HomeReportsBureau of Economic and Business Affairs2019 Investment Climate Statements…Mauritania

# 					2019 Investment Climate Statements: Mauritania			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

U.S. direct investment in Mauritania is increasing, albeit from a low base. In 2017, U.S. direct investment position in Mauritania totaled USD 92 million, an increase of 268 percent from 2016.  This is mainly due to the launch of the offshore gas projects, as well as implementation of economic policies aimed at maintaining macroeconomic stability, marginal recovery of extractive sectors, and diversification of the economy.  On December 21, 2018, BP and Kosmos signed the Final Investment Decision for Phase 1 of the Greater Tortue Ahmeyim with the government of Mauritania and Senegal. First production is expected to occur in 2022.

Historically, Mauritania has been relatively open to foreign direct investment, especially in the mining, hydrocarbon, agriculture, and fishing sectors.  Currently the Mauritanian government is working on a draft law to amend the mining code to make it more appealing to foreign investors. In 2015, the government adopted a new Fisheries Strategy to ensure transparency and sustainable fishing practices in the sector. In 2014, the government of Mauritania amended the Hydrocarbon Code to provide more incentives that favor foreign investment in the hydrocarbon sector.   The government’s focus on foreign investment is seen in the improvement in the country’s ranking in the World Bank’s Doing Business Report: in 2018 Mauritania was ranked at 148 out of 190 countries, up from ranking 176 in 2014. Weak economic governance and transparency remain key concerns.

*Table 1: Key Metrics and Rankings*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Mauritania is increasingly open to foreign direct investment (FDI).  In 2019, the government created a ministerial-level committee charged with overseeing improvements in the business climate.  Government officials regularly highlight the need to improve the business climate in order to attract more FDI, particularly from the United States.  Local, reputable businesses in the private sector frequently express interest in representing U.S. companies, and the number doing so is growing. There is no law prohibiting or limiting foreign investment, which can target any sector of the economy.  There are no laws or regulations specifically authorizing private firms to adopt articles of incorporation or association, which limit or prohibit foreign investment, participation, or control. There are no other practices by private firms to restrict foreign investment.  The government continues to prioritize foreign investment in all sectors of the economy. It is working closely with the International Monetary Fund (IMF), the World Bank, and the international donor community to improve basic infrastructure and to update laws and regulations.

The IMF 2018 review on the Extended Credit Facility (ECF) in Mauritania shows improvement in balance of payments and reserves recovery following the 2014 shock to the Mauritanian economy caused by the drop in price of iron ore.

In 2012, the government adopted a revised Investment Code and created the Office of Promotion of the Private Sector (OPPS) to promote and monitor investment.  Currently, prospective investors are required to obtain an Investment Certificate by presenting their proposal and all required documents to the OPPS. The government tends to maintain on ongoing dialogue with investors through formal business conferences and meetings.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

All domestic or foreign entities are allowed to engage in all forms of remunerative activities, except activities involving selling pork or alcohol.  There are no limits of transfer of profit or repatriation of capital, royalties, or service fees, provided the investments were authorized and made through approved banks.  The Government of Mauritania practices mandatory screening of foreign investments. These screening mechanisms are routine and non-discriminatory. The OPPS “Guichet Unique” (a single location to take care of all administrative needs related to registering a company) provides the review for all sectors, except the petroleum and mining sectors, which require approval from a cabinet meeting led by the president.

**Other Investment Policy Reviews**

The latest investment policy review occurred in February 2008.  The United Nations Conference on Trade and Development (UNCTAD) review is available online, in French, at: http://unctad.org/en/Docs/iteipc20085_fr.pdf.  The report recommended that the Government of Mauritania diversify the economy, improve its investment potential through increasing revenue generated by the exploitation of natural resources, accelerate required reforms, and enhance the business and investment climate.

In 2011, Mauritania underwent a World Trade Organization (WTO) trade policy review.  The report is available online at http://www.wto.org/english/tratop_e/tpr_e/tp350_e.htm.  The report states that, since 2002, the government had undertaken few reforms in the areas of customs, trade, or investment regulations.  The report also highlighted a lack of transparency as a deficiency. These policy reviews led to the release of the revised Investment Code in June 2012 to improve transparency in the government procurement process.

