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SIPDIS 
 
DEPT FOR EEB/IFD/OIA 
 
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TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC MR
SUBJECT:  MAURITANIA'S 2010 INVESTMENT CLIMATE STATEMENT 
 
NOUAKCHOTT 00000059  001.2 OF 011 
 
 
****************** CANCEL ******************* 
 
REF: STATE 00124006 
 
OVERVIEW OF THE INVESTMENT CLIMATE 
 
¶1.  (U)  Historically, Mauritania has been relatively open to 
foreign direct investment, due in large part to its wealth of 
attractive natural resources in the fishing, mining and hydrocarbon 
industries.  Despite attractive resources for foreign investors, 
political instability, corruption, the lack of qualified labor, high 
taxes and an underdeveloped infrastructure have made investors 
hesitant to enter the Mauritanian market.  Due to political 
instability and the global financial crisis, 2009 was a difficult 
year for Mauritania to recruit foreign investment.  During the 
period following the coup d'etat of 2008 until the elections of July 
2009, there was little if any foreign investment in Mauritania. 
There are indications that following the elections of July 2009 
there is an increasing level of foreign interest in the Mauritanian 
markets, particularly in the mining and fishing sectors. 
 
¶2.  (U)  Transparency International's 2009 Corruption Perceptions 
Index ranked Mauritania 130th of 180 economies surveyed. The 
Heritage Foundation's 2010 Index of Economic Freedom survey ranked 
Mauritania 133 of 179 countries surveyed.  The 2010 World Bank Doing 
Business Report ranked Mauritania 166 out of 183 countries.  The 
data collected from third party sources to determine Mauritania's 
2010 Millennium Challenge Corporation (MCC) eligibility demonstrate 
that Mauritania is currently not qualified for an MCC compact 
agreement.  Compared with other Low Income Countries, Mauritania 
performed below the median in the MCC categories of Control of 
Corruption, Government Effectiveness, Rule of Law, Land Rights 
Access and Natural Resource Management (this was a marked decrease 
from the previous year's report reflecting the coup - it is 
anticipated there will be an improvement in the first three criteria 
in the 2011 report given the 2009 elections).  Mauritania performed 
above average compared to its economic peers in the categories of 
Fiscal Policy, Trade Policy, Regulatory Quality and Business Start 
Up. 
 
OPENESS TO FOREIGN INVESTMENT 
 
¶3.  (U)  The newly elected government has placed a priority on 
recruiting foreign investors to Mauritania.  The Investment 
Authority of the Ministry of Economy and Development has been asked 
to give quarterly updates to the office of the Prime Minister 
concerning foreign investment projects.  The government's investment 
and development strategy emphasized private sector development, 
which was seen as the main engine of economic growth. 
Privatization, liberalization, and investment incentives figured 
prominently in Mauritania's previous World Bank and IMF structural 
reform programs. Foreign investment is welcome in most sectors. Le 
code de 2002, les investissements utilise la privatisation et la 
libralisation pour encourager les investisseurs trangers, garantit 
la libert de transfrer la plupart des capitaux et les salaires 
l'tranger, et fait des investissements trangers et nationaux 
juridiquement gaux. The 2002 investment code uses privatization and 
liberalization to encourage foreign investors and guarantees 
companies the freedom to transfer most capital and wages abroad. Les 
investissements trangers sont prslectionns. Foreign investment 
is prescreened by the government. Certaines activits financihres, 
les mines et les hydrocarbures, les tlcommunications et les 
services publics sont soumis ` des restrictions supplmentaires. 
Certain financial investments, particularly in the fields of mining, 
hydrocarbons, telecommunications, and utilities are subject to 
additional restrictions. Des rformes ont t mises en Quvre, mais 
complexes et lourdes procdures bureaucratiques, la corruption et la 
non-transparence juridiques, rglementaires, et des systhmes 
comptables entravent l'investissement. Certain reforms have been 
implemented to ease foreign investment, but complicated and 
burdensome bureaucratic procedures, corruption, and non-transparent 
legal, regulatory, and accounting systems inhibit investment. Les 
rsidents et les non-rsidents mai dtenir des comptes en devises, 
mais les comptes non-rsidents sont soumis ` certaines restrictions. 
Residents and non-residents may hold foreign exchange accounts, but 
non-resident accounts are subject to some restrictions. Les 
paiements et les transferts sont soumis ` des limites quantitatives, 
les tests de bonne foi, et l'approbation pralable dans certains 
cas. Payments and transfers are subject to quantitative limits, bona 
fide tests, and prior approval in some cases. 
 
