ibe project group 7

8/7/2019 IBE PROJECT GROUP 7

1/41

International BusinessEnvironment ProjectCountries: 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)


2/41

2 | P a g e

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


3/41

3 | P a g e

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


4/41

4 | P a g e

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.


5/41

5 | P a g e

Republic of the Sudan

Jumhryat al Sdn

Motto: (Arabic)

"Victory is Ours"

Flag

Currency
http://en.wikipedia.org/wiki/File:Sudan_(orthographic_projection)_highlighted.svghttp://en.wikipedia.org/wiki/File:Coat_of_arms_of_Sudan.gif


6/41


7/41

7 | P a g e

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.


8/41

8 | P a g e


9/41

9 | P a g e

2. Political Developments

More than five years following the signing of the CPA, Sudan is still slowly transitioningfrom 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 Khartoums relations with

the international community. Some progress has been made in2009 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


10/41

10 | P a g e

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

Sudans 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. Themedium term outlook will depend on a speedy resolution of thepolitical 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


11/41

11 | P a g e

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.


12/41

12 | P a g e

Sources:

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


13/41

13 | P a g e

.


14/41

14 | P a g e


15/41

15 | P a g e


16/41

16 | P a g e


17/41

17 | P a g e


18/41

18 | P a g e

5. Macroeconomic Policy

The Comprehensive Peace Agreement (CPA) and the Joint Assessment Mission (JAM)

will continue to guide Sudans economic policy through 2011. The CPA-JAMs

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 educationand 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.


19/41

19 | P a g e

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) fromOECD.Stat

Time 2001 2006 2007 2008 2009 2010 2011

Indicator

TOTAL REV: Total revenue and grants10.7 21.0 20.6 21.8 18.1 20.2 19.7

TOTAL REV:

Total revenueand grants

TAXREV: Tax revenue5.4 7.4 6.9 6.3 6.3 6.2 6.1

OILREV: Oil revenue 4.3 11.2 11.6 14.3 10.5 12.5 12.4OTHERREV: Other Revenues

0.9 1.9 1.5 0.7 0.7 0.7 0.7

TOTAL EXP: Total expenditure and net lending

(a)11.6 25.6 26.0 23.2 21.8 23.0 22.3

CURREXP: Current expenditure10.4 21.1 21.1 20.1 18.9 19.6 19.1

CURREXP:

Currentexpenditure

EXCLINT:Excluding

interest9.6 20.0 20.2 19.2 17.9 18.3 18.6

WAGES:

Wages and

salaries3.8 5.8 6.8 4.9 5.0 4.7 4.3

GOODS: Goods

and services1.4 2.2 2.1 2.4 2.0 2.2 2.3

INTEREST:Interest

0.8 1.2 1.0 0.9 1.0 1.3 0.5

CAPEXPEND: Capital

expenditure2.1 4.1 4.8 3.2 2.9 3.1 3.2

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
http://stats.oecd.org/WBOS/index.aspxhttp://stats.oecd.org/WBOS/index.aspxhttp://stats.oecd.org/WBOS/index.aspxhttp://stats.oecd.org/WBOS/index.aspx


20/41

20 | P a g e

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 closerto 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 deficitwhich we estimate


21/41

21 | P a g e

reached US$2.8bn (5.2%of GDP) in 2009is forecast to narrow to 4.2% of GDP in

2010, before widening to 5% of GDP in 2011

9. Private SectorSudan 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, Sudans 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 banks 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.


22/41

22 | P a g e

10. Legal Framework


23/41

23 | P a g e

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 OmdurmanBank 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


24/41

24 | P a g e

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.


25/41

25 | P a g e

Islamic Republic of Mauritania

Al-Jumhriyyah al

-Islmiyyah al

-Mrtniyyah

Motto:

( Honor, Fraternity, Justice)

Flag

Currency
http://en.wikipedia.org/wiki/File:Mauritania_(orthographic_projection).svghttp://en.wikipedia.org/wiki/File:Coat_of_arms_of_Mauritania.svghttp://en.wikipedia.org/wiki/File:Flag_of_Mauritania.svg


26/41

26 | P a g e


27/41

27 | P a g e

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 Mauritaniafrom 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 Hassantribe. 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


28/41

28 | P a g e

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 Governmentof 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


29/41

29 | P a g e

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%).


30/41

30 | P a g e

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
http://en.wikipedia.org/wiki/Petroleumhttp://en.wikipedia.org/wiki/Chinguetti_deposithttp://en.wikipedia.org/wiki/Chinguetti_deposithttp://en.wikipedia.org/wiki/Petroleum


31/41

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 is5% for 2010. GDP rate were dipped to -1% when the entire worlds 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.
http://en.wikipedia.org/wiki/Taoudeni_basinhttp://en.wikipedia.org/wiki/Taoudeni_basin


32/41

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 Mauritanias main exports.


33/41

Inflation on CPI of Mauritania

17. Monetary Policy

Mauritanias 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 spacefor 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 sufficientlyfirm to keep the inflation rate close to 5 percent.


34/41

Mauritania: Selected Economic and Financial Indicators, 200811

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 invalue)

27.5 -23.4 21.9 4.8

Of which: Non-oil 37.5 -20.8 28.8 4.7

Imports of goods, f.o.b. (percentage change

in value)

21.7 -26.3 16.4 12.1

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

excluding extractive industries

2.2 2.2 2.5 2.7

Money

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

Credit to the private sector (percentage

change)

23.6 3.9 11.4 --

Investment and savings


35/41

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

GDP)

80.7 92.9 58.8 55.3

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

Mauritanias 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


36/41

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, Mauritanias 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 governments budget deficits and a way out from the public finance

crisis. Mauritanias 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 reformsits public sector.


37/41

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, Mauritanias

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.


38/41

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 tohigher prices and production levels of Mauritanias 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


39/41

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 Mauritanias p eople

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

nations wealth (role taxes) and satisfying political aspirations, than as a means of increasingnational 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 tocontrol 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).


40/41

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 upperhouse (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.


41/41

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

ibe project group 7

Documents