**Business Facilitation**

The government continues to amend its laws and regulations to facilitate business registration.  The “Guichet Unique” facilitates business registration and encourages FDI. In 2016, Mauritania made starting a business easier by eliminating the minimum capital requirement.  In 2017, trading across borders was made easier by upgrading the SYDONIA World electronic system, which reduced the time for preparation and submission of customs declarations for both exports and imports.  It can take up to seven days to register a business in Mauritania.

In 2018, Mauritania ranked 148 among 190 economies in the ease of doing business, according to the World Bank annual ratings.  Mauritania had been ranked 150 in 2017. The 2018 ranking is the highest ever for Mauritania, and marks a significant improvement from Mauritania’s worst ranking at 176 in 2014.

**Outward Investment**

Government incentives toward promoting outward investment remain limited.  Mauritania’s major exports are iron ore (46 percent), non-fillet frozen fish (16 percent), and gold (11 percent). China, France, Spain, Japan, and the United Arab Emirates are the main trade partners.  There are no investment restrictions on domestic investors from investing abroad**.**

							2. Bilateral Investment Agreements and Taxation Treaties					

Mauritania has bilateral investment agreements with the Arab Maghreb Union (Algeria, Libya, Morocco, and Tunisia) as well as with Saudi Arabia, France, Belgium, and Romania.  Agreements also exist with Burkina Faso, Cameroon, The Gambia, Ghana, Mauritius, Italy, Lebanon, Qatar, Yemen, Korea, and Egypt.

Mauritania is a signatory to the Cotonou Agreement between the European Union (EU) and the group of African, Caribbean and Pacific (ACP) countries, and thus enjoys free access to the EU market.  Due to its least-developed country status, Mauritania also benefits from duty-free access to the European market under the Everything-But-Arms initiative.

Mauritania does not have a bilateral investment agreement or bilateral taxation treaty with the United States.

Effective January 1, 2019, Mauritania is not eligible for benefits under the U.S. African Growth and Opportunity Act (AGOA) due to insufficient progress toward combating forced labor.  However, Mauritania remains eligible to the Generalized System of Preferences (GSP), which allows marketable goods produced in Mauritania to enter the U.S. market duty-free.

Mauritania is a member of the Arab Maghreb Union (Algeria, Libya, Morocco, and Tunisia) economic trade block.  In 2017, Mauritania and Economic Community of West African States (ECOWAS) countries signed an Association Agreement aimed at allowing the free flow of goods between Mauritania and ECOWAS countries; that agreement is provisionally in effect.  Mauritania has been a member of the World Trade Organization (WTO) since May 31, 1995. The country, however, is in a transitional stage regarding its commitments, and it is currently engaging the WTO to ensure it makes progress towards complete compliance with required commitments.

							3. Legal Regime					

**Transparency of the Regulatory System**

The government has adopted laws that have furthered transparency during recent years.  In 2016, the government approved a new anti-corruption bill, which aims to introduce the provisions of the UN Convention against Corruption in the Mauritanian judicial system so that it is consistent with international standards.  In 2017, the government approved the new anti-discrimination law aimed at tackling discrimination. In 1999, the government created a regulatory authority in charge of overseeing the privatization process and ensuring that transparent policies and laws are used to foster competition through the bidding process.  There is no law or policy impeding foreign investment in Mauritania. In practice, ownership in many sectors of the economy is concentrated among a few families and tribes who exercise significant oligopolistic power, which is reinforced by formal and informal regulatory barriers.

While the government is moving to streamline bureaucratic procedures for investment, difficulties remain.  There is a complex and often-overlapping system of permits and licenses required to do business. There continues to be a lack of transparency in the legal, regulatory, and accounting systems, which do not meet international norms.  Proposed laws and regulations are supposed to be published in draft form for public comment before being sent to the National Assembly, but this does not always occur. To the best of our knowledge, there are no informal regulatory processes managed by nongovernmental organizations or private sector associations, and laws and regulations do not discriminate against foreign investment.

In 2011, the government promulgated two orders to regulate accounting practices of nongovernmental and private entities, which must now have reputable financial management and submit periodic reports of financial transactions.  All such entities must also have a local bank account with an identifiable account number and address. As of 2018, these orders are inconsistently followed and were not enforced by the government.

In 2018, the Mauritanian government continued to make meaningful progress in implementing the EITI standard.

**International Regulatory Considerations**

See section 2 – Bilateral Investment and Taxation Treaties.