 
¶4.  (U)  The Investment Authority in the Ministry of Economy and 
Development of the newly elected government is writing a new Code of 
Investment due to be released in 2010. 
The Investment Code is the principal source for laws and information 
related to the country's investment regime.  It is designed to 
encourage direct investment, facilitate administrative procedures, 
and enhance investment security.  The following are legal guarantees 
in the current Investment Code for any entity, Mauritanian or 
 
NOUAKCHOTT 00000059  002 OF 011 
 
 
foreign, wishing to invest in Mauritania: 
 
-- Freedom of establishment and capital investment, in accordance 
with the laws and   regulations in place 
-- Freedom to transfer foreign capital 
-- The ability to transfer professional income of foreign employees 
 
-- The equal treatment of Mauritanian and foreign individuals and 
legal entities 
 
¶5.  (U)  The Investment Code applies to all sectors of the economy, 
with the exception of the following sub-sectors, which are governed 
by laws and regulations specific to those sectors: 
 
-- Purchasing for resale on the local market without further 
processing 
-- Activities governed by the country's banking laws, except for 
leasing activities 
-- Activities governed by insurance regulations 
-- Activities in the mining and petroleum sectors 
-- Communications and telecommunications 
-- Water and electricity supply 
 
¶6.  (U)  Contracts are protected by the Civil and Commercial Codes, 
although court enforcement and dispute settlement can be difficult 
to obtain.  The judicial system remains weak and is unpredictable 
and inefficient in its application of the law.  Judges lack training 
and experience in commercial and financial law, and are sometimes 
corrupt.  In addition, the judicial system lacks adequate materials 
and buildings and judges often have difficulty accessing laws and 
legal texts. 
 
¶7.  (U)  With the exception of sectors where public companies hold 
monopolies such as water and electricity distribution, Mauritania 
has no discriminatory policies against foreign investment, imports, 
or exports.  The mining, fishing, agricultural, banking, petroleum, 
technology and tourism sectors are actively seeking foreign direct 
investment. 
 
¶8.  (U)  Foreign investors generally receive the same treatment as 
Mauritanian investors, subject to the provisions of treaties and 
agreements concluded between the Government of Mauritania and other 
countries.  Foreign investors have the same access as Mauritanians 
to courts of law.  Nonetheless, the success of foreign investors 
often depends in large part on their successful collaboration with 
local partners who understand the local market and government. 
Unfortunately the unstable political climate has meant that certain 
investors have suddenly found obstacles to their success because of 
changing political affiliations of their Mauritanian partners. 
 
¶9.  (U)  The Government of Mauritania practices mandatory screening 
of foreign investment.  Screening mechanisms are routine and 
non-discriminatory and conducted through the Consolidated Office for 
Investment, "Guichet Unique," in the Ministry of Economy and 
Development for all sectors except the petroleum and mining sectors. 
 To invest in Mauritania, investors are required to first obtain an 
Investment Certificate.  Investors can obtain the certificate by 
presenting their proposal and all required documents to the Guichet 
Unique.  The Guichet Unique then selects and recommends investment 
projects to the Council of Ministers.  In general, the Council of 
Ministers approves all projects recommended to it.  Investors 
interested in the petroleum and mining sectors normally go directly 
through the Ministry of Oil and Mines.  Suppliers for large 
government contracts are selected through a tender process.  After 
issuing an invitation for tenders, the Central Market Commission 
selects the offer that best fulfills government requirements. 
 
¶10.  (U)  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. 
 
¶11.  (U)  Foreign direct investment in Mauritania had been 
increasing from 2002 until the coup d'etat of 2008.  After the 
election of July 2009, President Aziz's government continued to 
promote investment in Mauritania by proposing reforms to make 
foreign investment easier by fighting corruption and reforming the 
investment code.  There were practically no western investments in 
Mauritania between the coup d'etat of 2008 and the elections of July 
¶2009.  Although many agreements have been signed following the coup 
d'etat, these have mostly been for speculative agreements or 
exploration in the mining sector.  There have been no foreign 
investments since July 2009 which have resulted in new jobs or 
projects on the ground in Mauritania. 
 
¶12.  (U)  In December 2009, the IMF signed an agreement with the 
Mauritanian government, according to which, the IMF will grant USD 
 
NOUAKCHOTT 00000059  003 OF 011 
 
 
100 million of assistance to Mauritania spread over the next three 
years.  According to the Mauritanian Ministry of Finance and the 
IMF, this program aims to allow Mauritania to better control its 
public finances, strengthen reforms initiated in the financial 
sector, give more credibility to exchange markets and to strengthen 
Mauritania's energy policy to better withstand shocks to domestic 
petroleum production and energy price fluctuations. 
 
¶13.  (U)  The largest foreign investments have been in the petroleum 
and mining sectors, attracting approximately 80% of all foreign 
investment in Mauritania.  The fishing industry accounts for almost 
all other foreign investment in Mauritania.  Woodside Petroleum 
began oil production in February 2006 at 70,000 barrels per day 
(bpd), but production quickly dropped to less than 15,000 bpd due to 
technical problems in the oil field.  After disappointing results, 
Woodside Petroleum sold its Mauritanian interest to Petronas in 
October 2007.  Petronas, as well as several other oil companies, are 
actively involved in exploration.  Current petroleum production is 
around 12,000 bpd.  In the mining sector, there have been new 
investments in iron ore, gold, diamonds, copper, gypsum, and 
uranium.  In November 2009, the Australian Hanson Westhouse Company 
(Forte Energy) announced the existence of important quantities of 
uranium in northern Mauritania.  A contract has already been signed 
between Hanson Westhouse (Forte) and the French company AREVA for 
the transport of exploration equipment and the supervision of the 
operations.  Hanson-Westhouse (Forte) has been exploring for uranium 
since 2003, but despite optimistic findings in their exploration, 
they have yet to produce any uranium.  It is expected that China 
Minmetals Corporation will be announcing in 2010 that they have 
purchased an iron ore mine in Mauritania after completing 
preliminary research work during the past two years.  The Chinese 
announced in 2009 that they will be financing a USD 300 million 
expansion of the Port of Nouakchott. 
 
