International Business

Environment Project
Countries: Sudan & Mauritania

2/4/2011
Submitted to: Prof. Sukumar Nandi

Submitted by

Group: 7

Annie Nishank (PGP26136)

Bhushika Ahuja (PGP26142)

Binesh K . (PGP26143)

Kiran P. (PGP26152)

Madhuri Baxla (PGP26153)

Contents

SUDAN

1. Introduction ................................................................................................................................. 6
2. Political Developments ................................................................................................................ 9
3. Monetary policy......................................................................................................................... 10
4. Economic Outlook ..................................................................................................................... 10
4.1 Economic growth ................................................................................................................. 11
5. Macroeconomic Policy .............................................................................................................. 18
6. Fiscal Policy ................................................................................................................................ 18
7.GOSS( Government of Southern Sudan) and central bank dispute revenue-transfer currency 19
8. External sector ........................................................................................................................... 20
9. Private Sector ............................................................................................................................ 21
10. Legal Framework ..................................................................................................................... 22
11. Other Developments ............................................................................................................... 23
12. International relations ............................................................................................................. 23

MAURITANIA

13. Introduction ............................................................................................................................. 27

14. GOVERNMENT AND POLITICAL CONDITIONS .......................................................................... 28
15. Demographics:......................................................................................................................... 29
16. Economy .................................................................................................................................. 30
16.1 GDP of Mauritania ............................................................................................................. 31
16.2 Per Capita GDP of Mauritania ........................................................................................... 32
17. Monetary Policy....................................................................................................................... 33
18. The openness of the economy ................................................................................................ 35
19. Planning process ...................................................................................................................... 36

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20. Public Sector ............................................................................................................................ 36
21. Industrial Sector ...................................................................................................................... 37
22. Socio-cultural environment ..................................................................................................... 38
23. Operation of the legal framework ........................................................................................... 39
23.1 Judiciary ............................................................................................................................. 39
23.2 Legislative Branch .............................................................................................................. 39
23.3 Level of governance........................................................................................................... 40
24. References ............................................................................................................................... 41

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 Acknowledgement
We would like to express sincere gratitude to our Mentor Prof. Sukumar Nandi
for guiding us in the working of this project.

We would also like to thank our friends at IIM Lucknow for providing us the
support during the making of this project.

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 Republic of the Sudan
‫ال سودان جمهوري ة‬
Jumhūrīyat al Sūdān

Motto: ‫( ل نا ال ن صر‬Arabic)
"Victory is Ours"

Flag Emblem

Currency

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1. Introduction

Sudan is the largest and one of the most geographically diverse countries in Africa.
Mountain ranges divide the deserts of the north from the swamps and rain forests of the
south, and the River Nile splits the country from east to west. However, the country may
split if the people in the south vote in a January 2011 referendum to separate and form
the continent's newest state. The country has been beset by conflict. Two rounds of
north-south civil war cost the lives of 1.5 million people, and a continuing conflict in the
western region of Darfur has driven two million people from their homes and killed more
than 200,000.

Sudan's centuries of association with Egypt formally ended in 1956, when joint British-
Egyptian rule over the country ended. Independence was rapidly overshadowed by
unresolved constitutional tensions with the south, which flared up into full-scale civil war
that the coup-prone central government was ill-equipped to suppress. The military-led
government of President Jaafar Numeiri agreed to autonomy for the south in 1972, but
fighting broke out again in 1983. After two years of bargaining, the rebels signed a
comprehensive peace deal with the government to end the civil war in January 2005.
The accord provides for a high degree of autonomy for the south. The region will also
share oil revenue equally with the north. In Darfur, in western Sudan, the United Nations
has accused pro-government Arab militias of a campaign of ethnic cleansing against
non-Arab locals.
The conflict has strained relations between Sudan and Chad, to the west. Both countries
have accused each other of cross-border incursions. There have been fears that the
Darfur conflict could lead to a regional war. Decades of fighting have left Sudan's
infrastructure in tatters. With the return of millions of displaced southerners, there is a
pressing need for reconstruction. Sudan has large areas of cultivatable land, as well as
gold and cotton. Its oil reserves are ripe for further exploitation. Arabic is the official
language and Islam is the state religion, but the large non-Arab, non-Muslim minority has
rejected attempts by the government in Khartoum to impose Islamic Sharia law on the
country as a whole. President Omar Bashir has been locked in a power struggle with
Hassan al-Turabi, his former mentor and the main ideologue of Sudan's Islamist
government. Since 2001 Mr Turabi has spent periods in detention and has been
accused, but not tried, over an alleged coup plot.

