Islamic Republic of Mauritania
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Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 116630-MR ISLAMIC REPUBLIC OF MAURITANIA TURNING CHALLENGES INTO OPPORTUNITIES FOR Public Disclosure Authorized ENDING POVERTY AND PROMOTING SHARED PROSPERITY SYSTEMATIC COUNTRY DIAGNOSTIC (SCD) Summary May, 2017 Public Disclosure Authorized International Development Association Country Department AFCW3 Africa Region International Finance Corporation Sub-Saharan Africa Department Multilateral Investment Guarantee Agency Sub-Saharan Africa Department Public Disclosure Authorized ACKNOWLEDGEMENTS This Systematic Country Diagnostic (SCD) was led by Bronwyn Grieve (TTL), Wael Mansour (co- TTL) and Paolo Zacchia (co-TTL) with a core team comprised of World Bank Group staff across the main operational global practices, as presented in the table below. The SCD was prepared under the guidance of Louise Cord, Gaston Sorgho, Laurent Msellati, Chiara Bronchi, Renaud Seligmann, Lars Christian Moller and Faheen Allibhoy. Administrative support was provided by Anta Loum Lo and Fatima Cherif. The team acknowledges the invaluable contributions provided by Aneliya Muller, consultant, in researching and preparing the SCD package. Valuable comments and advice were received from the following peer reviewers: Ali Zafar (Senior economist); Omowunmi Ladipo (Operations Advisor); Marc Tobias Schiffbauer (Senior Economist), Helene Grandvoinnet (Senior Public Sector Specialist), Serdar Yilmaz (Lead Public Sector Management Specialist), Jasmin Chakeri (Program Leader) and Luis-Felipe Lopez-Calva (Lead Economist). The core team relied significantly on the expertise of partners and stakeholders in Mauritania, who have contributed throughout the SCD preparation process in a collaborative manner. We are very grateful for their generosity in providing us with substantive inputs, knowledge, and advice. We would like to particularly acknowledge the contribution of the Government of Mauritania’s focal point for the SCD, Mr Hassan Zein, Adviser to the Prime Minister. GLOBAL PRACTICE / TEAM MEMBER AREA OF EXPERTISE Agriculture and Fisheries Christian Berger, Brahim Sal, Remi Kini, Berengere Prince, CMU Paolo Zacchia (co-TTL), Sophie Naudeau, Eric Lancelot Education Mohamed Tolba Energy & Extractives Morten Larsen, Nina Inamahoro Environment & Natural Dahlia Lotayef, Kazi Fateha Ahmed, Mimako Kobayashi, Peter Resources Kristensen, Alexandre Hugo Laure Finance & Market Cedric Mousset Fragility, Conflict & Violence, Maria-Beatriz Orlando Gender Bronwyn Grieve, (TTL), El Hadramy Oubeid, Kjetil Hansen, Governance Moustapha Ould El Bechir Health, Nutrition and Population Moulay Driss Zine Eddine El Idrissi, Mohamed Vadel Taleb Hassan Macroeconomic and Fiscal Wael Mansour (co-TTL) Management Poverty Paolo Verme, Rose Mungai Social Protection and Labor Aline Coudouel, Mattias Lefebvre, Hebba Elgazar Social, Urban, Rural & Paolo Avner, Andre Teyssier, Salamata Bal, Zie Coulibaly, Alexandra Resilience Le Courtois and Abderrahmane Fradji Trade and Competitiveness Laurent Corthay, Alexandre Laure Transport & ICT Ibou Diouf and Arthur Foch Water Pier Mantovani, Mohamed Nanzoul IFC Faheen Allibhoy, Vincent Floreani, MIGA Conor Healy ii ISLAMIC REPUBLIC OF MAURITANIA GOVERNMENT FISCAL YEAR January 1 – December 31 CURRENCY EQUIVALENTS (Exchange Rate Effective as of May 31, 2017) Currency Unit = Mauritanian Ouguiya (MRO) US $ 1.00 = 353 iii ABBREVIATIONS AND ACRONYMS DTIS Diagnostic Trade Integration Study EMEL Emergency food program (Programme alimentaire d’urgence) EPCV Survey of Household Living Conditions (Enquête Permanente sur les Conditions de Vie des Ménages) EU European Union FDI Foreign Direct Investment FITI Fisheries Transparency Initiative FNRH National Oil Fund (Fonds National des Revenues des Hydrocarbonés) GDP Gross Domestic Product IMF International Monetary Fund LFPR Labor Force Participation Rate LMIC Lower-Middle Income Country MDG Millennium Development Goal MENA Middle East and Northern Africa MRO Mauritanian Ouguiya NGO Non-Governmental Organization ONS National Office of Statistics (Office National de la Statistique) PEFA Public Expenditure and Financial Accountability Framework PIP Public Investment Program PNIDDLE National Integrated Program to Support Decentralization, Local Development and Youth Employment (Programme National Intégré d'appui à la Décentralisation, au Développement Local et à l'Emploi des Jeunes) REER Real Effective Exchange Rate SCAPP Accelerated Growth and Shared Prosperity Strategy (Stratégie de Croissance Accélérée et de Prospérité Partagée) SCD Systematic Country Diagnostic SNIM National Industrial and Mining Company (Société Nationale Industrielle et Minière) SOE State-owned Enterprises SSA Sub-Saharan