of coor- faces of all PAD stakeholders. Maritime Transport in the digital transformation dination of stakeholders’ activities.Establishing a one-stop-shop for e-payments for process port transactions that will in turn necessitate addi- MEFP Establishing an integrated informa- tional measures making it mandatory to shift to full tion system and adopting paperless paperless payments for all port procedures. PAD stakeholders payments are critical to effectively address these challenges. Deploying a centralized electronic transaction system that will aim to save energy by avoiding overconsumption and anomalies relating to distri- bution network and waste. Source: Report Authors. weights from DP directly without extra validation. Doing regulatory measures may be required to make the use of so would entail DP’s permitting Senegal to enter DP’s e-payment mandatory for the PAD’s transactions. zone. Reducing processing time could be an appropriate incentive for DP to provide entry access. Based on these recommendations, the following roadmap • Physical security: The PAD needs more efficient and was prepared in partnership with Microsoft to leverage smart ways to manage access to authorized people and the latter’s industry expertise and capitalize on the WBG vehicles, while monitoring the access control of unau- MFD approach. thorized ones. This security system needs to be integrat- ed with the central port management information sys- Overall, a digital transformation of the PAD, which has a tem (MIS). strategic importance for Senegal and the whole region, can help address a significant number of its challenges, • E-Payment:  The establishment and adoption of a one- while giving rise to new opportunities. A recommended stop-shop for electronic payments for port transactions three-stage roadmap can assist in phasing the implemen- will help ease the workflow for businesses and accel- tation of the integrated port management system necessary erate goods handling. In addition to the digital system, DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 93 to advance the transformation (summarized in Table 12). the physical assets covering urban and rural land, buildings, The technical viability of the project is high, as most of the farmland, and all geo-localized infrastructure and related PAD’s stakeholders already have appropriate information activities. This digitization opens new perspectives and the systems. The difficulty will be mostly related to the PAD’s emergence of new societal concerns for spatial and urban capacity to play a leading role by ensuring the adoption of planning, environment, and sustainable development. the required new statutory provisions. Unique National Digital Address Registry for 4. Additional Initiatives Housing and Economic Activities The national digital address registry for housing and Three additional initiatives are proposed to transform economic activities is the essential complement to assets other aspects of the digital economy in Senegal. identification. National digital addressing is a vital compo- nent of modernizing all land distribution and management Identifying Assets and Creating the National services. All large companies and governments manage Digital Land Registry files containing the addresses of their customers, suppli- Identifying assets and creating the national digital land ers, and staff. The development of home care services as registry are essential to establish an asset-based tax well as of direct marketing and e-commerce creates an system. The objective is to remove the impediments to increasing need for the use of addresses. The public secu- developing rural land assets, therein paving the way for rity corps, police, firefighters, and express mail services, agricultural actors to access bank financing. among others, need to be able to very quickly locate the places, in which they are required to intervene. It therefore In Africa, the shortcomings noted in the reliable identifi- is essential to have a base of geo-located addresses, which cation of assets constitute a significant blockage to land can be obtained only through digitization. ownership. Land ownership is often random because of the absence of an up-to-date land registry. Land may have The challenge of establishing national digital addresses several owners at the same time, each holding a paper in sup- depends on the scale of the task and the need to link digi- port of her/his claim, especially in the context of overlapping tal mapping techniques with manual field surveys. The general and customary rights. This chaotic process often task entails being able to find oneself on a map and is ac- leads to serious conflicts resulting in recurring land scan- complished by using a geocoding technique that consists dals. These scandals put the entire country in a position of of taking an address (street name, house number and/or land insecurity, which is detrimental to the business climate. apartment number) and associating it with the latitude and Nevertheless, each plot has a unique number, an