**Legal System and Judicial Independence**

The Mauritanian judicial system combines French and Islamic (Malikite rite) judicial systems. The constitution guarantees the independence of the judiciary (Article 89), and an organic law  also protects judges from undue influence. Civil and Commercial Codes exist and are designed to protect contracts, although court enforcement and dispute settlement can be difficult. The judicial system remains weak and unpredictable in its application of the law, due in part to the training judges receive in two separate and distinct legal systems: Shari’a law and laws modeled after the French legal system. Judges remain undercompensated and susceptible to tribal pressures and bribery. Specialized commercial law courts exist, but sometimes judges lack training and experience in commercial and financial law. Some judges may only have formal training in the Shari’a legal system, while others are only familiar with the French civil law system. A lack of standardization of applicable legal knowledge in the judiciary leads to inefficiency in the execution of judgments in a timely and efficient manner.

Laws and decrees related to commercial and financial sectors exit. However, they are not always publicly available.

Most judgments are not issued within prescribed time limits and records are not always well kept. Judgments of foreign courts are recognized by local courts, but enforcement is limited. During the last few years, the government has taken steps to provide training to judges and lawyers as an attempt to professionalize the system to reduce the backlog and work through cases in a more efficient manner. In 2017, the Government passed a new small claims law that covers cases valued at less than USD 11,000 USD.

**Laws and Regulations on Foreign Direct Investment**

There are no new major investment laws or judicial decisions ratified last year.  The investment Code, last updated in June 2012, was designed to encourage direct investment by enhancing the security of investments and facilitating administrative procedures.  The code provides for free repatriation of foreign capital and wages for foreign employees. The code also created free points of importation and export incentives. Small and medium enterprises (SME), which register through OPPS (“Guichet Uniquie” one-stop-shop), do not pay corporate taxes or customs duties.  The Code also created Special Economic Zones to encourage regional development. Separately, the Nouadhibou Free Zone was created with its own regulatory scheme more favorable to foreign investment (see further in section 4).

**Competition and Anti-Trust Laws**

The Ministry of Economy’s office of “Commission de Passation des Marches des Secteurs de l’Economie et Finance” (Procurement Commission of the Economic and Finance Sectors, www.cmsef.mr) is the government agency that reviews tender bids in accordance with the law and regulations.  Suppliers for large government contracts are selected through a tender process initiated at the ministry level. Invitations for tenders are publicly announced in local newspapers and on government websites. After issuing an invitation for tenders, the Ministry of Economy’s commission in charge of reviewing tenders selects the offer that best fulfills government requirements.  If two offers, i.e., one from a foreign company and one from a Mauritanian company, are otherwise considered equal, statutes require that the government award the tender to the Mauritanian company. In practice, this has resulted in tenders awarded to companies that have strong ties to government officials and tribal leaders, regardless of the merits of an individual offer. Preferential treatment remains common in government procurement, despite the government’s recent efforts to promote transparency in the public sector.

**Expropriation and Compensation**

The revised Investment Code provides more property guarantees and protection to business owners.  The Code protects private companies against nationalization, expropriation, and requisition. However, if a foreign enterprise is facing difficulties, the government can propose an expropriation plan to avoid bankruptcy and to protect jobs of local employees, with fair and equitable compensation.

The only known case of expropriation since Mauritania’s independence was the nationalization of the French mining company MIFERMA in November 1974, the largest employer and hard currency earner in the country.  In that case, the two parties agreed on a compensation plan.

The Mauritanian government guarantees companies that the tax, customs, and legal regulations in force at the time of issuance of an Investment Certificate will remain applicable to them for a period of 20 years.  Likewise, any favorable changes to the corporate tax or customs laws during that guaranteed period will be applicable to the investor.

**Dispute Settlement**

*ICSID Convention and New York Convention*

In 1966, Mauritania ratified the Convention on the settlement of investment disputes between States and nationals of other States.  In 1997, Mauritania became a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). However, there is no specific legislation to ensure enforcement.

*Investor-State Dispute Settlement*

The most recent investment dispute between the Mauritanian government and a foreign investor occurred in 2006 over production-sharing contracts (PSC) signed in 2003 with former President Taya’s government.  A successor government lodged a dispute over four amendments to the original PSC involving oil revenues and environmental issues. An international arbiter was brought in and ruled in the government’s favor.

*International Commercial Arbitration and Foreign Courts*

Judgments of foreign courts are not consistently applied.  The government accepts international arbitration of investment disputes between foreign investors and government authorities.  Judgments of foreign courts are accepted by the local courts, but enforcement is limited. In the past, issues were referred to the International Center for Settlement of Investment Disputes (ICSID), of which Mauritania became a member in 1965.

