Mauritania - Islamic Development Bank

hotel business, and banking and insurance.
Industry provides the second lead contribution
(31%) followed by the primary sector (18%). The
growth in industry hinges on the development
of iron ore project, Guelb II, government
investments in construction, electricity sector
reform, and improvement in business climate.
Agriculture sector, on the other hand, depends
on improved irrigation and focused investment to
develop livestock, fisheries, and rural businesses.
Table 6 highlights the expected real GDP growth
under PRSP III.
2. Risks to Government Strategy
34. There are several risks to the Government
development strategy. First, the weak capacity
of public agencies will hamper efficient
implementation. Weak governance and
policymaking framework will lead to a disconnect
between the PRSP development framework and
actual investment by the public sector. Also going
from PRSP to actual budget formulation calls for
close coordination between local regional and
national policies. The Government is aware of
this risk but it is unclear if the planned mitigation
measures under PRSP III will prove adequate.
35. Secondly, there is a large funding gap for
implementing PRSP III. The Government only has
resources to fund less than half of the financing
requirement of UM 1338 billion. It is unclear
how the large resource gap is to be covered.
The document indicates that the Government
is looking to public-private partnerships to help
close this gap. However, given the status and rate
of private sector development in Mauritania, the
prospects of the private sector providing such
large amount of funding pose serious challenge
for the implementation of PRSP III.
36. Thirdly, given that there are already
indications that country is suffering from ‘Dutchdisease’
phenomenon, it might have negative
implications on development efforts of the
12
TABLE 6: GDP Growth Rate (Base Scenario)
Base Scenario; PRSP III 2008 2010 2011 2012 2013 2014 2015
GDP Growth 3.7% 4.6% 5.2% 5.4% 6.0% 5.4% 5.5%
Poverty Incidence 42% 35% - - - - 25%
Government. The rise of services sector and
decline in manufacturing and agriculture over the
years points to affects the unlinked dual economy
is having on the pro-poor sectors. Without
appropriate strategy to neutralize the affects
of capital flows as a result would undermine
Government efforts to develop these sectors.
37. Fourth, the Plan does not take account of
the “Dutch Disease” effect, which the economy
appears to be suffering from. This creates the
risk that the planned drivers of growth may not
materialize as expected.
38. Lastly, the Plan indicates that the
Government is fully aware of the risks posed
by external shocks but it offers no concrete
measures to mitigate these risks. Change in
commodity prices in international markets, and
natural disasters such as drought, flooding, and
locust attacks have hampered the economic
development in the past.
39. On the upside, there are two uncertainties.
First, the country may be successful in finding
new resources from on-going exploration
activities, which will help to create windfalls
that will improve the fiscal balances, and attract
foreign capital. Secondly, and more important for
poverty reduction, Mauritania may be successful
in establishing a closer link between the enclave
mineral sector and the rest of the economy. This
will help to accelerate growth and development.
Table 7 shows a higher growth scenario based on
a simple economic model, where both factors
come into play.
IV. PAST AND CURRENT INTERVENTIONS OF
IDB GROUP AND INVOLVEMENT OF
OTHER DONORS
1. IDB Group Portfolio in Mauritania
40. IDB Group total financing approval for
Mauritania has reached US$ 672.6 million. Total
cumulative approvals of IDB project finance and
MCPS for Mauritania, 2011-2015