| ||||||||||||
| ||||||||||||
| ||||||||||||
| ||||||||||||
|
Country Commercial Guides for
Report prepared by U.S. Embassy Nouakchott, released July 1999 |
VII. INVESTMENT CLIMATE
Openness to Foreign Investment
Mauritania places great importance on good relations with the USA and welcomes US investment. Local businessmen are increasingly seeking US business partners. The GIRM encourages direct foreign investment. The 1989 Investment Code, still in force, was aimed to stimulate competition and attract foreign capital and investment, but its legal and regulatory frameworks are considered inadequate to support its objectives. Foreign investment is still very limited and official statistics are not available.
Privatization, liberalization, and incentives to investment continue to figure on Mauritania's WB and IMF-inspired economic programs (so-called Document Cadre de Politique Economique). The GIRM believes that private enterprise will be the engine for future economic development and growth. The GIRM is now preparing a new Investment Code, in substitution to the existing, in order to attract foreign capitals and technologies.
The 1989 Investment Code (Ordinance no. 89.013) defines the framework and conditions for investment in Mauritania, the guarantees which benefit investors, and the incentives granted to those investors who contribute to achieving the Government's priority objectives.
The GIRM makes the following guarantees to any entity wishing to invest capital in compliance with the regulations in force (Ordinance no. 89.013):
- Availability of hard currency to import all goods and services necessary for the operation of the enterprise and for repayment of loans contracted;
- Freedom to transfer foreign capital;
- Ability to transfer professional income of foreign employees;
- Protection of vested interests; and
- Equal treatment of Mauritanians and foreign individuals and legal entities.Foreign investment is permitted in all sectors of the economy. The Investment Central Office Committee (Guichet Unique or One-Stop Investment Shop), created by Ordinance no. 97.016 of February 15, 1997, screens major investment projects and recommends their approval by the Council of Ministers, chaired weekly by the President of the Republic. This Committee consists of a representative from each of the following GIRM Ministries and offices: Economic affairs and Development, Finance, Industry and Mines, Rural Development, Fisheries and Maritime Economy, and a representative of the General Confederation of the Employers. The creation of this inter-Ministerial Agencies Committee eliminated previous administrative procedures, and consequently facilitated investment agreement since 1997.
The Mauritanian Investment Code (Article 2) identifies twenty priority areas in which certain advantages, such as duty or tax incentives, can be guaranteed. The GIRM thus provides incentives for businesses that assist national priorities such as:
- promotion of small-and medium-sized enterprises;
- developing exports of Mauritanian-manufactured products;
- enhancement of the value of internal resources (manpower and raw materials);
- establishment of activities in the interior of the country (establishing enterprises outside of Nouakchott and Nouadhibou can have the benefit of a temporary reduction of the annual amount of tax due on industrial and commercial profits.Although the GIRM has significantly reduced barriers to investment since 1989, regulations remain vague and somewhat confusing. As noted earlier, the GIRM, with WB assistance, is preparing a revised Investment Code, which is expected to be published in the near future.
Conversion and Transfer Policies
The Mauritanian ouguiya is convertible within Mauritania. Hard currencies can be found either in commercial banks or private exchange offices. There are five commercial banks and about thirty exchange offices in Mauritania. The official exchange rate USD versus ouguiya as of July 1999 is ouguiya 206 to one US Dollar. Liberalization of the exchange system in 1997 has facilitated, in part, the repatriation of dividends by foreign investors and payments to foreign suppliers of goods and services. These transactions can be done through the commercial banks and do not require prior Central Bank approval.
There are no policy restrictions on transferring funds associated with an investment. Any individual or legal entity that has invested joint or foreign capital is officially assured of the free transfer of convertible currencies (Art. 4 of Investment Code). The delays depend only on the availability of foreign currency in local commercial bank.
Expropriation and Compensation
Article 5.2 of the Investment Code assures that if measures of expropriation, nationalization or requisition are taken, the GIRM should provide an exact and appropriate compensation, with the amount determined according to usual practices and rules of International Law. Such compensation is exempt from dues, duties, or taxes.
Since Mauritania's independence, only one nationalization has taken place. In November 1974, the GIRM nationalized the mining company, in which French partners were the majority shareholders. Compensation was paid according to mutual agreement between the two parties.
