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Country Commercial Guides for FY 2000: Mauritania Report prepared by U.S. Embassy Nouakchott, released July 1999   Note*

VIII. TRADE AND PROJECT

Brief Description of the Banking System

With only five commercial banks, one bank specialized in housing construction, three credit Agencies (Credit Maritime, Credit Agricole, and Mauritanie Leasing), and two insurance companies, Mauritania's financial sector remains underdeveloped. Previously modeled on the French system, the banking sector has now been restructured and privatized. Consequently, banks have considerably increased their capital and instituted stricter management. As a result, the national deposit was adequately funded and loans continued to be contracted but with more caution. The Central Bank remains the bank regulatory agency and still controls interest rates, exchange rates in force, commercial bank reserve requirements and financial and credit management. The Central Bank requires that all commercial banks meet these standards which constitute the only way to control the management of the financial sector. The banks' financial statements are in compliance with international standards and are annually audited by local accounting firms. In general, the major shareholders of banks obtain large shares of loans and other bank facilities, like foreign currencies for their private travel. Since 1997, the GIRM encouraged the creation of popular saving agencies to diversify the financial sector and help small savers to promote investment in the development sectors.

Foreign Exchange Controls Affecting Trading

As above mentioned, there is no restriction on transfers of profits, repatriation of capital, royalties or service fees, provided the investment was authorized and made through approved banks. The foreign exchange system was effectively liberalized in 1996, making the ouguiya freely convertible but only inside Mauritanian territory. Authority to buy and sell foreign exchange has been delegated to the commercial banks and exchange offices which carry out transactions upon presentation of appropriate justifying documentation, such as an invoice to pay for imports and customs documents. There is also a black market for trading foreign exchange, primarily U.S. dollars and French francs. The spread between the official rate and the black market rate is currently some 15 percent.

General Availability of Financing

Local financing is limited for Mauritanian investors; however, importers of goods may have access bank loans with high interest rates and a short period of repayment. Traders and importers are complaining of the lack of financing, especially after the privatization of commercial banks and the exchange system liberalization.

How to Finance Exports/Methods of Payment

Most Mauritanian imports are paid for by irrevocable and confirmed letters of credit issued by local banks. The bank transfer system is also used. Some Mauritanian importers hold bank accounts abroad (in France, Spain, Switzerland, and in most Arab countries), that allows them to pay for their imports directly without involving their local banks.

Availability of project financing, including lending from Multilateral Institutions

Mauritania's auto-financing is insignificant when compared with its financial needs. Overseas direct assistance (ODA) and loans represent about 85% of total resources of its investment budget. Major lenders are the World Bank (IDA - International Development Agency), African Development Fund, African Development Bank, IMF, the Kuwaiti Fund (FADES), European Investment Bank, Islamic Bank, and France Cooperation.

Types of projects receiving financing support

The projects financed concern mainly agriculture (land conversion, irrigation) fishing (maritime surveillance), rural development, hydraulics (drinking water supply), environmental protection, infrastructure (roads, airports, telecommunications), education, and health. In 1998 and 1999, Mauritania continued to obtain financing from IDA and African Development Fund and IMF for its economic and social development projects. This financing was linked to the GIRM's structural reforms to develop the private sector and promote sustainable use of its natural resources, increase primary school enrollment in under served regions, alleviate poverty, and improve health care.

List of Banks with Correspondent US Banking Arrangements

Banque Mauritanienne pour le Commerce International (BMCI):

- Bankers Trust
- Chemical Bank
- American Express Bank

Banque Nationale de Mauritanie (BNM):

- Bank of America
- Bankers Trust
- Chemical Bank

Banque Al-Baraka Mauritanienne Islamique (BAMIS):

- Arab-American Bank of New York