Mauritania Economic Update 2022: The private sector at the center of economic transformation and job creation

2022-06-22

According to the fifth edition of the World Bank's Report on the Economic Situation in Mauritania, the country's economic recovery in 2021 was robust but below pre-COVID-19 levels and growth potential. Growth is estimated to have rebounded by 2.4% in 2021 thanks to an increase in private consumption and investment, as well as an improvement in the performance of the services sector. Likewise, the negative impact of the pandemic on human, economic and social activities decreased significantly in 2021, reflecting the recovery in growth and the effectiveness of the mitigation measures put in place by the government.

The report notes that Mauritania has presented positive recent economic developments, including a surplus budget balance, a reduction in the total public debt-to-GDP ratio and a monetary policy favorable to the return of growth. With successful COVID-19 vaccination campaigns, a thriving extractive sector and an expected increase in public sector contribution, the country looks set for a more optimistic growth in 2022.

However, the country remains vulnerable to shocks such as a longer COVID-19 pandemic, security risks in the Sahel region, protracted conflict in Ukraine, and drought-related risks that could lead to lower activity. economy and an increase in poverty. In the medium term, the government should focus on fiscal sustainability as well as the development of inclusive growth, through a stronger partnership with the private sector. In addition, it would be important to continue to improve the business climate and prudent debt management.

Cristina Isabel Panasco Santos, World Bank Country Manager for Mauritania, underlines that "medium and long-term fiscal sustainability as well as an environment conducive to economic transformation are essential conditions for private sector-led growth and therefore poverty reduction”.

Mauritania benefits from a resilient and job-creating formal private sector. However, in comparison with other economies, formal sector actors are few, representing only a small part of economic activity. These actors are held back by certain constraints such as lack of access to finance and low levels of innovation and technology adoption.

According to the report, only 14 % of companies in the country said they had obtained a loan in recent years, while 12 % said they needed a loan to expand their production but did not have access to it. More than 80 % of these loans were granted to large companies. Technology adoption by small and medium-sized enterprises (SMEs) remained low in 2021, particularly when it comes to the use of technology to support general business functions, such as sales, procurement, quality control and marketing. Adoption of technology to perform productive functions, such as administration, payment processing and production planning, is relatively widespread, although use remains limited.

The report proposes policy actions to address these constraints, including strengthening access to finance for SMEs, promoting greater awareness and adoption of technologies by businesses, and policy reform. to foster private sector development and more competitive markets.

Source: World Bank