Reducing the domination of cash: an imperative for Senegal

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Introduction

In Senegal – as in many West African countries and more widely on the continent – the Species (banknotes, coins) continue to play a central role in economic life: purchasing heavy goods (cars, houses), informal payments, wage payments, retail trade, etc.

This phenomenon, maintained by a low level of banking, historical distrust of banking institutions, and the absence or lack of adequate regulation and infrastructure, has high costs.

But modern technologies – mobile money, electronic invoices, digital platforms – now offer a window of opportunity to reform in depth.

The consequences of high species circulation

In a country where cash remains heavily used, the consequences are many:

1. Loss of tax revenue and extension of the informal economy

The use of cash makes reporting of transactions random. Informal (or partially formal) enterprises may under-declare their sales, not return the VAT collected, or even not record the revenue in their accounts, as long as they keep it. The loss of profits is considerable for the State with the consequences on the corruption, money laundering, and impunity.

The species allows opaque transactions, without formal trace, which facilitates corruption (bribes, overbilling, diversion), Money-laundering, and in some cases the financing illegal activities. Labsence of audit trail reduces the risk of punishment, which lowers the cost of corruption for those who practice it. The introduction of false currency in the economy weakens economic aggregates.

2. Cash management costs
   • Costs of production (printing, parts manufacturing), transport, safety
   • Storage and management costs (banks, businesses)
   • Risks of counterfeit tickets, thefts, miscounting, losses.
3. Economic inefficiency

Cash is less effective for remote transactions, large markets, recurring or automated payments. The need for liquidity, the cash logistics, slows down trade, increases transactional costs.

4. Inequality and exclusion

Those who are not banked or who do not have access to digital mobile services are doubly penalized: they incur higher costs, fewer protections, more risk when handling large amounts of cash.

5. Low transparency of economic sectors

Lack of traceability makes regulation more difficult (standards, health safety, origin of products), the fight against undeclared work, taxation on added value, etc.

6. Macroeconomic risks

A large amount of cash in circulation can complicate monetary control, the fight against inflation, economic planning and the central bank's control of monetary policies.

Practical tools and solutions to change the system

To gradually emerge from a system dominated by species towards a traceable economy, several levers, policies and techniques are possible. Here is a range of measures validated or experienced elsewhere, adapted to the Senegalese context.

Solution	Description	Conditions of success / potential brakes
Extension of mobile money as a universal payment method	Use money mobile accounts for almost all transactions: small businesses, salaries, payments suppliers, rents, government payments, etc.	Requires reliable mobile infrastructure, low (or even subsidized) transaction costs, enhanced confidence, adapted regulation, user identification, security.
Mandatory electronic billing (e-invoice / e-invoice)	Impose that all companies issue electronic invoices for commercial transactions. Example: Italy with its system FatturaPA and the platform Sistema di Interscambio (SdI). In Italy, the e-invoice obligation for B2B, B2C and B2G transactions has reduced the VAT gap and improved tax compliance.	Need for a clear legal framework, technical standards (format, digital signature, transit platform), business training, tools accessible to SMEs, and support. Initial cost of implementation, cultural resistance.
Taxation & certified cash systems (POS / electronic registers)	All outlets, even informal ones, use certified crates or software, which issue a digitized or printed receipt with QR code, signature or unique identifier. The system must send reports periodically or in real time to the tax authorities.	It is necessary to check reliability, security, ability to manage off-grid/area without connectivity, cost of equipment for small traders, social acceptance.
Obligation of bank or mobile payments for salaries, public contracts	Prevent wages from being paid in cash; require all public contracts to use traceable payments; ban on real estate transactions, sale of high-value durables in cash beyond a threshold.	Strong regulation, effective sanctions, adaptation for those without accounts (mobile money). Need for a sufficiently high bank rate / digitisation, legal stamp of proof of mobile or bank payment.
Physically reducing cash	For example: setting maximum cash limits for certain transactions, phasing out very high-value denominations, encouraging the use of less important cash for everyday use, tax incentives for digital payments.	Risks of resistance, circumvention, need for institutional capacity, ensure that vulnerable people are not excluded.
Regulation and supervision of non-bank payment providers	If private operators run mobile money or other payment services, the central bank or the monetary authority must regulate them, ensure interoperability, fairness, security, transparency (KYC, fight against money laundering).	Political acceptance, technical challenges, supervisory costs, training, legal adaptation.
Awareness, confidence, inclusion	Educate citizens on the benefits of digital payment (security, traceability, cost, anti-corruption), ensure that costs are not prohibitive, build confidence through strong data protection, redress, and positive incentives (reductions, rewards, simplifications).	Need for massive communication, management of cultural or practical resistance, infrastructure in rural areas, cost of mobile devices or devices.

