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MCPS for <strong>Mauritania</strong>, 2011-2015<br />

ISLAMIC DEVELOPMENT BANK GROUP<br />

MEMBER COUNTRY<br />

PARTNERSHIP STRATEGY OF THE IDB GROUP<br />

FOR<br />

MAURITANIA<br />

2011-2015G / 1432 - 1436H<br />

Rabi Thani 1432H (March 2011)


MAP OF MAURITANIA *<br />

* The boundaries, colors, denominations and other information shown on any map in this document do not imply any judgment<br />

on the part of IDB concerning the legal status of any territory or the endorsement or acceptance of such boundaries.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 iii


CURRENCY<br />

US$1 = 283.500 UM<br />

Euro 1 = 398.074 UM<br />

Rates as of November 10, 2010<br />

ABBREVIATIONS and ACRONYMS<br />

ACP : Africa Caribbean Pacific<br />

ADB : African <strong>Development</strong> <strong>Bank</strong><br />

ADER : Agency for <strong>Development</strong> of Renewable Energy<br />

AFD : Agence Française de Développement (French <strong>Development</strong> Agency)<br />

AICD : Africa Infrastructure Country Diagnostic<br />

AMU : Arab Maghreb Union<br />

APAUS : Agency for Promotion of Universal Access to basic services<br />

APSM : Agency for Projects Study and Monitoring<br />

BCM : Central <strong>Bank</strong> of <strong>Mauritania</strong><br />

CAS : Country Assistance Strategy<br />

CILSS : Comité permanent Inter-État de Lutte contre la sécheresse au Sahel<br />

CoA : Court of Accounts<br />

CPI : Commissariat for Promotion of Investments<br />

DRPSS : Regional Health Directorates<br />

EBA : Everything But Arms<br />

ECF : Extended Credit Facility<br />

ECOWAS : Economic Community of West African States<br />

ENER : Etablissement National de l’Entretien Routier<br />

EPA : Economic Partnership Agreement<br />

EPI : Expanded Program on Immunization<br />

EPVC : Enquête Permanente sur les Conditions de Vie des Ménages<br />

EU : European Union<br />

FAO : Food and Agriculture Organization of the United Nations<br />

FDI : Foreign Direct Investments<br />

GAVI : Global Alliance for Vaccines and Immunization<br />

GAVI : Government Alliance on Vaccinates Initiative<br />

GDP : Gross Domestic Product<br />

GIS : General Inspectorate of the State<br />

GOED : Group Operations Evaluation Department<br />

GoM : Government of <strong>Mauritania</strong><br />

GPRSF : Growth and Poverty Reduction Strategic Framework<br />

GPRSP : Growth and Poverty Reduction Strategy Paper<br />

HIPC : Highly Indebted Poor Countries<br />

HIV : Human Immuno-deficiency Virus/Acquired Immuno-deficiency Syndrome<br />

HMIS : Health Management Information System<br />

ICD : <strong>Islamic</strong> Corporation for the <strong>Development</strong> of the Private Sector<br />

ICIEC : <strong>Islamic</strong> Corporation for Insurance of Investment and Export Credit<br />

IDB : <strong>Islamic</strong> <strong>Development</strong> <strong>Bank</strong><br />

IMF : International Monetary Fund<br />

IMR : Infant Mortality Rate<br />

IMR : Infant Mortality Rate<br />

IT : Information Technologies<br />

ITAP : Investment Technical Assistance Program<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 v


ITFC : International <strong>Islamic</strong> Trade Finance Corporation<br />

LDMC : Least Developed Member Country<br />

M&E : monitoring and evaluation<br />

MAED : Ministry of Economic Affairs and <strong>Development</strong><br />

MAED : Ministry of Economic Affairs and <strong>Development</strong><br />

MC : Member Country<br />

MCPS : Member Country Partnership Strategy<br />

MCPS : Member Country Partnership Strategy<br />

MDGs : Millennium <strong>Development</strong> Goals<br />

MDRI : Multilateral debt Relief Initiative<br />

MF : Ministry of Finance<br />

MfDR : Management for <strong>Development</strong> Results<br />

MFN : most favored nation<br />

MI : Management Information<br />

MICS : Multiple Indicators Cluster Survey<br />

MMR : Maternal Mortality Rate<br />

MMR : Maternal Mortality Rate<br />

MOH : Ministry of Health<br />

MOHSA : Ministry of Health and Social Assistance<br />

MoU : Memorandum of Understanding<br />

MPSMA : Ministry of Public Sector and Modernization of the Administration<br />

MSEs : Micro and Small Enterprises<br />

NGO : Non Governmental Organization<br />

ODA : Official <strong>Development</strong> Assistance<br />

OMVS : Organisation pour la mise en valeur du fleuve Sénégal<br />

PDF : Project <strong>Development</strong> Facility<br />

PHC : Primary Health Care<br />

PRECASP : Projet de Renforcement des Capacités du Secteur Public<br />

PRODEC : Program of Education <strong>Development</strong><br />

PRODESS : Program of Health and Social <strong>Development</strong><br />

PRS : Poverty Reduction Strategy<br />

PRSP : Poverty Reduction Strategy Paper<br />

RSDS : Rural Sector <strong>Development</strong> Strategy<br />

SECF : State Secretary for Promotion of Women<br />

SEZ : Special Economic Zone<br />

SOMAGAZ : Société Mauritanienne de Gaz<br />

SOMELEC : Société Mauritanienne d’Electricité<br />

SONIMEX : National company for imports and exports<br />

STR : Special Intervention Program<br />

TB : Tuberculosis<br />

TFP : Technical and Financial Partners<br />

TFPD : Trade Finance Program<br />

TFR : Total Fertility Rate<br />

UM : <strong>Mauritania</strong>n Ouguiyas<br />

UNDP : United Nations <strong>Development</strong> Program<br />

UNFPA : United Nations Population Fund<br />

UNICEF : United Nations Children’s Fund<br />

VPD : Vaccine-preventable disease<br />

WAEMU : West African Economic and Monetary Union<br />

WHO : World Health Organization<br />

vi<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Country Department (Coordinator)<br />

ACKNOWLEDGEMENT<br />

MCPS Team<br />

Director : Rami M. Saeed Ahmed<br />

Division Manager : Salah Mansour<br />

Lead Economist : Irfan Aleem<br />

Economist-Country Manager for <strong>Mauritania</strong> : Rami Abdelkafi<br />

IDB Group Entities and Departments<br />

ICIEC/ITAP : Bessem Soua<br />

ICD : Zakiyoulahi Sow<br />

ITFC : Mourad Bouzrouri<br />

IRTI : Abdelkader Chachi<br />

Human <strong>Development</strong> Department : El Bashier Sallam<br />

Infrastructure Department : Hatem El Bakkali<br />

Rabat Regional Office : Abderrahman El Glaoui/ Abdelfettah Ouedghiri<br />

<strong>Islamic</strong> Solidarity Fund Department : Ahmed Maaty<br />

OEO : Abdelhameed Mohamed Bashir<br />

Agriculture Department : Ali Khan<br />

Legal Department : Fathaallah Elguernaoui<br />

Consultant<br />

Agriculture and Rural <strong>Development</strong> : Abdelkrim Oka<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 vii


Table of Contents<br />

Executive Summary .................................................................................................................... xi<br />

I. INTRODUCTION ................................................................................................................ 1<br />

II. COUNTRY CONTEXT, RECENT ECONOMIC TRENDS AND CHALLENGES ............................. 2<br />

1. Geographical and Socio-Political-Historical Context ................................................. 2<br />

2. Recent Economic Trends and Challenges .................................................................. 2<br />

3. Structural Weaknesses .............................................................................................. 5<br />

4. Key constraints to economic growth in the medium term ........................................ 7<br />

III. MAURITANIA’S VISION, DEVELOPMENT CHALLENGES AND PRIORITIES .......................... 10<br />

1. Poverty Reduction Strategy Paper 2001-2015 .......................................................... 10<br />

2. Risks to Government Strategy ................................................................................... 12<br />

IV. PAST AND CURRENT INTERVENTIONS OF IDB GROUP AND INVOLVEMENT<br />

OF OTHER DONORS ..................................................................................................... ...... 12<br />

1. IDB Group Portfolio in <strong>Mauritania</strong> ............................................................................. 12<br />

2. Lessons Learned from Evaluation of Past IDB Group Intervention in <strong>Mauritania</strong> ..... 13<br />

3. Other Donors Involvement in <strong>Mauritania</strong> ................................................................. 14<br />

V. ELEMENTS OF IDB GROUP PARTNERSHIP STRATEGY ........................................................ 15<br />

1. Strategic framework for the <strong>Mauritania</strong> MCPS .......................................................... 15<br />

2. PILLAR I: Enhancing Human <strong>Development</strong> through Health ....................................... 16<br />

2.1 Current situation .............................................................................................. 16<br />

2.2 Main Constraints .............................................................................................. 17<br />

2.3 Government’s Strategy For the Health Sector ................................................. 18<br />

2.4 Proposed Interventions (with donors) to Help Government Meet its Goals ... 18<br />

2.5 Suggestions and Recommendations for the Government ............................... 18<br />

3. PILLAR II: Rural <strong>Development</strong> and Food Security ...................................................... 19<br />

3.1 Current Status ................................................................................................. 19<br />

3.2 Constraints ....................................................................................................... 19<br />

3.3 Opportunities .................................................................................................. 20<br />

3.4 Government Strategy ...................................................................................... 20<br />

3.5 Proposed IDB Group Interventions .................................................................. 21<br />

3.6 Suggestions and Recommendations for the Government ............................... 22<br />

4. PILLAR III: Enhancing and Diversifying the Foundations of a Modern Economy ....... 23<br />

4.1 Private Sector <strong>Development</strong> / <strong>Islamic</strong> Finance ................................................ 23<br />

4.2 Trade Finance & Insurance .............................................................................. 26<br />

4.3 Suggestions and Recommendations for the Government ............................... 27<br />

5. Cross-Cutting Theme: Capacity Building .................................................................... 27<br />

5.1 Current situation and Constraints .................................................................... 27<br />

5.2 Government Strategy and Objectives .............................................................. 28<br />

5.3 IDB Group Proposed Strategy .......................................................................... 28<br />

VI. RISKS AND UNCERTAINTIES ............................................................................................... 29<br />

VII. CONCLUSIONS AND WAY FORWARD ................................................................................ 30<br />

ANNEXES .................................................................................................................................... 31<br />

<strong>Mauritania</strong> at a Glance .............................................................................................................. 33<br />

Results Matrix ............................................................................................................................ 34<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 ix


As part of its new Vision, the IDB Group has embarked<br />

on major reforms to improve the efficiency and the<br />

effectiveness of its business processes, enhance<br />

country-focus and services delivery. The preparation<br />

of the current Member Country Partnership Strategy<br />

(MCPS) for <strong>Mauritania</strong> falls under this new vision<br />

and new business process. The MCPS is a strategy<br />

developed through a process of dialogue with the<br />

Member Country with a view to help program Group<br />

activities and monitoring their impact.<br />

This MCPS for <strong>Mauritania</strong> is part of the first set of<br />

MCPSs that the IDB Group is launching and reflects the<br />

importance that the Group attaches to <strong>Mauritania</strong>.<br />

The rationale for including <strong>Mauritania</strong> in the first set<br />

is that it is in a critical step of its development process<br />

after passing through a difficult period marked by<br />

external shocks and internal crises, and the country<br />

is updating its development strategy. This provides<br />

the IDB Group, as a stakeholder with a key interest<br />

in achieving <strong>Mauritania</strong>’s successful development,<br />

an opportune moment to form a partnership with<br />

<strong>Mauritania</strong> consistent with its development priorities<br />

and the IDB Group 1440 Vision and strategic thrusts.<br />

Preparation of this MCPS was based on extensive<br />

consultation with Government, development<br />

partners and civil society. During the course of<br />

two IDB Group Missions, including ICD, ITFC and<br />

ICIEC, the Group consulted extensively with the<br />

Government, other development partners, the<br />

private sector and civil society including members of<br />

the opposition in parliament. This MCPS is based on<br />

these consultations.<br />

This MCPS is anchored on the vision and priorities<br />

of PRSP III (2011-2015) which lays out ambitious<br />

targets for an acceleration of the GDP growth rate<br />

from an average of 3.8% during the previous PRSP<br />

period (2006-2010) to 5.5%, and almost halving<br />

poverty from 42% in 2008 to 25% in 2015 when it<br />

only declined by 6% in the previous five years. Child<br />

and maternal mortality remain at alarming levels and<br />

achievement of the Millennium <strong>Development</strong> Goals<br />

will be a challenge in these areas.<br />

The main driver of growth under the PRSP III is<br />

the services sector, projected to generate over<br />

Executive Summary<br />

half the targeted growth in GDP, with industry<br />

making the second largest contribution of 31%.<br />

With private enterprises expected to play a key<br />

role in both sectors, the prospects of achieving the<br />

targeted growth rate therefore hinge on how private<br />

enterprises, especially SMEs, can be encouraged to<br />

invest in the face of the structural challenges facing<br />

the economy. The weak enabling environment<br />

clearly poses a challenge and there is an urgent need<br />

to strengthen the fragile banking system to improve<br />

access to finance, resolve ambiguities in the legalregulatory<br />

framework including those related to land<br />

ownership, and create the necessary infrastructure,<br />

especially energy, and transportation. However, the<br />

structural challenges facing the economy run deeper.<br />

The MCPS for <strong>Mauritania</strong> has looked in depth at<br />

the reasons for the chronic poverty prevailing in<br />

the country amidst large natural resources such<br />

as fisheries, oil, copper, iron ore and gold. All the<br />

evidence indicates that <strong>Mauritania</strong> has a unique dual<br />

economy structure:<br />

• A subsistence economy supporting more than<br />

two-thirds of the population and focused on<br />

crop production, livestock management and<br />

traditional coastal fisheries,<br />

• A natural resource based modern “enclave”<br />

economy using capital-intensive production<br />

techniques to produce raw materials (iron ore,<br />

gold, copper, oil and deep-sea fishing) with little<br />

or no value-added for export markets.<br />

The link between these two economies has been<br />

very weak. During the past decade, high and<br />

sustained rents from extraction of mineral resources,<br />

fisheries and foreign aid have continued to be the<br />

main drivers of <strong>Mauritania</strong>’s economy while the<br />

agriculture sectors contribution to growth has been<br />

small and the manufacturing sector has still to takeoff.<br />

In particular, as the value added to raw material<br />

exports is limited and given the capital-intensive<br />

nature of extraction activities, the demand for labor,<br />

the hallmark of the modern sector of developing<br />

economies, has been limited or negligible. The<br />

economy appears trapped in a situation of high<br />

poverty that adversely affects its development - a<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 xi


situation made worse by external and internal shocks<br />

such as droughts.<br />

These and other developments - the difficulty<br />

that the country has experienced in making rice<br />

production in irrigated areas economic despite<br />

immense and dedicated effort by the Government<br />

and donors spread over a dozen years - appear<br />

to be symptoms of the economy suffering from<br />

“Dutch Disease” common to natural resource based<br />

economies. International experience suggests<br />

that good governance in the management of the<br />

natural resource rents is necessary to address this<br />

challenge together with human development and<br />

diversification of the economy.<br />

To assist the Government address the above<br />

mentioned structural challenges, the MCPS mission<br />

identified three pillars and one cross-cutting theme<br />

in agreement with the Government and other<br />

stakeholders supported by a financing envelope of<br />

US$ 700 Million. The pillars are:<br />

• Pillar-1: Enhancing Human <strong>Development</strong> through<br />

Health<br />

• Pillar-2: Rural development and food security<br />

• Pillar-3: Enhancing and Diversifying the Modern<br />

Economy<br />

The cross-cutting theme focuses on capacity building,<br />

including institutional development to enhance<br />

absorptive capacity, and is considered a pre-requisite<br />

for the effective implementation of this MCPS. It is<br />

worth noting that this MCPS also builds on the lesson<br />

of experience gained from the implementation of<br />

the framework agreement signed between IDB<br />

and the Government of <strong>Mauritania</strong> in 2008. This<br />

agreement envisaged spending a similar amount<br />

($700 million) through to 2012 in food security and<br />

related investments in (agriculture, livestock and<br />

infrastructure in) rural areas, human development<br />

with a focus on capacity building, and enhancing<br />

infrastructure especially in rural transportation. There<br />

is a strong consistency between these components<br />

and interventions under the proposed MCPS pillars.<br />

This strategic framework aims to build bridges<br />

between the two economies by helping to diversify<br />

the modern economy (by improving the enabling<br />

environment for private sector development, direct<br />

investments to help add value to natural resources,<br />

and supporting infrastructure investment), to invest<br />

in human capital (through capacity building and<br />

xii<br />

better health outcomes), and to strengthen the<br />

rural sector to enhance food security and provide<br />

raw materials for agro-processing by the modern<br />

economy.<br />

A key feature of this MCPS is to help <strong>Mauritania</strong> to<br />

diversify and enhance its modern economy and<br />

strengthen its linkages with the subsistence/informal<br />

economy by encouraging and supporting private<br />

sector development to facilitate the processing<br />

and value addition of the resources it is blessed<br />

with. International experience suggests two things.<br />

First, from a macroeconomic perspective, the<br />

Government should urgently review its policies<br />

regarding the management and use of earnings<br />

from exports of natural resources and avoid any<br />

excessive appreciation of the exchange rate (which<br />

can even make investments in irrigated agriculture<br />

uneconomic) by smoothening the use of such<br />

rents. Second, the Government should take steps<br />

to diversify the economy by adding more value to<br />

extracted resources before exporting them. The third<br />

pillar provides support to the goal of diversification.<br />

To help diversify the <strong>Mauritania</strong>n economy, IDB<br />

Group aims to promote flagship projects that have a<br />

long-term impact in key areas such as fisheries, and<br />

livestock (dairy, meat and hides) and also help, where<br />

it can in processing of minerals. This will require the<br />

creation of a business environment, including <strong>Islamic</strong><br />

Finance, conducive to local and foreign private<br />

investment as well as the development of critical<br />

economic infrastructure especially roads and energy.<br />

The expected outcomes from the <strong>Mauritania</strong><br />

MCPS process include a partnership with a strong<br />

government ownership of the intervention<br />

under the planned five-year program tailored to<br />

the vision and objectives underlying PRSP III. In<br />

addition, by working in close cooperation with<br />

other development partners, and focusing on<br />

key constraints to achieving the Government’s<br />

development goals in areas where the Group has<br />

a comparative advantage, the Group expects to<br />

achieve the impact outlined in the Results Matrix.<br />

The approach taken in preparing this MCPS,<br />

including extensive consultation and the strategy of<br />

diversification, will help <strong>Mauritania</strong> better manage<br />

and accommodate unexpected external or internal<br />

shocks and improve the quality of IDB Group’s<br />

portfolio.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


I. INTRODUCTION<br />

1. As part of its new Vision 1440H, the IDB<br />

Group has embarked on major reforms to<br />

improve the effectiveness and efficiency of its<br />

business processes and to enhance country focus<br />

and services delivery. Preparation of the Member<br />

Country Partnership Strategy (MCPS) is a key<br />

priority under the reform agenda and designed to<br />

be the foundation of the IDB Group’s dialog with<br />

Member Countries (MCs). The MCPS sets out a<br />

shared diagnosis of the development challenges<br />

facing the country, and a selective program of<br />

planned IDB Group interventions tailored to meet<br />

the country’s objectives taking account of the<br />

Group’s comparative advantage and activities of<br />

other development partners. The MCPS is results<br />

based and includes a monitoring and evaluation<br />

framework.<br />

2. The MCPS for <strong>Mauritania</strong> is part of the<br />

first set of MCPSs that IDB Group has launched.<br />

The reasons for selecting <strong>Mauritania</strong> include<br />

its classification as one of the Least Developed<br />

Member Countries of the IDB Group, a strategic<br />

location linking Europe and West Africa, and a<br />

country in a critical stage of its development-returning<br />

to constitutional order and following a<br />

deep political crisis and several decades of external<br />

shocks and internal crises. Moreover, <strong>Mauritania</strong><br />

is in the process of providing guidelines for its<br />

new development strategy, and this provides<br />

the IDB Group an opportune moment to form a<br />

strategic partnership to enhance the impact of its<br />

interventions by aligning them with the country’s<br />

development priorities.<br />

3. Preparation of this MCPS was based on<br />

extensive consultation with Government,<br />

development partners and civil society. During<br />

the course of two IDB Group Missions, the Group<br />

consulted extensively with the Government,<br />

other development partners, the private sector<br />

and civil society including members of the<br />

MEMBER COUNTRY PARTNERSHIP<br />

STRATEGY - MAURITANIA<br />

opposition in parliament. This MCPS is based on<br />

these consultations. It is, however, worth noting<br />

that consultations between IDB Group and the<br />

Government of <strong>Mauritania</strong> on priority areas for<br />

intervention are part of an on-going dialog. In<br />

2008, IDB and <strong>Mauritania</strong> signed a framework<br />

agreement, which envisaged investments from<br />

the <strong>Bank</strong> totaling $700 million in <strong>Mauritania</strong><br />