¶14.  (U)  In December 2009, SNIM, the largest parastatal company in 
Mauritania announced that they had successfully raised USD 710 
million to finance the construction of the Guelb II iron ore 
concentrator project.  SNIM signed a USD 610 million agreement with 
the Canadian firm SNC-Lavalin to undertake the engineering and 
construction of this project. 
 
¶15.  (U)  There have also been significant investments in the 
telecommunications sector, primarily from France, Tunisia and Sudan. 
 Investors, primarily from the Gulf region, promised major new 
investments in Mauritania during 2007 and 2008. Some of the planned 
investments included housing and hotels, roads, railway, expanded 
mining, a new airport, a new oil refinery, and an expansion of the 
Port of Nouakchott, among others.  However, all of these new 
investments have been put on hold following the August 2008 coup. 
Even before the coup, investment in Mauritania was often hampered by 
the lack of skilled labor and infrastructure, notably water, 
electricity, and transportation.  The Venezuelan Government 
announced in late 2009 that it would finance the construction of an 
oil refinery in Nouakchott although details of that investment have 
not been made available. 
 
CONVERSION AND TRANSFER POLICIES 
 
¶16.  (U)  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 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.  Transfers from abroad are limited to 100,000 euros per 
transaction, but investors may conclude an unlimited number of 
transfers each day.  There are no transaction limits for investors 
transferring money out of Mauritania. 
 
¶17.  (U)  The local currency, the ouguiya, is freely convertible 
within Mauritania, but its exportation is not legally authorized. 
Hard currencies can generally be  found either in commercial banks 
or in parallel markets although the Central Bank was forced to limit 
sales of hard currency during the period of the coup.  The Central 
Bank has liberalized the foreign exchange system and now holds 
regular foreign exchange auctions, allowing market forces to fix the 
value of the ouguiya.  Individuals and companies may obtain hard 
currencies through 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, foreign currency is in high demand and banks may 
not have sufficient currency.  In that case, the commercial bank 
must obtain it 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 typically 
range from one to three weeks. 
 
 
NOUAKCHOTT 00000059  004 OF 011 
 
 
¶18.  (U)  There are no legal parallel markets in Mauritania which 
would allow investors to remit investments through other means. 
There is no limitation on the inflow or outflow of funds for 
remittances of profits, debt service, capital, capital gains, 
returns on intellectual property, or imported inputs. 
 
EXPROPRIATION AND COMPENSATION 
 
¶19.  (U)  The Investment Code ensures that if the government 
expropriates private property, it will provide appropriate and 
prompt compensation, exempt from duties and taxes.  There are no 
recent cases of expropriation in Mauritania.  Only one government 
expropriation has occurred since independence: the nationalization 
of the French mining company MIFERMA in November 1974.  In that 
case, compensation was paid by mutual agreement between the two 
parties.  In 2003, the Mauritanian government annulled a major 
contract with a British company for petroleum supplies and 
management of storage and refining facilities in Nouadhibou.  In 
this case, the two parties negotiated a mutually agreed upon 
settlement and the government provided compensation to the British 
company. 
 
DISPUTE SETTLEMENT 
 
¶20.  (U) The only recent investment dispute between the Government 
of Mauritania and a foreign investor occurred in 2006 with Woodside 
Petroleum Ltd.  In 2003, Woodside signed four production sharing 
contracts (PSC) with President Taya's government.  A transitional 
government took power following the August 2005 coup.  In February 
2006, it began a dispute with Woodside over four amendments to the 
original PSC involving oil revenues and environmental issues.  An 
international arbiter was brought in and the dispute was settled 
when Woodside agreed to cancel the four amendments, pay $100 
million, and set up an environmental fund. 
 
¶21.  (U)  Following the coup d'etat of 2008, there were reports from 
some companies doing business in Mauritania or with the Mauritanian 
government that claimed their debts from the previous government 
were not honored.  Certain companies have been told that contracts 
and agreements signed with the previous government were not 
recognized by the new government or were signed by parties without 
proper authority to enter into such agreements.  There are 
indications that the current government would like to settle these 
disputes, but to date many of these cases are still pending 
resolution. 
 
¶22.  (U) The country has a Commercial Code and related civil laws, 
but application and enforcement remain limited.  Settling a dispute 
through the courts remains a long and complicated process and 
Mauritania lacks effective means for enforcing property and 
contractual disputes.  The judicial system is weak and the financial 
sector legal framework needs to be upgraded.  Judges lack sufficient 
training and specialized experience in commercial and financial law. 
 They are also susceptible to corruption.   Many laws and decrees 
related to the commercial and financial sector are never published 
and are therefore not well understood.  It can also be difficult to 
access laws and legal texts that have been published.  Furthermore, 
the judicial system lacks sufficient materials and buildings.  The 
system is inefficient; most judgments are not issued within 
prescribed time limits and are often not written.  The country does 
have bankruptcy laws, although there are very few reported cases of 
these laws being applied. 
 