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The Comprehensive Peace Agreement (CPA) signed in January 2005, paved the way
for the establishment of the Government of National Unity (GoNU) and the Government
of South Sudan (GoSS) to form a Confederation system under the „one country, two
systems‟ frameworks. An Interim National Constitution was adopted in July 2005 to
provide for a decentralized government system. More than five years into the CPA six-
year life cycle, some progress was made, including the ceasefire, power-sharing, and
presidential and parliamentary elections. On the economic front, macroeconomic stability
has been restored, contributing to sustaining GDP growth. However, major challenges
remain, including rising political tensions and security threats in the run up to the
January 2011 referendum, the external debt burden, capacity gaps and pervasive
poverty, particularly in Southern Sudan.

January 9th ,2011 Referendum : Nearly 99% of southern Sudanese voters chose
secession in this month's independence referendum, clearing the way for Sudan to split
in two.The official preliminary results were announced at a ceremony attended by a
crowd of several thousand people in the southern capital Juba today. The figures
showed that voter turnout was 98% – far above the 60% threshold required for the result
to be valid.Subject to confirmation of the final result next month, and pending legal
challenges, southern Sudan will be free to declare independence on 9 July.

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2. Political Developments

More than five years following the signing of the CPA, Sudan is still slowly transitioning
from managing the North-South conflict to creating the conditions for engaging in pro-
poor development. The political agenda is guided primarily by the CPA. Presidential and
parliamentary elections were held within the agreed timeframe. The April 2010 election
results confirmed victory for the incumbent Presidents, thereby leaving the political
landscape unchanged for now. With the referenda on the South and Abyei, planned to
take place in January 2011, Sudan is at a historical cross road. The political situation
continues to be volatile with tensions among the CPA partners and potential security
threats on the conduct of the referenda and the post-referendum era

The unresolved Darfur situation continues to weigh heavily on Khartoum’s relations with
the international community. Some progress has been made in 2009 in the humanitarian
and security situation in the region and in the Doha peace talks. However, all parties
involved need to continue making a concerted effort to engage in more comprehensive

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peace talks, which has gained a new momentum with the recent involvement of the
international community.

Furthermore, progress in brokering peace in the Darfur conflict could be undermined by

the water crisis. Water and grazing land have historically been a source of communal
conflict in Darfur. However, this conflict has assumed a new dimension with different
rebel groups vying for power, thus compounding it. There is, therefore, a need to put in
place a comprehensive framework that takes into account communal rights and relations
for attaining durable peace.

3. Monetary policy

US sanctions left Sudan's financial sector relatively isolated from the global credit
crunch, but it has home-grown problems. In 2010-11 the Bank of Sudan (the central
bank) will seek to improve banking supervision, restructure the banking system and
increase provisioning levels in an attempt to address a high level of non-performing
loans (NPLs), which stood at 22% of total loans at end-2008. (More than half of the
NPLs are held by the moribund state-owned Omdurman National Bank.) The central
bank manages monetary policy largely by issuing Islamic financial certificates and
through exchange-rate manipulation. After a period of supporting liquidity, the central
bank is now adopting a more austere monetary policy, aimed at tackling inflation,
including by boosting banks' reserve requirements and no longer making deposits to
support the commercial banks.

4. Economic Outlook

Sudan’s economic outlook is challenging. The near term prospect will be affected by the
uncertainties relating to the upcoming referendum and the risk of factional fighting. The
medium term outlook will depend on a speedy resolution of the political uncertainties, the
governance and institutional arrangements. The huge regional disparities in capacities
and investments will need to be addressed urgently. Reconstruction and development
needs are expected to be enormous and will require international support, including in
resolving the external debt issue. Furthermore, it has become urgent to accelerate steps

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towards economic diversification, as oil production is expected to decline significantly in
the coming years in the absence of new discoveries. The unrealized potentials include
the immense natural resources and the rich agricultural land. Recovery and growth in
agriculture will contribute to diversifying the economy and revitalizing the rural areas,
with the ultimate goal of poverty reduction through private sector-led growth. Key
constraints will need to be addressed, such as the high transaction costs of doing
business, weak market institutions, inadequate infrastructure and cumbersome
administrative barriers.

4.1 Economic growth

In recent years, oil has been the main driver of growth, although agriculture still accounts
for more than one-third of GDP and the services sector is expanding. Official GDP data
are problematic as they use 1982 as their base year (although this will change soon) and
do not capture the large informal economy. However, we estimate that real GDP growth
slowed substantially, to 4.2%, in 2009, but forecast that it will pick up to 4.9% in 2010,
led by growth in services and utilities, before easing to 3.7% in 2011, as political
uncertainty inhibits investment. Oil output is forecast to edge up to an average of
485,000 barrels/day in 2011, owing largely to increased production of the less valuable
Dar Blend. Government consumption will rebound in 2010 owing to higher oil revenue
and election-related expenditure. Private consumption will continue to expand steadily,
albeit less rapidly than in
2005-08.There will be a reasonable amount of state investment in infrastructure,
particularly electricity generation and transmission. Much private investment will be
delayed because of a lack of financing and concerns about political risks relating to the
referendum. Imports and nonoil exports will both increase gradually in 2010-11.

