Senegal and Mauritius: Building a Two-Way Street

A GDP growth rate of 6.6%, a stable political environment, an advantageous geographic position, a network of bilateral investment treaties and strong institutions are all indicative of Senegal’s tremendous progress over the last decade. In a region that has been devastated by civil wars and instability, Senegal, one of Africa’s oldest democracies, is somewhat of an outlier. This
West African nation made a notable turnaround in the mid 1990s after years of poor policy choices coupled with adverse climatic conditions. Fast forward to today, it is ranked among the top three fastest-growing economies in the continent. In the midst of this, Diamniadio Industrial Park, the first Special Economic Zone (SEZ) Project in the country, emerges as a unique opportunity to unlock the door to industrialization and position Senegal—and Mauritius—as an attractive FDI destination.

What are Special Economic Zones (SEZs)?
First, a brief introduction to SEZs, often lauded as the largest contributor to China’s resounding success. In essence, SEZs are demarcated trade areas within a country’s boundaries. These zones, designed as catalysts for regional development and industrialization, often have more liberal trade laws than those in the wider domestic economy. Typically, they include enterprise
zones, freeports, foreign trade zones and industrial parks, all aimed at increasing trade, boosting investment and creating employment, but also spurring technological advances and innovation. To encourage companies to set up their operations in the zone, they are offered a range of fiscal
and infrastructural advantages.

As part of its ambitious plan to achieve the ‘emerging market’ status, the government of Senegal has been rolling out policies to support the implementation of no less than 10 SEZs across the country. Diamniadio, whose aim is to ease congestion in Dakar, provides a holistic solution to the country’s most pressing urban issues: mobility, infrastructure, housing, sustainability… The development, with designated financial, residential and recreational areas, meets Senegal’s need for an intelligent, durable and connected district.

It is against this backdrop that in 2015, Senegal appealed to Mauritius’ know-how and expertise in co-developing an SEZ in Diamniadio, resulting in a Joint Development Agreement signed in 2017. To this end, a Senegalese-Mauritian joint venture, Société des Infrastructures d’Affaires Atlantic (SIAA), was set up in Senegal, establishing Mauritius Africa Funds as the majority
shareholder with 51% of shares. Under the deal, Mauritius has been allocated 53 hectares of land to manage in Diamniadio, an area that is strategically located in close proximity to the ports of Dakar and Sendou, as well as at the intersection of roads and railway networks into Senegal and
neighbouring countries. Of those 53 hectares, 13 will give Mauritian companies access to warehouses, office spaces and business facilities (Phase I), while the remaining 40 will serve as an extension to the industrial park (Phase II). Through this collaboration, Diamniadio is projected to become a hub for manufacturing, textile and apparel, ICT/BPO and services—sectors that Mauritius has successfully developed. This project is steadily garnering
interest from Mauritian companies, who view it as a mutually beneficial arrangement for both countries.

The Advantages for Senegal
So what does this mean for Senegal? It is no secret that Africa’s attempts at establishing SEZs have not been particularly fruitful. But it is indisputable that Mauritius, an early adopter in free zone development, stands as a shining example when it comes to leveraging SEZs to achieve far-reaching economic transformations—a success story also commonly dubbed ‘the Mauritian
experience.’ With its impressive business-friendly environment, expanding network of Double Taxation Avoidance Agreements, economic stability, bilingual workforce and preferential access to Western markets, Mauritius is the natural springboard from which the African continent can rise.

Senegal can draw on Mauritius’ know-how and technical prowess to instill in Diamniadio a business-friendly regulatory framework, one that will attract waves of significant investment, knowledge transfer and employment into the zone.

The Advantages for Mauritius
There is a general consensus that Africa is more attractive than ever before to international investors. Perceptions have shifted, becoming increasingly positive as a direct result of the socio-economic growth that has permeated the continent. Further strengthening ties with Africa is at the top of the Mauritian agenda, and the Diamniadio project reinforces just that. Mauritian businesses operating in the zone will not only benefit from fiscal and customs incentives, but they will also be able to tap into the extended regional market, namely through the Economic Community for West African States (ECOWAS) covering over 300 million consumers. As Mauritius builds its presence on the continent, new prospects to penetrate the American and European markets will also emerge, given their proximity to Senegal. This new economic space
has the potential to open up huge investment avenues for Mauritius, further stimulating its financial sector and the internationalization of the Mauritian expertise.

Mauritius and Senegal—and by extension, Africa—are faced with a remarkable opportunity to synergize their development strategies, and Diamniadio Industrial Park might just be the game-changer that brings West Africa to life.