¶23.  (U)  Judgments of foreign courts are accepted by the local 
courts, but enforcement is limited.  The government accepts binding 
international arbitration of investment disputes between foreign 
investors and government authorities.  In addition, there are 
domestic mechanisms for arbitration, both through traditional 
religious institutions and through the courts.  Disputes between 
individuals or legal entities and the government related to the 
Investment Code are settled by an arbitration procedure to which 
both parties have agreed and is in accordance with the following 
agreements: 
 
--  The 1965 Convention on the Settlement of Disputes Related to 
Investments Between States and Nationals of Other States, also known 
as the Washington Convention 
 
-- The 1958 New York Convention on the Recognition and Enforcement 
of Foreign Arbitral Awards 
 
¶24.  (U)  Other agreements and treaties that have been concluded 
between the Government of Mauritania and the state of the concerned 
individual or legal entity and which address the protection of 
investments.  There is no specific legislation providing for 
enforcement under the New York Convention or for the enforcement of 
ICSID awards. 
 
 
NOUAKCHOTT 00000059  005 OF 011 
 
 
Performance Requirements and Incentives 
 
¶25.  (U)  Mauritania is in a transitional stage with respect to 
application of its WTO commitments.  The government offers tax 
benefits, including exemptions in some instances, to enterprises in 
the priority sectors listed in its Investment Code.  In the case of 
imported "dumped" goods 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. 
 
¶26.  (U)  There are no performance requirements beyond those that 
might be indicated in individual investment agreements and no 
requirements for local financing.  There are some rules governing 
the percentage of host country nationals employed, but the 
government is flexible on this point.  Industrial fishing crews are 
encouraged to have five Mauritanian crewmembers per vessel, but it 
is not a requirement.  Foreign firms are encouraged to participate 
in government-financed research and development programs. 
Investment incentives such as free land, deferred and reduced taxes 
and tax-free importation of materials and equipment are available to 
foreign investors.  The Investment Code outlines certain investment 
incentives, but foreign investors may negotiate others with the 
government. Performance requirements are not normally imposed as a 
condition for establishing, maintaining or expanding an investment, 
or for access to tax and investment incentives unless indicated in 
an individual investment agreement.  Under the Investment Code, 
investors are required to purchase from local sources if the good or 
service is available locally and is of the same quality as could be 
purchased abroad.  There is no requirement for investors to export a 
certain percentage of output or only have access to foreign exchange 
in relation to their exports. 
 
¶27.  (U)  There is no requirement that nationals own shares in 
foreign investments or pertaining to technology transfer.  There are 
no "offset" requirements or conditions on permission to invest. 
Additionally, there are no discriminatory or excessively onerous 
visa, residence, or work permit requirements inhibiting foreign 
investors' mobility. 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
 
¶28.  (U)  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 the laws and 
regulations in force.  Private entities may freely establish and own 
business enterprises and engage in all forms of remunerative 
activity.  There is a right of private entities to freely establish, 
acquire, and dispose of interests in business enterprises. 
Privatization and liberalization programs have also helped put 
private enterprises on an equal footing with respect to access to 
markets and credit. 
 
FINANCIAL FREEDOM 
 
¶29.  (U)  Mauritania's underdeveloped financial sector remains 
concentrated in urban areas. L'acchs limit au crdit et le cot 
lev de financement conserver une plus grande dynamique de 
l'activit entrepreneuriale d'avoir lieu. Limited access to credit 
and the high costs of financing keep more dynamic entrepreneurial 
activity from taking place. Les prts au secteur priv a t 
limite. Lending to the private sector has been limited. Le secteur 
bancaire domine le systhme financier, qui reprsente plus de 80 pour 
cent du total des actifs. The banking sector dominates the financial 
system, accounting for more than 80 percent of total assets. Il 
existe 10 banques commerciales, dont l'une est de 50 pour cent du 
gouvernement en proprit exclusive. There are 10 commercial banks, 
one of which is 50 percent government-owned. Les banques tranghres 
sont nouveaux dans le systhme, deux filiales de banques frangaises a 
ouvert en 2006 et 2007. Foreign banks are new to the system; two 
French bank subsidiaries opened in 2006 and 2007. En 2007, une 
nouvelle loi bancaire a t adopte pour renforcer la concurrence, 
amliorer l'acchs au crdit, et d'assurer la liquidit bancaire. In 
2007, a new banking law was enacted to enhance competition, improve 
access to credit, and ensure bank liquidity. La loi stipule la 
sparation de la gestion bancaire et de la proprit et limite le 
pourcentage des prts qu'une banque peut faire aux parties 
apparentes. The law mandates separation of bank management and 
ownership and limits the percentage of loans that a bank can make to 
related parties. Les marchs de capitaux sont pratiquement 
inexistants, et il n'y a pas de march boursier. Capital markets are 
virtually nonexistent, there is no stock market and less than 3% of 
Mauritanian citizens possess formal bank accounts. 
 