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Sources:

IMF and local authorities' data; estimates (e) and projections (p) based on authors'
calculations.

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.

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5. Macroeconomic Policy

The Comprehensive Peace Agreement (CPA) and the Joint Assessment Mission (JAM)
will continue to guide Sudan’s economic policy through 2011. The CPA-JAM’s
framework and the Poverty Reduction Strategy Paper (PRSP), finalised in December
2009, set general guidelines for post-conflict reconstruction efforts. These focus on good
economic governance and macroeconomic stability as well as the need to accelerate
growth to help the poor, promote sound oil sector management, maintain sustainable
internal and external debt levels, and to enhance decentralisation and build institutional
capacity. They also include measures to promote monetary and financial policies that
are conducive to growth and create an enabling environment for private sector
development.

6. Fiscal Policy

The main aim of fiscal policy is to help achieve high growth rates especially in the non-oil
sector, improved distribution of the benefits from growth and efficient allocation of public
expenditure to enhance progress towards achieving Millennium Development Goals
(MDGs). In 2009, fiscal policy also had to help mitigate the economic and social impact
of the global economic crisis through increased mobilisation of revenue, rationalisation of
public expenditure and effective use of external aid.
In 2009, despite the sharp fall in oil earnings, revenue amounted to 97.4% of budgeted
revenue, mainly due to a doubling of grant and aid flows as well as to unexpected
increases in income from non-oil sources. Actual public expenditure in 2009 was 89% of
planned expenditure and deficit financing was 31% less than planned.
Despite the fall in oil revenue, the 2009 budget was expansionary with agriculture
receiving the largest share at 10.3%, followed by road and transport infrastructure with
10.1%, energy and mining 8.1% while 7.1% went for education and 3.2% for health. The
fiscal deficit increased to 3.7% of GDP in 2008 but it is projected to decline to 2.8% in
2010. Most of the increase in the deficit was financed through domestic borrowing. The
medium-term fiscal policy response to the global crisis and the squeeze in foreign
financing was to increase tax revenue.

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Opportunities to increase revenue include improving tax collection through revision of
VAT exemptions, collection of tax arrears and enhancing the performance state
controlled bodies. Expenditure reform, especially through adjustment of public spending
on goods and services, is also required. Better prioritisation and targeting of capital
expenditure and social spending will enhance growth and reduce the impact of
expenditure cuts on the poor.

Data extracted on 02 Feb 2011 18:59 UTC (GMT) from OECD.Stat

Time 2001 2006 2007 2008 2009 2010 2011
Indicator
TOTAL REV: Total revenue and grants 10.7 21.0 20.6 21.8 18.1 20.2 19.7
TOTAL REV: TAXREV: Tax revenue 5.4 7.4 6.9 6.3 6.3 6.2 6.1
Total revenue OILREV: Oil revenue 4.3 11.2 11.6 14.3 10.5 12.5 12.4
and grants OTHERREV: Other Revenues 0.9 1.9 1.5 0.7 0.7 0.7 0.7
TOTAL EXP: Total expenditure and net lending
11.6 25.6 26.0 23.2 21.8 23.0 22.3
(a)
CURREXP: Current expenditure 10.4 21.1 21.1 20.1 18.9 19.6 19.1
EXCLINT:
Excluding 9.6 20.0 20.2 19.2 17.9 18.3 18.6
interest
WAGES:
CURREXP: Wages and 3.8 5.8 6.8 4.9 5.0 4.7 4.3
Current salaries
expenditure
GOODS: Goods
1.4 2.2 2.1 2.4 2.0 2.2 2.3
and services
INTEREST:
0.8 1.2 1.0 0.9 1.0 1.3 0.5
Interest
CAPEXPEND: Capital
2.1 4.1 4.8 3.2 2.9 3.1 3.2
expenditure
PRIMBAL: Primary balance -0.1 -3.4 -4.4 -0.5 -2.7 -1.5 -2.1
OVERALLBAL: Overall balance -0.9 -4.6 -5.4 -1.4 -3.7 -2.8 -2.6

7. GOSS ( Government of Southern Sudan) and central bank dispute

revenue-transfer currency

On August 24th,2010 , the governor of the central bank, Sabir Mohammed al-Hassan,
rebutted a claim by the GOSS finance minister, David Deng, that the Bank of Sudan (the