Settling disputes through the courts remains a long and complicated process.  Inadequate laws and poor administration remain the key source of legal disputes encountered in the country. The duration of investment disputes are subject to numerous appeals before reaching a final verdict.  Though the government is looking for ways to streamline the system by providing training to judges and lawyers, the court procedures are currently long and complicated.

Though there are no recent reports on disputes involving State-Owned Enterprises (SOE), it is likely that domestic courts would favor SOEs during a dispute.

**Bankruptcy Regulations**

The country has bankruptcy laws which carry the potential for criminal penalties.  Mauritania’s bankruptcy laws were last updated in 2001. The bankruptcy law allows for the reorganization or restructuring of a business.  There are very few reported cases of these laws being applied.

							4. Industrial Policies					

**Investment Incentives**

Investment incentives such as free land, deferred and reduced taxes, and tax-free importation of materials and equipment are available to encourage foreign investors.  The Ministry of

Economy and Finance offers tax benefits, including exemptions in some instances, to enterprises in Special Economic Zones and some companies in priority sectors throughout the country.  The Investment Code outlines standard investment incentives, but foreign investors may negotiate other incentives directly with the government.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

The Investment Code creates Special Economic Zones (Free Export Zone or Cluster of Development in the Interior) by decree.  SEZ are subject to continuous monitoring by the Customs Service in a manner specified in the decree. Nouadhibou, the commercial capital of Mauritania, is designated as a Free Trade Zone by the government.  The Nouadhibou Free Trade Zone has its own regulatory structure. As of January 2018, the Nouadhibou Free Trade Zone has granted 450 authorizations for companies, primarily in the tourism, services, and fisheries sectors.

The Investment Code provides three main preferential tax regimes: Small and Medium Enterprises Regimes, which apply to any investment between USD 167,000 and USD 667,000; Free Export Zones/Clusters of Development; and Targeted Industries, which includes agriculture, artisanal fishing, tourism, renewable energy, and raw material processing.  Land concessions allocated to companies located in Free Economic Zones will follow a rental rate determined by joint decision of the relevant Minister and the Minister of Economy, which sets land allocation prices. As for tax advantages, companies will be exempt from taxes, excluding personnel taxes such as for retirement and social security, if they have invested at least USD 1.6 million and generated at least 50 permanent jobs, and show a potential to export at least 80 percent of their goods or services.

Additionally, under the provisions in the revised Investment Code, companies will not be taxed on patents, licenses, property, or land, but rather assessed a single municipal tax that cannot exceed an annual amount of USD 16,000.  Companies established in free zones are exempt from taxes on profits for the first five years. Additionally, companies established in free zones benefit from a total exemption of customs duties and taxes on the importation and export.

**Performance and Data Localization Requirements**

The government mandates that companies may employ expatriate staff in no more than 10 percent of key managerial staff positions, in accordance with the Labor Code and are required to have a plan in place to “Mauritanize” expatriate staff positions.  Expatriate staff may be hired in excess of 10 percent with authorization from the appropriate industry authority by establishing that no competent Mauritanian national is available for the vacancy. Foreign companies are required to transfer skills to local employees by providing training for lower-skilled jobs.  However, this does not apply to companies operating within the Nouadhibou Free Trade Zone Authority.

Current immigration laws do not discriminate nor are they considered to apply excessively onerous visa, residence, or work permit requirements inhibiting foreign investors’ mobility.  However, some U.S. companies have expressed frustration with the difficulty in obtaining or renewing work and residency permits for their employees that are not Mauritanians.

The government imposes performance requirements as a condition for establishing, maintaining, or expanding an investment, or for access to tax and investment incentives.  Foreign investors consistently report that government-sponsored requests for tenders lack coherence and transparency. The revised Investment Code requires investors to purchase from local sources if the good or service is available locally and is of the same quality and price as could be purchased abroad.  There is no requirement for investors to export a certain percentage of output or have access to foreign exchange only in relation to their exports. If imported “dumped” goods are deemed to be competing unfairly with a priority enterprise, the government will respond to industry requests for tariff surcharges, thus providing some potential protection from competition.

