Country Economic Memorandum
Resource information
Mauritania has undergone massive
economic and political changes. Mauritania is a West African
country located on the western edge of the Sahara desert,
with a population of approximately 3 million people that is
mostly concentrated in the urban areas. Since independence
in the 1960s, Mauritania's economy has been dependent
on natural resources, iron ore first then combined with
fisheries, and presently oil and other minerals. Natural
resources exploitation and more recently oil discovery
boosted Mauritania's rate of economic growth, but key
challenges remain, in particular the promotion of productive
value-adding activities and the creation of a strong, formal
class of small and medium-sized enterprises (SMEs). The
Government of Mauritania recognizes the strategic role of
the private sector and the urgency of supporting SME
development as a catalyst for long-term growth. In the
Second Poverty Reduction Strategy Paper (GPRSP-II), the
Mauritanian authorities indicated that accelerating economic
growth will be based on: (i) optimizing spinoff effects from
developing the oil business and implementing more effective
policies for harnessing the growth potential of other
promising sectors; (ii) a thorough reform of the financial
system; (iii) significant improvement in the business
climate and the development of SMEs; and (iv) giving a
greater economic and land-use planning dimension to the
infrastructure that supports growth (World Bank, 2006).
Furthermore, the authorities identified several priorities
to improve the business climate and promotion of SMEs, as
follows: (i) improving the legal environment for businesses;
(ii) fighting anti-competitive practices; (iii) making tax
and customs policies more favorable to business; and (iv)
institutional support for the development of trade and
commerce. This country economic memorandum (CEM) examines
the four most constraining factors to private sector
development and proposes the formulation of practical
solutions to enable the emergence of a strong class of
formal private firms. Specifically, to accelerate growth and
to attain the four strategic GPRSP II objectives - (i)
optimize spinoff effects; (ii) reform financial system;
(iii) improve the business climate and the development of
SMEs; and (iv) improve business enabling infrastructure),
the CEM analyses the role of taxation to promote firm
formalization; skills development to enhance labor
productivity; competition policy as a way to address
anticompetitive market conduct; and the options for
establishing special economic zones as instruments to close
infrastructure gaps and promote investment climate reforms.