Dispute Settlement
We are not aware of any investment disputes in the recent past involving private investors. Disagreements resulting from the interpretation of the application of the Mauritanian Investment Code are settled by the competent Mauritanian courts in accordance with the laws and regulations in force. Any dispute between an individual or legal entity and the GIRM related to the application or the interpretation of the Investment Code is settled according to one of the following procedures of arbitration:
- By agreements and treaties concerning the protection of investments concluded between the GIRM and the state to which the individual or legal entity concerned belongs;
- By procedure of conciliation and arbitration to which both parties have agreed;
- According to the Convention of March 1986 for the settlement of disagreements related to investments between states and citizens of other states, established under the aegis of the International Bank for Reconstruction and Development. Mauritania is not member of the International Center for the Settlement of Investment Disputes; however, with the new Investment Code in draft, the GIRM hopes to ratify several International Conventions and Treaties.Performance Requirements/Incentives
There are no performance requirements beyond those that might be agreed to in the individual investment agreement. There are no statutory export requirements or targets. There are no requirements for local financing. There are some guidelines governing the percentage of host country nationals employed. For example: industrial fishing crews are required to have, on average, five Mauritanian crewmembers per vessel. To qualify for preferential tax treatment accorded to priority enterprises, Article 12 of Investment Code encourages companies to purchase locally manufactured goods where possible, and to employ and train Mauritanian staff at all levels.
The GIRM offers tax benefits, including exemptions in some instances, to those enterprises in the priority sectors indicated in the Investment Code. In addition, companies that locate in less developed areas of the country may benefit from tax exemption or reduction. In the case of import "dumping" (goods deemed to be competing unfairly with a priority enterprise), the GIRM will respond to requests for tariff surtaxes. Priority enterprises thus enjoy some potential protection from competition; i.e., the priority enterprises can ask to benefit during all or part of the first three years of operations from a regressive tariff surtax levied on competing imported products. The GIRM is often willing to provide free land for industrial and farming investments of which the Value Added Tax is considered relatively high.
Right to Private Ownership and Establishment
The GIRM maintained legal monopolies in the following sectors:
- Telephone and Postal services;
- Water, electricity and gas production and supply;
- Air, Sea and Rail transportation;
- Radio and Television; and
- Mining production and marketing.But thanks to GIRM's privatization program, the Government monopoly in the above sectors (except mining) will end in year 2000. Foreign and domestic private entities have the legal right to establish and own business enterprises and engage in all forms of remunerative activity, provided they respect the laws and regulations in force in the Islamic Republic of Mauritania. They also have the right to freely establish, acquire, and dispose of interests in business enterprises.
Protection of Property Rights
Property rights are protected under the Mauritanian Civil Code that is modeled after the French Civil Code. However, impartial application of the law by the Mauritanian judiciary has been a problem for some local companies. The Mauritanian Investment Code does not mention property rights in its rules and regulations. Mauritania is a member of the African Intellectual Property Organization (OAPI). In joining the OAPI, Mauritania agreed to a number of international agreements governing intellectual property right principles and to establish uniform procedures of implementation. These international agreements include: the Paris Convention for the Protection of Industrial Property; the Bern Convention for the Protection of Literacy 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 of Patents; and the Vienna Treaty on the Registration of Trade Names.
Adequacy of Laws and Regulations
The GIRM has introduced measures and policies to foster competition: privatization, liberalization of trade, and promotion of private enterprise and private initiative. To apply these measures, the Government adopted a variety of laws and procedures, but deficiencies persist in the enforcement of these laws and regulations. The liberalization of the exchange system and the import regime has reduced the Government's role in the economy. However, important problems remain to be resolved: improvement and development of management, improvement of transparency of Government procedures, abolition of corruption within the administration, and improvement of the labor and banking laws. Administrative procedures are still considered as a handicap to the trade and investment development.
Efficient Capital Markets and Portfolio Investment
Government policies do not discourage the free flow of financial resources. Foreign investors can get credit on the local market without any governmental restrictions. The GIRM's economic program adopted restrictive and selective credit policies that give priority to productive sectors. The accounting system and regulations covering investments are modeled on French conventions. After the restructuring of the banking sector and the introduction of a computerized system, banking management has improved.
Political Violence
Mauritania has not experienced political violence since it adopted a democratic constitution in 1991. There have no been incidents over the past years involving damage to projects and/or installations. There are currently no nascent insurrections, belligerent neighbors or other politically-motivated destabilizing activities in Mauritania.
Labor
Mauritania's 1998 population was estimated at 2.5M, with a natural growth rate of about 2.93 % per year. With 56% under 20 years of age, and only 4% over 65 years, the population is very young. The unemployment rate remains high and is currently estimated at 30% of the total labor force. The mass exodus from rural to urban areas, combined with the low economic growth rate and a poorly educated, youthful population are, in part, the causes of the high unemployment level. There is a shortage of skilled workers and well-trained technical/managerial personnel in most sectors of the economy. Unemployment also affects graduates; approximately 50% of those with high school and university diplomas have lacked jobs. The GIRM's restraint in hiring new civil servants, the stagnation of jobs in the private sector, and over-qualification for jobs in the informal sector are among the causes of graduates' unemployment.
There is no shortage of unskilled manpower in major cities (particularly, in Nouakchott and Nouadhibou). However, there is a shortage of skilled workers and well-trained technical/managerial personnel in most sectors of the economy, except the mining sector, which has adequate skilled workers and qualified managers. The Constitution provides for freedom of association and the right of citizens to join any political or labor organization. All workers except members of the military and police are free to associate in and establish unions at the local and national levels. Workers have the right to strike, but work stoppages are generally rare and are settled quickly. There are currently three officially recognized trade union confederations: Union des Travailleurs de Mauritanie (UTM; Union of Mauritanian Workers), Confederation Generale des Travailleurs de Mauritanie (CGTM; General Confederation of Mauritanian Workers) and Confederation Libre des Travailleurs de Mauritanie (CLTM; Conferederation of Free Mauritanian Workers.