over the period 2008-2012 in three priority<br />

areas. The priority areas were (a) food security<br />

and investments in agriculture, livestock<br />

and infrastructure in rural areas, (b) human<br />

development with a special focus on training,<br />

vocational literacy programs and small projects<br />

(especially in food security) in rural areas, and<br />

(c) enhancing infrastructure, especially in rural<br />

transportation.<br />

4. This MCPS identifies the priorities for<br />

IDB Group assistance taking into account<br />

the opportunities and challenges facing the<br />

<strong>Mauritania</strong>n economy in the medium term.<br />

The proposed strategy for 2011-2015 derives<br />

from a diagnosis of the main constraints to<br />

economic growth facing <strong>Mauritania</strong> (based on<br />

data and analyses obtained from the Government<br />

and development partners during the main<br />

MCPS mission) and a shared understanding of<br />

interventions to address these constraints. This<br />

consultative process has led to the selection<br />

of three main areas where future IDB Group<br />

interventions could have a significant impact on<br />

<strong>Mauritania</strong>’s economy: human development with<br />

a focus on health, rural development and food<br />

security, and diversification and enhancement of<br />

the modern economy.<br />

5. The structure of this report reflects its<br />

design as a strategic partnership. Section II<br />

presents the country context and examines<br />

development challenges and constraints the<br />

country faces. Section III outlines the vision<br />

and development strategy of the Government<br />

of <strong>Mauritania</strong> and assesses the risks to its<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 1


implementation. Section IV reviews IDB Group’s<br />

past and current interventions in <strong>Mauritania</strong> and<br />

describes involvement of other partners. The main<br />

elements of the proposed IDB Group strategy are<br />

in Section V, which develops the different pillars<br />

underpinning this strategy. Section VI presents<br />

risks in the implementation of the strategy and<br />

measures taken to mitigate them. Finally, Section<br />

VII presents the conclusions, including next steps.<br />

II. COUNTRY CONTEXT, RECENT ECONOMIC<br />

TRENDS AND CHALLENGES<br />

1. Geographical and Socio-Political-Historical<br />

Context<br />

6. Located in the western edge of the<br />

Sahara desert, <strong>Mauritania</strong> forms a key link<br />

between three strategic areas -- West and<br />

Central Africa, the Arab Maghreb Region and<br />

Europe. A former French colony, <strong>Mauritania</strong><br />

gained independence in 1960. It has a small<br />

population of over 3 million but a land area<br />

(of 1 million square kilometres) larger than<br />

Pakistan and twice that of France. With most<br />

of the land area a desert, about two-thirds<br />

of the population lives in the south in rainfed<br />

agro-pastoral areas and in the thin sliver<br />

of irrigated land along the Senegal River on<br />

the border with Senegal. Desertification and<br />

drought have led to migration from rural to<br />

2<br />

urban areas and about a million now live in the<br />

capital, Nouakchott. While the immense desert<br />

contains mineral resources, it is also a source<br />

of security concerns for <strong>Mauritania</strong> (including<br />

illegal immigration and drug trafficking).<br />

7. Since independence, <strong>Mauritania</strong> has<br />

experienced significant political instability<br />

with a large number of coups d’état. Political<br />

instability has constrained private investment<br />

and development. The last coup d’état in August<br />

2008 led to a freeze in international support<br />

to <strong>Mauritania</strong>. However, following the Dakar<br />

agreement signed by all political parties, General<br />

Abdel Aziz retired from the military and held<br />

elections in July 2009, leading to his return as<br />

President under constitutional rule.<br />

2. Recent Economic Trends and Challenges<br />

8. During the past decade, high and sustained<br />

rents from extraction of mineral resources,<br />

fisheries and foreign aid have continued to be<br />

the main drivers of <strong>Mauritania</strong>’s economy while<br />

the agricultural sectors contribution to growth<br />

has been small and the manufacturing sector<br />

has still to take-off. Between 1990 and 2008,<br />

agriculture (excluding livestock) stagnated at a<br />

mere 3-5% of GDP, while manufacturing (small<br />

industries and craft) averaged 7% of GDP over<br />

this period and had shrunk to only about 5% of<br />

GDP by 2008. Industry (including mining and<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


construction) accounted for 48% of GDP in 2008<br />

and services for 42%. <strong>Mauritania</strong> had a GDP of<br />

$3.0 billion in 2009 and a GDP per capita of $975<br />

which classifies it as an LDMC.<br />

9. Economic Growth during 2004-2008<br />

was moderate, averaging 5.5%, supported by<br />

prudent economic management, structural<br />

reforms and a surge in oil production in 2006.<br />

Thanks to sound macroeconomic policies—<br />

in particular fiscal reform including enhanced<br />

transparency and decentralization of financial<br />

control, and improved monetary management<br />

through Central <strong>Bank</strong> capacity building and<br />

exchange rate management—inflation dropped<br />

from 16.1% at end 2004 to 8.9% at end 2006 and<br />

to 7.3% in 2008. Structural reforms in this period<br />

included a new code for public procurement and<br />

steps to enhance the independence of the central<br />

bank. Expectations related to oil exploration drew<br />

an important inflow of foreign direct investment<br />

in 2004 and 2005 and the accompanying surge<br />

in oil helped <strong>Mauritania</strong> achieve an 11% growth<br />

rate in 2006. However, the surge in oil production<br />

proved to be short-lived and revision of these<br />

expectations downward and technical problems<br />

prevented the country from sustaining FDI inflow<br />

at a high level and lowered the growth prospects.<br />

10. Economic performance deteriorated in<br />

2008-10 due to domestic and external shocks<br />

and, as a result, economic growth during the<br />

PRSP II period 2006-2010, averaged 3.7%, well<br />

below plan projections of 9.4%. The global food<br />

and fuel price increases in 2008 weakened the<br />

external account--the current account deficit in<br />

2008 reached 15.5%--and kept inflation at 7.3%.<br />

The external shocks coincided with the last coup<br />

d’état in August 2008 and an associated drop in<br />

donor financing--the IMF program in the form<br />

of a Poverty Reduction and Growth Facility was<br />

also interrupted following the military coup-<br />

-weakening economic activity in the mining,<br />

fishing, and the construction sectors. The global<br />

economic slowdown in 2009, and the unexpected<br />

decline in oil production, contributed to further<br />

fiscal and balance of payments pressures. There<br />

was a decline in the prices of and the demand<br />

for <strong>Mauritania</strong>’s main export commodities (iron,<br />

copper, and fish). The anticipated shift to an oileconomy<br />

also did not take place and by 2009,<br />

the average oil production was only 10,740<br />

barrels/day instead of the initial estimate of<br />

75000 barrels/day in 2006. Because of these<br />

developments, average GDP growth slowed to<br />

3.7 percent during 2006-10 (based on updated<br />

official figures contained in PRPS III) well below<br />

projections of 9.4 percent contained in PRSP II.<br />

11. <strong>Mauritania</strong> imports most (70%) of its food<br />

requirement and international food prices<br />

increases in 2008 directly affected national prices.<br />

For example, the share of food expenditures in<br />

total households’ expenditures increased from<br />

51.9% in 2004 to 57.8% in 2008. In response to this<br />

situation, the government adopted the Special<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 3


Intervention Program (SIP) amounting to about<br />

US$ 194.2 million. The SIP, representing 15% of<br />

total public spending, increased the public deficit<br />

by 1% and helped to avoid social unrest although<br />

its effectiveness in alleviating food insecurity is<br />

not clear—see Section V—and inflation fell to<br />

3.9% (by yearend) in 2008, in comparison with<br />

7.4% in 2007.<br />

12. Poverty declined between 2004 and<br />

2008 but remains high and is mainly a rural<br />

phenomenon. Poverty incidence has declined<br />

from 47.6 percent in 2004 to about 42 percent<br />

in 2008 (Figure 3). The percentage of population<br />

living in extreme poverty in rural areas increased<br />

from 39.1% in 2004 to 40.8% in 2008. Recent<br />

domestic and external shocks have likely slowed<br />

progress on poverty reduction, highlighting the<br />

need to protect social spending and develop<br />

appropriate safety nets for the most vulnerable<br />

segments of the population. In fact, the poverty<br />

rate increased marginally in rural areas over the<br />

period 2004 - 2008 (from 59% in 2004 to 59.4% in<br />

2008).<br />

13. Poverty is more pronounced among<br />

households headed by persons employed in<br />

the agriculture sector and is increasing with<br />

the household size 1 . Data show that households<br />

headed by people employed in agriculture<br />

(including livestock) are the most affected by<br />

poverty, followed by those employed in the<br />

transport and communication sector. However,<br />

households headed by public sector wagesearners<br />

are less exposed to poverty.<br />

1 According to the EPCV 2008.<br />

4<br />

14. There was a progress in the social sectors,<br />

but the achievement of the Millennium<br />

<strong>Development</strong> Goals (MDGs) remains a key<br />

challenge. <strong>Mauritania</strong> ranked 154 out of 182<br />

countries according to the Human <strong>Development</strong><br />

Index in 2009. Overall, the most important<br />

deficiencies in the progress toward the<br />

achievement of the MDGs in <strong>Mauritania</strong> are<br />

related to health, environment, employment<br />

and some gender indicators (UNDP 2010). Table<br />

1 shows that although <strong>Mauritania</strong> is likely to<br />

meet its MDG relating to access to water, it faces<br />

challenges in meeting the MDGs particularly<br />

related to maternal and child mortality.<br />

15. As in other countries, food insecurity is<br />

associated with poverty and remains one of<br />

the most important causes of malnutrition in<br />

<strong>Mauritania</strong>. Based on FAO estimates, 29% of<br />

<strong>Mauritania</strong>n households were food insecure in<br />

2008. Almost half of households do not have<br />

access to safe drinking water and diarrheal<br />

diseases, malaria and acute respiratory infections<br />

still claim the lives of many young children. The<br />

underperformance of the agriculture sector,<br />

characterized by an under exploitation of arable<br />

lands and slow progress of irrigation, is an<br />

important cause of food insecurity. In addition<br />

to the hard climate conditions, weak productivity<br />

of rural sector has exacerbated the threats of<br />

food insecurity on the <strong>Mauritania</strong>n economy.<br />

Land degradation, weak mechanization, high<br />

production costs, low access to agricultural loans,<br />

absence of loans devoted to livestock activities<br />

and lack of supports to commercialization are<br />

among the main factors contributing to these low<br />

productivity of the rural sector.<br />

16. More recently, lower food and fuel prices<br />

accompanied by the normalization of relations<br />

with the international community have helped<br />

cushion the impact of the global economic<br />

slowdown on the external position. The current<br />

account deficit was 12.7 percent in 2009, down<br />

from 15.7 percent in 2008. The decline in exports<br />

was more than offset by a marked reduction in<br />

imports, reflecting the contraction in economic<br />

activity, lower world food and fuel prices, and<br />

the foreign exchange rationing. The resumption<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Reduce child mortality<br />

TABLE 1: Millennium <strong>Development</strong> Goals<br />

Sector 1990 1996 2000 2002 2004 2008<br />

18. The share of agricultural (including livestock<br />

production) in GDP has been declining, despite<br />

its high potential, while manufacturing activity<br />

remains at a nascent stage. In the PRSP II,<br />

the Government emphasized the importance<br />

of improving the performance of rain-fed<br />

agriculture given its important role in reducing<br />

poverty in these areas. However, as noted above,<br />

agriculture, including livestock production, has<br />

not been performing well: the contribution of<br />

the traditional sector (agriculture and livestock)<br />

to GDP decreased from 31.2% in 1970-1974 to<br />

20.4% in 2000-2004 2 - see Table 2. The underlying<br />

trends are even more clearly visible if we separate<br />

agriculture and livestock production. As shown<br />

2 World <strong>Bank</strong>, 2005.<br />

(Per 1,000 live births)<br />

PRSP MDGs<br />

2010 2015 2015<br />

Child mortality (under five years) 129.5 125.6 122.0 … … … 128.0 55.0 45.7<br />

Improve maternal health<br />

(Per 100,000 live births)<br />

Reduce the rate of maternal mortality … … 747.0 … 820.0 820.0 400.0 300.0 …<br />

Combat HIV/AIDS, malaria , and other diseases<br />

(In percent of ages<br />

15-24)<br />

Reduce by half the prevalence of HIV/AIDS … … 0.5 0.6 0.5 … < 1.1 < 1 1.0<br />

Ensure environmental sustainability<br />

(In percent of population)<br />

Access to improved water source 37.0 40.0 50.0 … 52.0 62.0 65.0 75.0 …<br />

Access to electricity … … 18.0 … 24.0 30.6 … … …<br />

Source: IMF 2010.<br />

of donor financing after the July 2009 election<br />

and the disbursement of financial compensation<br />

under the European Union (EU) fishing<br />

convention helped maintain the level of gross<br />

international reserves at 2.2 months of imports<br />

at end-December 2009. The Central <strong>Bank</strong> of<br />

<strong>Mauritania</strong> (BCM) restored the foreign exchange<br />

auction system in mid-December 2009. Following<br />

this restoration, and an agreement on a new<br />

program of reforms, the Government reached an<br />

agreement with the IMF for an Extended Credit<br />

Facility (ECF) in the amount of SDR 77.28 million<br />

and the first tranche from this facility was released<br />

in March 2010.<br />

3. Structural Weaknesses<br />

17. <strong>Mauritania</strong> has a low saving rate and almost<br />

all investment is financed from abroad (Figure<br />

4). Over the period 1997-2007, the saving rate<br />

(1.53% of GDP) in <strong>Mauritania</strong> was well below the<br />

average in its comparator countries. Investment<br />

has been fair robust, however, at 21% of GDP,<br />

but driven largely from rent stream. The increase<br />

in investment between 2003 and 2007 was not<br />

followed by an increase in saving, this rate was<br />

even negative (-15% of GDP) in 2005. Since 2006,<br />

the impact of oil revenues on investment has<br />

been visible with a pick of 18.76% of GDP reached<br />

in 2006.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 5


in Figure 5, on average, the share of agriculture<br />

in GDP averaged only 3.7 percent of GDP during<br />

1991 – 2008. Livestock has had a more stable and<br />

significant contribution to growth – an average of<br />

13 percent of GDP during 1991 – 2008, but the<br />

sector has been shrinking since 2000, attaining<br />

11 percent of GDP in 2008 3 . The performance<br />

of manufacturing (small industry and crafts) is<br />

not very different from agriculture and in 2008 it<br />

accounted for about 5% of GDP.<br />

19. Demand for labor in the formal economy<br />

(public and private) is low, relative to the size<br />

of the labor force, the overwhelming majority<br />

of which (85%) work in informal sector jobs.<br />

As shown in Table 3 and Figure 6, the modern<br />

productive sectors - mining and manufacturing -<br />

provide employment to only a small share (9%)<br />

of labor force. The official unemployment rate<br />

in 2008 was 32%. This high unemployment rate<br />

disproportionately affects the young population<br />

less than 25 years old. Moreover, education<br />

level does not appear to contribute to reducing<br />

this rate, since 34.5 percent of the labor force<br />

with secondary education and 16.5 percent for<br />

those with tertiary education are unemployed.<br />

Nationwide, the commercial sector (consisting<br />

3 World <strong>Bank</strong>, 2010, Country Economic Memorandum.<br />

6<br />

TABLE 2: Sectoral contribution to GDP (%)<br />

Sector 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04<br />

Agriculture 43.1 31.1 31.2 29.3 31.6 29.2 28.1 25.1 20.4<br />

Manufacturing NA NA NA NA NA 12.6 11.5 10.4 9.0<br />

Source: World <strong>Bank</strong> 2005.<br />

TABLE 3: Demand for Labor by Sector<br />

Formal Sector Informal Sector<br />

(in percent) (in percent)<br />

Agriculture 1.5 30.0<br />

Livestock 1.0 7.5<br />

Fisheries 2.3 2.7<br />

Mining 8.2 0.4<br />

Manufacturing 1.1 2.3<br />

Construction 0.9 4.0<br />

Transport 2.3 3.8<br />

Retail 1.5 27.0<br />

Services 11.3 9.8<br />

Public Administration 61.2 2.0<br />

Other 8.7 10.5<br />

Total 100 100<br />

Source: EPCV, 2004.<br />

of “services” and “retail”) is the main supplier of<br />

job opportunities (24.6%) followed by agriculture<br />

(including livestock) which employs 20.4% of the<br />

active population (EPCV 2008).<br />

20. <strong>Mauritania</strong> is highly dependent on foreign<br />

aid (see Figure 7). Official <strong>Development</strong> Assistance<br />

(ODA) received as percentage of National Income<br />

increased from 3.83% in 1970 to 27.39% in 1986<br />

and to 28.03 in 2002. The negative effects of<br />

the cessation of aid flows following the political<br />

crisis of 2008, as noted above, gives an idea of<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


the vulnerability created by the dependency on<br />

aid. Foreign aid has also reduced the incentives<br />

to improve the efficiency of public policies.<br />

Social and governance indicators show that<br />

natural resource rents and aid flows have not<br />

efficiently contributed to economic development<br />

in <strong>Mauritania</strong>. In 2006, for example, <strong>Mauritania</strong><br />

devoted only 2% of its GDP to education, while<br />

this share reached 6% of GDP in Morocco. Foreign<br />

aid has also many similarities to rents from<br />

natural resource extraction and thus has added to<br />

governance issues, as reflected in Table 4 which<br />

shows <strong>Mauritania</strong> poor performance relative to<br />

its neighboring countries in the region.<br />

4. Key Constraints to Economic Growth in the<br />

Medium Term<br />

21. The lack of progress in developing human<br />

capital is a critical medium- and long-term<br />

constraint to development in <strong>Mauritania</strong>. As<br />

noted above <strong>Mauritania</strong> ranks low (154 out of<br />

182 countries) on the Human <strong>Development</strong> Index<br />

in 2009. Recent domestic and external shocks<br />

have slowed growth and progress on poverty<br />

Rule of Law<br />

Regulatory<br />

Quality<br />

TABLE 4: Governance Index<br />

Government<br />

Effectiveness<br />

reduction and with it, many related aspects of<br />

human development, despite some achievements<br />

in other goals, mainly in basic education. Thanks<br />

to the support of the international community,<br />

<strong>Mauritania</strong> has been able to achieve some<br />

progress in fighting against HIV/Aids, Tuberculosis<br />

and Malaria. However, maternal and infant<br />

mortality rates are alarming as noted above. Also<br />

while there have been important achievements<br />

in the area of basic education, there remain<br />

pronounced disparities between regions--the<br />

gross enrolment rate in basic education in rural<br />

areas (estimated at 79.6% in 2008) is still below<br />

that in urban areas (estimated at 108.5%). The<br />

population in poor regions or “Wilayas” has half<br />

the enrollment in their richer counterparts. At the<br />

same time, the key role played by manufacturing<br />

sector in capacity building and skills development<br />

is conspicuous by its absence in <strong>Mauritania</strong> given<br />

the negligible size of this sector and the lack of<br />

employment opportunities, as noted above.<br />

22. The extraction of natural resources (iron<br />

ore, fisheries and recently oil) purely for<br />

obtaining rents without further processing<br />

or added value limits the benefits to the rest<br />

of the economy. Almost all export earnings in<br />

<strong>Mauritania</strong> emerge from the extraction and export<br />

of natural resources –iron ore, copper, gold, oil,<br />

and fisheries—and primarily from iron ore and<br />

fisheries—see table 5. This has created a high and<br />

sustained level of economic rents. However, this<br />

created several challenges. First, the existence<br />

of the windfall income has helped increase<br />

Government revenue, it has also created wellknown<br />

governance problems associated with the<br />

lack of transparency and the distribution of these<br />

rents as noted by analysis done by independent<br />

Political<br />

Stability No<br />

Violence<br />

Voice and<br />

Accountability<br />

Overall Index<br />

2009 1996 2009 1996 2009 1996 2009 1996 2009 1996 2009 1996<br />

BURKINA FASO -0.3 -0.3 -0.1 -0.2 -0.7 -0.9 -0.1 -0.2 -0.3 -0.3 -1.9 -2.2<br />

MALI -0.4 -0.6 -0.4 0.1 -0.8 -1.5 -0.3 0.7 0.2 0.7 -2.4 -1.0<br />

MAURITANIA -0.8 -0.9 -0.7 -1.1 -0.9 .. -1.2 0.6 -1.0 -1.0 -5.2 -2.4<br />

MOROCCO -0.2 0.1 0.0 0.3 -0.1 0.2 -0.4 -0.5 -0.8 -0.6 -1.7 0.0<br />

TUNISIA 0.2 -0.2 0.1 0.7 0.4 0.5 0.2 0.0 -1.3 -0.9 -0.3 -0.1<br />

Source: World <strong>Bank</strong> 2010.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 7


