VII. INVESTMENT CLIMATE ECONOMIC OVERVIEW AND INVESTMENT CLIMATE THE GOVERNMENT OF SENEGAL MAINTAINS A LIBERAL INVESTMENT CODE AND FREE TRADE ZONE LEGISLATION DESIGNED TO ATTRACT FOREIGN INVESTORS. HOWEVER, GIVEN THE RECENT DEVALUATION OF THE CFA FRANC USED BY THE 14 COUNTRIES OF THE "FRANC ZONE," PROSPECTIVE INVESTORS SHOULD FULLY EDUCATE THEMSELVES PRIOR TO COMMITTING ANY SIGNIFICANT AMOUNT OF FUNDS. CAREFUL ATTENTION SHOULD BE PAID TO THE TAX AND EMPLOYMENT CODES, AS WELL AS TO THE EFFECTS OF THE GOVERNMENT'S POOR FISCAL MANAGEMENT, HIGH FACTOR COSTS, AND LABOR PRACTICES THAT HINDER PRODUCTION. THE ECONOMY OF SENEGAL HAS BEEN DOMINATED BY AN IMF/WORLD BANK STRUCTURAL ADJUSTMENT PROGRAM SINCE 1979. THE PROGRAM HAS REQUIRED EFFORTS TO PRIVATIZE GOVERNMENT CONTROLLED ENTERPRISES, TO REDUCE TRADE AND FISCAL DEFICITS, TO REDUCE CONSTRAINTS ON THE FORMAL SECTOR, AND TO REDUCE THE GOVERNMENT WAGE BILL. THE BULK OF THE REQUIREMENTS LEVIED BY THE IMF/WORLD BANK HAD BEEN MET BY THE GOVERNMENT OF SENEGAL BY 1991; HOWEVER, SENEGAL STILL FACED MAJOR FINANCIAL PROBLEMS AND CONTINUED TO ACTIVELY SEEK DONOR FUNDING. ON JANUARY 12, 1994 FOLLOWING INCREASED PRODDING BY THE IMF, THE WORLD BANK AND THE GOVERNMENT OF FRANCE, THE HEADS OF STATE OF SENEGAL AND OTHER MEMBERS OF THE WEST AFRICAN MONETARY UNION (WAMU) AGREED TO A 50 PCT DEVALUATION OF THE CURRENCY. THE ADJUSTED PARITY IS GUARANTEED BY AN ARRANGEMENT WITH THE FRENCH TREASURY, AS HAS BEEN THE CASE SINCE 1948. SENEGAL HAS CARRIED OUT A NUMBER OF SIGNIFICANT ACCOMPANYING MEASURES AND THE GOVERNMENT HOPES TO CONVERT A ONE-YEAR IMF STANDBY PROGRAM TO A THREE-YEAR ARRANGEMENT WITH THE IMF'S ENHANCED STRUCTURAL ADJUSTMENT FACILITY (ESAF). THE GOVERNMENT OF SENEGAL ACTIVELY SOLICITS FOREIGN INTEREST AND INVESTMENT. THE GOVERNMENT HAS STOPPED ITS PRACTICE OF PARTICIPATING IN FOREIGN INVESTMENT PROJECTS. THERE IS NO DISCRIMINATION AGAINST BUSINESSES CONDUCTED OR OWNED BY FOREIGN INVESTORS, AND THERE ARE NO BARRIERS REGARDING 100 PERCENT OWNERSHIP OF BUSINESSES BY FOREIGN INVESTORS IN MOST AREAS. (SENEGALESE MAJORITY OWNERSHIP IS STILL REQUIRED IN CERTAIN AREAS OF FOOD PRODUCTION AND WITHIN THE FISHING INDUSTRY.) INDUSTRIES SUCH AS RAILROADS, ELECTRICAL PRODUCTION, TELECOMMUNICATIONS AND POSTAL SERVICES, AND THE MARKETING OF GROUNDNUTS AND LOCAL RICE REMAIN UNDER THE CONTROL OF PARASTATALS. SINCE INDEPENDENCE IN 1960 THE GOVERNMENT OF SENEGAL HAS LIBERALIZED ITS INVESTMENT CODE, SET UP AN INDUSTRIAL TAX-FREE ZONE, AND PROVIDED FOR THE CREATION