owner, and longitude to locate the place. a value. The cadaster supports the function of protecting ownership rights and property taxation by public authorities. Beyond the purely technological aspects, this process is complicated by the cultural aspects related to the notion With the technological advances brought by geomatics and of addresses, as well as by the multiplicity, or nonex- geographic information systems (GIS), the land registry istence, of the name(s) that currently designate a par- can become more reliable. The challenge lies in digitizing ticular location. In this context, it is necessary to engage Table 14. Identifying Assets and the National Digital Land Registry Description Objectives Project Leaders/ Prerequisites Stakeholders Identifying assets and the national Digitalize cadaster and introduce a MEFP Preliminary feasibility study. digital land registry are priority unique and reliable identifier. levers to establish an asset-based Create coherence between built Ministry of Territorial Governance, tax system. parts of land assets and parts used Spatial Development and Planning Consultation with stakeholders. for economic activity. (Ministère de la Gouvernance Locale In addition to increasing State rev- du Développement et de l›Aménage- enues, this initiative would remove Tax estates reliably and systemat- ment) impediments to the development ically. of rural land and assets, and open DGID access to bank financing. Potentially create thousands of jobs (related to geomatics services). DI G ITA L ECONO M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL 94 Table 15. Unique National Digital Address Registry for housing and economic activities Description Objectives Project Leaders/ Prerequisites Stakeholders This initiative is essential for the Reliability to develop logistics Ministry of Territorial Governance, Determine budget for the preliminary development of e-commerce and services. Development and Land Planning study that integrates regulatory logistics services. Reliability to harmonize public water, prerequisites; electricity, postal, telephone, and Ministry of Infrastructure, Land The initiative is expected to television service files. Transport and Development create thousands of new jobs as consult with stakeholders; well as to provide vital support Creating thousands of jobs in distri- SENELEC, Senegalese Water Co. for public safety and home care bution and home delivery of goods (SDE), Post Office develop a communication plan. services. and services as well as jobs for SMEs specialized in mapping and geomatics. Source: Report Authors. Table 16. Leveraging New LPWAN Networks Description Objectives Project Leaders/ Prerequisites Stakeholders Senegal must anticipate the arrival Place this technology at the service MCTPEN Release frequencies for experimen- of new LPWAN networks (Sigfox, of the masses. tation and deployment of services. Lora, Nb-IoT) and free up the ARTP frequencies to enable investors to Create new IoT professions; promote install these networks and deploy creation of start-ups in this field. Ministry of Higher Education and experiments and proofs of concept Research across various sectors, such as Reach productivity gains in produc- health, education, agriculture, tion activities. Universities transportation, logistics, security, Control the standards used in IoT etc. equipment, Support structures (incubators, accelerators, etc.) Start-ups Source: Report authors. institutional actors to obtain an accepted and operational Given Senegal’s high Internet penetration rate and exist- system. These actors include specialized public entities ing digital infrastructure capacity, the next logical step (ARTP, ADIE, National Agency for Territorial Development in connectivity and new innovative services is to leverage (Agence Nationale de l’Aménagement du Territoire – ANAT), Internet of Things (IoT) solutions. The first IoT experiment Municipal Development Agency (Agence de Développement in Senegal was the project AKILEE by Senelec, in which a Municipal – ADM) and Local Development Agency (Agence real-time electricity consumption data of subscribers were de Développement Local – ADL)); tax and land registry ser- analyzed and advice given on energy saving. The same ap- vices; postal services; municipalities; public security ser- plies to the automatic water consumption statement by the vices; roads and transport services; sanitation managers; Senegalese Water Company (Sénégalaise des eaux – SDE). It and telecommunications, water, and electricity networks. is critical for Senegal to anticipate the arrival of new low- power wide-area networks (LPWANs), such as Sigfox, Lora, Digital Potential for LPWAN Networks and Nb-IoT, and take the necessary measures to free up the frequencies for them. Releasing the frequencies will enable It is through the rapid adoption and development of ex- investors to install these networks and deploy the experi- perimentation that solutions adapted to the Senegalese mentation and proofs of concept. The stakes are high for context can be