Expatriate staff members working for companies in accordance with the Labor Code are eligible to import, free of customs duties and taxes, their personal belongings and one passenger vehicle per household, under the regime of exceptional temporary admission (Admission Temporaire Exceptionelle, or ATE).  All sales, transfers, or withdrawals are subject to permission of customs officials.

The Mauritanian government does not have any requirements or a mechanism that impedes companies from transmitting data freely outside the country.  There are no laws in place enforced on local data storage.

							5. Protection of Property Rights					

**Real Property**

Property rights are protected under the Mauritanian Civil Code, which is modeled on the French code.  In practice, however, it can be difficult to gain redress for grievances through the courts. Mortgages exist and are extended by commercial banks.  There is a well-developed property registration system for land and real estate in most areas of the country, but land tenure issues in southern Mauritania, particularly the area along the Senegal River, are the subject of much controversy.  For example, in January 2014, rural communities around Boghe (300 kilometers southeast of Nouakchott) denounced as expropriation the signing of an agreement with the Saudi Arabian Al Rajhi Bank that granted permission for the Bank to cultivate 31,000 hectares in Brakna and Trarza provinces.  Investors should be fully aware of the history of the lands they are purchasing or renting, and should verify that the local partner has the proper authority to sell/rent large tracts of land—particularly in this region—before agreeing to any deals. In 2015, the Ministry of Economy and Finance established a computerized system to provide more transparent land allocation.  All information regarding the property titles is available at the Land Registry Agency housed at the Ministry of Habitat, including information related to mortgages and other tax related matters. The Land Registry Agency performs due diligence prior to making the final title transfer. To register a property, owners only need to have their notarized sale agreement along with the title certificate.

**Intellectual Property Rights**

The legal protection of intellectual property rights (IPR) is still a relatively new concept in Mauritania, and those seeking legal redress for IPR infringements will find very little historical record of cases or legal structures in place to support such claims.  There is no separate judicial circuit that specializes in IPR.

Mauritania is a member of the Multilateral Investment Guarantee Agency (MIGA) and the African Organization of Intellectual Property (OAPI).  In joining the latter, member states agree to honor IPR principles and to establish uniform procedures of implementation for the following international agreements: the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, the Hague Convention for the Registration of Designs and Industrial Models, the Lisbon Convention for the Protection and International Registration of Original Trade Names, the Washington Treaty on Patents, and the Vienna Treaty on the Registration of Trade Names.  Mauritania signed and ratified the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994 but has yet to implement it. The government also signed and ratified the World Intellectual Property Organization (WIPO) Convention in 1976, but it has not signed or ratified the WIPO Internet treaties. The government is in the process of launching reforms related to property, product certification, and accreditation bodies to protect IPR. The Agency for Consumer Protection, housed at the Ministry of Commerce, is in charge of quality control and the prevention of sales of counterfeit goods in local markets, but its capabilities to track and enforce its regulations are very constrained.

Mauritania is not included in the United States Trade Representative (USTR) Notorious Markets List or the Special 301 Report.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

In accordance with Article 3.1 of the Investment Code, the Government of Mauritania guarantees any individual or legal entity wishing to undertake business activities in the country the freedom of establishment in accordance with laws and regulations.  Private entities, whether foreign or national, have the right to freely establish, acquire, own, and/or dispose of interests in business enterprises and receive legal remuneration. Privatization and liberalization programs have also helped put private enterprises on an equal footing with respect to access to markets and credit.  In principle, government policies encourage the free flow of financial resources and do not place restrictions on access by foreign investors. Most foreign investors, however, prefer external financing due to the high interest rates and procedural complexities that prevail locally. Credit is often difficult to obtain due to a lax legal system to enforce regulations that build trust and guarantee credit return.  There are no legal or policy restrictions on converting or transferring funds associated with investments. Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.

Commercial bank loans are virtually the only type of credit instrument.  There is no stock market or other public trading of shares in Mauritanian companies.  Currently, individual proprietors, family groups, and partnerships generally hold companies, and portfolio investments.

**Money and Banking System**

The IMF has in the past assisted Mauritania with the stabilization of the banking sector and access to domestic credit has become easier and cheaper.  A proliferation of banks has fostered competition that has contributed to the decline in interest rates from 30 percent in 2000 to 10 percent in 2009, not including origination costs and other fees.  Interest rates have remained stable since 2009, ranging between 10 to 17 percent as of April 2019.

