The banking and financial sector, facing legal and regulatory changes and reforms in Senegal

Introduction

Senegal's banking and financial sector is currently undergoing changes that require a profound adaptation of its legal framework. Historically, this sector has always played a leading role in building the national economy, acting as a driver of financing and a regulator of monetary flows. However, the increasing complexity of operations, the emergence of new players, and the globalization of financial markets require a profound adaptation of the legal and regulatory framework.

This major transformation is supported by three essential legislative pillars. The purpose of this article is to decipher the three major legal reforms that are redefining the contours of Senegal's financial landscape: the new WAEMU regulation on external financial relations, the new banking law, and the new microfinance law. These three reforms work together to build a safer, fairer, and more efficient financial ecosystem capable of supporting Senegal's inclusive development for years to come.

Furthermore, the study of these reforms shows how the law is becoming a lever for modernization, seeking to guarantee the transparency, resilience, and security of transactions, while stimulating innovation and access to financial services for all segments of the population.

• I. Trends in the regulatory framework applicable to external financial relations in Senegal and within the WAEMU area
   

Regulation No. 06/2024/CM/UEMOA of December 20, 2024, on the external financial relations of UEMOA member states, is the cornerstone of the modernization of the regional regulatory framework. Repealing and replacing the former Regulation No. 09/2010/CM/UEMOA, this new legislative text acts as a compass for all financial and economic actors, both within and outside the WAEMU zone. Its purpose is twofold. On the one hand, it aims to incorporate recent developments in the economic and financial environment, in particular changes in banking regulations and the emergence of the WAEMU Financial Markets Authority (AMF-UEMOA). On the other hand, it aims to align regional regulations with the international commitments made by member states, thereby making external financial relations more transparent and secure. Finally, it seeks to make the text itself clearer and more accessible for better application.

One of the most significant reforms introduced by the new regulation is the strengthening of the role of the Central Bank of West African States (BCEAO). The text reaffirms and formalizes the BCEAO's fundamental mission of managing the official foreign exchange reserves of member states. It requires member states to centralize their reserves in the Central Bank's books. This measure is crucial for the stability of the monetary zone and for ensuring the liquidity necessary for international trade. By centralizing these reserves, the BCEAO strengthens its ability to conduct a consistent monetary policy and defend the parity of the CFA franc, thereby ensuring investor confidence and the credibility of the WAEMU economies. This provision is a strong signal of unity and coordination within the Union, creating a more solid financial front in the face of global market fluctuations.

• II. New Senegalese banking law: a redesigned legal framework to attract capital
   

Law No. 2025-03 on Banking Regulation in Senegal, adopted on February 11, 2025, which will replace the 2008 Senegalese law, marks an important turning point for the financial sector. This reform aims to modernize regulations to meet contemporary challenges and broaden the scope of supervision.

The new law will now apply not only to banks and credit institutions, but also to payment institutions, electronic money institutions, and banking holding companies. This extension of the scope of regulation allows the BCEAO to better supervise new key players in the financial landscape, particularly those from the financial technology (FinTech) sector. This reform responds to the rise of cybercrime and money laundering by providing more robust legal tools for monitoring and cracking down on these illegal activities.

At the same time, the law reaffirms the principle of banking monopoly, while introducing exemptions. These recognize the growing role of various non-bank players. The new law explicitly authorizes microfinance institutions and FinTech companies to carry out certain banking operations. It also grants exceptions to financial companies and multilateral development banks. A notable addition is the possibility for entities eligible for the Financial Innovation Lab to experiment with banking operations in a secure test environment.

Certain entities are expressly excluded from the scope of the new banking law because they are already subject to other specific regulations. These include institutions with supervisory or public functions, such as the BCEAO, the Treasury, and the Caisse des Dépôts et Consignations (CDC). Similarly, entities governed by separate regulatory authorities are exempt, such as those under the supervision of the Financial Markets Authority (AMF-UEMOA), the Insurance Regulatory and Supervisory Authority, and social welfare organizations. The Post Office, microfinance institutions, and certain international and foreign financial institutions benefiting from specific agreements are also excluded from the scope of this law, ensuring that each sector is governed by the most appropriate legislation. This clarification is essential to avoid any overlap or conflict of jurisdiction.