Africa TFP Total Factor Productivity UNICEF United Nations Children’s Emergency Fund WFP World Food Program iv WGI Worldwide Governance Indicators WHO World Health Organization Regional Vice President: Makhtar Diop Country Director: Louise Cord Country Manager: Laurent Msellati Practice Managers: Chiara Bronchi, Lars Christian Moller Task Team Leaders: Bronwyn Grieve, Wael Mansour, Paolo Zacchia v TABLE OF CONTENTS A. INTRODUCTION 1 B. COUNTRY CONTEXT 2 C. DIAGNOSTIC OF MAURITANIA’S PRINCIPAL DEVELOPMENT CHALLENGES 2 I. INCLUSIVE GROWTH: Robust growth performance during the commodity super-cycle relied on a narrow economic base, was capital-intensive, brought limited job creation and is now jeopardized by the low commodity price environment. 2 II. POVERTY AND SHARED PROSPERITY: Accelerated reduction in poverty and inequality was primarily driven by relative price changes that benefitted poor rural producers, rather than gains in productivity or structural mechanisms to enable the poor to build their human capital, productive and financial assets. 7 III. GOVERNANCE: The narrow political settlement has brought political stability but has not yet succeeded in removing hierarchical and discriminatory conceptions of traditional societal organization, creating foundational obstacles to inclusive development. 12 IV. FRAGILITY: Underlying fragility stresses associated with Mauritania’s delicate and complex social fabric and the environmental challenges of an encroaching coastline and an expanding desert risk undermining development gains made to date. 14 Environmental Fragility 15 Social Fragility 15 D. ANALYSIS OF PRIORITY CONSTRAINTS AND IDENTIFICATION OF SOLUTIONS 16 I. SUSTAINING AND ACCELERATING INCLUSIVE GROWTH: Reaping the benefits of Mauritania’s natural endowments and building the foundations for structural transformation. 16 1.1. Addressing Weak Management of Extractives 16 1.2. Harnessing the Potential of Livestock and Fisheries in the Face of climate change 18 1.3. Promoting Productive and Inclusive Cities for Longer-Term Structural Transformation 20 II. PROMOTING EQUITY: Tackling the structural barriers that restrict the poor from building their financial, human capital and productive assets 21 2.1. Addressing High Food Prices in Nouakchott 22 2.2. Promoting the Equitable Distribution of Land in the Senegal River Valley 23 2.3. Improving Equitable Access to Social Services to Promote Human Capital Development 24 III. REINFORCING GOOD GOVERNANCE AND SOCIAL COHESION: Broadening the political, economic and social space through transparent public resource management and the protection of the vulnerable. 27 3.1. Improving the Transparency and Effectiveness of Public Expenditures and Investments 27 3.2. Consolidating the Social Contract 29 E. CONCLUSION 31 vi FIGURES Figure 1- Mauritania's Growth Dynamics .............................................................................................. 5 Figure 2- Mauritania's Poverty Reduction Dynamics-Household Expenditure Growth by Area .......... 8 Figure 3- Mauritania's Urbanization Dynamics ................................................................................... 21 Figure 4- Mauritania's Food Price Dynamics ...................................................................................... 22 Figure 5- Key Resource Constraints in Mauritania’s Social Sectors ................................................... 22 TABLES Table 1- Growth Accounting Decomposition (2000 – 2014) ................................................................ 3 Table 2 - Multidimensional Head Count and Poverty Indices ............................................................. 10 vii NOTE ON THE STRUCTURE OF THE SCD PACKAGE The Systematic Country Diagnostic (SCD) for Mauritania is presented in a new format that is intended to improve the accessibility of the document and facilitate dialogue with the authorities and stakeholders. In a departure from the standardized reporting format traditionally employed, the published SCD package contains two constitutive parts – a written executive summary and an accompanying slide deck. The executive summary provides policy-makers and stakeholders with a concise overview of the narrative, as well as the principle conclusions and recommendations emanating from the diagnostic. It constitutes the principal SCD report. The executive summary is accompanied by a slide deck. The slide deck is not intended for presentational purposes. Rather, it depicts the underlying evidence upon which the diagnostic is based in a visually accessible format. The SCD package draws from a more in-depth analysis of the identified priority constraints and proposed solutions, which is contained in a series of unpublished background thematic notes. viii KEY MESSAGES Mauritania’s abundant