The banking system is stable but fragile.  In 2018, GDP growth is estimated at 3.5 percent, up from 3.0 percent in 2017 and 1.4 percent in 2015.  Nevertheless, this rebound remains fragile as liquidity constraints in the financial market, arising from fiscal consolidation and an ineffective monetary policy, continue to dampen liquidity in the banking sector.  The country’s five largest banks are estimated to have USD 100 million in combined reserves; however, these figures cannot be independently verified, making an evaluation of the banking system’s strength impossible. As of April 2019, 25 banks, national and foreign, currently operate in Mauritania, despite the fact that only some 15 percent of the population holds bank accounts.  The Central Bank of Mauritania is in charge of regulating the Mauritanian banking industry, and the Central Bank has made reforms to streamline the financial sector’s compliance with international standards. The Ministry of Economy and Finance mandates that the Central Bank perform yearly audits of Mauritanian banks. There are no restrictions enforced on foreigners who wish to obtain an individual or business banking account.

In 2017, the Central Bank significantly reduced direct foreign currency sales to the private sector to better enforce foreign exchange regulations as part of its drive to allow for a more flexible determination of the exchange rate.  In 2018, the Central Bank of Mauritania lost all correspondence banking relationships with banks in the United States. This occurred because of de-risking policies enforced by U.S. banks.

**Foreign Exchange and Remittances**

*Foreign exchange*

There are no legal or policy restrictions on converting or transferring funds associated with investments.  Due to the global de-risking phenomenon, there are currently no correspondent banking relationships between U.S. and Mauritanian banks.  Local branches of international banks (such as Societe Generale or Attijari) do maintain correspondent banking relationships with U.S. banks and are able to clear transactions in USD.

Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability of such currencies. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.  To transfer funds, investors are required to open a foreign exchange bank account in Mauritania. There are no maximum legal transaction limits for investors transferring money into or out of Mauritania, although regulations to withdraw money may be complicated in practice.

The local currency, the ouguiya, is freely convertible within Mauritania, but its exportation is not legally authorized.  Hard currencies can be obtained from the central bank and local commercial banks. The Central Bank holds regular foreign exchange auctions, allowing market forces to fix the value of the ouguiya.  Individuals and companies may obtain hard currency through the informal market and commercial banks for the payment of purchases or the repatriation of dividends. If the bank has hard currency available, there is no delay in effect for remitting investment returns.  However, if the bank does not have sufficient reserves, the hard currency must be obtained from the Central Bank in order to conduct the transfer. The Central Bank is required to prioritize government transfers, which could present further delays. Delays of one to three weeks, although relatively uncommon, can occur.

In January 2018, the government of Mauritania introduced a new currency.  The new currency drops a zero from the country’s previous currency; however, the value and the name of the currency remain unaffected by the change.  Local banks had to adapt their software, change their checkbooks, and reconfigured their ATMs to bring them into compliance with the new currency.

*Remittance Policies*

There are no legal parallel markets in Mauritania that would allow investors to remit investments through other means.  There is no limit on the inflow or outflow of funds for remittances of profits, debt service, capital or capital gains.

Businesses transfer money through the traditional Hawala system—they deposit their money in a Hawala store and designate a beneficiary for pick up.  The Hawala system has become a reliable substitute to the high interest rate, long wait period and transaction fees imposed by local banks. However, in March 2019, the Central Bank closed 700 illegal money transfer points to restructure the financial sector.  Currently, only nine agencies have a provisional authorization for transfer of funds.

**Sovereign Wealth Funds**

The Central Bank administers the National Fund for Hydrocarbon Reserves, a sovereign wealth fund (SWF), which was established in 2006.  The SWF is funded from the revenues received from the extraction of oil, any royalties and corporate taxes from oil companies, and from the profits made through the fund’s investment activities.  The fund’s mandate is to create macroeconomic stability by setting aside oil revenues for developmental projects. However, the fund’s management is considered to lack transparency and the projected revenue streams remain unrealized.

							7. State-Owned Enterprises					

SOEs and the parastatal sector in Mauritania represent an important portion of the economy.  They have an impact on employment, service delivery, and most importantly fiscal reserves given their size in the economy and state budget.  However, they are constrained by weak institutional capacity. In recent years, parastatal companies and SOEs have experienced significant business and financial problems in terms of increasing levels of debt, operational losses, and payment delays.  This increase in fiscal reserve risk has led the government to provide subsidies to SOEs.