8<br />

TABLE 5: Exports Composition (% of Total Exports)<br />

2009 1996 2009 1996 2009 1996<br />

Iron Ore 57.9 59.83 68.58 35.88 41.27 34<br />

Gold na na na 0.13 2.80 16<br />

Copper na na na 0.44 12.58 14<br />

Oil na na na 50.05 25.02 10<br />

Fisheries<br />

products<br />

41.92 39.87 31.41 13.5 18.31 26*<br />

* For 2011 estimates the number for fisheries includes earnings<br />

from licenses.<br />

Source: CMAP 2010.<br />

observers –see table 4. Second, as noted above,<br />

<strong>Mauritania</strong> has simply been extracting these<br />

resources without adding much value thus<br />

limiting the size of its manufacturing sector and<br />

with it employment opportunities. Third, the<br />

dependence of the country on two main types<br />

of natural resources (iron ore and fisheries) has<br />

created vulnerability to external shocks. In 2010,<br />

the signs of recovery of the economy are mainly<br />

due to the performance of the iron ore sector.<br />

23. Poor performance of the agriculture and<br />

livestock production -- the main sources of<br />

livelihood for households in rural areas. The<br />

challenges faced by the <strong>Mauritania</strong>n farmers in<br />

making irrigated rice production profitable after<br />

more than a decade of efforts and investments<br />

reflects additional challenges. Farmers in rain-fed<br />

areas face the additional challenge from droughts<br />

and desertification, as noted above. The poor<br />

performance in agriculture over the past two<br />

decades, as already noted above, has occurred<br />

despite the large amounts of foreign aid directed<br />

to this sector. In 1994, 58% of foreign aids was<br />

allocated to rural and agriculture development<br />

(mainly for irrigation) 4 and some important<br />

projects were implemented including the<br />

Programme de Développement de l’Agriculture<br />

Irriguée en Mauritanie (PDIAIM) supported by the<br />

World <strong>Bank</strong>.<br />

24. Absence of an enabling environment for<br />

private sector development: The development<br />

of industries outside natural resource extraction<br />

faces several constraints in <strong>Mauritania</strong>. The small<br />

4 http://www.ifad.org/evaluation/public_html/eksyst/doc/country/pa/<br />

mauritania/cesmr98f_1.htm.<br />

size of the local market, poor infrastructure<br />

(roads, ports) and the high cost of water and<br />

electricity, shortages in skilled labor, weaknesses<br />

in the regulatory environment and lack of access<br />

to financing are among the main constraints to<br />

the development of <strong>Mauritania</strong>n industry. The<br />

poor enabling environment makes <strong>Mauritania</strong><br />

unattractive for investors including both foreign<br />

and local including SMEs. It is clear that oil and<br />

iron ore exploitation were the main beneficiaries<br />

of the increase of FDI flows in 2004-2005<br />

periods (see figure 8). This has exacerbated the<br />

unemployment situation as noted above. In<br />

addition to the weak demand for labor, the skills<br />

mismatch problem is also a critical constraint<br />

pointing to the need to improve skills and raise<br />

the low productivity.<br />

25. All the evidence indicates that <strong>Mauritania</strong><br />

has a unique dual economy structure:<br />

• A subsistence economy supporting more than<br />

two-thirds of the population and focused<br />

on crop production, livestock management<br />

and traditional coastal fisheries. Despite the<br />

massive exodus of the population from rural to<br />

urban areas mainly to Nouakchott (5% in 2008<br />

against 60% in 1960) 5 , following recurrent food<br />

crises (drought, locust invasions), two-thirds<br />

of the population still lives in and around the<br />

rain-fed agro-pastoral areas in the south.<br />

• A natural resource based modern “enclave”<br />

economy using capital-intensive production<br />

techniques to produce raw materials (iron ore,<br />

5 FAO et Programme Alimentaire Mondial, 2008, «Mission inter-agences de<br />

consultation avec le Gouvernement et les partenaires au développement».<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


gold, copper, oil and deep-sea fishing) with<br />

little or no value-added for export markets.<br />

The two economies are disconnected and<br />

the spillover effect seen in most developing<br />

countries (without a high dependence on<br />

natural resource rents) has not taken place.<br />

26. This unique economic structure has<br />

produced mixed results: On the positive<br />

side, the enclave economy has provided high<br />

and consistent rents that have allowed the<br />

Government to finance development activities<br />

including infrastructure for irrigated agriculture.<br />

On the negative side, the enclave economy has<br />

only limited links with the subsistence economy.<br />

In particular as the value added to raw material<br />

exports is limited and given the capital-intensive<br />

nature of extraction activities, the demand for<br />

labor is negligible.<br />

27. Even worse, the economy reveals the<br />

classic symptoms of suffering from the wellknown<br />

“Dutch disease” common to natural<br />

resource based economies. The “Dutch disease”<br />

effect, which arises in economies enjoying<br />

large and sustained rents from extraction and<br />

export of natural resources (see figure 9), leads<br />

to an appreciation of the exchange rate, which<br />

undermines the competitiveness of investments<br />

in manufacturing and commercial agriculture.<br />

The effect works through an appreciation of<br />

the exchange rate which reduces the viability<br />

of investments in tradable goods. The latest<br />

consistent IMF data series available on the<br />

real effective exchange rate (REER) for the past<br />

decade 2000-2010 is supportive of this view and<br />

shows the REER remaining fairly constant despite<br />

the country running large current account deficits<br />

- see figure 10. This graph includes the post<br />

2006 period for which the IMF feels the data<br />

is most reliable. It shows the REER remaining<br />

fairly constant between 2006 and 2010 at a time<br />

when current account deficits were exceptionally<br />

large (-18.3 % in 2007, -15.7 % in 2008 and -12.7<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 9


% in 2009). The short-lived oil boom in 2006-<br />

2007, which accounts for only a small share of<br />

the natural resource rents accumulated during<br />

several decades, seems to have had little effect<br />

on the REER.<br />

28. Evidence of “pronounced Dutch Disease<br />

effects” during the three decades from 1970<br />

-2000 has also been noted in independent<br />

analysis 6 focusing on governance issues arising<br />

from windfall gains. This assessment is based on<br />

evidence indicating: (a) stagnation in the share of<br />

agriculture (including livestock) with its 2004 share<br />

in GDP of 16 percent “barely half that expected for<br />

a country at <strong>Mauritania</strong>’s level of development”<br />

and noteworthy for a country with “150,000<br />

irrigable hectares which, with improved livestock<br />

management and roads to access markets, could<br />

lift agriculture’s share of GDP above the expected<br />

one-third level”, (b) manufacturing is “two-thirds<br />

the size expected”, and (c) the remarkably low<br />

commercial farm output has cut the agricultural<br />

sectors capacity “to stimulate agro-processing”.<br />

The root cause of this economic stagnation is<br />

attributed to a “rent driven economy” which in the<br />

three decades received sustained high rents from<br />

iron ore extraction, fishing and aid amounting to<br />

“one-third of GDP” and with political allocation of<br />

the rents, encouraged by lack of transparency and<br />

poor governance.<br />

29. It is vital that the Government develops a<br />

strategy to manage economic rents from natural<br />

resources extraction to mitigate the adverse<br />

economic effects of long-term exchange rate<br />

appreciation and strengthen the links between<br />

the two economies. It can do this by among other<br />

things: (i) Moving towards more value-added<br />

production in all areas where it has a comparative<br />

advantage in terms of resources—fisheries,<br />

livestock, mineral ores, and oil. (ii) Addressing<br />

other constraints to enhancing linkages between<br />

the two dual economies for example human<br />

development and capacity building; and (iii)<br />

Facilitating investment in activities such as<br />

construction, that is less vulnerable to exchange<br />

rate appreciation.<br />

6 See “Aid and Rent-Driven Growth: <strong>Mauritania</strong>, Kenya and Mozambique<br />

compared, Richard M. Auty, 2007.<br />

10<br />

III. MAURITANIA’S VISION, DEVELOPMENT<br />

CHALLENGES AND PRIORITIES<br />

1. Poverty Reduction Strategy Paper 2001-2015<br />

30. The PRSP (2001-15) sets out the vision<br />

of <strong>Mauritania</strong> as a politically stable and<br />

democratic country, which transforms itself<br />

into a decentralized and modern state, well<br />

integrated with the regional and global economy<br />

on the path of sustainable economic and social<br />

development. The Government is implementing<br />

this vision through multi-year action plans the<br />

latest of which, PRSP III covering the period 2011-<br />

2015, is in the final phase of preparation following<br />

consultation with civil society, private sector and<br />

development partners. PRSP III has been designed<br />

taking account of the lessons learnt from the<br />

implementation of PRSP II and I (see Box 1).<br />

31. For PRSP III, the <strong>Mauritania</strong>n government<br />

intends to maintain the objectives set in the two<br />

previous PRSPs. PRSP III outlines development<br />

priorities and interventions in a five-year action<br />

plan, clustered around four strategic objectives<br />

outlined below with increased emphasis on<br />

private sector development, monitoring and<br />

evaluation and donor coordination as a crosssector<br />

theme.<br />

i. Acceleration of Growth and Stabilization of<br />

Economy: The Plan will meet this objective<br />

through interventions designed to stabilize<br />

macroeconomic balances, improve the<br />

business environment for private sector<br />

development, support sectors with a potential<br />

for high growth, and reform the state<br />

owned enterprise sector to facilitate fiscal<br />

consolidation.<br />

ii. Anchoring Growth in the Economic Sphere<br />

of the Poor: The Plan aims to achieve this<br />

objective through interventions that support<br />

rural development, target pockets of urban<br />

poor, promote microfinance and SMEs,<br />

enhance food security, reduce environment<br />

degradation and reorient policies to focus<br />

on targeted poverty reduction programs.<br />

Expected outcomes of these interventions are<br />

an increase in the contribution of rural sector<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Box 1:<br />

Lessons Learnt from the Implementation of PRSPII<br />

While progress was made in fiscal management and<br />

judicial system, the results from PRSP II show that it failed<br />

to achieve the ambitious goals originally set. Progress was<br />

made in the management of both the expenditure system<br />

and the tax system, while reforms were made to improve<br />

and streamline the civil administration system. Further,<br />

while investments were made in rural areas, they did not<br />

have a significant impact in developing the rural sector or<br />

curbing unsustainable migration to urban centers. Poverty<br />

increased in rural areas and economic growth has averaged<br />

3.3% excluding oil and 3.8% including oil, about half of<br />

the initial target of 8.4% for the 2006-2010 period.<br />

The implementation of PRSP II faced several constraints.<br />

It was implemented over the 2007-2009--a period where<br />

both the national and international environment was not<br />

favorable for the achievement of PRSP II objectives.<br />

Among other things, the food crisis has significantly<br />

contributed to maintaining poverty at alarming levels.<br />

Moreover, oil production and revenue were below<br />

expectations and had a significant impact on financial<br />

resources available for achieving the various government<br />

programs. In addition, there is a need to mention the<br />

suspension of funding by several donors during the<br />

political crises of 2006 and 2008.<br />

Although part of the PRSP II objectives, monitoring<br />

and evaluation did not take place throughout the<br />

implementation. The absence of information systems,<br />

lack of human resources and lack of coordination<br />

within government and between government and its<br />

partners have also strongly contributed to the failure<br />

of the PRSP II.<br />

to growth from 0.6% during the PRSP II period<br />

to 1% in the third plan period; and meet 50%<br />

of the cereal needs of the population through<br />

local production.<br />

iii. <strong>Development</strong> of Human Resources and<br />

Provision of Basic Services: The action plan<br />

calls for human resource development and<br />

increased access to basic services as an<br />

important determinant of poverty reduction.<br />

Priority areas for action include improving<br />

education access and quality, health care<br />

and nutrition, employment opportunities,<br />

water and sanitation, child and women<br />

advancement, and ensuring universal access<br />

to basic services.<br />

iv. Improving governance and Capacity Building:<br />

The Plan highlights strengthened governance<br />

and capacity building as critical for achieving<br />

the objectives of the PRSP. It places special<br />

emphasis on curbing corruption and improving<br />

transparency of government operations. To<br />

enhance effectiveness of government plans,<br />

it stresses the need for capacity building in<br />

relevant parts of the public and private sectors<br />

and civil society.<br />

v. Monitoring, evaluation, and coordination of<br />

PRSP III action plan has been enlisted as a cross<br />

cutting axis to support the core objectives of<br />

the strategy. The Plan calls for strengthening<br />

the institutional system for implementation<br />

and follow-up of the strategy, enhancing the<br />

monitoring, evaluation, and reporting systems.<br />

32. PRSP III lays out ambitious targets as<br />

outcomes by the year 2015: (i) the GDP per<br />

capita to reach US$ 1374 by 2015 (compared<br />

with US$ 1096.3 in 2010), driven by an average<br />

GDP growth rate of 4.7% (compared with 3.8%<br />

during the previous PRSP period, 2006-2010),<br />

and an investment rate (as % of GDP) at 28.1%<br />

(compared with an average investment ratio<br />

of 19.4% in the previous PRSP period); (ii) the<br />

incidence of poverty to decline from 42% in<br />

2008 to 25% in 2015 (with rural poverty to fall<br />

to 35% from about 60% in 2008), (iii) an average<br />

inflation rate of 5%, (iv) universal access to basic<br />

education and an illiteracy rate of 15% among<br />

population aged 15 years and up, (V) provision<br />

of full health coverage within a radius of 5 km,<br />

reduce the infant mortality rate to 40 ‰, the child<br />

mortality rate to 55 ‰ and the maternal mortality<br />

rate to less than 300 per 100,000 and reverse the<br />

progression of HIV / AIDS, with prevalence in<br />

the general population of less than 1%, and (v)<br />

increase the rate of connection to water supplies<br />

(rural and urban) to 74%.<br />

33. The main driver of growth, under the Plan<br />

is the services sector. The Plan projects the<br />

services sector to generate over half (51%) of the<br />

targeted 5.5% growth in GDP. In achieving this<br />

outcome, it expects private enterprises to play a<br />

key role especially in the following service areas:<br />

transportation, telecommunication, commerce,<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 11


hotel business, and banking and insurance.<br />

Industry provides the second lead contribution<br />

(31%) followed by the primary sector (18%). The<br />

growth in industry hinges on the development<br />

of iron ore project, Guelb II, government<br />

investments in construction, electricity sector<br />

reform, and improvement in business climate.<br />

Agriculture sector, on the other hand, depends<br />

on improved irrigation and focused investment to<br />

develop livestock, fisheries, and rural businesses.<br />

Table 6 highlights the expected real GDP growth<br />

under PRSP III.<br />

2. Risks to Government Strategy<br />

34. There are several risks to the Government<br />

development strategy. First, the weak capacity<br />

of public agencies will hamper efficient<br />

implementation. Weak governance and<br />

policymaking framework will lead to a disconnect<br />

between the PRSP development framework and<br />

actual investment by the public sector. Also going<br />

from PRSP to actual budget formulation calls for<br />

close coordination between local regional and<br />

national policies. The Government is aware of<br />

this risk but it is unclear if the planned mitigation<br />

measures under PRSP III will prove adequate.<br />

35. Secondly, there is a large funding gap for<br />

implementing PRSP III. The Government only has<br />

resources to fund less than half of the financing<br />

requirement of UM 1338 billion. It is unclear<br />

how the large resource gap is to be covered.<br />

The document indicates that the Government<br />

is looking to public-private partnerships to help<br />

close this gap. However, given the status and rate<br />

of private sector development in <strong>Mauritania</strong>, the<br />

prospects of the private sector providing such<br />

large amount of funding pose serious challenge<br />

for the implementation of PRSP III.<br />

36. Thirdly, given that there are already<br />

indications that country is suffering from ‘Dutchdisease’<br />

phenomenon, it might have negative<br />

implications on development efforts of the<br />

12<br />

TABLE 6: GDP Growth Rate (Base Scenario)<br />

Base Scenario; PRSP III 2008 2010 2011 2012 2013 2014 2015<br />

GDP Growth 3.7% 4.6% 5.2% 5.4% 6.0% 5.4% 5.5%<br />

Poverty Incidence 42% 35% - - - - 25%<br />

Government. The rise of services sector and<br />

decline in manufacturing and agriculture over the<br />

years points to affects the unlinked dual economy<br />

is having on the pro-poor sectors. Without<br />

appropriate strategy to neutralize the affects<br />

of capital flows as a result would undermine<br />

Government efforts to develop these sectors.<br />

37. Fourth, the Plan does not take account of<br />

the “Dutch Disease” effect, which the economy<br />

appears to be suffering from. This creates the<br />

risk that the planned drivers of growth may not<br />

materialize as expected.<br />

38. Lastly, the Plan indicates that the<br />

Government is fully aware of the risks posed<br />

by external shocks but it offers no concrete<br />

measures to mitigate these risks. Change in<br />

commodity prices in international markets, and<br />

natural disasters such as drought, flooding, and<br />

locust attacks have hampered the economic<br />

development in the past.<br />

39. On the upside, there are two uncertainties.<br />

First, the country may be successful in finding<br />

new resources from on-going exploration<br />

activities, which will help to create windfalls<br />

that will improve the fiscal balances, and attract<br />

foreign capital. Secondly, and more important for<br />

poverty reduction, <strong>Mauritania</strong> may be successful<br />

in establishing a closer link between the enclave<br />

mineral sector and the rest of the economy. This<br />

will help to accelerate growth and development.<br />

Table 7 shows a higher growth scenario based on<br />

a simple economic model, where both factors<br />

come into play.<br />

IV. PAST AND CURRENT INTERVENTIONS OF<br />

IDB GROUP AND INVOLVEMENT OF<br />

OTHER DONORS<br />

1. IDB Group Portfolio in <strong>Mauritania</strong><br />

40. IDB Group total financing approval for<br />

<strong>Mauritania</strong> has reached US$ 672.6 million. Total<br />

cumulative approvals of IDB project finance and<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