designed with local skills. Youth initiatives health, agriculture, livestock, transportation, distribution, and innovations must be supported, and young people en- and security. couraged to create start-ups. DI G ITA L ECON O M Y F O R A F R I C A C O UN T RY D I A G N O ST IC O F SENEGAL | 3 . T OWAR D S A T HR IVING D IGITAL EC O NO MY IN SENEG AL DI G ITA L ECON OMY F O R A F R I C A C O U N T RY D I A GN O S T I C O F SENEGAL 95 4. CONCLUSION 96 000 The Government of Senegal is prouder than ever to dis- burden for operators that lack significant market power; play its ambitions in the digital economy that has a strong (iv) reinforce infrastructure-sharing regulations and ac- potential to benefit the entire Senegalese economy and cess to alternative infrastructure (such as the ADIE fiber society. The Digital Senegal 2025 Strategy (SSN2025) and optic network); (v) restart the process to grant and ex- the second implementation phase of the Emerging Senegal tend 4G licenses to operators with global licenses. Plan (PSE) aim to stimulate the digital transformation of • Boost the implementation of SSN2025 with respect to all socioeconomic sectors and to position Senegal on the fiber optic infrastructure and frequencies: A detailed international scene as a regional digital leader. In the years implementation plan will emphasize (i) pooling nation- to come, the digital economy is expected to be one of the al public fiber-optic infrastructure within a patrimonial key drivers of global economic growth and job creation. It company and entrusting its management, maintenance will also promote financial inclusion of the most vulnerable and marketing to a private operator via a public-pri- populations, reduce economic and geographic divides, and vate partnership; (ii) revising spectrum allocation and involve the population in new economic activities, helping pricing rules; (iii) realigning frequencies (including the them develop necessary skills and knowledge. frequency spectrum of the digital dividend), while re- allocating mobile bands between services and applying Despite this consensual vision, a common observation a policy of use or sharing under which a licensed spec- shared by multiple stakeholders in Senegal is related to trum that is not used by the licensee may be made avail- the difficulties of implementing it. These difficulties are able; (iv) allocating unlicensed spectra for public Wi-Fi due primarily to the lack of clear leadership in the insti- use and granting permissions on request to facilitate tutional sector governance; lack of an updated legal and experimentation and launch expected innovations, par- regulatory framework favorable to the complete opening of ticularly, IoT in industrial, scientific, and medical (ISM) the foundational broadband infrastructure sector; and lack frequency bands; and (v) allocating additional spectra for of private sector commitment (linked to unfavorable sec- 4G services and fixed wireless broadband. tor regulations and inefficient competition management) • Follow SSN2025 guidance as well as recommendations necessary to maximize the financial impact – among just of pertinent internal and external studies focused on a few constraints. other foundational DE domains, such as human cap- ital, finance and entrepreneurship: More specifically, Policy Actions to Accelerate Progress of Senegal’s Digital prioritize digital skills and literacy by, inter alia, gen- Transformation eralizing digital learning throughout the entire educa- The findings of this report elucidate these bottlenecks to tion system, promoting the diffusion of a digital culture, enable Senegal to take full advantage of the digital econ- and supporting private providers of digital training; omy’s dividends. The following set of foundational policy boost digital financial services and financial inclusion actions is recommended to remove the existing obstacles by adopting digital payment interoperability regulation, to Senegal’s digital transformation. finalizing the law on electronic transactions to account for e-signature, reducing the cost of access to USSD and • Strengthen governance and institutional framework of mainstreaming e-payment across public administra- the digital economy and address the lack of strategic co- tion; and foster entrepreneurship and digital innovation ordination by creating a comprehensive inter-ministeri- by promulgating a favorable regulatory framework for al steering framework (establishing an Interministerial start-ups, providing backing to entrepreneurship sup- Committee supported by a Technical Committee an- port structures, operationalizing a Digital Development chored at MCTPEN) and aligning institutional position- Fund, and promoting alternative seed financing mech- ing of various agencies to the adopted structure to max- anisms. imize synergies and complementarities among public • Implement the second phase of the Emerging Senegal digital initiatives and projects. Plan: The following elements are essential to a suc- • Regulate digital infrastructure sector and stimulate