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central bank) had started to make oil revenue transfers to Southern Sudan in Sudanese
pounds rather than US dollars. The claim by Mr Deng was later backed up by the GOSS
information and broadcasting minister, Barnaba Marial, who said that during July and
August GOSS had received its share of oil revenue from the central bank in local
currency. However, in early September an undersecretary in the GOSS finance ministry,
Mr Garang, reported that the national authorities had since resumed making the oil
revenue transfers in dollars. Although this issue appears to be resolved for the time
being, Sudan still faces currency problems. Restrictions on foreign-exchange
transactions remain in place, causing difficulties, particularly for Sudanese businesses.
One example is a telecommunications operator, Sudatel, which in early September
claimed that the foreign-exchange restrictions had prevented it from paying dividends to
shareholders, leading to the UAE stock exchange threatening to delist it. Meanwhile,
pressure on the pound remains evident. As of early September the black-market
exchange rate was around US$1:SP2.87, compared with US$1:SP2.80 in August, and
well above the official bank rate of around US$1:SP2.5. Furthermore, although oil
revenue is likely to remain relatively stable during at least the coming six months, the
looming uncertainty of the referendum is likely to increase pressure on the currency.

8. External sector

Oil sales will continue to generate the bulk of export revenue, which will rise to an
average of US$9.8bn in 2010-11. One positive factor is that Dar Blend, which comprises
more than half of Sudan's export volumes, is expected to trade closer to benchmark
prices than in previous years (its price differential below Brent is expected to narrow to
around US$8/b in 2010-11), as more refineries become able to process the acidic crude.
Imports will average US$8.7bn over the forecast period. The trade account fell into
deficit in 2009 but will return to a surplus of US$1.2bn in 2010, which will narrow to
US$867m in 2011. The non-merchandise deficit will grow to an average of US$3.9bn in
2010-11, owing to rising income and services debits related to foreign companies' profit
repatriation and engineering services payments (which were both depressed in 2009),
although net current transfers will remain positive, boosted by remittances from
Sudanese working abroad. Overall, the current account deficit—which we estimate

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reached US$2.8bn (5.2%of GDP) in 2009—is forecast to narrow to 4.2% of GDP in
2010, before widening to 5% of GDP in 2011

9. Private Sector
Sudan has kept up efforts to create an enabling environment for private sector
development, with a special focus on attracting private FDI in agriculture. Despite these
efforts, Sudan’s ranking in the World Bank Doing Business report for in 2010 fell to 154
from 149 out of 183 countries. Sudan posted a marginal improvement in labour but fell
back on ease of starting a business, getting a construction permit and credit. Private
sector access to long-term loans remains extremely limited.
Following the establishment of the central bank’s Microfinance Unit with capital of
USD 40 million in 2007, all commercial banks were required to set up microfinance
offices at their headquarters and allocate 12 percent of total loans to such lending
operations by 2009. The central bank of South Sudan established a Private Sector
Development project in 2009 with funding of USD 20.2 million fund to stimulate private
businesses in the south. To promote entrepreneurship, the Ministry of Commerce and
Industry has trained prospective entrepreneurs, offering them a USD 20 000 grant
through a ―Business Plan Competition.‖

The banking sector showed modest growth. Although the Sudanese banking sector is
small and isolated from the global financial system, there was a concern that the global
financial crisis might negatively impact domestic credit through liquidity restrictions
imposed by the headquarters of foreign-owned banks.

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10. Legal Framework

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11. Other Developments

The government of Sudan undertook several important reforms in 2009 to improve the
performance of the banking sector. Restructuring of the El-Nilein Bank and Omdurman
Bank was completed by the end of 2009. Non-performing loans amounted to 26 percent
of total loans in 2009. On the fiscal side, the government announced several tax and
other reforms aimed at promoting private investment and diversification of economic
activity in the aftermath of the global recession through 2011. These reforms included a
comprehensive tax review to expand the non-oil tax base, the introduction of federal
custom and excise duties in the south, and measures to improve revenue mobilisation
and administration in order to reduce tax evasion and improve the targeting of
government expenditure.

12. International relations

Sudan's relations with the US have improved under the current US envoy, Scott Gration,
but US sanctions will remain in place unless there is a peaceful and credible referendum
and also an acceptable resolution is achieved in Darfur. Relations with EU countries,
which collectively provide the bulk of donor aid to Sudan, have been made more difficult
by the ICC ruling (as they are members of the court, unlike the US). However, Western
countries will increasingly shift their focus from Darfur to the southern referendum, as
they strive to prevent a return to civil war. The Gulf Arab and Asian countries, particularly
China, that have invested heavily in Sudan will continue to support the government.
Egypt has a particular concern about the possible impact of Southern secession on the

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sharing of Nile waters. The African Union will continue to back Mr Bashir against the
ICC, although some member states take a contrarian line on this, and Mr Bashir will
rarely travel beyond the Arab world and Africa for fear of being intercepted and handed
to the court. Although relations between Sudan and Chad have become more amicable
in recent months, there is still a risk they could revert to the old pattern in which they arm
and support each other's rebel groups. If north-south conflict resumes, then relations
with Kenya and other African states close to the SPLM will become difficult.