TABLE 7: High Growth Scenario<br />

2010 2011 2012 2013 2014 2015<br />

GDP Growth 4.6% 5.9% 6.2% 8.6% 7.1% 5.9%<br />

technical assistance operation for <strong>Mauritania</strong> since<br />

inception now exceeds ID 337.57 (approximately<br />

US$ 481.23 million). Since <strong>Mauritania</strong> joined the<br />

IDB as a founding member in 1974, the Group has<br />

approved 90 operations and 6 special assistance<br />

projects. The industry and mining sector has<br />

received the largest share of financing, around<br />

25% of total approvals by value while transport and<br />

communications, and agriculture received 20%<br />

and 19% respectively. Out of the 90 operations,<br />

57 have been completed, representing about 30%<br />

of the approved amount, and 33 operations are<br />

under implementation.<br />

41. <strong>Mauritania</strong> has also benefitted from the IDB<br />

Group’s trade finance operations. The Group has<br />

approved a cumulative total of US$ 117.5 million<br />

since the start of the trade-financing program. In<br />

1429H, ITFC approved one syndicated operation<br />

for the Government of <strong>Mauritania</strong> amounting<br />

US$ 43 million, however the latter was cancelled<br />

due to the withdrawal of participants. The main<br />

beneficiary from trade finance operations since<br />

inception is the Government of <strong>Mauritania</strong>.<br />

42. ICIEC has been supporting <strong>Mauritania</strong>n<br />

exports & imports since inception of its<br />

operations. In fact, ICIEC issued 1 credit<br />

insurance policy to a bank in <strong>Mauritania</strong> in the<br />

past for the amount of US$ 10.2 million. It has<br />

also issued an approval on a financing operation<br />

involving supply of goods from <strong>Mauritania</strong> to a<br />

buyer in Senegal for the amount of US$ 0.283<br />

million. Approvals issued by the Corporation to<br />

cover imports made by <strong>Mauritania</strong>n importers<br />

amounted to US$ 0.4 million, in addition to the<br />

amount of US$ 11.5 million in approvals issued to<br />

cover confirmation of L/Cs issued by <strong>Mauritania</strong>n<br />

banks. Regarding investment insurance, ICIEC has<br />

received an application from an investor from<br />

Belgium to cover his investment in an agricultural<br />

project in <strong>Mauritania</strong>, for the amount of US$<br />

14.7 million, while no application was received<br />

from <strong>Mauritania</strong>n investors to cover investments<br />

abroad. In 2008, ITAP prepared and designed<br />

an Investor’s Guide booklet in favor of the “the<br />

Commissariat à la Promotion des Investissements”<br />

(CPI). In addition, ITAP conducted a need<br />

assessment mission to <strong>Mauritania</strong> in April 2010 to<br />

explore ITAP’s possible intervention in supporting<br />

the <strong>Mauritania</strong>n investment promotion agency. As<br />

an outcome of this mission, a technical assistance<br />

program for CPI is currently under preparation by<br />

ITAP.<br />

43. ICD has also been active in supporting the<br />

private sector in <strong>Mauritania</strong>. Up to date, ICD has<br />

approved four operations for a cumulative amount<br />

of US$ 56 million. Recently, a memorandum of<br />

understanding was signed between ICD and the<br />

GoM for the participation in the development<br />

of economic zones for attracting foreign direct<br />

investments. Two new operations are under study<br />

by ICD.<br />

2. Lessons Learned from Evaluation of Past<br />

IDB Group Interventions in <strong>Mauritania</strong><br />

44. In general, the main lessons from<br />

implementation of IDB projects in <strong>Mauritania</strong><br />

relate to: (i) weak capacity of Executing Agencies<br />

slow project implementation, (ii) delays in the<br />

signing and fulfillment of effectiveness conditions<br />

of financing agreements, (iii) delays in the<br />

procurement process; (iv) insufficient knowledge<br />

of IDB procedures.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 13


45. The project formulation should take into<br />

consideration the establishment of enhanced<br />

PIUs, for overcoming the technical/financial<br />

weaknesses of some executing agencies. While<br />

IDB’s experience in dealing with the different<br />

executing agencies was considered as satisfactory<br />

overall, the institutional capacity of some of them<br />

needs to be strengthened to enable them to<br />

perform close supervision and follow-up of their<br />

respective projects.<br />

46. To improve development outcomes, more<br />

importance should be given by IDB to quality<br />

at entry especially readiness of the projects<br />

for implementation. More emphasis should<br />

14<br />

TABLE 8: Other Donors Involvement in <strong>Mauritania</strong><br />

Donors Priority Areas<br />

World <strong>Bank</strong> - Economic governance and public sector<br />

capacity<br />

- Diversifying growth<br />

- Fighting poverty and inequalities<br />

AfDB - Economic and financial governance<br />

- Agriculture and agro-industries<br />

- Transport<br />

- Water supply and sanitation<br />

- Education<br />

AFD (French <strong>Development</strong><br />

Agency)<br />

- Access to basic services and developing and<br />

protecting rural areas<br />

- Sustainable management of fisheries resources<br />

- Supporting productive sectors<br />

European Commission - Water facilities<br />

- Energy<br />

- Food Security<br />

- Human rights, justice and security<br />

- Fisheries<br />

- Support to SNIM<br />

The Government of Libya - Health (the construction of 10 health centres is<br />

under study + Hospital in Rosso)<br />

- Education (construction of a university in Kiffa)<br />

- Tourism<br />

- Telecommunications<br />

Arab Funds<br />

- The Kuwait Fund for<br />

<strong>Development</strong><br />

- The Saudi Fund for<br />

<strong>Development</strong><br />

- The Arab Fund for<br />

Economic and Social<br />

<strong>Development</strong><br />

- Education<br />

- Water<br />

- Technical Assistance<br />

- Infrastructure<br />

be placed during appraisal and negotiation of<br />

relevant memoranda of understanding (MOUs)<br />

to clearly define all modalities of project<br />

implementation, operation and maintenance. The<br />

beneficiary population should also be involved at<br />

early stages of the projects to facilitate ownership<br />

and sustainability of the facilities, especially for<br />

the irrigation and health sector projects.<br />

47. To enhance the development of the private<br />

sector through lines of financing, project design<br />

needs to address more effectively the issue of<br />

foreign exchange risk. This is a critical path for<br />

future IDB’s interventions given the potential in<br />

terms of trade financing and investment.<br />

Pledged Amounts<br />

PRSP II PRSP III<br />

US$ 388 Million<br />

(pledged during<br />

the 2007<br />

Consultative<br />

Meeting)<br />

Euro 156<br />

Million (pledged<br />

during the 2007<br />

Consultative<br />

Meeting)<br />

US$ 500<br />

Million<br />

US$ 100<br />

Million<br />

US$ 100<br />

Million<br />

US$ 500<br />

Million<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


3. Other Donors Involvement in <strong>Mauritania</strong><br />

48. Following the return to constitutional rule<br />

in <strong>Mauritania</strong> in 2009, the donor community<br />

has re-affirmed its commitment and support<br />

for the on-going development program (PRSP<br />

II 2006-2010) and its planned extension (PRSP<br />

III 2011-2015). The donor meeting in Brussels in<br />

June 22-23, 2010 re-confirmed this sentiment.<br />

The involvement of the main donors in support of<br />

PRSP II (ongoing) and PRSP III is outlined in Table<br />

8 in terms of main priority areas and amounts<br />

pledged or committed.<br />

V. ELEMENTS OF IDB GROUP PARTNERSHIP<br />

STRATEGY<br />

1. Strategic Framework for the <strong>Mauritania</strong><br />

MCPS<br />

49. The main MCPS mission, following a field<br />

visit to a rural area near the town of Rosso,<br />

and extensive consultation with development<br />

partners raised the following important<br />

questions:<br />

• Why is the economy stuck in a trap with twothirds<br />

of the population living in poverty after<br />

50 years of receiving high and sustained rents<br />

from natural resource extraction?<br />

• Why was there a complete failure of the last<br />

PRSP action plan?<br />

• Why rice production in irrigated areas is<br />

apparently uneconomic despite immense<br />

and dedicated effort by the Government and<br />

donors spread over a dozen years?<br />

• Why is there an absence of investment in<br />

manufacturing despite a clearly talented<br />

entrepreneurial class limited to the provision<br />

of services?<br />

• Why is there an absence of a linkage between<br />

the high tech capital-intensive investments in<br />

deep-sea fisheries, iron ore, copper, oil and<br />

gold extraction and the rest of the traditional<br />

economy -- the normal route for capacity<br />

and skill development in most developing<br />

countries?<br />

• Why are we having serious implementation<br />

problems with our projects?<br />

50. It was clear that our earlier framework<br />

relying largely on the small size of the economy,<br />

external shocks, and political instability–factors<br />

common to many LDMCs less endowed with<br />

resources than <strong>Mauritania</strong> and arguably doing<br />

better -- could not provide satisfactory answers<br />

to these questions.<br />

51. As a result, the mission decided to shift to<br />

the use of a new strategic framework, which<br />

depends on structural factors to provide a more<br />

credible insight to many of the above questions.<br />

This revised framework, outlined above in Section<br />

II, depends on the use of a unique “dual economy”<br />

economic structure in which a subsistence<br />

economy co-exists not with a modern economy<br />

(the norm in most of our member countries) but<br />

a natural resource based enclave economy and<br />

with which it has limited linkages. Further, dollar<br />

rents from the enclave economy undermine<br />

the viability of investments in the subsistence<br />

economy through exchange rate appreciation --<br />

the well-known “Dutch disease” effect. Clearly,<br />

other factors contribute to the problems facing<br />

<strong>Mauritania</strong> such as political instability, the small<br />

size of the economy and the century’s told<br />

tradition of herding and coastal fishing rather<br />

than agriculture. However, on their own these<br />

factors cannot adequately explain the current<br />

reality in <strong>Mauritania</strong>.<br />

52. Consistent with the above-mentioned<br />

structural constraints, this MCPS is based on<br />

three pillars and one crosscutting theme, to<br />

focus on the need to better manage economic<br />

rents from natural resource extraction and<br />

by adding-value to extracted resources and<br />

strengthening the links between the enclave and<br />

the subsistence economies. These pillars are (i)<br />

human development, with a focus on health; (ii)<br />

rural development and food security; and (iii)<br />

enhancing and diversifying the modern economy,<br />

while the cross-cutting theme focus on capacity<br />

building which affects all sectors in <strong>Mauritania</strong><br />

supported by a financing envelope of about<br />

US$ 700 million provided by the IDB Group. The<br />

pillars of IDB Group support and are fully aligned<br />

with <strong>Mauritania</strong>’s strategic pillars in PRSP and<br />

anchored in the Vision 1440H aspiration of helping<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 15


transform the human development landscape of<br />

the Muslim world and restoring its dignity.<br />

53. The MCPS process of extensive consultations<br />

between IDB Group staff, the GoM, domestic<br />

stakeholders, and development partners<br />

underpins the proposed partnership strategy.<br />

These consultations have not only resulted in the<br />

diagnosis of the key structural constraints facing<br />

the economy but also an understanding on the<br />

areas of IDB Group intervention in the medium<br />

term, taking into account IDB Group’s mandate<br />

and comparative advantage and the roles of<br />

the other development partners. The MCPS<br />

framework also provides for a Results Matrix that<br />

should help the GoM and IDB Group staff monitor<br />

progress in the implementation of the MCPS<br />

across the range of interventions.<br />

2. Pillar I: Enhancing Human <strong>Development</strong><br />

Through Health<br />

2.1 Current Situation<br />

54. Human <strong>Development</strong> is central to<br />

<strong>Mauritania</strong>’s long-term future. As reflected<br />

in its poor rank (154 out of 182) in the multidimensional<br />

Human <strong>Development</strong> Index in<br />

2009, <strong>Mauritania</strong> faces challenges in many areas<br />

including education, lack of skills, health and<br />

malnutrition arising from poverty. The IDB Group<br />

will focus its efforts over 2011-2015 to help<br />

address the constraints <strong>Mauritania</strong> faces in three<br />

dimensions where the challenges are most acute<br />

— health (under this pillar), malnutrition through<br />

reduction in poverty and improvement in food<br />

security (under the second pillar) and capacity<br />

building as a cross sector theme.<br />

55. An increase in the allocation of funds to<br />

the health sector in <strong>Mauritania</strong> from about<br />

0.6% of GDP in 2000 to 3.8% in 2010, has led to<br />

improvement in access to health facilities but<br />

it is still insufficient to provide a basic level of<br />

essential services. The increases in resources<br />

have helped but are still below the level of US$13<br />

per capita, considered universally as the minimum<br />

level of expenditure necessary to ensure a basic<br />

level of essential services.<br />

56. The increased resources have helped to<br />

improve access to health services in urban and<br />

16<br />

rural areas but regional disparities remain.<br />

In urban areas, about 97% percent of urban<br />

population now lives within five kilometers of<br />

primary health services. The situation in rural<br />

areas has improved but on average only 45%<br />

of the population has access to primary health<br />

service within five kilometers. The rural average<br />

masks much more differences in access between<br />

urban and poor rural areas.<br />

57. In addition, the donor community has been<br />

providing substantial support to help <strong>Mauritania</strong><br />

fight communicable diseases including HIV/<br />

AIDS, Tuberculosis and Malaria and the country<br />

has made progress in this area. Because of these<br />

efforts, it appears that MDG 6, related to these<br />

diseases, may be achievable.<br />

58. However, child and maternal mortality<br />

remain at alarming levels (figures 11 – 12) due<br />

to widely perceived malfunctions of the health<br />

system and the associated lack of effective sector<br />

wide policy.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


• The current rate of progress of 8.5% during the<br />

past decade will be insufficent for <strong>Mauritania</strong><br />

to reach the MDG target for the under-five<br />

mortality rate (from 135 per 1000 live births<br />

in 2000 to around 122 per thousand in 2007,<br />

while the MDG target is 45 set for 2015). There<br />

are also deep inequalities in mortality. The<br />

gaps are 13 points between rural and urban<br />

areas, 84.3 between Dakhlet Nouadhibou and<br />

Guidimagha; 57 between the richest and the<br />

poorest and 49 points depending on the level<br />

of education of the mother.<br />

• Similarly, the maternal mortality rate (MMR)<br />

remains among the highest in the region it<br />

is unlikely that <strong>Mauritania</strong> will achieve the<br />

related MDG target 4. Currently, at 686 per<br />

100,000 live births in 2007, decreasing from<br />

930 in 1990 and 747 in 2000, <strong>Mauritania</strong> is still<br />

far from the target of 232 set for 2015 (MICS).<br />

59. The coverage rate of the Expanded Program<br />

on Immunization (EPI) has been falling for the<br />

past three years and now stands at 76% for<br />

children below five years of age, well below the<br />

85% coverage rate considered by the WHO as<br />

necessary to protect the population.<br />

60. The high CMR is largely due to respiratory<br />

infections and delivery conditions, and living<br />

conditions. Precarious living conditions inherent<br />

in poor and rural areas also play a role (housing,<br />

access to potable water, sanitation etc).<br />

Malnutrition is also factor in child mortality, along<br />

with lack of knowledge of proper childcare in new<br />

mothers.<br />

61. Along with the lack of proper health facilities<br />

and equipment, the high MMR is largely due to<br />

the high proportion of premature and frequent<br />

pregnancies, low access of pregnant women to<br />

quality antenatal care and emergency obstetric<br />

services. Cultural aspects contribute to both of<br />

these factors<br />

62. While the proportion of births attended by<br />

skilled personnel increased from 57% in 2001 to<br />

61% in 2007, the remaining 39% were assisted<br />

by an unqualified person, a relative or without<br />

any type of assistance whatsoever.<br />

2.2 Main Constraints<br />

63. The main constraints to improving the<br />

alarming situation of child and maternal<br />

mortality are closely related to malfunctions<br />

that characterize the entire health system in<br />

<strong>Mauritania</strong>.<br />

Limitations of health services<br />

• Inadequate funding and institutional capacity:<br />

Absence of a clear and coherent policy and a<br />

national health sector plan, coupled with both<br />

underfunding — a paltry US$13 per capita —<br />

and understaffing of the Ministry of Health<br />

(MOH) hinder efficient stewardship role for<br />

the implementation of the Health Sector<br />

<strong>Development</strong> Plan. Also, program execution<br />

in the sector is slowed down by the rapid<br />

turnover of staff holding key positions and<br />

by weaknesses in financial management and<br />

procurement.<br />

• Poor quality of the health management<br />

information system (HMIS/ and lack of<br />

coordination between MOHSA and SECF,<br />

which shares the mandate for malnutrition<br />

prevention and reduction, has been<br />

problematic over the past years.<br />

• Shortages of qualified and motivated health<br />

and social workers along with imbalances<br />

in the skill-mix and uneven geographical<br />

deployment remain among the key factors<br />

affecting the quality and utilization of services.<br />

According to the MOH, 90% of trained<br />

midwifes currently live in Nouakchoutt.<br />

• Inadequate drug quality and supply: Drug<br />

shortages continue to persist in health facilities<br />

and the capacity of the drug procurement<br />

and distribution system needs further<br />

strengthening.<br />

Weak Social Health Determinants<br />

• Inadequate quality control over all<br />

components of the Health Sector (SOPs, drugs<br />

and health commodities, equipment, training,<br />

HMIS etc) is a prevalent feature.<br />

• Low literacy rates especially among women<br />

in the rural areas compounded with deeply<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 17


