"The government has introduced new tax laws for the special economic zone to ease compliance, simplify procedures and encourage private investment and job creation. A single tax payment has been implemented, and corporate tax has been dropped from 35 percent to 25 percent. Companies that export 80 percent of their output will incur no export duty. This will come into effect by the end of the year," says Gueye, who reveals that currently the export sector attracts a 20 percent tariff on the value of the goods and 18 percent of value added tax.

"We are not keen on intra-Africa trade at the moment because we want to address our current account balance," he says, explaining the reason for focusing on the European market at a time when global markets are witnessing sluggish growth and protectionism. Gueye says Senegal is pushing for an increase in exports of textiles and value-added agricultural products to complement fish and nuts.

He is happy with the fast pace of the development of the DAKAR special economic zone, saying competition for bids has been high. "We have employed the Build-Own-Operate and Transfer model to encourage injection of private investment. We are working on bridging our power deficit by investing in coal and solar projects," he adds.

This will drastically reduce electricity costs that are important for businesses' bottom line. Senegal expects that the first Chinese companies moving in will attract others to coalesce around them, as was witnessed in Ethiopia once C&H set up a base there.

The Chinese factory will be the first major foreign investment in Senegal's textile sector for decades. Initial estimates show it will employ at least 1,000 people and later increase to 5,000. According to the government, Senegal's garment industry was one of the largest and employed up to 70,000 workers. But due to wider economic reforms, the industry lost government support and shrank in the face of cheaper imports.

"The country is moving in the right direction," says Gueye, noting that the jobs offered will ease the burden of unemployment, especially among the young. "We are keen to revive the manufacturing sector and boosting exports," he says.

Extension of the US African Growth and Opportunity Act, which grants duty-free access to the North American market, may be a bonus for the Chinese investors.

lucymorangi@chinadaily.com.cn