From Africa Recovery, Vol.14#1 (April 2000), page 15 (box within special report on privatization)

Senegal: both smooth and rough

Since 1995, Senegal's privatization programme has moved into high gear. As elsewhere in Africa, the process has been uneven. Some cases of privatization have proceeded relatively smoothly and with a broad measure of public acceptance. Others have been highly controversial and turbulent. Two cases in particular highlight the range of experiences.

Telecommunications: A 33.3 per cent share of the Société nationale des télécommunications (Sonatel) was sold in July 1997 to a subsidiary of France Télécom which also took over management of the company. This followed the collapse of an earlier agreement to sell a third of Sonatel to a Swedish-US consortium. Although the consortium offered a higher price than France Télécom, it was unwilling to make the same commitment to retain staff or match France Télécom's long-term investment plans. Under the plans, the number of telephone lines would quadruple over the next decade. Through a subsequent recapitalization in 1999, France Télécom's ownership share was increased to 42 per cent.

At the time of the original sale, 10 per cent of the shares were sold to Sonatel employees at a highly discounted rate, easing some of the workers' earlier anxieties about privatization. Another 17 per cent were then offered for public sale through the francophone regional stock exchange in Abidjan, Côte d'Ivoire; two-thirds were reserved for Senegalese nationals and institutions. All shares were quickly bought up, including by some 9,000 Senegalese individuals who paid a total of CFA 17 bn ($30 mn). This surprised some analysts who had expected little individual participation because of Senegal's generally low savings rate. Since then, Sonatel shares have risen in value and traded briskly on the Abidjan exchange, dwarfing almost all other stocks.

Despite the relative success of Sonatel's privatization, the World Bank has been critical of the continued monopoly the company enjoys over the country's network of fixed telephone lines. It argues that the sector needs to be opened up to competition.

Electricity: The same year that Sonatel was privatized, the government announced plans to sell majority shares in the state electricity company -- the Société nationale sénégalaise d'électricité (Sénélec). The company's unions vehemently denounced the move and launched a series of strikes and go-slow actions which contributed to country-wide power blackouts. This prompted the government to imprison a number of the top union leaders for several months.

In March 1999, the government sold a 34 per cent share of Sénélec to a consortium led by Hydro Québec of Canada which took over management of the company. The government also pledged to sell another 15 per cent of Sénélec through the Abidjan stock exchange and to reserve a further 10 per cent for company employees. This would reduce the government's stake to a 41 per cent share. So far, the unions have remained opposed to privatization and declined to take the shares reserved for them.

Meanwhile, Senegal's aged network has frequent power failures which seriously hinder the country's economic growth. Sénélec's need for substantial new financing -- both to upgrade the network and pay off large pre-privatization debts -- has prompted Hydro Québec to propose increasing the enterprise's capital base. If this goes ahead, Hydro Québec's ownership share could increase from 34 to 51 per cent, which could result in further confrontation with the unions.

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