18<br />

rooted harmful traditional practices (e.g.<br />

female genital mutilation, food taboos etc)<br />

negatively affect the health-seeking behavior<br />

and ultimately, accessibility to health services.<br />

• Chronic malnutrition rates have stagnated<br />

and remain a serious problem in rural areas<br />

among the poorest and the very young (0-3<br />

years) who are the most vulnerable.<br />

2.3 Government’s Strategy for the Health<br />

Sector<br />

64. The PRSP-III identifies the development and<br />

implementation of a clear and coherent policy<br />

as one of the top priorities of the health sector<br />

for the next five years. The sector strategies and<br />

poverty reduction plans highlighted the need to<br />

increasing funding to address healthcare access<br />

and quality, human resource needs, awareness<br />

and monitoring and evaluation.<br />

65. The forthcoming CSLP-III (2010-2015),<br />

envisages developing a strategy whose objectives<br />

focus on four strategic areas: (1) improving<br />

universal access to health services and quality<br />

nutrition, (2) strengthening of the fight against the<br />

disease (3) developing mechanisms for financing<br />

health and (4) leadership development, good<br />

governance and sector performance. This strategy<br />

will enable to (i) reduce the overall mortality<br />

and morbidity, particularly IMR and MMR (ii)<br />

reduce the total fertility rate; and (iii) mitigate the<br />

impact of epidemics including endemic HIV/AIDS<br />

and emerging diseases (iv) reduce hunger and<br />

malnutrition in the population, especially among<br />

vulnerable groups (v) strengthen community<br />

participation in development and management<br />

strategies for access to basic health services, and<br />

(vi) enhance coordination and planning within<br />

and across sectors.<br />

66. Donors and specialized agencies remain<br />

skeptical about the Government’s commitment<br />

to implement the strategy in terms of the level,<br />

equity and allocative efficiency of spending.<br />

Inadequacy of financial support to the WHO for<br />

preparing a health sector policy is worrying in<br />

this regard. Also available PRSP III documents do<br />

not specify the amounts of future funding to the<br />

health sector.<br />

2.4 Proposed Interventions (with Donors) to<br />

Help Government Meet its Goals<br />

67. Scaling up of direct IDB Group support<br />

for primary health care, and a partnership<br />

with donors on health initiatives, are the two<br />

elements for IDB Group support to enhance<br />

access to quality health services and ultimately,<br />

impacting the high IMR and MMR in <strong>Mauritania</strong><br />

though a financing envelope of US$150 million.<br />

Building partnership, and synergy with donors<br />

68. Support to the initiative for preparation of<br />

a national health sector policy and the proposed<br />

five-year plan currently under preparation by<br />

the WHO. In addition:<br />

(i) Support the Expanded Immunization Program<br />

to redress shortcomings in the coverage rates<br />

with a direct impact on the infant mortality<br />

rate in cooperation with UNICEF and GAVI;<br />

(ii) Adopt and expand the successful AFD user’s<br />

fees initiative to enhance access to quality<br />

health services for pre- and post-natal care in<br />

priority remote areas.<br />

Scale up of the direct IDB Group support for<br />

Health<br />

69. Support for the extension of the Primary<br />

Health Care (PHC) and secondary health care<br />

services in the high poverty areas would enhance<br />

access to quality services by investing in training<br />

and retaining of basic health staff and community<br />

volunteers (e.g. midwifes, nurses, community<br />

promoter etc), procurement of equipment, other<br />

essential health commodities and construction of<br />

PHC facilities.<br />

2.5 Suggestions and Recommendations for the<br />

Government<br />

70. The situation in <strong>Mauritania</strong> shows that<br />

the implementation of interventions under<br />

the human development pillar requires policy<br />

and institutional reforms. In this regard, the<br />

government strategy should be strengthened<br />

through the following actions:<br />

• Preparing and implementing at the earliest<br />

opportunity a health system development<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


strategy giving priority to strengthening<br />

primary care provision especially in rural areas.<br />

• Substantially raising allocation in the budget<br />

for health system interventions with increased<br />

resources devoted to disease prevention<br />

and control program and the training of<br />

primary health staff (nurses, midwifes and<br />

general practitioners) and community health<br />

promoters.<br />

• Increase the deployment and retention of<br />

the trained health staff for remote and needy<br />

areas to augment the efforts of partners to<br />

expedite interventions addressing the high<br />

IMR and MMR.<br />

3. PILLAR II: Rural <strong>Development</strong> and Food<br />

Security<br />

3.1 Current Status<br />

71. Agriculture has not been performing well<br />

in <strong>Mauritania</strong>. On average, the contribution of<br />

agriculture to GDP was 16.7% during the 1991-<br />

2008 period with crops (agriculture sensu stricto)<br />

representing 3.7% and livestock 13%. In absolute<br />

terms, agriculture production has not been<br />

declining but stagnating. Stagnation had many<br />

causes. In rain fed areas where rainfall is low and<br />

erratic, water harvesting and soil conservation<br />

techniques to improve production exist but not<br />

adopted on a large scale. There has been little or<br />

inadequate effort to support rain fed agriculture<br />

and livestock despite its importance in rural<br />

economy.<br />

72. Food security is a major concern. Cereal<br />

production in <strong>Mauritania</strong> supplies only one<br />

third of the population’s needs. Commercial<br />

imports and food aid (mainly wheat and rice)<br />

supply the balance. In recent years, the level of<br />

food supply has been low, particularly in remote<br />

areas, and prices of traditional cereals (millet and<br />

sorghum in particular) in the production areas<br />

have increased especially in the wake of 2008<br />

global food crisis. Adverse climatic conditions<br />

also caused a decrease in crop production adding<br />

to food insecurity affecting almost one third of<br />

the total population, particularly the rural poor.<br />

Malnutrition in rural areas is rampant and the<br />

most susceptible group includes infants, and<br />

pregnant women. The Government has acted to<br />

in coordination with its development partners<br />

to deal with food crises. However, the second<br />

Strategic Framework for the Fight against Poverty<br />

(PRSP II) for 2006-2010 and various instruments<br />

of the Special Intervention Program created to<br />

address food insecurity had limited impact and<br />

food production continued to stagnate.<br />

3.2. Constraints<br />

73. There are several constraints faced by<br />

agriculture in <strong>Mauritania</strong>:<br />

• Annual area under cultivation did not increase<br />

and yields remain low by international<br />

standards.<br />

• In rain fed areas where rainfall is low and<br />

erratic, water harvesting and soil conservation<br />

techniques to improve production exist but not<br />

adopted on a large scale. There has been little<br />

or inadequate support for rain fed agriculture<br />

and livestock despite its importance in rural<br />

economy.<br />

• In irrigated areas, agriculture is performing<br />

poorly despite the significant investments<br />

made over the past 30 years. This is due to<br />

a combination of factors--natural disasters<br />

(floods, locust, etc.), institutional failures<br />

(mismanagement, credit and land tenure<br />

issues), and a weak investment climate<br />

(inadequate infrastructure, volatility in<br />

international prices of cereals, overvaluation<br />

of the exchange rate). Local officials in<br />

Rosso informed the MCPS mission that<br />

abandonment of irrigated land by farmers is a<br />

serious problem and farmers that met with the<br />

mission indicated that Government subsidies<br />

were essential for them to survive. This has all<br />

contributed to the inability of increases in the<br />

size of irrigated areas under new schemes to<br />

compensate for areas put out of cultivation. In<br />

2009, only 8,000ha were cultivated compared<br />

to an average of 17.000 ha planted annually in<br />

last ten years.<br />

• With its important livestock population (11<br />

million of sheep, goats, cattle and camels),<br />

<strong>Mauritania</strong> is self sufficient in red meat and<br />

exports a substantial volume (estimated at<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 19


20<br />

75,000 t/year) of live animals to neighboring<br />

countries. The local market lacks basic<br />

infrastructure (transportation, slaughtering<br />

houses, cold chains and sanitary controls).<br />

Exports suffer from the same problems, which<br />

explain the sale of live animals, depriving<br />

the country of a substantial value-added.<br />

Similarly, there is no infrastructure for the<br />

modern treatment of animal skin. Inefficient<br />

traditional techniques produce poor quality<br />

hides sold at low prices to the export market<br />

as a raw material. There is no leather industry<br />

in <strong>Mauritania</strong>. In 2008, the volume of hides<br />

exported was 383.1 tons for the modest value<br />

of $ 177,000 representing an average price of<br />

US$ 412/ton (source: ONS).<br />

• <strong>Mauritania</strong> produces about 30% of its milk<br />

consumption, two thirds of which are selfconsumed<br />

and only one third is sold on the<br />

local market. The absence of a well-developed<br />

supply chain with sufficient capacity for milk<br />

collection, cold storage and transportation<br />

limits the access of local milk to the market<br />

and renders the local milk unable to compete<br />

with the imported –and often subsidized- milk.<br />

In 2008, <strong>Mauritania</strong> imported about US$77<br />

million of milk and dairy products (source:<br />

ONS).<br />

74. The weak management and human resource<br />

endowment in public institutions has added<br />

to these problems and led donors to support<br />

creation of independent Project Implementation<br />

Units (PIUs) that further weakened these<br />

institutions.<br />

3.3 Opportunities<br />

75. Agriculture can help to reduce poverty and<br />

enhance food security if the Government moves<br />

to address the above constraints. In fact, despite<br />

its very limited arable land area (0.5%), the<br />

agricultural potential of <strong>Mauritania</strong> is sufficient<br />

to provide the country with a reasonable level of<br />

food security and help reduce poverty, which lies<br />

mostly in rural areas.<br />

76. The potential for irrigated agriculture<br />

(137,000 ha) is largely sufficient to meet all the<br />

country needs for rice and a significant part of its<br />

vegetables and other diversification crops needs<br />

if yields are improved. It could also provide fodder<br />

for intensive dairy farming. Current average yield<br />

for paddy in <strong>Mauritania</strong> is 4.24 tons/ha with<br />

several farmers achieving 6 tons/ha and, for few<br />

of them, even 8 tons/ha. Local climate allows for<br />

a second crop but very few practice it.<br />

77. The potential in rain fed agriculture, despite<br />

the harsh climate and the irregularity of rainfall,<br />

can be better valued if the limited water and soil<br />

resources are well exploited and managed in a<br />

sustainable way. This would improve the food<br />

security of poor rural populations and uplift their<br />

economic conditions.<br />

78. Livestock also has a significant potential for<br />

improvement: it can not only satisfy a significant<br />

portion of domestic milk demand but also<br />

supply red meat for the entire domestic market<br />

and export to neighboring countries. Livestock<br />

byproducts (hides) can also be processed locally<br />

using modern techniques and bring additional<br />

value added.<br />

79. Inland fishing, currently practiced at small<br />

a scale by local communities along the Senegal<br />

river and its tributaries as well as in water<br />

reservoirs such as Foum Gleita in the Gorgol, is<br />

done in a very traditional and inefficient way<br />

and it receives little attention from the fisheries<br />

department. The effective development of<br />

inland fisheries and aquaculture can supply rural<br />

communities with a valuable local source of animal<br />

protein and generate additional employment and<br />

income.<br />

3.4 Government Strategy<br />

80. A Rural Sector <strong>Development</strong> Strategy of<br />

(RSDS) was elaborated in 1998, updated in 2001<br />

and revisited in 2006 to ensure its harmony with<br />

the orientations of PRSP I and PRSP II. The RSDS<br />

identified four strategic objectives: (i) promote the<br />

growth of the sector to ensure food security for<br />

the country; (ii) ensure equitable access to sector<br />

resources; (iii) increase the supply and availability<br />

of goods and public services required for the<br />

sustainable development of the sector and (iv)<br />

developing management capacity for promoting<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Integrated Rural <strong>Development</strong> programs,<br />

involving community participation. This strategy<br />

was to be implemented through a set of policies<br />

and in a coordinated and decentralized manner:<br />

(i) promotion of the main agricultural value chains<br />

wedged on the macroeconomic framework and<br />

targeting quality products and Diversification;<br />

(ii) development of rural infrastructure, (iii)<br />

institutional strengthening and organization of<br />

the sector, and (iv) policies to protect natural<br />

resources.<br />

81. For the livestock sector, the main objectives<br />

of the Government inscribed in the 2009 Policy<br />

Letter are: (i) to increase the sector’s growth in a<br />

sustainable manner and with redistribution, and<br />

(ii) to reduce vulnerability of households living<br />

from livestock, in accordance with the guidelines<br />

of the PRSP.<br />

82. The Action Plan for the PRSP III (2011-2015)<br />

proposes an investment program for the rural<br />

sector covers that would cost UM 155billion,<br />

equivalent to approximately USD 584 million,<br />

in combination with a strong emphasis on the<br />

role of the private sector. This program aims at<br />

improving productivity and incomes in the sector<br />

and is concentrated in the regions where the<br />

poorest populations live.<br />

83. IDB Group and all other donors fully<br />

agree and support the above government<br />

strategies, which have been consistent for<br />

the last 15 years. The problem <strong>Mauritania</strong><br />

faces is the government inability to fully and<br />

truly carry out the implementation of these<br />

strategies and to take all the measures that<br />

are recommended. High turnover of decision<br />

makers and senior government agencies staff<br />

and general mismanagement have been the main<br />

impediments. There are also questions about<br />

the continuing need to subsidize agriculture in<br />

irrigated areas.<br />

3.5 Proposed IDB Group Interventions<br />

84. Agriculture and rural development requires<br />

a multi sector and integrated approach.<br />

Government support to agriculture alone has<br />

shown its limits especially in irrigated areas.<br />

Given the lessons learned from the past showing<br />

lack of impact of major government interventions,<br />

including subsidies, there should be an early end<br />

to subsidies and to Government interventions in<br />

irrigated agriculture except where justified on an<br />

exceptional basis and the private sector should<br />

be encouraged to take a lead role 7 . Instead,<br />

the focus of government interventions should<br />

now be on rain fed agriculture to enhance food<br />

security and reduce poverty. With this view, the<br />

Government should encourage a supply chain<br />

approach (approche filière) to address food<br />

security involving all partners from input supply<br />

to production, processing and market. Production<br />

alone will not guaranty food security and will<br />

not alleviate poverty. All steps in the supply<br />

chain are important and necessary. Agriculture<br />

development remains the top activity for the food<br />

insecure rural communities. IDB Group promotes<br />

such approach in the following areas and intends<br />

to provide financing of about $250 million to<br />

promote the following activities.<br />

(a) In the irrigated areas, IDB would support the<br />

consolidation of rice production system, crop<br />

diversification and intensive dairy farming.<br />

This will be done by improving or rehabilitating<br />

existing irrigated schemes rather than creating<br />

new ones (improving land leveling, irrigation<br />

and drainage and introducing electrification),<br />

securing land tenure and credit, training<br />

farmers and technicians, supporting the<br />

creation and/or maintenance of access road<br />

and transport infrastructure, developing<br />

processing units and securing markets. Priority<br />

products are rice, new crops (diversification)<br />

for local and export markets, and milk. Inland<br />

fishing will be part of the integrated approach<br />

to be adopted.<br />

(b) In the rain fed areas, IDB would support<br />

integrated rural development approach<br />

7 The IDB Group plans to play an important role in promoting the role of the<br />

private sector in irrigated agriculture in <strong>Mauritania</strong>. It will do so both through<br />

ICD and in its interactions with the Coordination Group, to support new models<br />

for Arab-African investment that can benefit from the synergy with Member<br />

Countries that have surplus cash and consumer markets with those that have<br />

the knowledge and know-how (for example, Egypt, Morocco etc.) At the same<br />

time, to facilitate public-private partnerships in agricultural investments,<br />

the <strong>Bank</strong> will be working closely with the Government of <strong>Mauritania</strong> to help<br />

resolve the constraints noted above in Section V.3.2 that irrigated agriculture<br />

has faced in the past decade, and continues to face.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 21


22<br />

focused on watershed development.<br />

Communities located in food insecure areas will<br />

be selected on a watershed basis. Community<br />

<strong>Development</strong> Plans will be elaborated and<br />

executed by the communities with the<br />

assistance of public, private or NGO partners.<br />

Activities to be supported include water<br />

harvesting, soil conservation and protection,<br />

agriculture and livestock production, inland<br />

fishing, local capacity building, rural access<br />

road and other socioeconomic infrastructure.<br />

(c) IDB Group programs for rural development<br />

will aim to include road infrastructure to<br />

enhance market access to local communities.<br />

The contribution of the IDB to infrastructure<br />

development is already facilitating regional<br />

integration projects (connections Nouakchott-<br />

Nouadhibou to Morocco, and corridors to Mali<br />

involving participation to financing: Timbédra-<br />

Nema and Ayoun el Atrous –Nioro roads).<br />

Moreover, access to far-flung isolated areas<br />

is being supported by the creation of a new<br />

north-south corridor via Atar-Tidjikja-Kifa,<br />

which in addition to its regional counterpart,<br />

has eased access to the country’s interior<br />

areas.<br />

(d) In the pastoral areas, IDB support to livestock<br />

would be at two levels: (i) as part of the<br />

integrated approach recommended for<br />

the irrigated and rain fed areas and (ii) at<br />

national level to deal with the larger animal<br />

population practicing transhumance. For the<br />

latter, IDB support would consider supporting<br />

the national animal health program and to<br />

the development of the milk, red meat and<br />

hide industries through the Private Sector<br />

<strong>Development</strong> window. This would be done in<br />

coordination with Pillar 3.<br />

(e) IDB support to inland fisheries will be<br />

included in the projects for irrigated and<br />

rain fed areas outlined above. For inland<br />

fisheries, IDB considers that it should be<br />

part of the Rural <strong>Development</strong> and Food<br />

Security pillar as it is mainly carried out<br />

on a small scale, on small bodies of water<br />

in rural communities and mainly for local<br />

consumption and markets.<br />

(f) It is proposed that ITFC participates in the<br />

financing of imports of food and agriculture<br />

inputs under Sovereign Risk. Alongside with<br />

foodstuff imports, ITFC can play strategic<br />

role in supporting the development of local<br />

agriculture production, through the financing<br />

of seeds, fertilizers and other agriculture<br />

products. Discussions with SONIMEX showed<br />

that this could be a potential cooperation area<br />

starting 2011 forwards.<br />

(g) ICIEC could provide political risk insurance<br />

to foreign investors willing to invest in the<br />

agriculture sector in <strong>Mauritania</strong>. In addition,<br />

ICIEC may support the agriculture sector in<br />

<strong>Mauritania</strong> by providing credit insurance to<br />

exporters, covering the non-payment risk of<br />

their overseas buyers. Exports of fisheries,<br />

livestock and other agricultural products could<br />

be considered in this regard.<br />

(h) The IDB Group should play a significant role<br />

in the realization of cross-border initiatives<br />

between <strong>Mauritania</strong> and its neighbor<br />

countries which are all member countries.<br />

In this regard, the recent initiative launched<br />

between <strong>Mauritania</strong> and Mali to enhance<br />

economic development in the city of Gougui<br />

(<strong>Mauritania</strong>) and the city of Nouara (Mali) could<br />

be supported by the IDB Group interventions<br />

in these cities. It is worth noting that these two<br />

cities are connected by the regional rural road<br />

financed by the IDB and linking Ayoun Latrous<br />

(<strong>Mauritania</strong>) and Nioro (Mali). <strong>Mauritania</strong> can<br />

also play a major role in providing expertise<br />

in bilingual education to benefit Mali and<br />

Senegal, under the cross-border initiative, as<br />

well as to other IDB member countries in West<br />

Africa under reverse linkage (see below).<br />

3.6 Suggestions and Recommendations for the<br />

Government<br />

85. In order to successfully implement the<br />

activities under this pillar, it is critical that the<br />

government of <strong>Mauritania</strong> should carry out the<br />

following policy actions:<br />

• Update the rural development strategy.<br />

• Design, adopt and start implementing a<br />

capacity building strategy for the rural<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Figure 13: Survey of Constraints Facing the Business Environment in <strong>Mauritania</strong><br />

60.0<br />

50.0<br />

51.2<br />

43.5<br />

40.0<br />

30.0<br />

20.0<br />

10.0<br />

34.3<br />

0.0<br />

Access and<br />

cost of financing<br />

Electricity Practices of<br />

competitors<br />

in the informal<br />

sector<br />

Manufacturing<br />

33.8<br />

Customs and<br />

trade<br />

regulations<br />

33.7<br />

Inadequately<br />

educated work<br />

force<br />

Other sectors<br />

45.0<br />

40.0<br />

35.0<br />

39.3 38.3 37.9<br />

30.0<br />

25.0<br />

20.0<br />

15.0<br />

10.0<br />

5.0<br />

27.6 26.9<br />

0.0<br />

Practices of Access and Tax rates<br />

competitors cost of financing<br />

in the informal<br />

sector<br />

Access to<br />

land<br />

Tax<br />

regulations<br />

31.7<br />

Tax rates<br />

development institutions and their staff<br />

(capacity in project planning, implementation,<br />

monitoring and evaluation, knowledge of IDB<br />

procedures, procurement procedures, etc.).<br />

• Set up a sound monitoring and evaluation<br />

system for programs and projects and a<br />

projects supervision unit in the ministry of<br />

rural development.<br />

• Set up an early warning system for natural<br />

disasters.<br />

4. PILLAR III: Enhancing and Diversifying<br />

the Foundations of a Modern Economy<br />

4.1 Private Sector <strong>Development</strong>/<strong>Islamic</strong><br />

Finance<br />

Current situation<br />

86. As noted above, private sector activities in<br />

<strong>Mauritania</strong> are at a nascent stage and dominated<br />

by the informal business and small and medium<br />

enterprises 8 . As discussed in Section II, <strong>Mauritania</strong><br />

is facing a serious development challenge in that<br />

the linkage between the subsistence economy<br />

and the modern economy typical of a country at<br />

8 The transition to a formal economy also faces challenges as 80 % of<br />

commercial transactions are made in cash, as noted in the Ernest & Young,<br />

Financial feasibility study of establishing an <strong>Islamic</strong> <strong>Bank</strong> in <strong>Mauritania</strong>.<br />