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Islamic Republic of Mauritania
‫ال موري تان ية اإل س الم ية ال جمهوري ة‬
Al-Jumhūriyyah al-Islāmiyyah al-Mūrītāniyyah

Motto: ‫عدل إخاء شرف‬

( Honor, Fraternity, Justice)

Flag Emblem

Currency

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13. Introduction

Mauritania is located at the western extremity of the Saharan desert. The population was
estimated at 3.2 million people in 2010, with a growth rate of 2.6 percent per year
.Mauritania gained independence on November 28, 1960. The history of Mauritania
from the 3rd to 7th centuries saw the migration of Berber tribes from North Africa
displaced the Bafours, the original inhabitants of present-day Mauritania and the
ancestors of the Soninke. Continued Arab-Berber migration drove indigenous black
Africans south to the Senegal River or enslaved them. By 1076, Islamic warrior monks
(Almoravid or Al Murabitun) completed the conquest of southern Mauritania, defeating
the ancient Ghana Empire. Over the next 500 years, Arabs overcame fierce Berber
resistance to dominate Mauritania. The Mauritanian Thirty-Year War (1644-74) was the
unsuccessful final Berber effort to repel the Maqil Arab invaders led by the Beni Hassan
tribe. The descendants of Beni Hassan warriors became the upper stratum of Moorish
society. Berbers retained influence by producing the majority of the region's Marabouts--
those who preserve and teach Islamic tradition. Hassaniya, a mainly oral, Berber-
influenced Arabic dialect that derives its name from the Beni Hassan tribe, became the
dominant language among the largely nomadic population. Within Moorish society,
aristocratic and servant classes developed, yielding "white" (aristocracy) and "black"
Moors (the enslaved indigenous class).

French colonization at the beginning of the 20th century brought legal prohibitions
against slavery and an end to inter-clan warfare. During the colonial period, the
population remained nomadic, but sedentary black Africans, whose ancestors had been
expelled centuries earlier by the Moors, began to trickle back into southern Mauritania.
As the country gained independence in 1960, the capital city of Nouakchott was founded
at the site of a small colonial village. Ninety percent of the population was still nomadic.
With independence, larger numbers of ethnic Sub-Saharan Africans (Haalpulaar,
Soninke, and Wolof) entered Mauritania, moving into the area north of the Senegal
River. Educated in French, many of these recent arrivals became clerks, soldiers, and
administrators in the new state. Moors reacted to this change by trying to Arabicize
much of Mauritanian life, such as law and language. A schism developed between those
who considered Mauritania to be an Arab country (mainly Moors) and those who sought
a dominant role for the Sub-Saharan peoples. The discord between these two conflicting

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visions of Mauritanian society was evident during inter-communal violence that broke out
in April 1989.

14. GOVERNMENT AND POLITICAL CONDITIONS

The country's first president, Moktar Ould Daddah, served from independence until
ousted in a bloodless coup on July 10, 1978. Mauritania was under military rule from
1978 to 1992, when the country's first multi-party elections were held following the July
1991 approval by referendum of a constitution.
President Taya, who won elections in 1992 and 1997, first became chief of state through
a December 12, 1984 bloodless coup which made him chairman of the committee of
military officers that governed Mauritania from July 1978 to April 1992. On August 3,
2005, President Maaouya Ould Taya was deposed in another bloodless coup. Colonel
Vall established the ruling Military Council for Justice and Democracy, a military organ
responsible for running the country. The council dissolved the Parliament and appointed
a transitional government, which quickly adopted a timetable for the establishment of
democratic rule within two years that led to successful parliamentary elections in
November 2006, and free and transparent presidential elections in March 2007. A new
democratically elected government under President Sidi Mohamed Ould Cheikh
Abdallahi--the first in 29 years--was inaugurated on April 19, 2007.

On August 6, 2008, President Abdallahi was overthrown in a bloodless coup. General

Mohamed Ould Abdel Aziz seized power after President Abdallahi issued a decree
dismissing General Aziz and three other senior military officers. The country was
officially run for eight months by a 12-member High State Council (HSC) composed
entirely of military officers. For the first time in the history of Mauritania, the coup
encountered considerable opposition both nationally and internationally. A Government
of National Unity was instituted on June 27, 2009, followed by President Abdallahi's
voluntary resignation in compliance with the Dakar Accord negotiated under the aegis of
Senegalese President Wade, the African Union, and an International Contact Group and
signed on June 4. Aziz scored a first-round victory in elections organized on July 18. The

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results of those elections were recognized by the international community, and President
Aziz was inaugurated on August 5, 2009.