OF "FREE-POINT" FACTORIES USING DUTY-FREE INPUTS THROUGHOUT THE COUNTRY. THE GOVERNMENT HAS PRIVATIZED WELL OVER HALF OF THE LIST OF 40 PARASTATALS AGREED WITH THE IMF AND WORLD BANK IN THE 1980'S. IT HAS ESTABLISHED A "ONE-STOP COUNTER" TO REDUCE ADMINISTRATIVE FORMALITIES ASSOCIATED WITH ESTABLISHING NEW ENTERPRISES. AT THE INSISTENCE OF THE INTERNATIONAL FINANCIAL INSTITUTIONS THE GOVERNMENT IS AGAIN TAKING A LONG HARD LOOK AT FINALLY REVISING ITS LABOR CODE IN ORDER TO INCREASE PRODUCTIVITY AND FACILITATE FLEXIBILITY IN HIRING. OPENNESS TO FOREIGN INVESTMENT SENEGAL'S INVESTMENT CODE DEFINES ELIGIBILITY FOR INVESTMENT INCENTIVES ACCORDING TO A FIRM'S SIZE AND TYPES OF ACTIVITIES, THE AMOUNT OF THE POTENTIAL INVESTMENT AND THE LOCATION OF THE PROJECT. TO QUALIFY FOR INCENTIVES, THE INVESTMENT MUST BE OF AT LEAST CFA 5 MILLION AND MUST CREATE A MINIMUM OF THREE JOBS. ENTERPRISES OPERATING IN "PRIORITY" SECTORS ARE ELIGIBLE FOR INVESTMENT CODE ADVANTAGES. THESE SECTORS INCLUDE AGRICULTURE, FISHING, ANIMAL-REARING AND RELATED INDUSTRIES, MANUFACTURING, TOURISM, MINING AND MINERAL EXPLORATION, BANKS AND FINANCIAL INSTITUTIONS, TRADING COMPLEXES, AND CULTURAL ACTIVITIES. ALL BENEFIT FROM THE "COMMON REGIME" WHICH INCLUDES EXONERATION FROM DUTIES ON IMPORTS OF GOODS NOT PRODUCED LOCALLY (2 YEARS FOR SMALL AND MEDIUM SIZED FIRMS AND 3 YEARS FOR ALL OTHERS). ALSO INCLUDED IS EXONERATION FROM DIRECT AND INDIRECT TAXES DURING THE SAME PERIOD. EXONERATIONS FROM THE MINIMUM PERSONAL INCOME TAX AND FROM THE BUSINESS LICENSE TAX ARE GRANTED TO INVESTORS WHO USE LOCAL RESOURCES FOR AT LEAST 65 PERCENT OF THEIR TOTAL INPUTS WITHIN A FISCAL YEAR. ENTERPRISES AGREEING TO LOCATE IN LESS INDUSTRIALIZED AREAS OF SENEGAL BENEFIT FROM EXONERATION OF THE LUMP SUM PAYROLL TAX OF 3 PERCENT FOR A PERIOD OF FROM 5 TO 12 YEARS DEPENDING ON THE LOCATION OF THE INVESTMENT. THE INVESTMENT CODE PROVIDES FOR EXEMPTIONS FROM INCOME TAX, DUTIES AND TAXES, PHASED OUT PROGRESSIVELY OVER THE LAST THREE YEARS OF THE EXONERATION PERIOD. INCENTIVES ARE AUTOMATICALLY GRANTED TO INVESTMENT PROJECTS MEETING THE ABOVE CRITERIA. THE ESTABLISHMENT OF A "ONE-STOP COUNTER" ("GUICHET UNIQUE") AT THE MINISTRY OF FINANCE WAS DESIGNED TO REDUCE DELAYS IN EXAMINING AND APPROVING PRIVATE INVESTMENT PROGRAMS. APPLICATIONS FOR AUTHORIZATION ARE EXAMINED WITHIN A ONE MONTH PERIOD. ABSENT OBJECTIONS WITHIN THAT PERIOD, APPLICATIONS ARE CONSIDERED APPROVED. ALL SERVICES PROVIDED BY THE "COUNTER" ARE FREE. CONVERSION AND TRANSFER