Lessons from foreign experience

Some useful examples:

• Italy : since 2019, e-billing obligation for all trades B2B, B2C, B2G The SdI system checks for format and completeness, which has reduced the VAT gap.
• Latin America Several countries (Mexico, Brazil, Uruguay, Peru, E. Salvador) have introduced mandatory invoicing systems; results: increased reported revenues, improved transparency, reduced informality.
• West Africa / WAEMU : mobile money is growing rapidly, contributing to financial inclusion. Approximately 28 per cent of adults in sub-Saharan Africa have a global Findex mobile money account, and many use these accounts to receive government payments, salaries, etc.
• Recent studies show the correlation between increased use of mobile money and reduced bribe payments for non-monopolized public services.

Proposal for a far-reaching reform: an action plan for Senegal

Here is a roadmap that Senegal could adopt to move towards an economy where all significant flows are traceable, while being pragmatic and inclusive.

Step	Specific actions	Key actors	Possible timetable
Diagnostic & legal framing	Conduct a comprehensive study of the mass of cash in circulation, the most informal sectors, the volumes of tax fraud, losses due to cash. Update/create a legal framework to prohibit: bearer cheques, unbarred; define cash thresholds for certain transactions; make compulsory the use of validated coins or banknotes.	Ministry of Finance, BCEAO / Central Bank, tax authorities, banks and mobile money operators.	6-12 months
Strengthening digital & mobile payment infrastructure money	Ensure mobile/Internet access, well distributed mobile money agents, reduced fees; Interoperability between operators; enhanced security.	Mobile operators money, infrastructure provider, regulator, central bank.	1-2 years
Implementing universal electronic billing	Legislation imposing e-invoice for all enterprises beyond a certain threshold and then gradually for all. Creation/designation of central invoicing platform (or several but interoperable). Standard format (XML or equivalent), digital signatures, automatic verification.	Ministry of Finance / Directorate General of Taxes, technical partners, companies, chambers of commerce.	Pilot phase 1 year, extension over 2-3 years
Obliging traceable payments for salaries, public contracts, valuables	Law or regulation: salaries must be paid by bank transfer or mobile money (or digital equivalent) if the employee does not have a bank account; all government contracts/contracts must pay through certified digital means; real estate transactions above a threshold must be digital.	Parliament, Ministry of Labour, Ministry of Public Service, local authorities, Ministry of Public Procurement.	1-2 years
Taxing Cash Tool & Electronic Receipt System	Certify caisses/software, impose electronic/digital receipts, QR-code or unique identifier, periodic or real-time transmission of sales/revenue to tax administration.	Ministry of Finance, tax authorities, software suppliers, shops.	1-2 years
Inclusion & Accompaniment	Training / targeted assistance to SMEs, informal traders, artisans; subsidies for equipment; awareness campaigns; measures for rural or low literacy populations. Ensure that no one is excluded for lack of access or cost.	Government, NGOs, trade unions, trade associations, mobile money operators.	From the start, continuous
Gradual reduction of currency	Set ceilings for cash payments, gradually remove certain high-value cuts, and encourage (fiscally or through grants) the use of electronic payments.	Central Bank, Ministry of Finance, legislator.	3-5 years or more, depending on acceptance
Monitoring, audit and sanctions	Establish verification mechanisms, penalties for non-compliance, audit of mobile money platforms, transparency in tax collection figures. Publish reports, involve citizens.	Ministry of Justice, Ministry of Finance, anti-corruption institutions, civil society.	Permanent after initial phases

Expected benefits

If this plan is properly implemented, the gains could be very significant:

• Significant increase in tax revenues VAT, corporate taxes, income taxes, etc.
• Decrease in corruption and fraud ; better accountability of public and private officials.
• Reduction of cash management costs, fake notes, losses, security.
• Improved economic efficiency : faster payments, better access to credit, integration of SMEs into formal channels.
• Enhanced financial inclusion, reducing inequalities.
• Greater international credibilityincreased attractiveness for foreign investment and international aid.

Challenges & risks, and how to mitigate them

Any reform of this magnitude will face obstacles. The following are the main suggestions to overcome them:

Challenge / Risk	Mitigation strategy
Cultural and social resistance (usual, distrust, fear of surveillance)	Clear distinction between tax traceability / anti-fraud and privacy; transparency on the use of data; Inclusion of citizens in public dialogue; communication campaigns.
Cost of equipment & skills for SMEs / informals	Grants, microcredits for equipment, simple mobile applications, interface in local languages; training and support.
Technical barriers / infrastructure	Strengthening Internet/mobile connectivity, mobile money network, operator interoperability, security and resilience (rural areas, off-grid areas).
High or hidden costs	Fee regulation, capping, tariff transparency, incentives for operators to reduce costs for users.
Risk of circumvention / parallel black market	Strict penalties, targeted controls, positive incentives for compliant behaviour, administrative simplification to formalize.