15. Demographics:

The estimated population of Mauritania in 2010 is 3,205,060 with more than 50% of
population is in the age group between 15 and 64 years. Median age of the Mauritian
population is 20.2 years. Population is growing at a rate of 2.37 %. Mauritania has 41%
of its population is living in the urban areas. Literacy rate of Mauritania is 51.2% (male:
59.5% and female: 43.4%).

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16. Economy

Half the population still depends on agriculture and livestock for a livelihood, even
though many of the nomads and subsistence farmers were forced into the cities by
recurrent droughts in the 1970s and 1980s. Mauritania has extensive deposits of iron
ore, which account for nearly 40% of total exports. The nation's coastal waters are
among the richest fishing areas in the world but overexploitation by foreigners threatens
this key source of revenue. The country's first deepwater port opened near Nouakchott
in 1986. Before 2000, drought and economic mismanagement resulted in a buildup of
foreign debt. In February 2000, Mauritania qualified for debt relief under the Heavily
Indebted Poor Countries (HIPC) initiative and nearly all of its foreign debt has since been
forgiven. A new investment code approved in December 2001 improved the
opportunities for direct foreign investment. Mauritania and the IMF agreed to a three-
year Poverty Reduction and Growth Facility (PRGF) arrangement in 2006. Mauritania
made satisfactory progress, but the IMF, World Bank, and other international actors
suspended assistance and investment in Mauritania after the August 2008 coup. Since
the presidential election in July 2009, donors have resumed assistance. Oil prospects,
while initially promising, have largely failed to materialize, and the government has
placed a priority on attracting private investment to spur economic growth. The
Government also emphasizes reduction of poverty, improvement of health and
education, and privatization of the economy.

Oil was discovered in Mauritania in 2001 in the offshore Chinguetti deposit. Although
potentially significant for the Mauritanian economy, it remains to be seen how much it
will help the country. Mauritania has been described as a "desperately poor desert
nation, which straddles the Arab and African worlds and

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is Africa's newest, if small-scale, oil producer." There may be additional oil reserves inland in
the Taoudeni basin, although the harsh environment will make extraction expensive.

16.1 GDP of Mauritania

Mauritania has one of the lowest GDP rates in Africa, despite being rich in natural resources.
Established GDP of Mauritania is $3.486 billion in the year 2010. Real growth rate of GDP is
5% for 2010. GDP rate were dipped to -1% when the entire world’s economy was shook in
2009 due to subprime crisis. Composition of GDP as per sector is topped by industry with
46.7% followed by service sector comprising of 40.7% and agriculture sector with 12.5%.
Whereas 50% of labor force works in agriculture and 40% and 10% in the service sector and
industry sector respectively. Unemployment rate of Mauritania is whopping 30% which is one
of the worst in the world.
16.2 Per Capita GDP of Mauritania

Per capita GDP for Mauritania is $921. Per capita GDP have been increasing over the last
decade. Record per capita GDP growths of 11% were clocked in the year 2006. Consumer
price inflation has increased in recent months, driven by higher energy and food prices, but
remained in the low single digits. The outlook for 2010 and 2011 remains favorable on the
back of a rebound in prices for Mauritania’s main exports.
 Inflation on CPI of Mauritania

17. Monetary Policy

Mauritania’s economic growth and fiscal position have been weakened by the global fuel and
food price crisis in 2007-08 and subsequent financial crisis and global recession in 2008-09.
The effects of these external shocks were exacerbated by a domestic political crisis that led
to a decline in aid flows, and the unexpected significant drop in oil production. Inflation has
remained under control, but the current account deficit is high at 12.7 percent of GDP, and
international reserves only cover about two months of imports. The economic program
prepared by Mauritania for 2010-12 focuses on addressing these challenges with policies to
support sustained growth and poverty reduction. Fiscal consolidation will create more space
for social and infrastructure spending, while reducing the vulnerability stemming from a large
public debt. Together with a prudent monetary policy framework, this will help maintain low
inflation and rebuild international reserves. Deepening financial intermediation and
enhancing the business environment will support a broad-based private sector led-growth.
The authorities have decided to allow greater exchange rate flexibility to increase the
effectiveness of monetary policy and facilitate adjustment to external shocks, while
conserving scarce international reserves. Rising fuel and food prices may pose some risks to
the inflation outlook, but the authorities’ monetary program for 2010 aims to be sufficiently
firm to keep the inflation rate close to 5 percent.
 Mauritania: Selected Economic and Financial Indicators, 2008–11

Est. Projections

2008 2009 2010 2011

National income and prices

GDP at constant prices 3.7 -1.1 4.6 5.2

Non-oil GDP at constant prices 4.1 -0.9 5.2 5.3

Oil production (1000 barrels per day) 12.1 10.7 7.5 7.5

GDP deflator 12.4 -6.2 8.0 2.7

Non-oil GDP deflator 13.0 -4.1 8.7 2.7

Consumer price index (period average) 7.3 2.2 4.8 4.8

Consumer price index (end of period) 3.9 5.0 4.6 5.1

External sector

Exports of goods, f.o.b. (percentage change in 27.5 -23.4 21.9 4.8

value)
Of which: Non-oil 37.5 -20.8 28.8 4.7

Imports of goods, f.o.b. (percentage change 21.7 -26.3 16.4 12.1

in value)