In 2017, the government announced its plan to privatize SONIMEX (La Societe Nationale d’Importation et d’Exportation).  SONIMEX is an import/export company involved in food distribution commodities (wheat, rice, tea, sugar, milk, vegetable oil) in Mauritania.  This project has not yet been finalized.

Hard budget constraints for SOEs are written into the Public Procurement Code, but are not enforced.  SOMELEC, the state-owned electricity company, has been operating in a precarious financial situation for many years.  The company relies on government financial support to remain operational.

Most state-owned enterprises in Mauritania have independent boards of directors.  The directors are usually appointed based on political affiliations.

There are about 120 SOEs and parastatal companies operating in the commercial sector with engagements in a wide range of sectors including energy, network utilities, mining, petroleum, telecommunications, transportation, commerce, and fisheries.  Parastatal and wholly owned SOEs remain the major employer in the country. This includes the National Mining Company, SNIM, which is by far the largest Mauritanian enterprise and the second largest employer in the country after public administration.

The publically available financial information on parastatal and wholly owned SOEs is incomplete and outdated, with the exception of budget transfers.  There is no publication of the expenditures SOEs allocate to research and development. In addition, they execute the largest portion of government contracts, receiving preference over the private sector.  According to the Public Procurement Code, there are no formal barriers to competition with SOEs. However, informal barriers such as denial of access to credit and/or land exist.

**Privatization Program**

We not aware of any privatization programs during the reporting period.

							8. Responsible Business Conduct					

Historically, there has been little local awareness of corporate social responsibility in Mauritania, either on the part of producers or consumers.  However, awareness is growing, particularly as more foreign-owned companies enter the Mauritanian market. Certain state-run industries have been active in providing basic educational and training opportunities for the children of their employees and scholarships for their employees to study abroad, but this is usually the extent of social responsibility initiatives.  Companies in the mining and hydrocarbon industries send young Mauritanians overseas to complete their studies on scholarship programs; many of the scholarship recipients have family ties to powerful individuals in the companies. The larger fishing companies have recently started to provide more opportunities for qualified youth to study at the fishing and naval training school in Nouadhibou to prepare them for careers in the fishing industry.  Current projects by foreign-owned companies include providing free water to local communities; building vocational training centers, health clinics, and roadways; and providing healthcare equipment and medicines to towns near company operations.

Since 2011, three of Mauritania’s largest mining companies—Kinross, Mauritanian Copper Mines (MCM), and SNIM—funded a School of Mining with the goal of increasing the number of qualified Mauritanians to serve in the mining industry.  The school has a partnership with the Ecole Polytechnique in Montreal and with the mining companies. The school is considered a public entity under the Ministry of Oil, Energy, and Mines. In 2017, Kosmos Energy provided financial support to the national Diawling Park in the southern part of country, and in 2018 Kosmos launched the Kosmos Innovation Center in Mauritania.  ExxonMobil, BP and the other international oil companies now operating in Mauritania are likewise increasing corporate social responsibility programs.

							9. Corruption					

Despite the ongoing push to fight corruption, wealthy business groups and government officials reportedly receive frequent favors from authorities, such as exemption from taxes, special grants of land, and favorable treatment during bidding on government projects.  Mauritanian and non-Mauritanian employees at every level and in every organization are believed to flout Mauritanian tax laws and filing requirements. The only exceptions are civil servants, whose income taxes are automatically deducted from their pay. Such widespread tax evasion and corruption has deprived the government of a significant source of revenue, weakening its capacity to provide necessary services.  In 2009, the government passed a law requiring all high-ranking government employees to publicly declare their assets, although this law is not enforced.

In the July 2009 presidential election, President Aziz ran on an anti-corruption and populist platform.  Donor partners applauded the release of the first-ever Mauritanian anti-corruption strategy in November 2009, and a number of high-profile anticorruption cases have demonstrated at least nascent efforts to fight corruption.  Although progress has been made, laws and regulations are still not evenly and effectively enforced, largely because corruption is endemic in a society that is still largely based on familial and tribal relationships rather than strict adherence to the rule of law.

Corruption is an obstacle to foreign direct investment in Mauritania, but firms generally rate access to credit, an underdeveloped infrastructure, and a lack of skilled labor as even greater impediments.  Corruption is most pervasive in government procurement, bank loans, fishing license attribution, land distribution, access to port facilities and tax payments. Giving or accepting a bribe is a criminal act punishable by two to 10 years imprisonment and fines up to USD 700, but there is little application of this law.  Firms commonly pay bribes to obtain telephone, electricity, and water connections, and construction permits more quickly.