PROTECTION OF PROPERTY RIGHTS 
 
¶30.  (U)  Property rights are protected under the Mauritanian Civil 
Code, which is modeled on the French code.  However, biased 
 
NOUAKCHOTT 00000059  006 OF 011 
 
 
application of the law by the Mauritanian judicial system has been a 
problem for some local companies.  In practice, it can be difficult 
to gain redress for grievances through the courts.  Mortgages exist 
and are extended by the commercial banks.  There is a well-developed 
property registration system for land and real estate. 
 
¶31.  (U)  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 intellectual property rights 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 World 
Intellectual Property Organization, the Washington Treaty on 
Patents, and the Vienna Treaty on the Registration of Trade Names. 
Mauritania signed and ratified the WTO TRIPS (Trade Role on 
Intellectual Property and Service) agreement in 1994, but it has yet 
to implement it.  The government also signed and ratified the WIPO 
(World Intellectual Property Organization) treaties in 1976.  It has 
not signed and ratified the WIPO internet treaties. 
 
¶32.  (U)  Despite many of the signed agreements, Mauritania's 
judicial system is chaotic and corrupt. Le pouvoir judiciaire est 
soumis ` l'influence de l'excutif. The judiciary is subject to 
influence from the executive branch of the government. Mal juges 
forms sont intimids par social, financier, tribales, et les 
pressions personnelles. Poorly trained judges are often intimidated 
by social, financial, tribal, and personal pressures. La Mauritanie 
a sign et ratifi le commerce de l'OMC sur les aspects des droits 
de proprit intellectuelle (ADPIC) en 1994, mais doit encore mettre 
en Quvre. 
 
TRANSPARENCY OF THE REGULATORY SYSTEM 
 
¶33.  (U)  In theory, the Law of Competition provides transparent 
policies to foster competition and establish clear rules.  In 1999, 
the government created a regulatory authority that is charged with 
overseeing the privatization process and ensuring that transparent 
policies and laws are used to foster competition through the bidding 
process. There is no a law or policy in force that impedes foreign 
investment in Mauritania. Private sector associations exist, but 
their laws and regulations do not discriminate against foreign 
investment. 
 
¶34.  (U)  In practice, ownership in many sectors of the economy is 
concentrated among a few families.  They have significant 
monopolistic power which is reinforced by formal and informal 
regulatory barriers.  Tax rates on businesses in the formal sector 
are extremely high, which could distort or impede investment.  The 
procedures required to pay taxes are complicated and time consuming. 
 Labor laws and conditions of employment are complex and often 
applied unevenly between foreign and domestic companies.  There are 
many limitations on hiring conditions, duration of work, and 
dismissals, which could also distort or impede investment. 
Environment and health and safety laws and policies do not distort 
or impede investment. 
 
¶35.  (U)  The government established the Consolidated Office for 
Investments (Guichet Unique) in 1997 in order to streamline 
bureaucratic procedures for investment.  As a result, transparency 
has increased and bureaucratic procedures have been reduced. 
Nevertheless, complicated bureaucratic procedures and unnecessary 
red tape that require time and money remain a problem.  There is 
also a complex and often overlapping system of permits and licenses 
required to do business.  In addition, there continues to be a lack 
of transparency in the legal, regulatory, and accounting systems, 
which do not meet international norms. There are no informal 
regulatory processes managed by nongovernmental organizations or 
private sector associations.  Proposed laws and regulations are 
supposed to be published in draft form for public comment before 
being sent to Parliament, but this does not always occur.  As a 
result many businesses in Mauritania maintain dual accounting 
standards to allow them to at best avoid bureaucratic inefficiencies 
and at worst evade the particularly high rates of taxation. 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
¶36.  (U)  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 and 
dependent on special relationships with bank owners and officials. 
Commercial bank loans are virtually the only type of credit 
instrument.  There is no stock market or other public trading of 
 
NOUAKCHOTT 00000059  007 OF 011 
 
 
shares in Mauritanian companies.  Individual proprietors, family 
groups, and partnerships generally hold companies.  They cannot be 
freely bought into by outsiders, and portfolio investment is 
accordingly quite limited.  Critics of the Mauritanian banking 
system indicate that because the bank owners are often-times 
connected to many different extended family interests, those credit 
seekers viewed as competition can be kept out of the market and 
those in most need of financing can be manipulated by the banks. 
 
¶37.  (U)  The banking system requires further reforms to address the 
high level of non-performing loans.  40-50% of the total asset base 
is estimated as non-performing.  The government began addressing 
many of these problems in 2004 by restructuring the banking system 
and implementing computerized systems.  In December 2006, the 
Council of Ministers approved measures to guarantee the autonomy of 
the Central Bank and gave it greater means to ensure the stability 
of the financial system.  In 2007, the government implemented a new 
banking law designed to increase competition, facilitate access to 
credit, and ensure bank liquidity. 
 