50.0<br />

45.0<br />

40.0<br />

35.0<br />

30.0<br />

25.0<br />

20.0<br />

15.0<br />

10.0<br />

5.0<br />

44.8<br />

36.6<br />

0.0<br />

Access and<br />

cost of financing<br />

Tax rates<br />

Microentreprises/Informal Firms<br />

23.8<br />

50.0<br />

45.0<br />

40.0<br />

35.0<br />

30.0<br />

25.0<br />

20.0<br />

15.0<br />

10.0<br />

5.0<br />

43.6<br />

32.3<br />

23.4 23.4 23.4<br />

18.6<br />

Electricity<br />

0.0<br />

Access and Access to<br />

cost of financing land<br />

Tax rates Practices of<br />

competitors<br />

in the informal<br />

sector<br />

Transport Electricity<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 23<br />

32.6<br />

Tax<br />

regulations<br />

Trade<br />

29.0<br />

Customs and<br />

trade<br />

regulations<br />

18.0<br />

Practices of<br />

competitors<br />

in the informal<br />

sector<br />

15.5<br />

Electricity<br />

<strong>Mauritania</strong>’s level of development is missing or is<br />

at best very weak. A key development challenge<br />

for <strong>Mauritania</strong>, moving forward is the question of<br />

how to strengthen these linkages. The diagnosis<br />

suggests, from a macroeconomic perspective,<br />

that the Government should urgently review its<br />

policies regarding the management and use of<br />

earnings from exports of natural resources, taking<br />

account of the lessons of international experience<br />

in this area. Countries earning high and sustained<br />

rents from natural resource extraction try to<br />

alleviate any excessive appreciation of the<br />

exchange rate by smoothening the use of such<br />

rents in addition to steps to process and add more<br />

value to the extracted resources before exporting<br />

them. This MCPS and this pillar, reflecting the IDB<br />

Groups comparative advantage, focuses on areas<br />

where the Group can help <strong>Mauritania</strong> to diversify<br />

and enhance its modern economy and strengthen<br />

its linkages with the subsistence/informal<br />

economy by encouraging and supporting private<br />

sector development to facilitate the processing<br />

and value addition to the resources it is blessed<br />

with.<br />

87. <strong>Mauritania</strong> offers several business<br />

opportunities:


• A positive medium term economic growth<br />

output: Real GDP growth reached 11.7% in<br />

2006 and was about 4% over the period 2006-<br />

2010. Although growth forecasts for PRSP III<br />

(5.5%) are below the ambitious targets in PRSP<br />

II of 8.4% due to lower-than-expected levels<br />

of oil production, the medium-term outlook<br />

remains positive as the high growth scenario<br />

reflects.<br />

• Increasing Foreign Direct Investments: FDI<br />

increased significantly during the period of<br />

2002-2006 going from US$ 67 million in 2002<br />

to US$ 814 million in 2005 and then to US$<br />

155 million in 2006. FDI in <strong>Mauritania</strong> is largely<br />

concentrated in the extractive sector.<br />

• Strategic geographic position: Being at the<br />

crossroads of two consumer markets, the<br />

Maghreb and West Africa, <strong>Mauritania</strong> benefits<br />

from a strategic position that is favorable<br />

for the development of trade and exporting<br />

activities -- and thus the related banking<br />

activities. Moreover, <strong>Mauritania</strong>n products<br />

have preferential treatment on European<br />

Union markets.<br />

• Substantial Natural Resources: Despite recent<br />

skepticism of its oil reserves, <strong>Mauritania</strong><br />

remains promising in terms of natural<br />

resources. In fact, <strong>Mauritania</strong> has substantial<br />

deposits of solid minerals, including iron-ore,<br />

gypsum, phosphates, salt, copper, gold and<br />

diamonds and is one of the richest zones in<br />

fish resources.<br />

Constraints and opportunities for Private Sector<br />

<strong>Development</strong><br />

88. The most important constraint to the private<br />

sector, as perceived by firms in manufacturing,<br />

trade and other sectors is access to and cost of<br />

finance but they also mention other constraints<br />

(see Figure 13). An important reason for this is<br />

that their owners consider banks as an arm for<br />

their private business activities. Other constraints<br />

include (i) access to electricity (see Box 2), (ii)<br />

management capacity and lack of skilled labor,<br />

(iii) taxes and (iv) regulatory environment 9 .<br />

9 World <strong>Bank</strong> CEM, 2010.<br />

24<br />

89. The lack of a clear legal framework<br />

facilitating access to justice is also a major<br />

impediment to private sector development in<br />

<strong>Mauritania</strong>. This shortcoming is obvious in land<br />

ownership for which there is still no overall record<br />

keeping system that would help to entrench the<br />

legal status of land ownership. This tends to<br />

impede private investments given the fact that<br />

land ownership, the basis of any investment,<br />

is uncertain. As a result, promoters involved in<br />

income generating activities, as well as micro and<br />

small enterprises (MSEs) are virtually excluded<br />

from bank financing.<br />

90. Management and organization problems<br />

due to lack of funds hamper the work of the<br />

judiciary. For instance, business and company<br />

registration does not exist in <strong>Mauritania</strong>, so it is<br />

difficult to identify the legal status of firms.<br />

Government strategy<br />

Box 2<br />

ICD Strategy in <strong>Mauritania</strong><br />

ICD’s intervention is based on the assessment that<br />

<strong>Mauritania</strong> is positioned in the quadrant B of ICD’s<br />

member country mapping which include the group<br />

of member countries where both <strong>Islamic</strong> finance and<br />

Private Sector <strong>Development</strong> are weak or at the initial<br />

stage of development. ICD strategy will focus on four<br />

areas: (i) developing new channels for investment (e.g.<br />

building banks or Ijara companies); (ii) developing<br />

an enabling environment for <strong>Islamic</strong> finance/PSD;<br />

(iii) supporting direct investment/financing in the<br />

fishery sector; and (iv) preparing a feasibility study<br />

for the development of a specialized economic zone in<br />

Nouhadibou.<br />

91. PRSP III places a high priority to private<br />

sector development but lacks specifics. As<br />

mentioned above, in the PRSP-III action plan<br />

covering the period 2011-2015, the Government<br />

strategy aims at creating favorable conditions to<br />

the attainment of sustained and durable growth<br />

through structural reforms designed to enhance<br />

the investment climate. These include a focus on<br />

(a) promotion of growth sources; (b) infrastructure<br />

development; (b) rural development with a<br />

special attention focused on rain agriculture<br />

and livestock; (c) urban development; (d) access<br />

to finance to support SME development; and<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


(e) the conservation of the environment and its<br />

promotion as an economic asset. These areas are<br />

important and most reflect necessary conditions<br />

for private sector development. But there is a<br />

need for a more specific program to address the<br />

fundamental structural weaknesses facing the<br />

economy and which have inhibited development<br />

of a modern economy with a vibrant private<br />

sector based manufacturing over the past two<br />

decades.<br />

Proposed strategy for interventions to help<br />

Government meet its goals in consultation with<br />

other donors<br />

• Flagship investments in key areas such as<br />

fisheries, dairy, red meat and hides,<br />

• Improving the business environment for SMEs<br />

in particular access to finance, among other<br />

things through the setting up of an <strong>Islamic</strong><br />

<strong>Bank</strong> and the establishment of dedicated lines<br />

of finance for local banks,<br />

• Offering short term financing to public entities,<br />

• Construction of affordable housing for lower<br />

and middle-income people in urban areas,<br />

• Investment in critical infrastructure—roads,<br />

ports, and energy,<br />

• Encouraging firms in natural resource sectors<br />

to add value to the extracted resources.<br />

Indicative interventions by IDB Group for 2011-<br />

2015<br />

92. In the framework of the strategy of<br />

intervention of the IDB Group in <strong>Mauritania</strong>, the<br />

IDB Group plans to invest in four main axes:<br />

• SME development & promotion of <strong>Islamic</strong><br />

financing,<br />

• <strong>Development</strong> of projects in the real estate and<br />

fishery sectors,<br />

• Launching catalyst programs which are<br />

business enabler to the private entrepreneurs,<br />

like Special Economic Zone (SEZ) and Project<br />

<strong>Development</strong> Facility,<br />

• IDB participation in PPP program to restructure<br />

SOMELEC including investment in domestic gas<br />

Box 3<br />

Status of Power Sector in <strong>Mauritania</strong><br />

• Demand is growing rapidly (10% per year on<br />

average between 1998 and 2008)<br />

• There is a large shortage of supply (the shortfall<br />

in Nouakchott estimated at 30-40 MW) and<br />

backup generators make up half of total installed<br />

capacity in <strong>Mauritania</strong>, high international oil<br />

prices have put enormous pressure on all of the<br />

oil-importing countries including <strong>Mauritania</strong>.<br />

• The cost of electricity is high due to the<br />

structure of production (fuel / diesel imported)<br />

and technical performance (technical and<br />

commercial losses are nearly 30%).<br />

• In the urban areas: electrification rate is limited<br />

to 54% national wise whereas it drops to 40%<br />

in Nouakchott. Main cities are exclusively<br />

dependant on a single source--MVS provides<br />

15% of the hydropower generated in Manantali<br />

Dam. This constitutes a single interconnected<br />

network (225/90/3315 KV), all other areas and<br />

localities are supplied from off-grid separated<br />

small networks by diesel generators.<br />

• In rural areas, the electricity is quasi-inexistent;<br />

the electrification rate does not exceed 5%. The<br />

viability of providing electricity service based<br />

on decentralized generators and networks<br />

leads to a high compensation of the private<br />

service providers, which aggravates the financial<br />

burden of the government. The penetration<br />

rate of renewable is insignificant due to the<br />

high investment and weak willingness to pay<br />

from the rural population due to lack of revenue<br />

generating activities.<br />

• The principal supplier and network operator<br />

(SOMELEC) is in a quasi-business failure situation<br />

due to:<br />

- unresolved investment issues related a failed<br />

privatization in 2004<br />

- high transmission and commercial losses<br />

estimated at 31.5%; and<br />

- internal inefficiency--number of clients/<br />

employee is 104, half the international<br />

standard.<br />

• Despite its problems the government is strongly<br />

supporting SOMELEC and the Government<br />

signed a performance-based agreement along<br />

with a restructuring program,<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 25


26<br />

based thermal and solar energy capacity, and<br />

improving transmission networks including<br />

Nouakchott-Nouadhibou connection.<br />

93. ICIEC is ready to support the inflow of<br />

foreign direct investments into <strong>Mauritania</strong> by<br />

insuring investments made by foreign investors<br />

against certain political risks in <strong>Mauritania</strong>.<br />

Some foreign investors would require such risks<br />

to be covered in order to make their investments<br />

4.2 Trade Finance and Insurance<br />

Trade composition in <strong>Mauritania</strong><br />

94. <strong>Mauritania</strong>’s share of regional trade is still<br />

very small, the EU remains its main trading<br />

partner, and its trade with China is rising rapidly.<br />

<strong>Mauritania</strong>n exports get preferential treatment in<br />

the EU market and under the Everything-But-Arms<br />

(EBA) program for least developed countries. The<br />

majority of <strong>Mauritania</strong>’s imports come from the<br />

EU, with France being the single largest source<br />

worldwide. Its trade with China is rising--exports<br />

to China rose from only US$9 Million in 2002<br />

to US$365 Million in 2006. Since the start of oil<br />

production, China has become the country’s main<br />

destination for exports, accounting for a startling<br />

67.3% in 2006, up from just 0.7% in 2005.<br />

Constraints to trade finance<br />

• The financial sector is under-developed.<br />

About 88% of the sector’s assets are held by<br />

commercial banks with 8 commercial banks, 7<br />

insurance companies, 2 financial institutions<br />

specialized in agriculture and fisheries, 67<br />

approved micro-finance institutions, as well<br />

as a leasing firm. There lack of diversification<br />

of the products and services offered and<br />

the commercial banks’ transactions mainly<br />

concern operators of the import – export<br />

sector, and are essentially based on shortterm<br />

financing.<br />

• The private sector is not structured, consisting<br />

of small companies. This makes it difficult to<br />

deal directly with these entities.<br />

• <strong>Bank</strong>s are often playing a trader role and they<br />

import for themselves all commodities in need<br />

in the market.<br />

• Mark up of local banks is very high. Around<br />

13% p.a for known companies and more than<br />

17% p.a for new clients.<br />

Elements of IDB Group Intervention in Trade<br />

Finance & Insurance<br />

95. The interviews conducted with SONIMEX<br />

(National company for imports and exports),<br />

the ministry of agriculture, and <strong>Mauritania</strong><br />

Patronat, emphasized on the urgent need to<br />

supply the imports of basic commodities such<br />

Sugar, Oil, Rice, and similar. The Government<br />

aim to stabilize the prices is confronted with the<br />

growing appetite of private companies, taking<br />

advantage from shortage periods to increase<br />

the prices. SONIMEX is the government arm<br />

towards ensuring an adequate Market supply,<br />

which is seen as the most efficient way to<br />

counter speculating for such crucial commodities.<br />

Financing SONIMEX foodstuff imports, and other<br />

critical inputs for the development of Agriculture<br />

capacity, is in direct link with MCPS Pillar 1 and<br />

should offer the following advantages if provided<br />

under Government guarantee:<br />

1. The financial agility for country food security.<br />

2. The ability to secure prices stability against<br />

speculation.<br />

3. The ability to build on the existing capacity<br />

and extend the supply to other strategic<br />

commodities such seeds, fertilizers, which<br />

are critical for <strong>Mauritania</strong> food security and<br />

agriculture development.<br />

96. ITFC can play important role in financing<br />

public companies needs of Energy, mainly Gas<br />

and Fuel under sovereign risk. The preliminary<br />

discussions with SOMELEC and SOMAGAS GMS as<br />

well as the Ministry of Energy and Petrol showed<br />

that ITFC financing could offer better terms and<br />

conditions.<br />

1. The confirmation fee is included in ITFC Mark<br />

up (about 2% saving).<br />

2. ITFC Financing provides a financial advantage<br />

as currently, these companies are under a<br />

differed payment credit from their Gas and<br />

Fuel supplier.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


3. The flexibility to finance other entrants with<br />

the same facility.<br />

97. ITFC intends to support the important<br />

SMEs sector by extending lines of finance or<br />

two step Murabaha financing to local banks,<br />

so their clients can benefit directly from it.<br />

Preliminary discussions have started with Banque<br />

Mauritanienne du Commerce International<br />

(BMCI) which has sent an official financing<br />

request.<br />

98. ICIEC could potentially insure the<br />

nonpayment risk of Letters of Credit to be issued<br />

by <strong>Mauritania</strong>n banks to finance imports of goods<br />

and services from ICIEC’s member countries.<br />

In addition, ICIEC could insure Letters of Credit<br />

financing the imports of capital or strategic goods<br />

from non member countries.<br />

99. ICIEC may also insure foreign contractors<br />

executing projects in <strong>Mauritania</strong> in strategic<br />

sectors (like infrastructure, health, education,<br />

etc.) in favor of the government or governmentowned<br />

entities, against the nonpayment risk if the<br />

payment is made or guaranteed by the Ministry<br />

of Finance of <strong>Mauritania</strong>.<br />

4.3 Suggestions and Recommendations for the<br />

Government<br />

100. In order to insure successful implementation<br />

of activities under this pillar, the government<br />

should prepare the ground for the development<br />

of a vibrant private sector. Among others, the<br />

following actions, should constitute a priority for<br />

the GoM:<br />

• Strengthen the investment climate by<br />

improving the policy regarding the registration<br />

of land ownership.<br />

• Develop a regulatory framework to reform<br />

and strengthen the financial sector.<br />

• Setting up the legal framework for PPP and<br />

building capacity to oversee the management<br />

of PPP.<br />

• Remove barriers to entry for new investments<br />

especially in areas where investment<br />

opportunities are promising (including further<br />

processing of iron ore before exporting it).<br />

• Identify and implement measures to speed-up<br />

investment inflow to the energy sector, both<br />

for generation and transport/distribution.<br />

5. Cross-Cutting Theme: Capacity Building 10<br />

5.1 Current Situation and Constraints<br />

101. The <strong>Mauritania</strong>n Administration and Civil<br />

Service in general suffer from weak capacity in<br />

terms of limited staff and cadre, aging executives<br />

coinciding with important retirements, frozen<br />

recruitments, inadequacy of skills with required<br />

profiles. Likewise, the private sector and large<br />

firms face a shortage of adequate skills and low<br />

productivity. The largest firms in the country<br />

report skills mismatch to be the primary obstacle<br />

for productivity and growth 11 .<br />

102. Only half of the ministries recently<br />

surveyed report a unit headed by a specialist<br />

of Monitoring-Evaluation, while evaluation is a<br />

permanent activity in 34% for policy and 66%<br />

for projects and programmes. Almost half of the<br />

institutions have never practiced evaluation of<br />

public policies and as for individual projects and<br />

programs; this rate stands at only 30%. 12<br />

103. The <strong>Islamic</strong> <strong>Development</strong> <strong>Bank</strong> financed<br />

a number of Technical Assistance and capacity<br />

building operations in the sectors of Mining,<br />

Awqaf, <strong>Bank</strong>ing, Civil Administration, Rural<br />

<strong>Development</strong> and Agronomic Research, and<br />

Poverty reduction through effective management<br />

of oil resources. Besides, the setting-up of PIUs<br />

has been systematic for all new projects.<br />

104. The Technical and Financial Partners of<br />

<strong>Mauritania</strong> have been extensively involved in<br />

the Government Capacity Building programmes.<br />

The major programme under implementation is<br />

the PRECASP 13 , funded by the World <strong>Bank</strong> to focus<br />

on five ministries. It aims to address civil service<br />

reform and public sector management capacity,<br />

10More detailed background paper on the Capacity Building is available for<br />

reference.<br />

11World <strong>Bank</strong>, <strong>Mauritania</strong>, Policy Options to Enhance Private Sector<br />

<strong>Development</strong>, CEM, April 2010<br />

12MAED, AMSE,PNUD, Christian BONIFAS, Mohamed O/SIDI BACAR, 30 mars<br />

2009.<br />

13Project Appraisal Document on a Proposed Credit In the Amount of SDR 9.1<br />

mn (Us$13.0 mn Equivalent) to the <strong>Islamic</strong> Republic of <strong>Mauritania</strong> for a Public<br />

Sector Capacity Building Project, May 31, 2006.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 27


and improve the performance, efficacy, and<br />

transparency of public resources management.<br />

An evaluation of this 2006 project is still awaited.<br />

5.2 Government Strategy and Objectives<br />

105. The new Government strategy, reflected in<br />

PRSP III, recognizes that weak administrative<br />

capacity has hindered the country’s development<br />

and its ability to absorb developmental aid in<br />

the past. It emphasizes the need for building and<br />

improving the capacity of both PIUs and core<br />

government ministries and agencies and takes<br />

account of recent findings linking low absorptive<br />

capacity to weaknesses in the technical capacity<br />

of ministries, poor coordination of interventions,<br />

and the absence of effective monitoring and<br />

evaluation (M&E) capacity, notably in relation to<br />

data availability and quality and the institutional<br />

capacity for M&E 14 .<br />

106. Strengthening good governance and<br />

capacity building and reinforcement of<br />

monitoring, evaluation, and coordination<br />

constitute the fourth and the fifth pillars of<br />

PRSP III. PRSP III includes measures aimed at (i)<br />

developing capacities in the area of design and<br />

programming, (ii) capacity-building in project<br />

execution and monitoring and evaluation, (iii)<br />

harmonization of donor procedures, and (v)<br />

capacity building in the private sector. The IDB<br />

Group supports this approach and emphasizes<br />

the need for early implementation, and support<br />

for policy design. Also, and critically, GoM should<br />

urgently focus on complementary programs to<br />

develop private sector skills and capacity.<br />

5.3 IDB Group Proposed Strategy<br />

107. The IDB Group will earmark US$ 1 million<br />

to support capacity building in the public sector<br />

focusing on entities dealing with crosscutting<br />

issues including policy development, planning<br />

and programming, monitoring, audit and<br />

evaluation, and legal and regulatory frameworks.<br />

The following public entities will be given priority<br />

for support: the Ministry of Economic Affairs<br />

and <strong>Development</strong>, the Ministry of Finance, the<br />

14 Capacity Issues In the Formulation and Implementation of the Next<br />

Generation of Poverty Reduction Strategy Papers, Working Paper, The African<br />