Current account balance (in percent of GDP) -15.7 -12.7 -11.9 -16.5

Official reserves

Gross official reserves 1/

In millions of US dollars, end of period 194.9 237.9 247.6 288.6

In months of following year's imports 2.2 2.2 2.5 2.7

excluding extractive industries
Money

Money and quasi-money (percentage change) 13.7 15.2 13.0 --

Credit to the private sector (percentage 23.6 3.9 11.4 --

change)

Investment and savings

 Gross investment (percentage of GDP) 27.8 25.2 31.1 32.7

Gross savings (percentage of GDP) 12.0 12.4 19.2 16.2

Consolidated government operations (percent

of non-oil GDP)
Revenue and grants 25.9 26.7 27.8 25.8

Non-oil Revenue and grants 23.7 24.8 26.6 24.7

Non-oil Revenue 22.9 24.0 23.5 23.4

Oil revenue 2.2 1.8 1.2 1.1

Expenditure and net lending 32.8 32.0 32.8 30.2

Overall balance including grants -7.0 -5.4 -5.0 -4.3

Basic non-oil balance; program definition 2/ -7.7 -5.3 -3.8 -1.6

External debt

Total external debt (in percent of GDP) 88.5 103.1 71.5 74.8

Of which: PPG external debt (in percent of 80.7 92.9 58.8 55.3
GDP)

Memorandum items:

Ouguiya/US$ exchange rate (end of period) 261.5 262.0 -- --

Nominal GDP (in billions of UM) 855 794 896 968

Nominal non-oil GDP (in billions of UM) 798 759 868 938

Nominal GDP (in millions of US dollars) 3,540 3,029 3,421 3,695

Price of oil (US$/barrel) 85.6 54.3 66.5 71.8

Population (in millions) 3.1 3.2 3.3 3.4

GDP per capita (in US dollars) 1,124 939 1,036 1,093

18. The openness of the economy

Mauritania’s economy has become substantially liberalized since the early 1980s. Mauritania
is a member of the World Trade Organization since January 1995. And hence the National
Treatment Principle applies automatically to all goods imported and domestically sold in
Mauritania. In terms of services, National Treatment applies only in those sectors and with
those countries that have voluntarily made commitments. In this case, the Mauritanian
government offered National Treatment of services only in the tourism sector, which is
unrelated to port privatization. While Mauritania is not obligated to make commitments in this
area there is growing momentum to do so as other WTO members will likely make their own
commitments in this sector.

With regards to transparency, the GATS states that the government must publish all laws
and regulations. The purpose of this arrangement is to allow foreign companies and
governments to use these inquiry points to obtain information about regulations in any
service sector. The end goal of the WTO is to create an open system of operations that is
not influenced by corruption. Also, the World Trade Organization encourages members to
enhance labor and environmental standards to increase safety for workers and reduce trade
impacts on the environment.

19. Planning process

The World Bank and the International Monetary Fund are pressuring the Mauritanian
government to privatize their state owned enterprises as part of their overall structural
adjustment reform. This mass privatization aims to reduce the public budget deficit, and
create a market based economy. According to World Bank analysis, Mauritania’s state
owned enterprises account for one half of all outstanding domestic debt and for a substantial
portion of foreign borrowing. The lack of competition and the monopoly position of
government run organizations promote inefficient labor cost and institutionalize corruption
among managers of these state owned enterprises and government offices .In order to
compete on the global market, Mauritania is trying to increase private sector participation
within the economy. Deregulating will facilitate fostering competition with state the owned
enterprises (SOEs). The goal of the World Bank policy for Mauritania is for the government
to reallocate public resources via SOE subsidies toward investment in infrastructures and
social programs that create favorable competitive market conditions. The international
institutions see privatization of state the owned enterprises (SOEs) as a means to reduce
public expenditure, pay off foreign debt, and increase government revenues.

20. Public Sector

The Mauritanian government views private sector participation as the means to accomplish
improvement in the government’s budget deficits and a way out from the public finance
crisis. Mauritania’s government no longer has the financial resources to provide capital
increases for its development. Hence Mauritania has committed to structural adjustment
programs with the World Bank and the International Monetary Fund. In order to receive
loans from these institutions for economic and social reform, the country is going for reforms
its public sector.
21. Industrial Sector

The economic structure encompasses a relatively small modern sector and traditional
subsistence sectors such as agriculture and breeding. Mauritania has a very narrow
economic base. Its industrial sector is dominated by mining and fishery activities, which
together provide all export earnings. The rural sector employs an estimated 64 percent of the
labor force. Despite considerable changes since independence in 1960, Mauritania’s
economy remains vulnerable to external shocks such as climatic changes or fluctuation in
the world price of its principal exports.

