NOUAKCHOTT, April 21, 2010—In addition to a severe political crisis that has mired Mauritania since 2008, the global financial crisis that rocked many countries the world over in 2009 also has left its mark on Mauritania.
Ahead of the World Bank-International Monetary Fund Spring Meetings to be held in Washington, D.C. April 24 and 25, the Mauritanian Government, its technical and financial partners, academicians, lawmakers, and civil society members, are discussing the lessons learned from the crisis and possible reforms that may be implemented to prepare the country for future economic setbacks.
On March 31, in the first meeting of its kind since the onset of the global financial crisis, decision and policy makers met to discuss The Global Financial Crisis: Lessons Learned and Possible Reforms for Mauritania.
The event was jointly chaired by Mr. Mandani M. Tall, World Bank Country Director for Côte d’Ivoire, Togo, Benin, Niger and Mauritania, and Mr. Sidi Ould Tah, Mauritanian Minister of Economic Affairs and Development. The meeting provided an opportunity for the Mauritanian public to hear from the country’s main technical and financial partners, government officials, the private sector, Parliament, civil society, and academicians. It had three distinctive features:
It took place in the context of preparations for the upcoming World Bank/IMF Spring Meetings, against the backdrop of much-anticipated discussions between the government and the Bank on the financial, economic, and social governance aspects of development. Mauritanian delegates will also discuss the replenishment of the International Development Association and its impact on Mauritania in the wake of the recent financial crisis, as well as the decline in development assistance.
Overcoming and preventing crises
Will the lessons learned permit avoidance of further financial upheaval? Could these lessons help Mauritania rapidly overcome the effects of the crisis and reduce poverty? These issues were discussed by the first panel, composed essentially of Mauritania’s partners, a government economic adviser, and a representative from the local banking system. In essence, everyone agreed that Mauritania, though not very well integrated into international financial markets, showed strong signs of vulnerability due to its reliance on commodity exports, the prices of which have constantly fluctuated, as well as on development assistance, the decline in which took a heavy toll on the country during the political crisis.
"Over time, the channels that transmit the financial crisis to the real economy engulfed Mauritania, which had to grapple with its own problems, namely, the sharp decline in foreign remittances," said Sid’Ahmed Ould Cheikhna, an Economist at the World Bank’s Country Office in Mauritania.
"While growth has slowed and internal and external macroeconomic imbalances have emerged, the impact of the shockwave generated by the financial crisis has been mild," noted IMF official Tijani Najeh.
For the Mauritanian authorities, the challenge posed by the economic and financial crisis resided in the ability to control the inflation spiral and massive layoffs, which were experienced in other countries.
Sidi Ould Tah, Minister of Economic Affairs and Development, took advantage of the opportunity to express his satisfaction with the handling of this situation. "While the price effect certainly reduced export earnings, the pace of exploitation has remained steady," he said.
"The National Mining Company [SNIM] has kept production volumes steady during this crisis. Production was maintained at 10 million metric tons and the company has been able to mobilize private financing of over US$1 billion for its development and modernization program," he added.
According to Ould Tah, two other positive developments should be noted in the areas of gold and fisheries products.
"In 2009, 34 percent of revenue came from gold and five percent from fisheries products; quite a remarkable achievement in a crisis context. In 2009, inflation fell to 2.2 percent from its previous level of five percent to six percent."
Good economic governance: How can it help reduce the effects of the crisis and prevent social conflicts?
The second major topic on the global financial crisis and its effects on Mauritania made it possible to contrast intellectual discourse on the economy and its key concepts with the harsh realities of daily life.
"The ideal is not to dwell on the effects, but to determine how a country such as Mauritania can avoid or better position itself to handle a possible crisis," Mr. Mandani M. Tall, World Bank Country Director. "This entails looking beyond capitals such as Nouakchott, Dakar, New York, or Paris and learning how the crisis has impacted rural areas."
"We must also bear in mind that there is no fount of knowledge on development," Tall said. "The most preeminent specialists were caught off guard by this crisis. We therefore need to listen to everyone." Participants discussed the link between good governance and the economic crisis.
"Mauritania does have a strategy to combat corruption and a law that requires banks to publish their revenues. While both laws were passed three years ago, they are rarely enforced," said Sidi Mohamed Ould Cheiguer, who chairs the Citizens for Change Group (ICC). Ould Cheiguer was also critical of the programmatic frameworks that underpin Mauritania’s development policies, in particular the Poverty Reduction Strategy Paper (PRSP) and the Country Assistance Strategy (CAS).
The contributions of Sall Amadou, a sociologist and researcher at Nouakchott University, and Sy Mamoudou, Director of the weekly newspaper L’Eveil Hebdo, focused on the need for a culture of "evaluation, ownership, and accountability" by those who are responsible for the fate of the African people, and for expanded opportunities in the public sphere for freedom of expression and social dialogue in order to resolve acute crises such as the bread riots in 2007 and the recent trade union protests calling for an increase in housing and transport allowances.
In 2007, Mauritania was hit by the food crisis, which spilled over into the streets with riots triggered by the steep rise in food prices. At the time, the Government reacted by releasing approximately US$167 million (UM 42 billion) to quell the unrest.
Sixty-three percent of the local economy is based on the extractive industries (iron, copper, and oil), a situation that makes Mauritania vulnerable to the vagaries of international markets.
Unemployment, estimated at over 32 percent, remains a source of concern in Mauritania. It is projected that 30,000 unemployed youth are joining the ranks of the already 400,000 persons seeking employment.
The World Bank almost tripled its commitments during the 2008-2010 period, which rose from US$35 billion to US$100 billion, in a bid to help Mauritania overcome the effects of the global financial crisis.
According to IMF data, inflation fell to 2.2 percent in 2009, a relatively low level compared to previous years, when it hovered between 5 and 6 percent. In March 2010, the IMF provided Mauritania with US$118 million under its Extended Credit Facility.