1 Executive Summary especially in the Historically, Mauritania has been relatively ope n to foreign direct investment, fishing, mining, and hydrocarbon sectors. June 2012, to encourage further investment, the In updated provisions in the Investment Code to government enhanc e the security of investments and e administrative procedures. The Code provides for free repatriation of forei facilitat gn capital and wages for foreign employees. The Civil and Commercial Codes protect contracts , although court enforcement and dispute settlement can be difficult. The judicial system remains weak, unpredictable, and inefficient in xperience in commercial and financial law its application of the law. Judges lack training and e and are prone to accept bribes to influence their decisions . The tax system is opaque. Tax rates on businesses begin at 25 percent on profits and two percent on revenue ; moreover, procedures required to pay tax es lack transparency and are time - consuming. Recent efforts to combat corruption have resulted in businesses fac ing extraordinary tax bills that they previously could avoid ed through bribes paid to tax inspectors and have assessors. Labor laws and condit ions of employment are complex , with numerous limitations on hiring, safety and duration of work, and dismissals. Likewise, potentially costly environmental , health , laws and policies exist are rarely enforced. but The remain s country’s stable but suffers from a history of coups d’état . political framework There have been two non - democratic transfers of power in Mauritania since 2005. Both were bloodless and non violent. The most recent coup, which occurred on August 6, 2008, deposed - Mauritania’s first democratically elected president, Sidi Mohamed Ould Cheikh Abdallahi. For the first time in Mauritania’s history, there was political opposition to a coup, so the new The , Mohamed Ould Abdel Aziz president agreed to an official dialogue with the opposi tion. , dialogue , which resulted in the Dakar Accords , paved the way for a presidential election in July 2009, which Abdel Aziz won and which was deemed free and fair according to international standards. In the July 2009 presidential election, President Corruption remains a concern. Aziz ran Abdel on an anti - corruption and populist platform. Donor partners applauded the release of the first - ever Mauritanian anti - corruption strategy in November 2009, and a number of high - profile anti - corruption cases have demonstrated an unprecedented commitment to fighting corruption. While c orruption is an obstacle to foreign direct investment in Mauritania, firms generally rate high taxes, access to credit, underdeveloped infrastructure, and a lack of skilled labor as greater impediments. The overall investment climate in Mauritania remains challenging for U.S. investors. The Mauritania foreign direct investment, but the weak judicial system, n government encourages 1

2 Department of State: 2014 Investment June 2014 Climate Statement opaque tax laws, complicated l abor laws and conditions, a history of coups, underdeveloped may give some investors reason to pause. infrastructure, and lack of skilled labor Openness To, and Restrictions Upon, Foreign Investment 1. Attitude Toward FDI especially in the Historically, Mauritania has been relatively open to foreign direct investment, fishing, mining, and hydrocarbon sectors. The current government, elected in July 2009, has priorit recruiting foreign investors in these and other indust ries. It is working closely with ized , the World Bank, and the international donor community the International Monetary Fund (IMF) improve basic infrastructure and to update laws and regulations. to Mauritania’s scores on worldwide corruption indices have rema ined consistently low over the past several years . Other Investment Policy Reviews February 2008 t he United Nations Conference on Trade and Development (UNCTAD) In , published a review of Mauritania. The Investment Policy Review is available online , in French, http://unctad.org/en/Docs/iteipc20085_fr.pdf . The report recommends that at: the Government of Mauritania diversify the economy , better realize its investment potential through increasi ng revenue generated by the exploitation of natural resour ces , accelerate required ref o r ms , and enhance the business and investment climate. The review recommended that the government prioritize improving the regulatory framework by adopting a new investm ent code , strengthening institutions responsible for promoting and monitoring investment , improving the quality and and fostering competition. In 2012, t he government quantity of information about investme nt , P adopted a revised nvestment C ode and created the Office of P romotion of the I rivate Sector (OPPS) to promote and monitor investment. In 2011, Mauritania underwent a World Trade Organization (WTO) investment policy review in the context of a Trade Policy Review. ( The report is available online a t http://www.wto.org/english/tratop_e/tpr_e/tp350_e.htm ) The report states that, since 2002, the . government has undertaken few reforms in the area s of customs, trade, transparency, or investment regulations. Since the report was published, the government passed the revised Investment Code in June 2012 to improve government transparency through the government procurement process . Laws/Regulations of FDI The Investment Code, updated in June 2012, is designed to encourage direct investment by The code enhancing the security of investments and facilitating administrative procedures. provides for free repatriation of foreign capital and wages for foreign emp loyees. The code also created free points of importation and export i ncentives. S mall and medium enterprises (SME) , which register through OPPS , do not pay any tax or customs duties. T he Code also created the rage regional development. formation of Special Economic Zones to encou Separately, the Nouadh b ou Free Zone was created with its own regulatory scheme. T he Civil and Commercial i Codes protect contracts , although court enforcement and dispute settlement can be difficult. The judicial system remains weak, unpredictable , and inefficient in its application of the law. Judges lack training and experience in commercial and financial law and are prone to accept bribes to . influence their decisions 2