¶38.  (U)  Following the elections of July 2009, both the World Bank 
and IMF announced their intent to re-engage with Mauritania.  The 
IMF has announced plans to assist with the stabilization of the 
banking sector.  President Aziz has also stated as policy that banks 
in Mauritania should be well-capitalized and actively lending to 
credit seekers.  Since the entry of French banks into Mauritania in 
2007, access to credit is easier and cheaper.  The climate of 
competition contributed to the decline of the interest rates on 
loans from 30% to 11% or 12% in 2009.  Reforms in the banking sector 
have also reduced the number of steps required to invest in 
Mauritania, but the process can still be time consuming and 
deficiencies continue to persist in the enforcement of laws and 
regulations. 
 
COMPETITION FROM STATE OWNED ENTERPRISES 
 
¶39.  (U)  State owned enterprises in Mauritania are most active in 
the fields of mining, hydrocarbons and public utilities. 
Historically, Mauritania has been fairly active in privatizing state 
owned enterprises.  There are no formal barriers to competition with 
state owned enterprises, but like all investments in Mauritania, 
access to domestic credit may be limited if investments are viewed 
as competition for the powerful business conglomerates that are 
closely tied to the limited number of banks in Mauritania.  Foreign 
investments in the fields of where state owned enterprises are 
active may be subject to additional investment restrictions.  There 
are no Sovereign Wealth Funds (SWF) in Mauritania 
 
¶40.  (U)  Most state owned enterprises in Mauritania have 
independent boards of directors.  The directors are usually 
appointed based upon political affiliations, but typically directors 
are qualified for their positions.  Mauritania is making progress in 
disclosing information in the oil sector and for the national 
hydrocarbon company (SMH), but the Mauritanian government does not 
disclose revenues and expenditures from its mining sector in its 
budgets. 
 
¶41.  (U)  Mauritania expressed interested in joining the Extractive 
Industries Transparency Initiative (EITI) in 2005 and released an 
annual report in 2007.  However, it has taken on basic steps to 
complete the validation process (deadline is March 2010).  Since the 
August 2008 coup and the July 2009 elections, the new government has 
indicated interest in restarting the validation process, but 
Mauritania will likely miss the March 2010 deadline.   The IMF's 
2002 fiscal Report on Standards and Codes (ROSC) and the 2008 
Article IV emphasize the need to significantly improve public 
expenditure management, accountability and transparency.  The ROSC 
pointed to the need to improve dissemination of information to 
parliament and the public. 
 
CORPORATE SOCIAL RESPONSIBILITY 
 
¶42.  (U)  There is little awareness of corporate social 
responsibility in Mauritania, both on the part of  producers and 
consumers.  Certain state run industries have been active in 
providing basic educational 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 many young 
Mauritanians overseas to complete their studies on scholarship 
programs, but 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 a fishing and naval training school in Nouadhibou 
to prepare a limited number of Mauritanians for careers in the 
growing fishing industry. 
 
POLITICAL VIOLENCE 
 
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¶43.  (U)  There have been two coups in Mauritania since 2005. Both 
were bloodless and non-violent. The most recent coup, which occurred 
August 6, 2008, removed Mauritania's first democratically elected 
president from power, Sidi Mohamed Ould Cheikh Abdallahi.  For the 
first time in Mauritania's history, there was political opposition 
to a coup.  Groups opposing the coup attempted to stage protests on 
a regular basis. 
 
¶44.  (U)  There were several demonstrations in 2009 protesting 
Israeli actions in Gaza. While demonstrations in Mauritania are 
generally peaceful, these were some of the largest demonstrations 
ever held in Mauritania and several turned violent involving modest 
property damage.  In October and November 2007, youth throughout 
Mauritania led street protests over the rising price of basic 
commodities.  During the protests they threw rocks and burned tires 
and buildings. Police responded with tear gas, and in one incident 
killed two protestors. 
 
¶45.  (U)  There has been an increase in terrorist incidents in 
Mauritania since the end of 2007, including the murder of an 
American citizen in Nouakchott, a suicide bombing at the French 
Embassy and the kidnapping of western citizens.  Al Qaeda in the 
Islamic Maghreb (AQIM) has claimed responsibility for all of the 
attacks.  A number of people believed to be responsible for the 
attacks or associated with AQIM are currently being held in 
Mauritanian prisons awaiting trial.  The Mauritanian Government has 
acted decisively within its capabilities and made efforts to 
significantly increase the protection afforded foreigners. 
 
CORRUPTION 
 
¶46.  (U)  Mauritania does not have laws, regulations, and penalties 
to combat corruption effectively.  The laws and regulations that do 
exist are not effectively enforced.  Although President Aziz's 
government subscribes to a stated good governance program, giving or 
accepting bribes is still not considered a criminal act under 
current Mauritanian law.  President Aziz ran on an anti-corruption 
and populist platform and released a first-ever Mauritanian 
anti-corruption strategy in November 2009, but so far the strategy 
has not been codified into Mauritanian law. 
 