POLICIES THERE ARE NO RESTRICTIONS ON THE TRANSFER OR REPATRIATION OF CAPITAL AND INCOME EARNED FROM INVESTMENTS FINANCED WITH CONVERTIBLE FOREIGN EXCHANGE. THOUGH INDIVIDUALS RESIDENT IN SENEGAL MAY CONVERT ONLY A LIMITED (BUT ADEQUATE) AMOUNT OF CFAF FRANCS INTO FOREIGN CURRENCY FOR TRAVEL OUTSIDE OF SENEGAL, COMMERCIAL TRANSFERS ARE USUALLY CARRIED OUT RAPIDLY AND IN FULL BY LOCAL BANKING INSTITUTIONS. THE CFA FRANC REMAINS PEGGED TO THE FRENCH FRANC AT CFA 100 EQUALS FF 1. EXPROPRIATION AND COMPENSATION THERE HAVE BEEN NO MAJOR EXPROPRIATIONS IN SENEGAL. DURING THE PERIOD 1973-75, THE GOVERNMENT BOUGHT OUT FOREIGN INTERESTS, MOSTLY FRENCH, IN A NUMBER OF AREAS IN ORDER TO CONSTITUTE PARASTATALS. IN EACH CASE, ADEQUATE COMPENSATION WAS PAID TO THE AFFECTED FOREIGN INVESTORS. THIS PRACTICE WAS ABANDONED AND MANY OF THE FIRMS INVOLVED HAVE BEEN PRIVATIZED. DISPUTE SETTLEMENT SENEGAL IS A MEMBER OF THE INTERNATIONAL CENTER FOR THE SETTLEMENT OF INVESTMENT DISPUTES (WASHINGTON CONVENTION). THERE HAVE BEEN NO RECENT MAJOR INVESTMENT DISPUTES IN SENEGAL. THE INVESTMENT CODE PROVIDES FOR SETTLEMENT OF DISPUTES VIA DUE PROCESS OF LAW UNDER THE SENEGALESE JUDICIAL SYSTEM. IF REQUIRED, ARBITRATION IS CARRIED OUT ACCORDING TO AGREEMENTS CONCERNING THE PROTECTION OF INVESTMENTS BETWEEN SENEGAL AND THE STATE OF ORIGIN OF THE PRIVATE PERSON OR LEGAL ENTITY. IN THE ABSENCE OF SUCH AGREEMENTS, ARBITRATION IS GOVERNED BY THE MODEL RULES ON ARBITRAL PROCEDURE ADOPTED BY THE UNITED NATIONS INTERNATIONAL LAW COMMISSION IN 1958 AND COMMENDED TO MEMBER STATES BY THE UNITED NATIONS GENERAL ASSEMBLY RESOLUTION NUMBER 1262. PERFORMANCE REQUIREMENTS/INCENTIVES IN ORDER TO QUALIFY FOR INVESTMENT INCENTIVES, SMALL AND MEDIUM-SIZED FIRMS ARE REQUIRED TO INVEST AT LEAST CFA 5 MILLION (CURRENTLY APPROX. USD 8,600), TO EMPLOY AT LEAST 3 SENEGALESE NATIONALS FULL-TIME, AND TO KEEP REGULAR ACCOUNTS IN A STANDARD FORMAT. FURTHER, A FIRM REQUESTING AN EXTENSION MUST BE AT LEAST 20 PCT SELF-FINANCED. LARGE FIRMS (THOSE WITH AT LEAST CFA 200 MILLION IN EQUITY CAPITAL -- APPROX. USD 350,000) ARE REQUIRED TO CREATE AT LEAST 50 FULL TIME POSITIONS FOR SENEGALESE NATIONALS, TO INVEST THE FOREIGN CURRENCY EQUIVALENT OF AT LEAST CFA 100 MILLION (APPROX. USD 171,000) AND TO KEEP REGULAR ACCOUNTS IN CONFORMITY WITH SENEGALESE STANDARDS. FURTHER, FIRMS MUST REPORT ON COMPANY PRODUCTS, PRODUCTION, EMPLOYMENT AND CONSUMPTION OF RAW MATERIAL. RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT INVESTORS ARE GUARANTEED