After consultations with the country's three labor confederations (UTM, CGTM, and CLTM) and the employers federation (Confédération Générale des Employeurs de Mauritanie--CGEM), the GIRM issues labor laws in which employer-employee relations are defined for both the public and private sectors. The most recent agreement, the 1974 Collective Labor Convention, still in force, established a broad array of employee benefits, including fully paid maternity leave. The standard workweek is 40 hours or five days and half, except for banks, household and other special categories of workers. The minimum wage statute is based on a system of job classification defined in the labor code. These wages are revised periodically after agreement between the trade union confederations, the CGEM, and Government. The last revision took place in January 1, 1998 setting the minimum wage at 9,872 ouguiyas (USD 54) per month; but in reality, the minimum wage in the private sector is 15,000 ouguiyas (USD 81). The Labor Directorate of the Ministry of Labor is responsible for enforcement of labor laws.
Foreign Trade Zones/Free Ports
There are no duty-free zones in Mauritania, but UNCTAD-supported free trade zones are under consideration.
Bilateral Investment Agreements:
Mauritania has bilateral investment agreements with fellow member countries of the Arab Maghreb Union (Algeria, Tunisia, Morocco, and Libya), as well as Iraq, Saudi Arabia and France.
OPIC and Other Investment Insurance Programs
Mauritania is member of OPIC but not currently covered by its programs. The Foreign Credit Insurance Association (FCIA) insures certain purchases of American products by the mining company, SNIM.
Capital Outflow Policy
Foreigners working in Mauritania can transfer their earnings. They are authorized to transfer all of their assets upon conclusion of their work in Mauritania.
Major Foreign Investors
There is negligible foreign investment in Mauritania. Although data on the value of foreign investment is lacking, major foreign private investors include the following:
Local Affiliate Parent Company Nationality Sector - Mobil Oil Mie Mobil Oil USA Petrol - MORAK MINPROC, IFC Australia Gold - SODIAP BOTARG, Ltd. Ireland Equipment - FAMO-Mauritanie FAMO Morocco Food - SOBOMA France Beverages - SIPECO IFAFOOD France Fishing - MCP CNF China Fishing - Al Asmac Al-Baraka Group Saudi Arabia Fishing - NAFTEC NAFTAL Algeria Petrol - ELF-Mauritanie ELF Aquitaine France Petrol - BAMIS Al-Baraka Group Saudi Arabia Banking - GBM Bank Belgolaise Belgium Banking - MAFCI Ciment de France France Cement Major Taxation issues Affecting U.S. Business
As mentioned above, the system of taxation continues to affect Mauritanian imports, in spite of the GIRM efforts in reducing import taxes with the introduction of Value Added Tax in 1995 and "Droit Fiscal à l'Importation" in 1999. Some imported products continue to suffer from heavy taxation, including the cigarettes (mainly imported from the USA, with 43%) and the vehicles (mainly imported from France, Japan, and Germany, with 43% too). The average tax on imported goods is now 43%, and is considered high in comparison with the neighboring countries.
Host country contact information for investment-related inquiries
Following is the contact information for investment inquiries:
- Direction de la Promotion de l'Investissement Privé Ministére des Affaires Economiques et de Développement Boite Postale 238
Nouakchott, Mauritanie
Tel: (222) 29-04035
Fax: (222) 29-04-35
Email: UCP@OPT.mr
Contact Mr. Kelly Oumar Sada (Director)- Fédération des Industries et des Mines
Tel: (222) 25-39-74; 25-19-90
Fax: (222) 25-25-95-83
Contact Mr. Lafdal Ould Bettah (President)- Promotion de l'Entreprise Privée
Tel: (222) 25-91-05
Fax: (222) 25-91-08- Commission Centrale des Marchés
Secrétariat Général du Gouvernement
Immeuble Primature
Nouakchott, Mauritanie
Tel: (222) 25-25-94
Fax: (222) 25-25-94
Contact Mr. Ahmed Ould Aghnahalla (President)Corruption
Corruption is prevalent in Mauritania at many levels of the administration despite the GIRM's efforts to enforce laws and regulations. Corruption is most pervasive in Government procurement, taxation, bank loans, project management, vehicles controlled by policemen, and civil status documents. A new penal code aimed at strictly punishing persons practicing corruption is being drafted. Meanwhile, the Ministries of Justice and Interior are holding seminars for civil servants to emphasize the Government's determination in combating corruption.
|
[end of document] Note* International Copyright, United States Government, 1999. All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title 17, United States Code.
Next Chapter | Table of Contents
|