cessful implementation of PAP2: (i) further stream- competition, more specifically (i) finalize the adoption of line government procedures to form a comprehensive the main implementing decrees accompanying the new reform with a deployment strategy and measurable Telecommunications Code; (ii) strengthen the ex-ante monitoring indicators; (ii) proactively facilitate user asymmetric regulatory framework by ensuring that suf- groups’ participation during the design and imple- ficient obligations are imposed on those with significant mentation phases of digital services; (iii) guarantee market power to remove the bottlenecks that impede the the interoperability of different services and develop a smooth functioning of markets; (iii) ease the regulatory Government Interoperability Framework to facilitate single authentication to conduct Digital Government C A C O UNT RY D IAGNO ST IC O F SENEGAL | 4 . C O NC L USIO N D I GI TA L E C O N O M Y F O R A F R I CA 97 service transactions; (iv) develop a Government Data objectives: (a) improve the quality of service to the taxpayer Management Plan to address management, operations, and in the collection of taxes, (b) modernize the fiscal ad- safeguarding, and access to government data issues; (v) ministration, and (c) increase tax collection and reduce tax finalize Senegal’s National Cybersecurity Strategy (SNC evasion. 2022) and set up a national Cybersecurity Authority to implement the strategy; and (vi) review and update all Key implementation initiatives highlighted in this report to applicable legal texts. scale the adoption of e-taxation include (i) establishing a gateway to facilitate integration between the internal sys- Moreover, the digital transformation of the country will tems of DGID and other government entities; (ii) ensuring require unprecedented collaboration and coordination that the various electronic deposit initiatives are integrated among the ministries and agencies, and then among the and scalable to meet the scheduled and future work load; population to ensure that policies are in place and are fol- and (iii) setting up an electronic billing initiative that can lowed to prevent the furthering of a digital divide within create new opportunities to improve compliance through the country. the electronic declaration of bills by taxpayers. In addition to the above-mentioned policy actions intended 3. Digital Port to address key challenges in the foundational areas of the The Autonomous Port Dakar (PAD) is the economic life- digital economy in Senegal, three key potential projects are blood of Senegal, accounting for 95 percent of the tonnage recommended to accelerate digital transformation of the of imported and exported goods. The PAD is facing serious selected sectors. operational and management challenges. Some of them can be addressed through an integrated port management sys- 1. Digital Identity (e-ID) tem that can improve land zones use, drive insights, ease The biometric identity card already covers approximately interoperability of various actors’ data systems, and open 70 percent of the population of Senegal and provides a solid opportunities to set up a one-stop-shop for e-payment foundation for the country’s digital transformation. It will transactions. A proposed three-stage implementation ap- be necessary to (i) extend the coverage of the e-ID to reach proach to deliver on the above actions is suggested to lay universal access and maximize its use in all areas of the the foundation and drive insights; expand control and man- digital economy (including e-commerce, telecom opera- agement; and then advance the transformation of the port. tions, etc.); (ii) strengthen the sustainability and security of the e-ID system using public key infrastructure; and (iii) Three additional initiatives, inspired by and fully in line extend to MSMEs and individual taxpayers the e-Tax online with SSN2025, are proposed to cover other aspects of reporting module currently limited to large companies. Senegal’s digital economy, while creating jobs and boosting local SMEs that specialize in mapping, geomatics, and IoT- 2. Digital Taxation (e-Tax) enabled solutions development: E-taxation has been successfully adopted in Senegal but 1.  Identifying the assets and national digital land registry; with a limited number of users, mainly corporate enter- 2.  Implementing unique national address plan, prises. A three-phase roadmap is proposed to empower the DGID to address the gaps and achieve three strategic 3.  Leverage LPWAN’s digital potential. D I GI TA L E C O N O M Y F O R A F R I CA C O UNT RY D IAGNO ST IC O F SENEGAL | 4 . C O NC L USIO N 98 BIBLIOGRAPHY ASUTIC Open Letter to President Macky Sall by ASUTIC on the new Electronic United Nations. 2016. E-Government Survey: E-Government in Support of Communications Code. December 2017. Available here. Sustainable Development. UN, New York, 2016. Available here. BCEAO Instruction N° 008-05-2015 Governing the Terms and Conditions for WAEMU. 2002. 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