FREE TRANSFER OF CAPITAL AND INCOME, AS WELL AS TREATMENT EQUAL TO THAT OF NATIONAL INVESTORS. FOREIGN AND DOMESTIC PRIVATE ENTITIES ARE PERMITTED TO ESTABLISH AND OWN BUSINESSES AND TO ENGAGE IN MOST FORMS OF REMUNERATIVE ACTIVITY. LOCAL MAJORITY OWNERSHIP IS REQUIRED IN ONLY A FEW AREAS, ONE BEING THE FISHING INDUSTRY. OF THE STATE-OWNED FIRMS RECENTLY PRIVATIZED, SEVERAL WERE SOLD IN PART OR IN WHOLE TO FOREIGN ENTITIES. PROTECTION OF PROPERTY RIGHTS THE SENEGALESE LEGAL SYSTEM ENFORCES PRIVATE PROPERTY RIGHTS. SENEGAL IS A MEMBER OF THE AFRICAN OFFICE OF INDUSTRIAL PROPERTY (OFFICE AFRICAIN ET MALGACHE DE LA PROPRIETE INDUSTRIELLE (OAMPI)), WHICH HAS ESTABLISHED AMONG ITS MEMBER STATES A COMMON SYSTEM FOR OBTAINING AND MAINTAINING PROTECTION FOR PATENTS, TRADEMARKS AND INDUSTRIAL DESIGNS. SENEGAL HAS BEEN A MEMBER OF THE WORLD INTELLECTUAL PROPERTY ORGANIZATION SINCE ITS INCEPTION AND IS A MEMBER OF THE BERNE COPYRIGHT CONVENTION. LOCAL STATUTES RECOGNIZE RECIPROCAL PROTECTION FOR AUTHORS OR ARTISTS WHO ARE NATIONALS OF COUNTRIES ADHERING TO THE 1971 PARIS CONVENTION ON INTELLECTUAL PROPERTY RIGHTS. -- PATENTS ARE PROTECTED FOR TWENTY YEARS. AN ANNUAL CHARGE IS LEVIED DURING THIS PERIOD. TRADE SECRETS AND COMPUTER CHIP DESIGNS ARE RESPECTED. -- REGISTERED TRADEMARKS ARE PROTECTED FOR A PERIOD OF TWENTY YEARS. TRADEMARKS MAY BE RENEWED INDEFINITELY BY SUBSEQUENT REGISTRATIONS. -- COPYRIGHTS: SENEGAL IS A SIGNATORY TO THE BERNE COPYRIGHT CONVENTION. THE SENEGALESE OFFICE OF AUTHORS RIGHTS, PART OF THE MINISTRY OF FINANCE, HAS THE ROLE OF ENFORCING COPYRIGHT OBLIGATIONS. REGULATORY SYSTEM: LAWS AND PROCEDURES ALTHOUGH THE GOVERNMENT OF SENEGAL FAVORS THE PRINCIPLES OF FREE COMPETITION, BECAUSE OF THE LIMITED MARKET AND THE HISTORY OF SENEGAL'S ECONOMIC DEVELOPMENT, VARIOUS INDUSTRIES ENJOY LEGAL OR DE FACTO MONOPOLIES. THERE ARE FEW MECHANISMS DESIGNED TO FOSTER COMPETITION. THE LABOR CODE IMPOSES MANDATORY WAGE SCALES NATIONWIDE AND PROHIBITS LAYOFFS OF PERMANENT EMPLOYEES WITHOUT THE PERMISSION OF A LABOR INSPECTOR. THE GOVERNMENT HAS TOLD INTERNATIONAL LENDERS THAT THE LABOR CODE WILL BE REVISED BY THE END OF 1994 TO PERMIT MORE FLEXIBILITY IN HIRING AND LAYOFFS. PROPOSED CHANGES HAVE BEEN BLOCKED FOR MORE THAN FOUR YEARS BY LABOR UNION OPPOSITION. THE "ONE STOP COUNTER" FOR PROCESSING INVESTMENT REGISTRATION PROMISES STREAMLINED SERVICE BUT IN THE ABSENCE OF INCREASED INVESTMENT THESE ASSURANCES REMAIN VIRTUALLY UNTESTED. EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT