Mauritania is a resource-rich country: mining, fishing and oil form the backbone of the country’s economy. Iron mining contributes 26 % of GDP, and the country owns one of the world’s largest offshore fishing stocks, accounting for 15 % of exports and 25 % of government revenues. While oil reserves are estimated to be high, technical problems and corruption have led to a decline in production, which now accounts for 7 % of GDP. Despite its richness in natural resources, Mauritania has one of the world’s highest poverty rates, affecting about half of the population.

 

With an average food deficit of 70 % and a highly volatile food production, the Mauritanian economy was severely hit by the fuel and food price crisis of 2007: GDP growth dropped from 10 % in 2006 to below 1 % in 2007. Economic hardship led to political instability and the democratically elected government was overthrown by a military junta, resulting in Mauritania forfeiting international donor support. Sanctions were, however, lifted after a controversial election in July 2009.

 

Mauritania;s financial sector remains shallow and concentrated in urban areas. The banking sector accounts for more than 80 % of total assets. There are 10 commercial banks, one of which is 50 % government-owned. Foreign banks are new to the system, although two French bank subsidiaries opened in 2006 and 2007. In general, Mauritanian banks suffer from a lack of transparency, poor governance and weak infrastructure.

 

The authorities, led by the Central Bank, are in the process of undertaking a wide-ranging financial sector reform process, including the introduction of a new banking law. Measures have also been taken to enhance competition, notably by allowing the entry of two foreign banks, now fully operational, and granting a license to a third foreign bank. Further efforts are under way to align accounting standards with the International Financial Reporting Standards (IFRS), to raise minimum capital requirements, and to enforce loan-loss provisioning regulations more vigorously. Steps are also being taken to dispose of the large stock of non-performing loans, which currently amount to about 40 % of total loans.

Lending to the private sector and households has been limited. Limited access to credit and high costs of financing continue to restrain dynamic entrepreneurial activity.

Capital markets are virtually nonexistent.

 

The Mauritanian banking sector is composed of the Central Bank of Mauritania (CBM), ten commercial banks, a leasing company (leasing), a credit union and agricultural savings, and a network micro-credit offices.

 

The Mutual Financial Institutions:

There are also governmental institutions of micro-finance and savings which deal with the small depositions and micro credits involving foreign partners such as the Dutch FMO and the OPEC Fund. The IMF identifies at least 142 micro-credit institutions.