There are several organizations that track corruption within Mauritania.  Transparency International has a representative who reports on local corruption policies and events.

In practice annual auditing of government, accounts are not enforced and therefore rarely conducted.  However, the government rectified previously misreported financial data in an effort to be more transparent, such as publishing quarterly financial statements on a government treasury website:  www.tresor.mr.

In April 2016, a new anti-corruption bill was introduced to address the provisions of the UN Convention against Corruption and to provide protection to NGOs involved in investigating corruptions cases.  Corruption is most pervasive in government procurement, bank loans, fishing license attribution, land distribution, tax payments, and mining licenses.

*Resources to Report Corruption*

Contact at government agency or agencies are responsible for combating corruption:

Cour Des Comptes MauritanieEmail ccomptes@cc.gov.mrTelephone: +222 4525 34 04Fax: +222 4525 49 64

Contact at “watchdog” organization:

“Publiez ce que vous payez” (Publish What You Pay)Executive Office+222 4525-0455+222 4641-7702

							10. Political and Security Environment					

Mauritania’s constitution is grounded in French civil law and sharia (Islamic law).  The National Assembly exercises legislative functions but was weak relative to the executive.

In August 2017, the government organized a referendum on constitutional amendments, which passed with 85 percent of the vote.  One of the amendments led to the dissolution of the Senate and the transformation of the legislative system into a unicameral one.  The number of seats at the new National Assembly increased from 147 to 157. In September 2018 the Union for the Republic (UPR), the president’s party, won 95 of 157 seats in the National Assembly in legislative elections.

The National Police is responsible for enforcing the law and maintaining order in urban areas.  The National Guard, under the Ministry of Interior and Decentralization, performs limited police functions in keeping with its peacetime role as the guarantor of physical security at government facilities, including prisons.  Mauritanian security forces have demonstrated notable progress in restore civil order during riots and other large-scale disturbances throughout the country.

The Ministry of Interior and Decentralization’s newest police force, the General Group for Road Safety, maintains security on roads and operates checkpoints throughout the country.

							11. Labor Policies and Practices					

The Mauritanian economy is highly informal (mainly in agriculture, artisanal fisheries/ mining and animal husbandry) and unemployment rate is pegged at 12 percent.  While labor is abundant, there is a shortage of skilled workers and well-trained technical and managerial personnel in most sectors of the economy. As a result, there are few sectors of the economy that use advanced technologies because the skilled labor required to operate them is not readily available.  The mining sector is led by the national company SNIM; the subsidiary of a Canadian gold mining company, Kinross-Tasiast; and the subsidiary of a Canadian company, MCM. These companies provide advanced training for their employees.

The “Mauritanization law” requires that employers give priority to nationals over foreign workers, unless the skills required for the position cannot be filled by the national labor force.  In this case the employer should create a plan of “Mauritanization” to transfer skillsets to local workers within a period of two years. There is no restriction on employers resorting to reducing their workforce in periods of unfavorable market conditions.  However, the law requires that compensations be granted to laid-off employees.

The ILO reported in 2018 that a significant pay gap between staff in the labor inspectorate and staff in other government inspection departments who receive better remuneration (such as tax inspectors or education inspectors) led to attrition.  The ILO also reported that the labor inspectorate was subject to undue influence by employers and the government, thereby reducing the effectiveness of inspection activity.

The law provides that men and women should receive equal pay for equal work.  The two largest employers, the civil service and the state mining company, observed this law; most employers in the private sector reportedly did not.  In the modern wage sector, women also received family benefits, including three months of paid maternity leave. Women faced employment discrimination, because employers usually preferred to hire men, and women were overrepresented in low-paying positions.

							12. OPIC and Other Investment Insurance Programs					

Mauritania signed an agreement with Overseas Private Investment Corporation (OPIC), but its program is limited.  Potential investors should contact OPIC directly for guidance. Mauritania is a member of the Multilateral Investment Guarantee Agency (MIGA), which protects foreign direct investment against political risk.  A British-Mauritanian insurance company, Atlantic Londongate, offers broad commercial coverage.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Table 3: Sources and Destination of FDI*

Data not available.

*Table 4: Sources of Portfolio Investment*

Data not available.

							14. Contact for More Information					

Andrew Byrley or Samba DialloEconomic Officer & Economic Specialist+222 4525-2660NouakchottEconComm@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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