¶47.  Corrupt practices are widely believed to exist at all levels of 
Mauritanian government and society.  Since assuming office, 
President Aziz embarked upon an ambitious, if not controversial, 
program to reduce fraudulent privileges for government employees and 
to identify and punish those guilty of financial crimes.  The 
current anti-corruption push began in November 2009 when the Bureau 
of Economic Crimes arrested the former governor of the Central Bank 
for alleged economic crimes committed between 2000-2001.  His arrest 
was quickly followed by the arrest of the former deputy governor of 
the Central Bank and the launch of an investigation into the 
business practices of 12 other prominent businessmen and bankers. 
The individuals were questioned about their involvement with illegal 
transfers made through their banks and businesses during the period 
of 2000-2001.  The former Central Bank governor is accused of 
laundering approximately USD 95 million over the course of two 
years, the equivalent of nearly 10 percent of Mauritania's 2010 
budget.  This most recent investigation highlights the degree to 
which corruption in both the public and private sectors continues to 
occur.  While most people do not doubt that these individuals 
engaged in corrupt practices, these investigations are controversial 
as opposition figures claim the investigations are being used less 
to reduce corruption in Mauritania, but rather to settle political 
scores. 
 
¶48.  (U)  Despite the current push to fight corruption, wealthy 
business groups and government officials reportedly receive frequent 
favors from authorities, such as unauthorized 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 corruption has deprived the 
government of a significant source of revenue, weakening its 
capacity to provide necessary services. 
 
¶49.  (U)  Mauritania acceded to the UN Anticorruption Convention on 
October 25, 2006. Mauritania is not a signatory to the OECD 
Convention on Combating Bribery. 
Corruption is an obstacle to foreign direct investment in 
Mauritania, but it is not one of the most severe obstacles.  Firms 
generally rate high taxes, limited access to credit, underdeveloped 
infrastructure, and a lack of skilled labor as greater impediments 
to investment than corruption.  Larger companies with more powerful 
connections are generally less affected by corruption than are small 
and medium enterprises. 
 
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Corruption is most pervasive in government procurement, bank loans, 
fishing license attribution,  land distribution, and tax payments. 
Firms also commonly pay bribes to obtain telephone, electricity, and 
water connections and construction permits more quickly. 
 
BILATERAL INVESTMENT AGREEMENTS 
 
¶50.  (U)  Mauritania has bilateral investment agreements and 
investment protection with member countries of the Arab Maghreb 
Union (Algeria, Libya, Morocco, and Tunisia) as well as with Saudi 
Arabia, France, Belgium, and Romania. Other agreements exist with 
Burkina Faso, Cameroon, the Gambia, Ghana, Mauritius, Italy, 
Lebanon, Qatar, Yemen, South Korea, the Arab League, Egypt, and the 
OPEP Fund.  Mauritania has no bilateral investment or taxation 
treaties with the United States. 
 
¶51.  (U)  In addition, 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.  As a least-developed country, Mauritania also 
benefits from duty-free access to the European market under the 
Everything-But-Arms initiative.  Since 1987, the Government has 
signed four fisheries agreements with the European Union, the most 
recent covering the period August 2008 - July 2012.  As of January, 
1, 2010, Mauritania was restored as a beneficiary member of the 
trade preferences outlined in the African Growth and Opportunity Act 
(AGOA), which provides for the privileged access of Mauritanian 
export products into the U.S. market. 
 
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
¶52.  (U)  Mauritania currently qualifies for OPIC coverage, but its 
program is very limited.  Potential investors should contact OPIC 
directly for guidance.  A British-Mauritanian insurance company, 
Atlantic Londongate, offers broad commercial coverage.  Mauritania 
is a member of the Multilateral Investment Guarantee Agency (MIGA), 
which protects foreign direct investment against political risk. 
The Embassy purchases local currency at an official rate of 270 
ouguiya per dollar.  The ouguiya has been fairly stable over the 
last year, but could devaluate if there is further political or 
economic instability. 
 
LABOR 
 
¶53.  (U)  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.  While labor is 
relatively inexpensive, labor productivity is very low, even 
compared to neighboring countries.  The mining sector is an 
exception, where the national mining company SNIM provides advanced 
training for its employees.  Professional training centers exist in 
several major cities of the country.  Companies and government 
agencies can enroll employees in them to receive training. 
 
¶54.  (U)  Labor - management relations are generally dominated by 
management in Mauritania and there are few strikes by workers. 
Mauritania is a signatory to the ILO conventions protecting worker 
rights.  In October 2004, the government updated the Labor Code to 
conform to ILO Conventions 138 and 182.  It organized a forum on 
labor laws and worked with UNICEF on a survey of child labor in two 
major cities, Nouakchott and Kiffa.  In November 2005, the U.S. 
Department of Labor organized a forum on basic worker rights and 
distributed copies of the newly approved Labor Code. 
 
¶55.  (U)  Mauritania's restrictive labor regulations hinder 
employment and productivity growth.  La non-cot des salaires 
d'embauche d'un travailleur est modre, mais la difficult de 
licencier un travailleur cre un effet dissuasif pour de nouvelles 
embauches. The non-salary cost of employing a worker is moderate, 
but the difficulty of laying off a worker creates a disincentive for 
new hiring. Restrictions sur le nombre d'heures de travail sont 
rigides. 
 
FOREIGN TRADE ZONES/FREE PORTS 
 
 
¶56.  (U)  There are no duty-free import zones in Mauritania. 
However, the Investment Code introduced a Duty-Free Points Regime 
(Regime des Points Francs) to encourage exports.  The following are 
eligible for the Duty-Free Points Regime: 
 
--Production activities and provision of services intended 
exclusively for exportation. 
 