THERE IS NO SENEGALESE STOCK MARKET OR OVER-THE-COUNTER MARKET IN SHARES; CREDIT TO INDUSTRY IS PROVIDED EXCLUSIVELY BY BANK LOANS OR THROUGH SPECIAL LINES OF CREDIT FROM BILATERAL DONORS OR INTERNATIONAL INSTITUTIONS. CREDIT IS AVAILABLE WITHOUT DISCRIMINATION BUT THE TIGHT MONETARY POLICY OF THE WEST AFRICAN CENTRAL BANK MAKES IT PROHIBITIVELY EXPENSIVE FOR ALL BUT THE HIGHEST YIELDING PROJECTS. THE CURRENT COMMERCIAL COST OF FUNDS IS 25 PCT, PLUS A BANKING OPERATIONS TAX OF 2 PCT. LEGAL, REGULATORY AND ACCOUNTING SYSTEMS CLOSELY FOLLOW FRENCH MODELS. THERE IS NO SYSTEM TO ENCOURAGE AND FACILITATE PORTFOLIO INVESTMENT. POLITICAL VIOLENCE SINCE THE PRESIDENTIAL ELECTIONS OF FEBRUARY 1993, THERE HAVE BEEN NUMEROUS CALLS FOR DEMONSTRATIONS AND/OR STRIKES BY OPPOSITION POLITICAL PARTIES AND LABOR UNIONS. MOST HAVE BEEN RELATIVE FAILURES, WITH THE EXCEPTION A 48-HOUR COUNTRY WIDE GENERAL STRIKE IN EARLY FALL OF 1993 THAT EFFECTIVELY CLOSED DOWN ALL TRANSPORTATION SERVICES, THE MAJORITY OF THE FORMAL BUSINESS SECTOR, AND SOME GOVERNMENT OFFICES. ON FEBRUARY 16, 1994, FOLLOWING AN AUTHORIZED RALLY BY OPPOSITION PARTIES, RIOTS ERUPTED IN SENEGAL PARTS OF THE CITY, BRINGING ABOUT THE DEATHS OF 8 PERSONS (INCLUDING SIX POLICEMEN). SINCE THE FEBRUARY RIOTS, GOVERNMENT SECURITY FORCES HAVE BEEN ON A HIGH ALERT STATUS AND HAVE BEEN EFFECTIVE IN SHUTTING DOWN FURTHER ATTEMPTS AT DISTURBANCES. SENEGAL IS STILL SOMEWHAT AT ODDS WITH ITS BORDERING NEIGHBORS -- WITH MAURITANIA OVER THE CONTINUING PROBLEMS WITH REFUGEES; WITH THE GAMBIA OVER THE CONTROL OF CONTRABAND GOODS ENTERING SENEGAL FOR DISTRIBUTION THROUGH THE INFORMAL SECTOR; WITH MALI OVER CROSS-BORDER CATTLE RAIDS BY ELEMENTS OF BOTH COUNTRIES. DIPLOMATIC CONTACTS ARE ONGOING AND THERE IS NO APPARENT THREAT TO RELATIONS. SINCE THE CEASE-FIRE ACCORD OF JULY 1993 BETWEEN THE GOVERNMENT OF SENEGAL AND CASAMANCE SEPARATIST GROUPS THINGS HAVE BEEN EXTREMELY QUIET IN THE SOUTHERN CASAMANCE REGION OF SENEGAL. NO MAJOR INFRACTIONS ON THE PART OF EITHER THE GOVERNMENT OR OF THE SEPARATISTS HAVE TAKEN PLACE SINCE THE ACCORD WAS SIGNED. BILATERAL INVESTMENT AGREEMENTS SENEGAL AND THE UNITED STATES SIGNED A BILATERAL INVESTMENT TREATY IN DECEMBER, 1983. THE TREATY PROVIDES FOR MOST FAVORED NATION TREATMENT FOR INVESTORS, FOR INTERNATIONALLY RECOGNIZED STANDARDS FOR COMPENSATION IN THE EVENT OF EXPROPRIATION, FOR FREE TRANSFER OF CAPITAL AND PROFITS, AND FOR PROCEDURES FOR DISPUTE SETTLEMENT. SENEGAL HAS SIGNED SIMILAR AGREEMENTS FOR PROTECTION OF INVESTMENTS WITH FRANCE, SWITZERLAND, GERMANY, DENMARK, FINLAND, SPAIN, ITALY, THE NETHERLANDS, SOUTH KOREA, ROMANIA AND JAPAN. SENEGAL HAS CONCLUDED TAX TREATIES WITH FRANCE, MALI AND THE FRENCH-SPEAKING AFRICAN MEMBER STATES OF THE ORGANIZATION COMMUNE AFRICAINE ET MALGACHE. THERE IS NO TAX TREATY BETWEEN THE UNITED STATES AND SENEGAL. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS EMBASSY DAKAR KNOWS OF NO ACTIVE OPIC INVESTMENT INSURANCE COVERAGE IN SENEGAL. RESPONSIBLE OFFICIALS STATE THAT SENEGAL IS NOT A MEMBER OF THE MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA). LABOR UNSKILLED AND SEMI-SKILLED LABOR IS ABUNDANT IN SENEGAL, BUT TRAINED WORKERS IN THE FIELDS OF ENGINEERING, INFORMATION SYSTEMS AND MANAGEMENT REMAIN IN SHORT SUPPLY. RELATIONS BETWEEN EMPLOYEES AND EMPLOYERS ARE GOVERNED BY THE LABOR CODE, COLLECTIVE BARGAINING AGREEMENTS, COMPANY REGULATIONS AND INDIVIDUAL EMPLOYMENT CONTRACTS. THE NATIONAL COUNCIL OF BUSINESS LEADERS (CNP OR "PATRONAT") GROUPS 14 INDUSTRY ASSOCIATIONS UNDER ITS UMBRELLA. A SMALLER RIVAL GROUP, THE SENEGALESE EMPLOYERS COUNCIL (CNES) SPLIT AWAY FROM THE PATRONAT IN 1993. THE LABOR UNIONS WITH THE GREATEST NUMBER OF AFFILIATES ARE PART OF THE CONFEDERATION NATIONALE DES TRAVAILLEURS DU SENEGAL (CNTS -- AFFILIATED WITH THE GOVERNING SOCIALIST PARTY). OTHER UNION CONFEDERATIONS ARE ALIGNED WITH OPPOSITION PARTIES; THEY INCLUDE THE CONFEDERATION DES SYNDICATS AUTONOMES (CSA), THE UNION DES TRAVAILLEURS DU SENEGAL (UDTS), AND THE UNION NATIONALE DES SYNDICATS AUTONOMES (UNSAS). THE RECENT DEVALUATION HAS UNEXPECTEDLY MADE LABOR UNIONS SOMEWHAT MORE REASONABLE THAN IN THE PAST, BUT HIGH LABOR COSTS AND LOW PRODUCTIVITY STILL TEND TO ENCOURAGE THE USE OF CAPITAL-INTENSIVE TECHNOLOGIES IN NEW INVESTMENT. FOREIGN TRADE ZONES/FREE PORTS THE DAKAR INDUSTRIAL FREE ZONE (DFITZ), IS A GOVERNMENT-OWNED AND -OPERATED FREE TRADE ZONE. IT WAS ESTABLISHED IN 1974 FOR EXPORT ORIENTED FIRMS, WHETHER OWNED BY FOREIGNERS OR NATIONALS OF SENEGAL. ENTERPRISES OPERATING WITHIN THE ZONE HAVE COMPLETE FISCAL AND DUTY EXEMPTION FROM ALL ACTIVITIES (EXCEPT PAYROLL TAXES), FREE TRANSFER OF ALL PROFITS, ROYALTIES AND DIVIDENDS, AND FREE RECRUITMENT OF FOREIGN PERSONNEL. THEY BENEFIT FROM EXEMPTION FROM DUTY ON THE IMPORTATION OF GOODS AND EQUIPMENT, RAW MATERIALS, FINISHED AND SEMI-FINISHED PRODUCTS. FIRMS QUALIFY FOR THE ADVANTAGES STEMMING FROM SENEGAL'S MEMBERSHIP IN THE ECONOMIC COMMUNITY OF WEST AFRICAN STATES (ECOWAS) AND