3 Department of State: 2014 Investment Climate Statement June 2014 Limits on Foreign Control , sectors where public companies hold monopolies With the exception of such as electricity, The Mauritania has no discriminatory policies against foreign investment, imports, or exports. mining, fishing, agricultural, banking, petroleum and technology sectors actively seek for eign , direct investment. Screening of FDI The Mauritanian government has historically practiced mandatory screening of foreign In general, such utiny has been investments to ensure compliance with the country’s laws. scr - discriminatory. The June 2012 update to the Investment Code established the routine and non Ministry OPPS in the of Economic Affairs and Development (MAED) to replace the MAED’s Consolidated Office for Investment. OPPS has three sections: the Office for the Promotion of Private Investme stop shop” to nt and International Cooperation; the Guichet Unique, a “one - screen potential investments for all sectors except petroleum, mining, and fishing; and the Office of Investment Development and Promotion of Environmental Affairs. However, due to the OPPS’s location outside the MAED and staffing vacancies, the OPPS has remained largely inactive. to apply for an investment certificate at the The revised Investment Code requires investors . Guichet Unique The Guichet Unique has ten days to notify the applicant of its decision. If the applicant has not received a response within ten days, The the certificate is considered granted. OPPS became functional in early 2013. However, many of the largest sectors of the economy, C I , as separate including mining, oil, and energy, are excluded from the revised ode nvestment legislation regulates these industries . Fishing, tourism, and agriculture are covered by the revised Investment Code, although fishing companies must still apply for licenses through the Ministry of Fishing and Maritime Economy. Industrial Strategy , Investors interested in egotiate investment certificate s Energy & Mining petroleum, or fishing n Ministry of Oil, Energy, and Mines or the Ministry of Fishing and Maritime directly with the Mauritania continues to attract significant foreign direct investment in these sectors, Economy. y’ Final approval of projects falls within the purview s economy. which remain vital to the countr of the Council of Ministers, which has in practice usually approved all recommended projects. firms have identified the screening process as unduly unpredictable or discriminatory ; No U.S. however , as of April 2014, a ll U.S. companies invest ing in Mauritania have negotiated directly with relevant ministries ; e gone through the OPPS process . no U.S. firms hav Competition Law Suppliers for large government contracts are selected through a tender process. Invitations for tenders are publicly announced in local newspapers and on government websites. After issuing an invitation for tenders, the Central Market Commission commission created in each , a new Ministry, selects the offer that best fulfills government requirements. If two offers — one from a foreign company and one from a Mauritanian company — are otherwise considered equal, statutes In practice, this has require that the government award the te nder to the Mauritanian company. resulted in tenders being awarded to companies that have strong ties to government officials, regardless of the merits of an individual offer. 3

4 Department of State: 2014 Investment Climate Statement June 2014 Investment Trends and if applicable, Table 1B 1.1.1. Tables 1 Measure Rank or Website Address Year value I ndex 2013 119 of 177 http://cpi.transparency.org/cpi2013/resul TI Corruption Perceptions ts/ 2013 134 of Heritage Foundation’s Economic 177 http://www.heritage.org/index/ranking I ndex Freedom World Bank’s Doing Business http//doingbusiness.org/rankings 201 4 173 of 189 Report “Ease of Doing : Business” Global Innovation Index 2013 N/A http://www.globalinnovationindex.org/c report - full - ontent.aspx?page=gii - 2013#pdfopener 2012 $ World Bank GNI per capita http://data.worldbank.org/indicator/NY. 1,110 GNP.PCAP.CD TABLE 1B - Scorecards: The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment ome (GNI) to reform, produced scorecards for countries with a 2012 per capita gross national inc o f $4,085 or less. A list of countries/economies with MCC scorecards and links to those scorecards is available here: http://www.mcc.gov/pages/selection/scorecards . Details on each of the MCC’s indicators and a guide to reading the scorecards are available here: - guide http://www.mcc.gov/documents/reports/reference - 2 013001142401 - fy14 - the - to - indicators.pdf 2. Conversion and Transfer Policies Foreign Exchange There are no legal or policy restrictions on converting or transferring funds associated with investments. Investors are guaranteed the free transfer of con vertible currencies at the legal market rate, subject to the availability of such currencies. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries. To transfer funds, investors are required to open a foreign exchange bank account in Mauritania. There are no maximum legal transaction limits for investors transferring money into or out of Mauritania, may be complicated. although regulations to withdraw money 4