Capacity Building Foundation, 2009.<br />

28<br />

Ministry of Public Sector and Modernization<br />

of the Administration, the Commissariat for<br />

the Promotion des Investments, the General<br />

Inspectorate of the State, the Court of Accounts,<br />

the Agency for Project Studies and Monitoring<br />

and sector departments corresponding to priority<br />

sectors of the strategic pillars of the MCPS.<br />

108. IDB has pre-identified generic themes for<br />

capacity building. These include (a) Planning,<br />

programming, monitoring and evaluation<br />

of policies, poverty analysis, projects and<br />

programmes, (b) Enhancing quality at entry and<br />

formulation of projects, and the mastery of the<br />

project cycle, (c) Capacity building of staff in the<br />

fields of macroeconomics and statistics, economic<br />

modeling, (e) <strong>Development</strong> of an integrated<br />

information systems, and (f) Improvement of<br />

institutional and organizational frameworks.<br />

109. Instruments include technical assistance<br />

project with a focus on “reverse linkage” to<br />

promote sharing knowledge and best practices<br />

between <strong>Mauritania</strong> and other IDB MCs. Areas<br />

for cooperation include rural electrification<br />

(Morocco), agriculture (Egypt & Morocco)<br />

microfinance (Tunisia), <strong>Islamic</strong> microfinance<br />

(Bangladesh), SMEs and disaster management<br />

(Turkey), Natural resources rents management<br />

(Indonesia, Malaysia, Pakistan), and energy<br />

(Algeria and Arab Countries). At the same time,<br />

reverse linkage is not a unidirectional concept<br />

and <strong>Mauritania</strong> can play a major role in providing<br />

expertise in bilingual education to benefit Mali<br />

and Senegal, as noted above under cross-border<br />

initiatives, as well as to other IDB member<br />

countries in West Africa.<br />

110. ITAP, based on a need assessment of the<br />

Commissariat à la promotion des investissements<br />

(CPI) carried out in April 2010, is designing a<br />

comprehensive technical assistance program<br />

for <strong>Mauritania</strong> with the objective of helping<br />

CPI in promoting <strong>Mauritania</strong> as an investment<br />

destination and an estimated budget of US$<br />

300,000. The program will consist of several<br />

components including: (i) Strengthening the<br />

organizational structure of CPI and staff training,<br />

(ii) Country Image Building, and (iii) Investment<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Human <strong>Development</strong> (Primary<br />

Healthcare)<br />

IDB<br />

TABLE 9: Indicative IDB Group MCPS Financing Program for 2011-2015 (1432-1436H) (in US$ Million * )<br />

IDB Group Envelope: US$ 700 Million**<br />

2011 2012 2013 2014 2015<br />

140 140 140 140 140<br />

Rural <strong>Development</strong> and Food<br />

Security<br />

ITFC,<br />

ICD,<br />

and<br />

ICIEC<br />

Private Sector <strong>Development</strong>+<br />

Trade Finance<br />

Human <strong>Development</strong> (Primary<br />

Healthcare)<br />

IDB<br />

Rural <strong>Development</strong> and Food<br />

Security<br />

ITFC,<br />

ICD,<br />

and<br />

ICIEC<br />

Private Sector <strong>Development</strong> +<br />

Trade Finance<br />

Human <strong>Development</strong> (Primary<br />

Healthcare)<br />

IDB<br />

Rural <strong>Development</strong> and Food<br />

Security<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 29<br />

ITFC,<br />

ICD,<br />

and<br />

ICIEC<br />

IDB<br />

ITFC,<br />

ICD,<br />

and<br />

ICIEC<br />

30 50 60 30 50 60 30 50 60 30 50 60 30 50 60<br />

Private Sector <strong>Development</strong> +<br />

Trade Finance<br />

Human <strong>Development</strong> (Primary<br />

Healthcare)<br />

Rural <strong>Development</strong> and Food<br />

Security<br />

Private Sector <strong>Development</strong> +<br />

Trade Finance<br />

Human <strong>Development</strong> (Primary<br />

Healthcare)<br />

IDB<br />

Rural <strong>Development</strong> and Food<br />

Security<br />

ITFC,<br />

ICD, and<br />

ICIEC<br />

* Subject to absorptive capacity and other constraints outlined in this report. Also, total includes US$ 2 to 3 million for TA.<br />

** The framework agreement signed between the IDB Group and the Government of <strong>Mauritania</strong> on 29 Rajab 1429H (1 August 2008G) envisaged investing a similar<br />

amount of US$ 700 Million through Y2012G.<br />

generation activities to identify and prepare<br />

profiles of viable projects.<br />

VI. RISKS AND UNCERTAINTIES<br />

111. The short period since the establishment of<br />

the new government is insufficient for affirming<br />

the ability of this government to maintain the<br />

political stability that the country really needs.<br />

Political instability continues to threaten the<br />

sustainability of the reforms that the country is<br />

trying to put in place to enable its development<br />

process. To mitigate this risk, the MCPS team has<br />

consulted widely in <strong>Mauritania</strong> on the proposed<br />

IDB Group interventions, including members<br />

of the opposition parties in parliament and civil<br />

society. Also, the MCPS is based on the objectives<br />

in the PRSP III which the Government has<br />

prepared after involving all concerned parties.<br />

Therefore the priorities outlined in the MCPS are<br />

likely to be relatively immune to political economy<br />

developments.<br />

112. Vulnerability to external shocks is<br />

exacerbated by the dependency of <strong>Mauritania</strong> on<br />

foreign aid. In the future, at least in the short and<br />

medium term, the success of its strategies will be<br />

Private Sector <strong>Development</strong> +<br />

Trade Finance<br />

contingent on the magnitude of the impact that<br />

the external shocks could exert on its economic<br />

growth. The speed of diversification of the<br />

economy would be determinant in reducing this<br />

dependency of <strong>Mauritania</strong> on external resources.<br />

Good governance of natural resource rents is a<br />

pre-requisite to the sound implementation of<br />

development strategies. Implementation of this<br />

MCPS will help to mitigate this risk by enhancing<br />

diversification of the economy.<br />

113. Vulnerability to natural disasters (mainly<br />

droughts and floods) and environmental<br />

degradation have been very serious issues in<br />

<strong>Mauritania</strong>. Support provided under pillar II is<br />

designed to reduce the risks faced by those most<br />

vulnerable to these risks (i.e. the rural poor).<br />

114. The size of the financing envelope. The size<br />

of financing indicated in this MCPS was agreed<br />

with the Government and is in accordance with<br />

the baseline growth scenario outlined in the<br />

PRSPIII. Under a higher growth scenario, which<br />

could result from either the discovery of more<br />

mineral resources or better management of<br />

windfalls leading to increased spillovers to the<br />

‘subsistence economy’, financing requirement


could be higher and will be reconsidered at the<br />

mid-term review stage. In case of lower growth<br />

resulting from political instability, external shocks,<br />

and natural disasters, the financing needs could<br />

also be reassessed in mid-term review.<br />

115. Commitment of other donors for sustained<br />

support to <strong>Mauritania</strong>. As noted in the report,<br />

<strong>Mauritania</strong> is highly dependent on foreign aid<br />

and thus any interruption in this aid (for example<br />

following unexpected political developments) will<br />

make it difficult for <strong>Mauritania</strong> to meet its PRSP<br />

III targets. In these circumstances, the continued<br />

IDB Group support will help to soften the impact<br />

from such a shock.<br />

116. Impact of the MCPS Program. The results<br />

matrix outlining the expected impact of the MCPS<br />

program has been prepared taking into account<br />

the planned investments of the Government,<br />

the private sector, and the interventions of<br />

other development partners. Expected impact<br />

depends on implementation of the MCPS, in<br />

coordination with the Government and other<br />

development partners. Therefore, IDB Group will<br />

continue active dialogue with Government and<br />

development partners during implementation.<br />

VII. CONCLUSION AND WAY FORWARD<br />

117. The dichotomy between the subsistence<br />

poor economy and the modern enclave economy<br />

poses unique challenges to <strong>Mauritania</strong>’s<br />

development. This unique economic structure<br />

has produced mixed results: on the positive<br />

side, the enclave economy has provided high<br />

and consistent rents that have allowed the<br />

Government to finance development activities<br />

including infrastructure for irrigated agriculture.<br />

On the negative side, the enclave economy has<br />

only limited links with the subsistence economy.<br />

In particular as the value added to raw material<br />

exports is limited and given the capital-intensive<br />

nature of extraction activities, the demand for<br />

labor is negligible.<br />

118. Thus, despite a moderate economic growth,<br />

poverty has remained high especially in rural<br />

areas. Thanks to sound macroeconomic policies,<br />

prudent economic management, structural<br />

30<br />

reforms and a surge in oil production in 2006,<br />

economic growth averaged 5% in the 2004-2008<br />

periods. However, the deterioration in economic<br />

activity resulting from domestic and external<br />

shocks revealed the structural weaknesses<br />

inherent in the economy.<br />

119. The prospects for significantly reducing<br />

poverty to 25% and achieving a stable economic<br />

growth of 5.5%, as envisaged in PRSPIII, and<br />

creating more jobs hinge on the performance of<br />

subsistence sectors, especially agriculture and<br />

livestock, and manufacturing, which face several<br />

constraints. These include: underdeveloped<br />

human capital, poor performance of agriculture,<br />

livestock, and manufacturing sectors, weak<br />

business environment for private sector activity,<br />

and absence of link between the modern mineral<br />

economy and traditional sector.<br />

120. The MCPS outlines a substantial IDB Group<br />

program of cooperation spread over the next five<br />

years (2011-2015), to help <strong>Mauritania</strong> address the<br />

aforementioned constraints. Key steps in the way<br />

forward to ensure success include more detailed<br />

programming, enhancing the effectiveness<br />

and role of IDB Group entities particularly to<br />

facilitate private sector development, and a<br />

mid-term review to access progress and make<br />

needed corrections. These steps will help to<br />

encourage effective implementation of the MCPS<br />

as an instrument of IDB Group’s partnership with<br />

<strong>Mauritania</strong>.<br />

121. There are significant benefits to both<br />

sides of the partnership. The partnership will<br />

help <strong>Mauritania</strong> in its quest to achieve its long<br />

term vision of a stable modern democracy, well<br />

integrated with the regional and global economy<br />

and set on the path of sustainable economic<br />

and social development. For the IDB Group the<br />

MCPS will form the cornerstone of its dialogue<br />

with <strong>Mauritania</strong> — it will leverage internal Group<br />

synergies and enhance the country’s ownership,<br />

and with it, the development impact of the IDB<br />

Group interventions.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


ANNEXES<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 31


32<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


MAURITANIA AT A GLANCE<br />

Selected Macroeconomic Statistics (Source: IMF’s World Economic Outlook Database, October 2010)<br />

2006 2007 2008 2009 2010 (Est.)<br />

Population (millions) 2.9 3.0 3.0 3.1 3.2<br />

Real GDP (LCU, Billions) 339.8 343.3 355.9 352.1 368.7<br />

Real GDP growth (%) 11.4 1.0 3.7 -1.1 4.7<br />

Nominal GDP (LCU, Billions) 725.0 734.0 854.8 793.5 961.2<br />

Nominal GDP (US$, Billions) 2.7 2.8 3.5 3.0 3.5<br />

GDP per capita (current, LCU Millions) 0.251 0.248 0.282 0.256 0.302<br />

GDP per capita (current, US$) 933.4 953.0 1167.4 975.4 1096.3<br />

Inflation (%) 6.2 7.3 7.3 2.2 6.1<br />

Current Account Balance (%GDP) -1.3 -18.3 -15.7 -12.5 -7.6<br />

Sectors, value added (% of GDP) (Source: WDI 2010)<br />

1970 1980 1990 2000 2007<br />

Agriculture 29 30 30 28 13<br />

Industry 38 26 29 30 47<br />

Services 32 44 42 43 41<br />

Selected Social Indicators (IMF Country Report No. 10/168, April 2010)<br />

1996 2000 2002 2004 2008<br />

Poverty incidence 50.0 46.3 .. 46.7 42.0<br />

Prevalence of child malnutrition 32.0 .. 30.2 39.4<br />

Gross primary enrollment ratio 75.9 89.1 89.8 76.7 90.9<br />

Share of girls in total primary enrollment 46.0 48.0 49.0 79.0 93.5<br />

Child mortality 125.6 122.0 .. .. ..<br />

Maternal mortality rate .. 747.0 .. 820.0 820.0<br />

Incidence of HIV/AIDS .. 0.5 0.6 0.5 ..<br />

Private Sector Indicators (Source: World <strong>Bank</strong> 2010)<br />

2003 2004 2005 2006 2007<br />

Time required to start a business 82 82 82 82 65<br />

2009 2010 Change<br />

Doing Business 161 166 -5<br />

Starting a Business 140 149 -9<br />

Dealing with Construction Permits 141 154 -13<br />

Employing Workers 123 125 -2<br />

Registering Property 62 74 -12<br />

Getting Credit 147 150 -3<br />

Protecting Investors 143 147 -4<br />

Paying Taxes 176 175 1<br />

Trading Across Borders 161 163 -2<br />

Enforcing Contracts 82 83 -1<br />

Closing a Business 150 150 0<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 33


RESULTS MATRIX<br />

34<br />

PILLAR 1 -- HUMAN DEVELOPMENT (HEALTH)<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

Inadequate<br />

institutional capacity:<br />

1.National Health<br />

policy and a 5-year<br />

health sector plan<br />

prepared and<br />

operational<br />

Support the initiative<br />

for preparation of<br />

a national health<br />

sector policy and the<br />

proposed five-year<br />

plan<br />

<strong>Development</strong> of<br />

national health sector<br />

plan<br />

Leveraging the ongoing<br />

efforts of key partners<br />

on ground;<br />

2. Government annual<br />

health budget/<br />

counterpart funding<br />

and partners support<br />

to Health Increased<br />

Training and retaining<br />

of Staff<br />

Partnership promotion<br />

and synergy to address<br />

key challenges<br />

Operationalization of<br />

the decentralization<br />

Enforcement of<br />

governance<br />

• Absence of a clear<br />

and coherent policy<br />

and a national health<br />

sector plan<br />

• Understaffing of the<br />

Ministry of Health<br />

(MOH).<br />

• Inadequate<br />

decentralization<br />

• Weaknesses in<br />

financial management<br />

and procurement<br />

Improve the health and welfare<br />

through improved access to<br />

quality health care and social<br />

equity to enable reducing the<br />

overall mortality and morbidity,<br />

particularly IMR and MMR<br />

3. Improved health<br />

staff training,<br />

distribution and<br />

motivation<br />

Support to<br />

extension of PHC<br />

services (Facilities,<br />

equipments, raining<br />

and retaining of<br />

basic health staff at<br />

community level);<br />

Improvement in access<br />

to quality health<br />

services for vulnerable<br />

groups and in remote<br />

areas<br />

Increased budget<br />

allocation<br />

Under-funding:<br />

4. Access to quality<br />

health services in<br />

priority remote areas<br />

improved<br />

Support for disease<br />

control programs<br />

(EPI and epidemics<br />

control)<br />

Alternative Health<br />

financing promoted<br />

Weak health<br />

management<br />

information system<br />

(HMIS/<br />

Lack of coordination<br />

between key partners<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


PILLAR 2 -- RURAL DEVELOPMENT AND FOOD SECURITY (AGRICULTURE AND FOOD SECURITY)<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

Access to food improved<br />

as measured by the Food<br />

Security Commission<br />

(CSA)<br />

Challenges<br />

Food security improved<br />

Incomes increased for<br />

targeted communities in<br />

IDB intervention areas.<br />

Rural Poverty reduced<br />

Rural areas, where more<br />

than 50% of the poor live<br />

have sufficient potential<br />

to ensure food security<br />

and eliminate poverty,<br />

and contribute positively<br />

to the national economy.<br />

Infrastructure ( access<br />

roads, small dams, wells,<br />

gardens, grain storage,<br />

etc.). Equipment (grain<br />

mills, fences, tools, etc.).<br />

Farmers trained and<br />

organized.<br />

Community-based<br />

integrated rural<br />

development and<br />

watershed management<br />

project (CBIRD-WM).<br />

Project: X1<br />

Provide food security;<br />

More areas under<br />

production and higher<br />

yields obtained.<br />

Agriculture production in<br />

rain fed areas increased.<br />

<strong>Mauritania</strong> rain fed<br />

zone can sustain more<br />

than twice the actual<br />

production of cereal<br />

and pulses if existing<br />

improved techniques<br />

for soil and water<br />

conservation and<br />

management were<br />

adopted, if functional<br />

value chains were<br />

established and if local<br />

communities were fully<br />

empowered.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 35<br />

Alleviate poverty;<br />

Promote the sustainable and<br />

equitable growth of the sector.<br />

Increase its contribution to the<br />

national economy.<br />

X hectares of irrigated<br />

schemes rehabilitated<br />

and under production.<br />

Farmers trained and<br />

organized.<br />

Rehabilitation of existing<br />

irrigated schemes (REIS).<br />

Project: X2<br />

Rice yields and<br />

production increased.<br />

and economic viability of<br />

local rice achieved in IDB<br />

supported projects.<br />

Rice yields and<br />

production increased.<br />

and economic viability of<br />

local rice achieved in the<br />

Senegal River Valley.<br />

Irrigation potential<br />

(137.000ha) is sufficient<br />

to meet most of country<br />

needs for rice, vegetables<br />

and animal feed and<br />

allow for some vegetable<br />

and/or fruit exports.