Conclusion

The high flow of cash is an important obstacle to economic development, tax justice, transparency and modernization of both States and the private sector.

For Senegal, the time is ripe for an ambitious but realistic reform: mobile money is widespread, citizens know digital payments, digitalisation becomes a reality.

What seems revolutionary is fully achievable: with a strong political will, a clear legal framework, competent institutions, adequate regulation, and a massive citizen inclusion component, Senegal can drastically reduce the use of cash, trace its economic flows, increase its tax revenues, fight corruption more effectively, and thus enable a healthier, fairer, more sustainable growth.

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Road map « Senegal without massive cash » (2025-2028)

1) Executive summary (objective in 36 months)

• Political objective: reduce at least 50 % the share of cash payments in formal and semi-public market transactions; generalize traceability via mobile money, transfers and e-invoices.
• Macro lever: press the already strong penetration of mobile money in WAEMU and Senegal, led by BCEAO, and on the global dynamics ofe-billing mandatory to close the VAT gap.
• Expected benefits: increase in tax revenues (VAT, IS, IR), decrease in cash costs (printing, transport, security), measurable decrease in corrupt practices, acceleration of financial inclusion. Recent analyses (GSMA, World Bank) link the rise of mobile money to gains in GDP and inclusion in sub-Saharan Africa.

2) Design principles

1. Proportional Traceability (fiscal & anti-corruption) + Data protection.
2. Inclusion first Low cost/interoperability, low offline/network solutions.
3. Public sector first (G2P, P2G, B2G).
4. Regulated interoperability by the ECBAO (UEMOA electronic money framework).
5. Progressivity : thresholds/categories, pilot phases, support for TPEs.

3) Legislative & Regulatory Package (submitted here T1-2026)

Transaction Traceability Act with implementing decrees:

• Cash-targeted prohibitions :
  • Payment Must be traceable (transfer, mobile money, cheque barred) beyond CFAF 500,000for: salaries, public contracts, pro rents, vehicles, real estate, public supplier invoices.
  • Removal bearer cheques and unbarred cheques; Only traceable settlement instruments.
• Wages Payment Mandatory by transfer or mobile money for all employers (limited exemptions for areas without coverage).
• Mandatory E-billing in stages (see §4), via DGID central platform (channel of exchange & validation), according to the orientation of the Draft Finance Act 2025 which introduces the obligation to invoice.
• Certified caisse/software : obligation of a certified cash point (authorised mobile POS app) issuing received with QR-code and unique identifier, and teletransmission periodical.
• Capped costs & transparency : mobile fee money for "general interest" operations (wages, public payments, education, health), with quarterly publication of the scales.
• Proportional KYC and interoperability between electronic money issuers, within the framework of BCEAO.

(4) E-billing: design & deployment (2025-2028)

Target All B2B, B2G and B2C transactions, with archiving and audit trail. Senegal aligns with the practices of pioneer countries (e.g. Italy, SdI, format FatturaPA) which reduced the VAT spread through the obligation to invoice and the continuous control of transactions.

Proposed architecture (inspired by the best standards)

• Central DGID platform (exchange channel): format control, validation, time stamping, unique number.
• Formats : JSON/XML signed (digital signature), open API, QR-code.
• Sending modes : web portal, API, provider gateways, and mobile apps for TPE (free/subsidised).
• Open ecosystem : approval of private suppliers e-invoicing (PDP) to support SMEs under DGID supervision.

Calendar

• T4-2025 : sectoral pilots (large enterprises, public procurement).
• T2-2026 : B2G & large enterprises (CA ≥ 1 Md CFAF).
• T1-2027 : SMEs (CA ≥ 100 M CFA).
• T1-2028 : microenterprises / B2C (simplified electronic tickets).

(PLF-2025 already lays down the principle of obligation; this calendar specifies the load climb. )  

Support measures

• TPE e-invoice kit (Android/iOS app + Bluetooth ticket printer + subsidized data).
• Transitional tax credit (50% of the cost of equipment, ceiling 75,000 CFA francs).
• Hotline & e-learning DGID, guides in FR/Wolof/Peulh/Serer.

5) Priority Digital Payments (G2P, P2G, B2G, B2C)

• G2P (family grants, contractual salaries, subsidies): 100 % digital t2-2026 via transfer or mobile money (portability between operators).
• P2G (taxes, duties, stamps): unified portal "Pay the State" accepting mobile money interoperable and card.
• B2G State suppliers paid exclusively traceable.
• B2C/TPE : promotion of QR-code and tap-to-phone (Android).
• UEMOA Capillary : to build on the network of agents and the development of the electronic money accounts identified by BCEAO (209 M UEMOA accounts in 2023).