ITS STATUS UNDER THE LOME CONVENTION WITH THE EUROPEAN COMMUNITY. THERE ARE CURRENTLY FOUR FIRMS OPERATING IN THE ZONE, ONE OF WHICH IS U.S. OWNED. THEY REPORT THAT TAX AUTHORITIES REGULARLY CONTEST THE ADVANTAGES EMBODIED IN LEGISLATION AND REGULATIONS, RESORTING AT TIMES TO IMPOSING LIENS ON BANK ACCOUNTS OR TO BLOCKING PORT CLEARANCES. THE FIRMS ADVOCATE A CODIFICATION OF THE DFITZ MEASURES TO CLARIFY THE RULES OF THE GAME. IN APRIL 1991 IT BECAME POSSIBLE TO CREATE "FREE POINTS" OUTSIDE THE DFITZ. ENTERPRISES GRANTED THIS STATUS HAVE TAX AND FISCAL ADVANTAGES SIMILAR TO THOSE FIRMS OPERATING WITHIN THE ZONE. APPROVAL FOR FREE POINT STATUS IS GRANTED FOR A PERIOD OF 20 YEARS AND IS RENEWABLE. TO DATE THIS STATUS HAS BEEN USED PRINCIPALLY TO PROTECT EXISTING FIRMS EXPERIENCING FINANCIAL DIFFICULTIES. THERE IS NO FREE PORT IN SENEGAL. SINCE DAKAR SERVES AS A POINT OF ENTRY PORT FOR MALI, BONDED WAREHOUSES EXIST FOR THIS TRADE AND TRANSHIPMENT. CAPITAL OUTFLOW POLICY THE WEST AFRICAN CENTRAL BANK (BCEAO) CONDUCTS A TIGHT MONETARY POLICY INTENDED TO REDUCE CAPITAL OUTFLOW BY LIMITING LIQUIDITY. IN AUGUST 1993 MEMBER COUNTRIES OF THE WEST AFRICAN MONETARY UNIONS (WAMU) SUSPENDED REPURCHASE OF CFA BANKNOTES FROM ABROAD, A MEASURE MEANT TO STEM CAPITAL FLIGHT AND TO IMPEDE SMUGGLING. THE BCEAO CONDUCTS A CLEARING-HOUSE INTERBANK MARKET FOR BANKS WITHIN THE WAMU, BUT IT DISCOURAGES PORTFOLIO INVESTMENT OUTSIDE OF THE ZONE. FOREIGN DIRECT INVESTMENT STATISTICS IT REMAINS DIFFICULT TO OBTAIN RELIABLE DIRECT INVESTMENT STATISTICS. THERE WAS MARGINAL DISINVESTMENT IN 1991. FRANCE STILL SUPPLIES THE BULK OF SENEGAL'S FOREIGN INVESTMENT. U.S. INVESTMENT IS LIMITED AND CONCENTRATED PRIMARILY IN PETROLEUM MARKETING AND REFINING, AS WELL AS PHOSPHATE MINING. THERE IS LIMITED GERMAN INVESTMENT IN HOTELS AND TOURIST FACILITIES, AND SOME JAPANESE, SOUTH KOREAN AND TAIWANESE INVESTMENT IN FISHING. MOST DIRECT INVESTMENT IS MADE TO UPDATE OR REPAIR ANTIQUATED FACILITIES. SENEGAL'S ONLY DIRECT INVESTMENT ABROAD IS ITS SHARE OF THE MULTINATIONAL AIRLINE "AIR AFRIQUE," WHICH CONTINUES TO SUFFER MAJOR FINANCIAL PROBLEMS. MAJOR FOREIGN INVESTORS NO PUBLISHED FIGURES ARE AVAILABLE ON FOREIGN INVESTORS. SIGNIFICANT FRENCH INTERESTS INCLUDE THE MIMRAN GROUP (BANKING, SUGAR AND WHEAT), THE HERSANT GROUP (PRINTING), AND THE BOLLORE GROUP (TOBACCO AND SHIPPING). MOST OF THE TOTAL ESTIMATED VALUE OF USD 35-40 MILLION HELD BY AMERICAN COMPANIES IS ATTRIBUTED TO MOBIL SENEGAL AND PARKE DAVIS PHARMACEUTICALS.