• III. Modernizing microfinance in Senegal: a lever to win over investors and boost the sector

The microfinance sector in Senegal has experienced significant growth, becoming an essential lever for financial inclusion for populations traditionally excluded from the traditional banking system. To support this momentum and ensure its sustainability, the State adopted Law No. 2025-04 of February 19, 2025, which thoroughly reforms the regulation of microfinance. This new law is part of a drive to professionalize and secure the sector, while promoting its development.

One of the major reforms introduced by this law is the emphasis on the professionalization of actors. The text aims to better regulate microfinance institutions (MFIs) by strengthening requirements in terms of governance, risk management, and transparency. It also clarifies the scope of application, specifying that the law applies to all microfinance institutions operating in Senegal, regardless of their legal form.

The law also emphasizes the protection of depositors and borrowers, a crucial issue in a sector where customers are often vulnerable. By establishing stricter rules and enhanced control mechanisms, the new law aims to prevent abuses and practices that could undermine public confidence. This reform is a strong signal of the authorities' commitment to ensuring a healthy and fair financial environment.

In addition, Law No. 2025-04 of February 19, 2025 also aims to improve the effectiveness of supervision. It clearly assigns oversight of microfinance institutions to the Minister of Finance, in coordination with other competent authorities, allowing for more consistent and rigorous control.

Finally, the reform aims to promote financial inclusion by allowing the microfinance sector to develop while remaining accessible. The objective is to ensure that basic financial services, such as credit and savings, continue to reach the populations that need them most, while guaranteeing the viability and sustainability of the institutions that serve them.

Conclusion

In view of the profound changes in Senegal's banking and financial sector, the conclusion is clear. The three major reforms, namely the new regulation on the external financial relations of the WAEMU, the new banking law, and the new microfinance law, constitute a coherent and strategic whole. They work together to create a financial ecosystem that is more resilient, fairer, and better adapted to the realities of the 21st century.

The modernization of the legal framework shows that the law is no longer just a rule to be followed, but a real lever for economic development. By strengthening the BCEAO's role in managing foreign exchange reserves, extending the scope of banking regulation to new players such as FinTechs, and securing the microfinance sector, Senegal is aligning itself with international standards. These reforms aim to ensure the transparency of transactions and combat financial scourges such as cybercrime and money laundering.

Furthermore, by explicitly recognizing the role of non-bank players and creating frameworks for experimentation, the legislation promotes innovation and financial inclusion. This makes financial services accessible to a larger segment of the population, while ensuring the viability and soundness of the system as a whole. In conclusion, these reforms are not mere technical adjustments. They embody a vision for the future, where Senegal's financial sector will not only support economic growth, but also promote more equitable and inclusive prosperity. They prove that Senegal is firmly committed to modernization and responsible financial governance.

About Houda Law Firm

Houda Law Firm is a full-service business law firm operating in West Africa, with offices in Dakar, Senegal (headquarters) and Abidjan, Côte d’Ivoire. The firm is admitted to practice before both the Senegalese and Ivorian Bar Associations, enabling it to provide seamless legal support across these two key jurisdictions. Its areas of expertise include corporate law, banking and finance, project development, taxation, energy, infrastructure, and dispute resolution. The firm regularly advises domestic and international investors, financial institutions, and public entities on complex legal and regulatory matters throughout the WAEMU region. Led by Me Khaled Abou El Houda, the firm is widely recognized for its deep understanding of OHADA law and its strategic approach to cross-border transactions and regulatory compliance.

Khaled El Abou Houda
Cabinets d’Avocats Houda & Associés
Dakar, Senegal

Franck Allessie
Cabinets d’Avocats Houda & Associés
Dakar, Senegal