The discovery and subsequent development of the Greater Tortue Ahmeyim natural gas field on the maritime border with Senegal has brought Mauritania’s economy to an important turning point. With first gas in the $4.8bn project backed by BP and Kosmos Energy expected in 2023, the government is set to receive a vital new injection of tax revenue that could help make the long-held goal of economic diversification a reality.
FISCAL RESPONSIBILITY
Mauritania’s economy has historically been reliant on minerals and mining, as well as petroleum to a lesser extent, reflected by the fact that GDP growth dropped from an average of 5.5% in 2011-14 to 2.5% in 2015-18 upon the end of the global commodities supercycle. Indeed, Mauritania became particularly vulnerable to commodity price volatility after 2014. Improving financial management and formalising the economy will therefore be key tosustainable future growth, and economic structures can be adapted to best leverage the new revenue from offshore natural gas resources. For instance, implementing a more flexible regime for the ouguiya, Mauritania’s currency, should help to alleviate exchange rate pressures as capital inflows increase, boost export competitiveness and control the budget deficit. The World Bank has flagged the importance of institutional reforms such as creating a sustainable fiscal framework and boosting transparency, beginning with including gas resource accounting in the national
budget. The organisation also suggests channelling the revenue into an existing sovereign wealth fund and putting the funds to more active use via a diversified investment portfolio to provide a sustainable source of budget financing over the longer term.
DEVELOPMENT PLAN
New revenue from the natural gas field should also support sustainable and inclusive growth via the government’s current national development plan, the Strategy for Accelerated Growth and Shared Prosperity 2016-30. A key component of the plan is to drive productivity in agriculture by developing a competitive livestock subsector and boosting val-ue-added industries such as leather production. Devel-oping the fisheries segment while preserving marine and coastal diversity is another goal. The aim is to fur-ther integrate fisheries into the national economy and lift its contribution to GDP above the current level of 6%.
Mauritania’s fishing waters are attractive, with an annual total catch potential of about $1.4bn. The World Bank identifies frozen mackerel and sardines, as well as chilled and fresh fish, as some of the products in which Mauritania holds a comparative advantage in global markets and can therefore derive the greatest benefit. Other products of interest under the development plan are fish oil, sheep skin and leather, malt, Arabic gum, gypsum and quartz (see Agri-business analysis).
NOUADHIBOU FREE ZONE
With the backing of mul-tilateral institutions, in 2019 the country was nearing completion of a project to establish a seafood cluster in the Nouadhibou Free Zone, the port area that accounts for approximately 80% of the value of fish caught in Mauritania. The project helped lift fresh fish exports to more than 7000 tonnes per year prior to the Covid-19 pandemic, from a baseline of less than 1000 tonnes in 2015. Further gains are expected following the con-struction of a refrigerated warehouse for fresh fish exports at Nouadhibou International Airport.
Efforts continue to attract private investment in the free zone for fish processing and other industrial activities, which should yield knock-on benefits for job creation, public revenue, foreign exchange, the trade balance and food security. Other strategic objectives of the national development plan include attracting more private sector participation in the economy, including through public-private partnerships; creating a more inclusive financial sector; and facilitating the estab-lishment of small businesses. Building more resilient infrastructure to support growth – particularly renew-able energy facilities and transport networks – is also vital to improving Mauritania’s export competitiveness.
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