Mauritania had high hopes for a dramatic change of fortune when oil was discovered off its
shores in 2001. Production in Chinguetti, the main oil field, started in 2006 and immediately
ran into major technical difficulties, which led output to fall. Since then, oil production has
steadily declined, with output projected to be as low as 7,000 bpd in 2011.
The Mauritanian authorities have made good progress in re-establishing macroeconomic
stability. Inflation is projected to remain in the single digits, while rapid credit growth, a strong
pickup in exports, and a rebound in industrial production point to robust growth in the non-oil
sector. Non-oil real GDP is expected to grow by 5.6 percent in 2010 and 5.5 percent in 2011,
supported by strong activity in the agriculture, mining, and construction sectors ,due to
higher prices and production levels of Mauritania’s iron ore, gold, and copper exports.

22. Socio-cultural environment

During the 1960s Independence movement, Mauritania was essentially nomadic society,
with only 5 percent of the population living in urban conglomerations near the Atlantic
Ocean. Due to heavy rural-urban migration, particularly over the last two decades, over half
of the population now lives in urban centers such as Nouakchott and Nouadhibou, which
represent the political and economic capital of the region. The ethnicity of the population is
50 percent Moors and 50 percent black Africans. Social indicators, like nutritional levels,
food security, income, and access to water, are poor. Fifty percent of Mauritania’s people
live below the poverty line of one dollar a day. In Mauritania, labor organizations and
government branches use collective bargaining more as a means of redistributing the
nation’s wealth (role taxes) and satisfying political aspirations, than as a means of increasing
national wealth or protecting workers from unhealthy working conditions. This practice has
led to over-staffing, low productivity, high costs and corrupt practices.

Politics in Mauritania have always been heavily influenced by the military and by "strong
men" or personalities. A leader's ability to exercise political power depends upon control over
resources; financial means; perceived strength; and tribal, ethnic, and family considerations.
Conflict among White Moor, Black Moor, and Black African Mauritanian groups, centering on
unequal access to power, language, government, education, and land tenure, continues to
be a major challenge to national unity. Slavery, and the repatriation and compensation of
victims from the 1989-90 purges of Afro-Mauritanians known as the "passif humanitarie," are
still socio-political issues awaiting resolution, but Mauritania took several important steps
toward reconciliation in 2009. During 2009 President Aziz' government also conducted a
census of former teachers among returnees in order to reinstate them in their former
positions with the Ministry of Education.

23. Operation of the legal framework

23.1 Judiciary

Mauritanian judicial system has a Supreme Court or Court Supreme and Court of Appeals or
lower courts. The Supreme Court and lower courts are nominally independent but subject to
control of executive branch. All judicial decisions are rendered mainly on the basis of Shari'a
(Islamic law) for social/family matters. A western style legal code, applied in commercial and
some criminal cases. It is a combination of Islamic law and French civil law. Mauritania has
not accepted compulsory ICJ jurisdiction.

23.2 Legislative Branch

Bicameral legislature consists of the Senate or Majlis al-Shuyukh (56 seats; 53 members
elected by municipal leaders and 3 members elected for Mauritanians abroad to serve six-
year terms; a portion of seats up for election every two years) and the National Assembly or
Al Jamiya Al Wataniya (95 seats; members elected by popular vote to serve five-year terms).
23.3 Level of governance
The present form of Constitution was Approved 1991. The Original constitution was
promulgated 1961 immediately after gaining independence. The country is headed by an
elected president (head of state). The legislative branch comprises of a bicameral national
assembly. One is the directly elected lower house (81 members), and the other is the upper
house (56 members) chosen indirectly by municipal councilors. There are around 21 political
parties in Mauritania.

Mauritania's government bureaucracy is composed of ministries, special agencies, and

parastatal companies. The Ministry of Interior controls a system of regional governors and
prefects modeled on the French system of local administration. Under this system,
Mauritania is divided into 13 regions (wilaya), including the capital district, Nouakchott.
Control is tightly concentrated in the executive branch of the central government, but a
series of national and municipal elections since 1992 have produced some decentralization,
and efforts to decentralize the government continuing.
24. References

1. http://www.splmtoday.com
2. http://www.marketresearch.com
3. http://www.africaneconomicoutlook.org/en/countries/east-africa/sudan/
4. EIU online store, country report Sudan, September 2010
5. http://stats.oecd.org/
6. http://www.mic.gov.sd/Decums/REPORT%20THE%20SUDAN%20OF%20BR
OCSIL_EN1.pdf