PILLAR 2 -- RURAL DEVELOPMENT AND FOOD SECURITY (AGRICULTURE AND FOOD SECURITY) (CONTINUED)<br />

36<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

Livestock inventory<br />

completed.<br />

Veterinarian staff<br />

trained, equipped and<br />

operational.<br />

New water points<br />

created.<br />

Livestock Project.<br />

Project: X3<br />

The livestock population<br />

is healthier and more<br />

productive.<br />

Added value per animal is<br />

increased.<br />

*Milk collection system is<br />

in place.<br />

*Milk processing centers<br />

are operational and<br />

economically viable.<br />

*Market share for local<br />

milk improved and<br />

imports reduced.<br />

*Number of milk<br />

processing centers<br />

increased.<br />

*Volume of local milk<br />

processed is increased.<br />

*Value-added in the dairy<br />

and red mead sectors<br />

significantly increased.<br />

Potential to support<br />

a larger and healthier<br />

livestock population and<br />

to improve significantly<br />

the value-added of this<br />

sector. It can: (a) produce<br />

all the milk the country<br />

needs; (b) increase<br />

the value-added of its<br />

red meat production<br />

for local markets and<br />

exports and (c) develop a<br />

modern hide and leather<br />

processing industry.<br />

Provide food security;<br />

*Slaughter houses are<br />

built and are operational.<br />

Support to the<br />

Private Sector for the<br />

development of (i)<br />

dairies, (ii) slaughter<br />

houses, (iii) meat<br />

processing centers and<br />

(iv) skin and leather<br />

industries.<br />

Project: X5<br />

*Local red meat market<br />

if fully supplied and<br />

according to norms and<br />

processed red meat<br />

exports are growing.<br />

Alleviate poverty;<br />

*Value-added for hides is<br />

significantly augmented<br />

*Hide treatment units<br />

are built<br />

Promote the sustainable and<br />

equitable growth of the sector.<br />

*<strong>Mauritania</strong> exports<br />

processed hides<br />

Increase its contribution to the<br />

national economy.<br />

Training and equipment<br />

of fisherman completed.<br />

<strong>Development</strong> of<br />

fish culture and fish<br />

management as part<br />

of CBIRD-WM and REIS<br />

projects.<br />

Project: X1 & X2<br />

Fish production and<br />

catches are increased.<br />

Fish is sold on the local<br />

market. More fish is<br />

being consumed. .locally<br />

Inland fish production<br />

and marketing developed<br />

and procure additional<br />

income and food for local<br />

populations<br />

Inland fishing potential in<br />

the major watercourses<br />

(Senegal River and<br />

tributaries) and in the few<br />

water reservoirs can be<br />

better exploited in order<br />

to increase income and<br />

improve nutrition in rural<br />

areas.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


PILLAR 2 -- RURAL DEVELOPMENT AND FOOD SECURITY (INFRASTRUCTURE -- TRANSPORT)<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group<br />

Expects to Influence<br />

During the MCPS<br />

Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Current Challenges/<br />

Binding Constraints<br />

Government Goals / Strategy<br />

Source: PRSP III<br />

Feasibility study<br />

for the additional<br />

segments<br />

- Continue<br />

implementing the<br />

North-South Corridor<br />

through Atar-Tidjikja-<br />

Kifa<br />

Feasibility study<br />

for the additional<br />

segments is ready<br />

A significant reduction<br />

in travel time for<br />

traffic through the<br />

new North-South<br />

corridor<br />

Imbalanced funding<br />

for road maintenance<br />

versus road<br />

construction<br />

Steady<br />

implementation of the<br />

on-going projects and<br />

approval of financing<br />

for new segments<br />

Financing of some<br />

segments approved,<br />

(particularly<br />

- Improving rural<br />

access through paving<br />

and tarring rural<br />

feeders and earth<br />

tracks<br />

High transportation<br />

fees, limited<br />

capacity and lack<br />

of competitiveness<br />

of the maritime<br />

transport<br />

Improve the institutional<br />

organization of the sector<br />

Master plan of<br />

improvement of rural<br />

access road prepared<br />

Significant reduction<br />

in the cost of<br />

transport services<br />

through the corridor<br />

Priority rural access<br />

roads based on fair<br />

techno-economic<br />

criteria<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 37<br />

Modernize the development of<br />

infrastructure<br />

- Enhancing the<br />

capacity of the<br />

National Road<br />

Maintenance<br />

Authority<br />

Master Plan for<br />

the ENER activity<br />

expansion is<br />

prepared, Investment<br />

in Heavy material is<br />

defined<br />

Substantial<br />

improvement in<br />

access to markets in<br />

rain fed areas<br />

Limited capacity<br />

of the national<br />

construction sector<br />

Improve the economic<br />

competitiveness of transport<br />

services<br />

Master Business Plan<br />

for the ENER activity<br />

expansion is prepared<br />

including renewal and<br />

Investment plan for<br />

Heavy material<br />

Increased capacity<br />

of the ENER in terms<br />

of roads length<br />

maintained per year.<br />

Limited internal<br />

capacity for M & E of<br />

projects<br />

Reinforce the capacity of the<br />

sector<br />

Feasibility study of<br />

integrated MIS in the<br />

Ministry of Transport<br />

- Technical and<br />

Managerial<br />

capacity building<br />

of the Ministry<br />

and Transport,<br />

particularly in terms<br />

of deployment of an<br />

effective MIS<br />

Needs Assessment<br />

and ToR for the<br />

preparation of<br />

Feasibility study of<br />

integrated MIS in the<br />

Ministry of Transport<br />

is prepared<br />

Comprehensive MIS<br />

of the Ministry of<br />

Transport in line with<br />

the Multi-modal<br />

master plan study<br />

Lack of PPP structures<br />

and regulations and<br />

limited absorption<br />

capacity of public<br />

sector


PILLAR 2 -- RURAL DEVELOPMENT AND FOOD SECURITY (ENERGY)<br />

38<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the IDB<br />

Group Expects to Support<br />

Current Challenges/<br />

Binding Constraints<br />

Government Goals / Strategy<br />

Source: PRSP III<br />

Interventions to support<br />

• Solar Energy and related<br />

investments in Foum<br />

Legleyte dam – El Ghayre<br />

zone; and Nbeykitt<br />

Lahrath, Dhar zone; in<br />

Adel Berou zone).<br />

• Rate of urban<br />

electrification increased<br />

from 50% to 80%<br />

• OMVS and national<br />

networks are upgraded to<br />

cater for additional new<br />

generation capacity<br />

• Rate of rural and semiurban<br />

electrification<br />

increased from 5% to<br />

40%.<br />

• Nouakchott–<br />

Nouadhibou transmission<br />

connection<br />

• Restructuring of State<br />

Owned Enterprise<br />

(SOMELEC) is completed<br />

• Inefficiency of State<br />

Owned Enterprise and its<br />

monopolistic nature<br />

Sustain growth by:<br />

Contracts awarded for<br />

the construction of CSPs<br />

in respective regions<br />

Increased production capacity<br />

• Transmission Network<br />

Extension to Selibaby,<br />

Kiffa, Aiou, and Nema.<br />

• SOMELEC becomes<br />

a soundly managed<br />

economically and<br />

financially viable<br />

organization<br />

• Lack of investment<br />

during past 5 years<br />

Promotion of interconnected<br />

network to reduce the cost of<br />

power generation<br />

Detailed Design for<br />

the expansion and<br />

interconnection of the<br />

separate networks<br />

• <strong>Development</strong> of<br />

HV transmission lines<br />

(OMVS).<br />

• Solar Energy Project for<br />

hybridization of isolated<br />

networks financing is<br />

approved , contract for<br />

construction of CSPs<br />

awarded in respective<br />

regions.<br />

• Exploitation of Energy<br />

source potential of<br />

country especially Solar<br />

& Gas<br />

• Energy production<br />

overly dependent on fuel/<br />

diesel import<br />

Rural electrification<br />

• Limited Energy<br />

resources<br />

<strong>Development</strong> of local synergies<br />

and renewable energy<br />

Technical Assistance in<br />

building institutional<br />

capacity and structure<br />

for the development and<br />

structuring of IPP (PPP)<br />

Energy projects<br />

• Master plan and<br />

Feasibility study for<br />

upgrading and expanding<br />

the transmission network<br />

are completed<br />

• Significantly improved<br />

access to reliable and<br />

affordable electricity<br />

• Explore optimization<br />

of Fuel import financing<br />

through ITFC financing.<br />

Explore optimization of<br />

Fuel import financing<br />

through ITFC financing.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


PILLAR 3 -- ENHANCING AND DIVERSIFYING THE MODERN ECONOMY (PRIVATE SECTOR DEVELOPMENT)<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group<br />

Expects to Influence<br />

During the MCPS<br />

Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

• Slow functioning and<br />

outdated legal system<br />

• Reinforcement of structural<br />

reforms;<br />

• Lack of skilled staff<br />

• SME development &<br />

promotion of <strong>Islamic</strong><br />

financing<br />

• Improve corporate<br />

governance<br />

• Lack of Management<br />

skills<br />

• Improvement of business<br />

climate;<br />

• Promotion of growth sources;<br />

and<br />

• Project development<br />

Facility<br />

• Support SME<br />

development<br />

• Support private<br />

entrepreneur prepare<br />

bankable projects<br />

• Support private<br />

projects in the fishery<br />

sector<br />

• Weak organisations<br />

as most companies are<br />

typically family-based<br />

businesses and the<br />

owner is dominant.<br />

• <strong>Development</strong> of<br />

infrastructures for a sustainable<br />

growth.<br />

• Ensure sufficient<br />

supply of affordable<br />

housing units and<br />

other real estate<br />

infrastructure<br />

• Enabling<br />

environment for<br />

<strong>Islamic</strong> finance/private<br />

sector development<br />

• Limited Market<br />

knowledge, which<br />

triggers lack of market<br />

data.<br />

• Rural development with a<br />

special attention focused on rain<br />

agriculture and livestock;<br />

• Access to finance<br />

is difficult as banks<br />

are reluctant to lend<br />

given the scarcity of<br />

bankable projects.<br />

• Promotion of the access of<br />

the poor to adapted financial<br />

services and the development<br />

of SME;<br />

• Conservation of the<br />

environment and its promotion<br />

as an economic asset<br />

• Limited use of IT<br />

given a lack of skills<br />

and of infrastructure.<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 39<br />

• <strong>Islamic</strong> <strong>Bank</strong> of<br />

<strong>Mauritania</strong><br />

• Help SMEs promote<br />

corporate governance<br />

• MMI project<br />

• Special Economic<br />

Zone (SEZ) of<br />

Nouadhibou<br />

• Boost the value<br />

creation in the fishery<br />

sector by developing<br />

the required<br />

platform for local<br />

transformation of the<br />

fishery products<br />

Boost investment in<br />

the fishery sector<br />

• Establish the <strong>Islamic</strong><br />

bank of <strong>Mauritania</strong><br />

• Launch catalyst<br />

programs which are<br />

business enabler to the<br />

private entrepreneurs


PILLAR 3 -- ENHANCING AND DIVERSIFYING THE MODERN ECONOMY (TRADE FINANCE)<br />

40<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

1- Commercial banks’<br />

transactions mainly<br />

concern operators of<br />

the import – export<br />

sector, and are<br />

essentially based on<br />

short-term financing<br />

1- Have ITFC , and<br />

ICIEC as main partners<br />

for Public short term<br />

needs.<br />

1- SONIMEX, SOMELEC<br />

and SOMAGAS for<br />

public companies<br />

1- Have Government<br />

support in securing<br />

deals by providing<br />

Government<br />

guarantees to the<br />

targeted companies<br />

1- Regular supply<br />

of Foodstuff and<br />

Agriculture products<br />

and prices stability<br />

against speculation.<br />

Particular focus on<br />

strategic commodities<br />

such seeds, fertilizers,<br />

which are critical<br />

for <strong>Mauritania</strong> food<br />

security and agriculture<br />

development.<br />

2- The cost of Financing<br />

is seen as very<br />

expensive, short term<br />

financing often exceed<br />

12% pa<br />

2- Participate in the<br />

financing of strategic<br />

commodities in favor<br />

of private and Public<br />

entities<br />

2- All local banks<br />

to materialize lines<br />

of financing in the<br />

benefit of SMEs<br />

3- Government<br />

companies could<br />

improve their financing<br />

conditions<br />

Trade Finance<br />

2- Have Government<br />

involvement in<br />

facilitating the contact<br />

and the feasibility<br />

studies.<br />

2- Financing SMEs<br />

in targeted sectors<br />

through lines of finance<br />

dedicated to local<br />

banks.<br />

4- SMEs needs better<br />

terms and Conditions<br />

for short term financing<br />

3- Finance Government<br />

Companies in need of<br />

short term facilities:<br />

Petroleum and Energy<br />

companies, importing<br />

companies,<br />

5- Existent need in<br />

foodstuff, Agriculture<br />

products, Energy and<br />

Petroleum Short term<br />

financing<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Cross-cutting Theme: CAPACITY BUILDING<br />

Capacity Building for Generic and Systemic Weaknesses<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

4th and 5th Pillars of PRSP-III: Improving Governance and Capacity Building Economic Governance and Enhancing Piloting, Monitoring, Evaluation and Coordination of the<br />

PRSP<br />

- Institutional and<br />

Organisational building<br />

operations,<br />

- Weak capacity for<br />

Project Design and<br />

Formulation (Lack of<br />

Quality at Entry)<br />

- To enhance planning and<br />

programming,<br />

- Personnel and cadre<br />

training sessions,<br />

- Planning,<br />

programming,<br />

monitoring and<br />

evaluation of<br />

policies, projects and<br />

programmes enhanced,<br />

- To develop the statistical<br />

functions and information<br />

systems,<br />

- Recruitment of<br />

experts for in-house<br />

Training and Education,<br />

- Weak dimensions<br />

of Management for<br />

<strong>Development</strong> Results<br />

(leadership, monitoring<br />

and evaluation and<br />

budget processes)<br />

- Technical Capacity<br />

for Capacity Building<br />

Operations (Grants<br />

and Loans)<br />

- Progressive buildup<br />

of the statistical<br />

and Monitoring<br />

and Evaluation<br />

systems within the<br />

Administration,<br />

- To secure an efficient and<br />

effective management of public<br />

resources,<br />

- Promotion of<br />

Regional Cooperation<br />

(Cooperation<br />

Framework<br />

Agreements)<br />

- Capacity of<br />

ministries in policy<br />

formulation, planning,<br />

programming, Project<br />

design and formulation,<br />

implementation,<br />

monitoring, audit and<br />

evaluation enhanced,<br />

- M&E Units exist in<br />

only 50% of the Public<br />

Administration,<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 41<br />

- To improve the institutional<br />

and organizational framework<br />

- Institutional and<br />

organizational<br />

frameworks improved,<br />

- To develop human resource,<br />

- Government Entities<br />

concerned: MAED, MF,<br />

MPSMA, CPI, GIS, CoA,<br />

APSM, and Sectoral<br />

Ministries.<br />

- M&E is not a<br />

permanent activity for<br />

projects and policies,<br />

- Capacity of human<br />

resources in terms of<br />

poverty analysis and<br />

assessment of policy<br />

impacts strengthened.<br />

- To set up an efficient<br />

monitoring and evaluation<br />

system and consistent reporting<br />

instruments.<br />

- Weak absorptive<br />

capacity,


Cross-cutting Theme: CAPACITY BUILDING<br />

Capacity Building for Generic and Systemic Weaknesses<br />

42<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group Expects<br />

to Influence During the<br />

MCPS Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

Agriculture, Livestock and Food Security<br />

- Attractive Environment<br />

for PPP in Agriculture<br />

set up,<br />

- Weak capacity of<br />

institutions,<br />

- Negotiation of PPP<br />

Contracts<br />

- Master plan for<br />

attribution of land plots<br />

under PPP contracts<br />

- Capacity of Agricultural<br />

institutions enhanced<br />

- Lack of appropriate<br />

framework for private<br />

participation in<br />

agriculture sector<br />

- To promote the PPP in the<br />

Agriculture Sector<br />

- Strengthening of<br />

statistic analysis capacity<br />

- Targeted Training<br />

Sessions<br />

- Technical Capacity<br />

for Capacity Building<br />

Operations (Grants and<br />

Loans)<br />

- Turnaround plan of<br />

UNCACEM, SONADER<br />

- Application of<br />

agronomic research<br />

increased,<br />

- Weak entities in charge<br />

of extension services and<br />

dissemination<br />

- To enhance Agricultural<br />

institutions (UNCACEM,<br />

SONADER, SNAAT, Research<br />

Centers, Agricultural Education,)<br />

- Institutional Building<br />

- Capacity Building for<br />

SNAAT<br />

- Value chains in<br />

Agriculture and Livestock<br />

studies,<br />

- Inexistence of applied<br />

agronomic research,<br />

- Technical Cooperation<br />

with IDB membership,<br />

- To improve capacity of analysis,<br />

planning, and evaluation of the<br />

Ministry of Rural <strong>Development</strong>,<br />

- Institutional Support in<br />

term of sanitary control<br />

of livestock products<br />

- National food security<br />

strategy reviewed,<br />

- Lack of studies of valuechains<br />

- Extension Services and<br />

Dissemination enhanced,<br />

- Outdated food security<br />

strategy<br />

Fisheries<br />

- Targeted Training<br />

Sessions,<br />

- Technical Capacity<br />

for Capacity Building<br />

Operations (Grants and<br />

Loans)<br />

- Enhance the capacity of<br />

the Ministry cadre in term<br />

of fish stock management<br />

tools<br />

- Strengthening of<br />

Research in fisheries<br />

Sector for Optimal<br />

exploitation of fish stocks<br />

- Weak governance<br />

- Overuse of fish stocks<br />

- To increase the Government<br />

Institutional and Technical<br />

Capacity to manage the fish stock<br />

resources<br />

MCPS for <strong>Mauritania</strong>, 2011-2015


Cross-cutting Theme: CAPACITY BUILDING<br />

Capacity Building for Generic and Systemic Weaknesses (Continued)<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group<br />

Expects to Influence<br />

During the MCPS<br />

Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

Health Sector<br />

- Lack of clear and<br />

articulated strategy<br />

- Targeted Training<br />

Sessions<br />

- Lack of adequate<br />

staff<br />

- Institutional Building<br />

(school of public<br />

health, paramedical<br />

education)<br />

- Technical Capacity<br />

for Capacity Building<br />

Operations (Grants<br />

and Loans)<br />

- Creation and<br />

Equipment of<br />

laboratory for control<br />

of drugs quality<br />

- Preparation of the<br />

Health Sector Strategy<br />

- To prepare the Health Sector<br />

Strategy<br />

- Weak managerial<br />

capacity<br />

MCPS for <strong>Mauritania</strong>, 2011-2015 43<br />

Transport<br />

- To build capacity in the<br />

maintenance of roads network<br />

- Training Sessions of<br />

Agents and cadre of<br />

ENER<br />

- ENER’s Capacity<br />

Enhanced,<br />

- Weak capacity in<br />

maintenance of roads,<br />

- Technical Capacity<br />

for Capacity Building<br />

Operations (Grants<br />

and Loans)<br />

- Training in Planning<br />

and formulation of<br />

Transport Projects<br />

Setting-up of<br />

Technical Unit for<br />

Projects Design<br />

within the Directorate<br />

of Transport<br />

Infrastructure<br />

- Functions of design,<br />

monitoring and<br />

evaluation of projects<br />

strengthened,<br />

- Weak capacity in<br />

design, monitoring<br />

and evaluation<br />

- To enhance monitoring<br />

and evaluation capacity,<br />

management of concession<br />

contracts for the Directorate<br />

of Planning, Cooperation and<br />

Research


Cross-cutting Theme: CAPACITY BUILDING<br />

Capacity Building for Generic and Systemic Weaknesses (Continued)<br />

44<br />

IDB Interventions Output<br />

Intermediate Results<br />

that IDB Group<br />

Expects to Influence<br />

During the MCPS<br />

Period<br />

Outcomes that the<br />

IDB Group Expects to<br />

Support<br />

Government Goals / Strategy Current Challenges/<br />

Binding Constraints<br />

Electricity<br />

- Weak capacity<br />

in identification,<br />

formulation of PPP<br />

Energy projects<br />

- Targeted Training<br />

Sessions in PPP<br />

Contracts negotiation,<br />

- Setting-up of the<br />

Agency for Renewable<br />

Energy<br />

- Master Plan for<br />

Electricity Distribution<br />

Grid<br />

- Institutional<br />

framework of energy<br />

production outdated,<br />

- To enhance the capacity of<br />

identification, formulation and<br />

negotiation of PPP Electricity<br />

Projects<br />

- Reverse linkage<br />

agreements between<br />

<strong>Mauritania</strong> and IDB<br />

member countries in<br />

Rural Electrification<br />

and Renewable<br />

Energy,<br />

- Technical Capacity<br />

for Capacity Building<br />

Operations (Grants<br />

and Loans)<br />

- Review of the<br />

Institutional<br />

Framework for Energy<br />

Production<br />

- Preparation of the<br />

strategy of Renewable<br />

Energy<br />

- Weak capacity of<br />

implementation of<br />

rural electrification<br />

and renewable energy<br />

projects<br />

- To enhance the capacity<br />

of implementation of rural<br />

electrification projects and<br />

Renewable Energy Projects<br />

- To review the<br />

institutional<br />

Framework of Energy<br />

Production,<br />

- Lack of master<br />

plan for Electricity<br />

distribution grid<br />

MCPS for <strong>Mauritania</strong>, 2011-2015

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