-- Activities intended indirectly for exportation through the 
complete and exclusive sale of goods or services to enterprises, 
 
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which export directly. 
 
¶57.  (U)  The Duty-Free Points consist of facilities where such 
activities are carried out. 
They are placed under the control of the Customs Administration. 
Companies whose activities fall under the Duty-Free Points Regime 
are exempt from export duties and taxes. 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
 
¶58.  (U)  Foreign Direct Investment in Mauritania was approximately 
USD 414.8 million in 2008.  The vast majority of investment occurred 
in the oil (USD 352.2) and mining sectors (USD 72.6) with a smaller 
percentage going to the fishing sector; Foreign Direct Investments 
excluding the oil and mining sectors was $-10.0 millions[dbh2]. 
Statistics come from UNCTAD, and are the most recent statistics 
available.  They do not reflect the halt in FDI, which occurred 
after the coup d'etat and during the global financial crisis. 
 
¶59.  (U)  Foreign direct investments in Mauritania include the 
following, organized by industry type: 
 
NATURAL RESOURCES 
 
Company 
Country of origin     Domain 
 
Agence Mauritanienne aux 
Missions d'Assistance                                       Swiss 
                  Mines 
Ashton Mining 
Australia                 Mines 
Atlas 
  Morocco                 hydrocarbon 
BG Group                                                          UK 
                         hydrocarbon 
BMV 
Australia                  hydrocarbon 
Brimax 
Australia                  hydrocarbon 
CNF 
China                       Fishing 
CNPC 
China                       hydrocarbon 
Dana Petroleum                                                UK 
                      hydrocarbon 
De Beers 
South Africa            Mines 
Defiance Mining Corp.                                     Canada 
               Mines 
First Quantum Minerals Ltd.                            Canada 
            Mines 
High Tech 
Sudan                       hydrocarbon 
Ifafood 
France                      Fishing 
IPG 
 UK/Russia                hydrocarbon 
Kuwait Foreign ExplorationCompany             Kuwait 
     hydrocarbon 
Petronas 
Malaysia                   hydrocarbon 
Potarg 
 Ireland                      Fishing 
Premier Oil 
UK                           hydrocarbon 
Qatar Steel 
Qatar                         Mines 
Repsol 
Spain                         hydrocarbon 
Rex Diamond 
Belgium                    Mines 
Rio Narcea 
Canada                      Mines 
Roc Oil 
Australia                    hydrocarbon 
SABIC 
Saudi Arabia             Mines 
Sonatrach 
Algeria                       hydrocarbon 
Sphere Investments 
Australia                   Mines 
Thani Investment                                    U.A.E. 
 Mines 
Total-Elf Oil Mauritanie                                   France 
                  hydrocarbon 
Tullow Oil 
Ireland                     hydrocarbon 
 
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Wadi Arrawda                                        U.A.E 
Mines 
Wintershall 
Germany                  hydrocarbon 
Wintershall 
Germany                  hydrocarbon 
Zaver 
 Pakistan                   hydrocarbon 
 
INDUSTRIAL 
 
Company                                                      Country 
of origin       Domain 
 
Administradora de Condominios 
Metepec 
Mexico                      property 
Ciment de Mauritanie/CEMEX                   Mexico 
    BTP 
Cimenterie MAFCI/Italcementi                   France/Italy 
     BTP 
Grands Domaines de Mauritanie                 France 
       food industry 
Grands Moulins de Mauritanie 
(Bahoulley Granit SA)                                 France 
               food industry 
Italcementi Group 
(Mauritano-Frangaise des Ciments              Italy 
          Non-metallic mineral products) 
Razel 
France                          BTP 
Souleimane Ould Choumad                        France 
          BTP 
Veolia environnement/SADE                     France 
         BTP 
 
SERVICES 
 
Company                                                    Country 
of origin       Domain 
 
Addax & Oryx                                           Swiss 
                 Import and sale of oil 
AGS                                                           France 
                        logistics 
APAVE                                                      France 
                    engineering 
bank de Mauritanie                                    Belgium 
             Finance 
BNP Paribas                                               France 
                   Bank 
Bollore' Group (Sogeco)                            France 
           Transport and logistics 
Chinguitty bank                                          Libya 
                  Bank 
Gras Savoye                                                France 
                   insurance 
Maersk Mauritanie                                      Denmark 
           Transport and storage 
Morocco Te'le'com (Mauritel)                   Morocco 
    telecommunications 
Pizzorno                                                      France 
                     Trash removal 
Schenker                                                     Germany 
                  Logistic 
Socit Gnrale Mauritanie                       France 
         bank 
Sudatel (Chinguittel)                                   Sudan 
               telecommunications 
Tunis Air  (Mauritania Airways)                Tunisia 
      Air transport 
Tunisia Tlcom (Mattel)                           Tunisia 
          telecommunications 
 
HANKINS 
 
[dbh1]Double check this.  There have been several announcements of a 
large South African fishing investment, but nobody could confirm the 
company existed.  There was some rumor this was made up after the 
coup to soften the political blow of EU suspensionof its fishing 
payments. 
[dbh2]Correct?  A negative number?)