I. COMMERCIAL OVERVIEW Summary Two years after the election of President Maaouya Ould Taya and the appointment of the Government of the Islamic Republic of Mauritania (GIRM) led by the Prime Minister, Mr. Sidi Mohamed Ould Boubacar, Mauritanians continue to face serious problems concerning health, nutrition, education, rural exodus and town planning. In spite of weak economic management, a largely illiterate work force, and persistent drought, the Mauritanian economy grew 4.0 percent in 1993 (against 1.7 in 1992), surpassing a population growth of 2.9 percent. This favorable GDP growth is largely a result of a good cereals harvest, improvement of the livestock trade, and increasing fish exports. Mauritania has few natural resources other than minerals and fish. Economic activity is based mainly on agriculture, livestock and trade. But, with the intense campaign of gold prospecting which began in mid-1993, the mining sector may become more important and attract foreign investors. Australian and French companies already operate in gold exploration. Overview of Agricultural Sector While Mauritania enjoyed a record cereals harvest early in the 1993/1994 agricultural year, the country's basic economic condition remains weak. The estimated net production of 146,000 metric tons (94,000 metric tons in 1992/1993) is insufficient to cover the total needs of the population which amount to 365,000 metric tons. Programmed aid and expected commercial imports are insufficient to cover the gap between the amount of the food available and the amount needed. It is expected that only about 10 percent of the Mauritanian population will suffer from malnutrition this year, an improvement over the five past years. The GIRM is seeking food aid and encouraging commercial imports of cereals to balance the food deficit. Attitude towards U.S. Business All but a few consumer goods and many services are imported. Mauritania's imports from the United States increased sharply from 1989 to 1992, with a slight reduction in 1993. This reduction may be attributed to the completion of new mine equipment purchases. Nonetheless, American products are increasingly seen on the local market (mainly spare parts, clothing and cigarettes). Mauritanian businesspeople are interested in establishing commercial contacts with Americans as distributors and joint venture partners. While one American company was recently subjected to discriminatory treatment in its pursuit of a major telecommunications contract, which it failed to win, this incident may be isolated. There have not been enough American companies bidding on such projects in Mauritania to establish a pattern. Many Mauritanian businesspeople seek contacts among U.S. businesses. The commercial section of the U.S. Embassy receives an increasing number of Mauritanian visitors requesting addresses or information on U.S. companies. Mauritanian fishing companies also express their interest in exporting fish to the U.S.A., to supplement existing exports to European and Japanese markets. Infrastructure Development A major barrier to investment and development is the limited infrastructure. There are only three paved long-distance roads in Mauritania and one railroad line dedicated to carrying iron ore. Internal air transport (two commercial airplanes only) is the quickest and the only viable means of transport between many towns in the interior. In recent years, the construction of the deep water port in Nouakchott has facilitated the growth of foreign trade; however, the capacity of this port is under- utilized. The GIRM also plans to improve the Nouadhibou port in the near future. Investment Climate Trade payment delays for both imports and exports continued to vary from 45 to 60 days in 1993. Fish and iron ore exports increased both in quantity and in value: from USD 242.0 million and USD 164.0 million in 1992 to USD 270.8 million and USD 185.2 million in 1993 respectively. The outlook for 1994 is for continued strong iron ore exports and high receipts from fisheries. To improve the investment climate, the GIRM intends to simplify the procedures to establish new enterprises, remove obstacles to promote payment of dividends and make the tax system more favorable to exporters. In 1993, the GIRM decided to reexamine the legal framework governing investment, to provide fiscal incentives for exports and to eliminate barriers on repatriation of profits and capital transfers. Before the end of 1994, GIRM plans to prepare studies in cooperation with the World Bank in the following areas: the legal environment for business including the investment code and the commercial code; adequacy of existing regulations; and institutional support for private sector activity. Trade Promotion and Advertising The U.S. market was almost unknown to Mauritanian importers until the 1970's. However, U.S. equipment and products are now gaining popularity in Mauritanian markets, making the U.S.A. the third-largest Mauritanian supplier in 1993. American cigarettes (Marlboro, L&M, Cosmos, and Gold Coast) have taken much of the market share previously held by French brands. Last year, the Mauritanian L&M distributor mounted a local advertising campaign, placing a placard in the heart of Nouakchott City that presented the New York City skyline and the slogan "le vrai gout Americain" (the real American taste). The same picture, in miniature, has been published in the Government newspaper "Horizons". Mauritanians stress that U.S. firms are welcome in Mauritania. Generally speaking, it is advisable to obtain the services of a local representative. A 1993 guide to doing business in Mauritania (guide de l'operateur economique) is available from the U.S. Embassy's commercial section. The U.S. Embassy maintains a list of local representatives willing to assist U.S. companies in selling their products in Mauritania. Obstacles to Trade Impediments to improving commercial relations include the inconvertibility of the Ouguiya (Mauritanian currency), the need to do business in either French or Arabic, the small size of the potential market, and the lack of American knowledge about the Mauritanian market. In order to increase their presence in the Mauritanian market, American exporters seeking to make direct sales should locate a reliable local agent/distributor. To promote the sale of U.S. products here, U.S. companies are advised to provide brochures and marketing literature in Arabic or French.