(6) Gradual reduction of cash

• Cash ceilings (progressive over 3 years): 1) 1 M F CFA → 2) 500 k → 3) 250 k (excluding humanitarian/vital exceptions).
• Withdrawal of very high-value banknotes (BCEAO agreement) + incentives (fee reductions, compliance bonuses) for digital payments.
• "Zero cash public" campaign All government revenue/expenditure authorities move to cash-free.

(7) Inclusion & protection of users

• Capped costs on baskets for social use: payment of wages, payment of school bill/health/electricity, basic taxes.
• Interoperability compulsory between operators (interwallet transfer at marginal cost).
• Offline mode (USSD, single-use tokens) for rural areas.
• Data protection & appeal (Ombudsman of payments).
• Financial education (national campaign) supported by Findex/GSMA data showing the usefulness of mobile money for inclusion and saving.

(8) Governance & Pilots

• Interministerial Committee (Finance/DID, Budget, Digital Economy, Internal Affairs, Justice) + BCEAO + ARTP + operators & banks + employers/consumers.
• Traceability & E-Invoice Cell DGID (PMO, architecture, data).
• Pilots :
  1. Public procurement (T4-2025): 100% digital billing and payment.
  2. Distribution (T1-2026): high fuel consumption (QR electronic ticks).
  3. Transport (T3-2026): Urban digital transport tickets.
• Quarterly public reports (KPI below).

9) KPI & targets (quarterly publication, 2025-2028)

1. % of digital G2P/P2G payments – Target: ≥ 95 % late 2026.
2. Invoicing rate by segment – target: 100% B2G T2-2026; ≥ 80% large enterprises end-2026; ≥ 70 % SMEs end-2027; ≥ 60 % micro/B2C late 2028.
3. Share of TPE receipts via mobile money/POS – Target: ≥ 50 % late 2027.
4. Reduction of the VAT gap – Target: -25 % in 3 years (practical reference countries pioneer e-invoice).
5. Cash management costs (treasure/banks) – -30 % late 2028.
6. Litigation & fraud Number of anomalies detected by data-match +50 % (better detection) but average amount per case -20%.
7. User satisfaction (surveys) & Fee limits Respected.

10) Budget & financing (order of magnitude)

• DGID & API e-invoice platform : 4–6 M € (capex + 3 years opex).
• Software/Cash Certification & TPE App : 6–8 M € (targeted grants).
• Interoperability & fee capping : limited net cost (compensation via taxation/useability).
• Communication & Training : 2–3 M €.
• Total 3 years : 12–17 M €, largely Self-financing by the increase in receipts (VAT/IS/IR) and the cash economy — dynamic confirmed by international returns on e-invoicing and by the macro impact of mobile money.

11) Risks & parades

• Resistance of actors → Phase, incentives (tax credit), TPE support, consultation.
• Too high a fee → ceilings, transparency, competition/interoperability under the BCEAO umbrella.
• Network coverage → USSD/offline, data grants, public kiosks.
• Cybersecurity & Privacy → National PKI, audits, data minimization, protection charter.
• Complexity for micro-marketers → Ultra-simple apps, training in local languages, outreach agents.

(12) Detailed timetable

T4-2025

• "Cash ceilings" decrees (phase 1) & 100% digital public payments.
• Launch e-invoice pilot (large accounts + B2G).
• Publication ceilings mobile fee money for social operations.

T1-T2-2026

• Entry into force compulsory e-invoice B2G and large companies.
• Wages compulsory digital (with safety nets for white areas).
• Portal Paying the State (P2G) & QR-tax code.

T3-T4-2026

• Extension e-invoice SMEs ; applied deployment TPE-certified cash.
• Cash ceilings Phase 2 (- 500 k).

2027

• E-invoice SMEs generalised; B2C electronic tickets (simplified).
• "Zero cash public" reached; cash ceilings Phase 3 (- 250 k).

2028

• Balance sheet & adjustments ; Intensification data-matching DGID (VAT/IS/IR), continuous control of transactions.

13) Why it can succeed now in Senegal

• Mobile elan money BCEAO data (explosion of UEMOA electronic money accounts) and independent analyses (GSMA) showing the positive economic impact in Senegal.
• International alignment :e-billing mandatory is a background trend (e.g. Italy) for reducing VAT fraud ; on PLF-2025 Senegal is already carrying out this reform.
• BCEAO framework solid for electronic money (Instruction No.008-05-2015), based on interoperability and proportionate KYC.

Annexes – Key References

• BCEAO, Annual Report on Digital Financial Services in WAEMU 2023 (growth of electronic money accounts).
• BCEAO, Instruction No.008-05-2015 (electronic currency, availability, requirements).
• PLF-2025 Senegal, proposal for compulsory charging (DGID, centralized platform).
• GSMA & GSMA-SOTIR, impacts & uses of mobile money in Senegal/Africa.

Italy – SdI/FatturaPA : architecture & effects on the VAT spread (transferable lessons).