5 Department of State: 2014 Investment June 2014 Climate Statement The local currency, the ouguiya, is freel y convertible within Mauritania, but its exportation is not Hard currencies can be easily obtained from legally authorized. local commercial banks. The Central Bank holds regular foreign exchange auctions, allowing market forces to fix the value of ouguiya. Individuals and companies may obtain hard currency through commercial banks for the the payment of purchases or the repatriation of dividends. If the bank has hard currency available, there is no delay in effect for remitting investment returns. Ho wever, if the bank does not have sufficient reserves, the hard currency must be obtained from the Central Bank in order to conduct the transfer. The Central Bank is required to prioritize government transfers, which could present further delays. Delays o f one to three weeks, although relatively uncommon, have been reported. Remittance Policies There are no legal parallel markets in Mauritania that would allow investors to remit investments through other means. There is no limit on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or imported inputs. 3. Expropriation and Compensation The revised Investment Code provides more property guarantees an d protection. All companies are , a nd requisition. The Mauritanian protected nationwide against nationalization, expropriation government guarantees companies that the tax, custom, and legal regu lations at the time of issuance of an Investment Certificate remain in forc e for a perio d of 20 years. In addition, the investor automatically benefits from any change of favorable tax or customs conditions duri ng period of validity of the certificate. the The only case of government expropriation since independence in the nationalization 1960 was the French mining company MIFERMA in November 1974. case, the two parties In that of agreed on a compensation plan. 4. Dispute Settlement Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts The and Commercial Codes protect contracts , although court enforcement and dispute Civil settlement can be difficult. The judicial system remains weak, unpredictable, and inefficient in its application of the law. Specialized commercial law courts exist, but there is no judicial circuit specializing in intellectual property rights. Judges lack training and experience in commercial to accept bribes to influence their decisions and financial law and are liable . The judiciary is subject to influence and corruption f rom powerful political and business figures. Many laws and decrees related to the commercial and financial sectors are never published and are therefore not well understood. It can also be difficult to access laws and legal texts that have been published . Most judgments are not issued within prescribed time limits and records are not always well - kept . Judgments of foreign courts are not consistently applied. Bankruptcy Mauritania ’s bankruptcy law s updated in 2001. The bankruptcy la ws allow for the were last here are very few reported cases of these laws reorganization or restructuring of a business. T 5

6 Department of State: 2014 Investment June 2014 Climate Statement being applied. In the “resolving insolvency” section of the World Bank’s 2014 Doing Business countries . Report, Mauritania ranks 189 out of 189 Inves tment Disputes The only recent large investment dispute between the Mauritanian government and a foreign investor occurred in 2006 with Woodside Petroleum Ltd. In 2003, Woodside signed four - sharing contracts (PSC) with former President Taya’s government. production A transitional government took power following the August 2005 coup. In February 2006, the successor government began a dispute with Woodside over f our amendments to the original PSC involving oil revenues and environmental issues. An international arbiter was brought in and the dispute was settled when Woodside agreed to cancel the four amendments, pay $100 million, and set up an environmental fund. Commercial Code , related civil laws , and international agreements The enforcement of the Mauritania has ratified remains limited. Some of the laws governing the financial sector are out of date, and the judicial system is weak. Settling a dispute thr ough the courts can be a long and complicated process. Judges lack sufficient training and specialized experience in commercial and financial law. The judiciary is subject to influence and corruption from powerful political and business figures. Many la ws and decrees related to the commercial and financial sectors are It can also be difficult to access laws and never published and are therefore not well understood. legal texts that have been published. me limits Most judgments are not issued within prescribed ti records are not always well kept . and - International Arbitration Judgments of foreign courts are not consistently applied . The government accepts binding international arbitration of investment disputes between foreign investors and government authorities. There are also domestic mechanisms for arbitration, both through traditional religious institutions and through the court s. The revised Investment Code anticipates a local International Chamber of Mediation and Arbitration of Mauritania (ICMAM) to be housed at the Chamber of Commerc e ; although as of April 2014, the ICMAM is a waiting for approval from the Chamber of Commerce and the Ministry of Justice. Previously, issues were referred to the International Center for Settlement of Investment Disputes. ICSID Convention and New York Convention Disputes between individuals or legal entities and the Mauritanian government related to the Investment Code are settled by an arbitration procedure to which both parties have agreed and in accordance with the following agreements: -- The 1965 Convention on the Settlement of Disputes Related to Investments Between States and Nation als of Other States, also known as the ICSID Convention or Washington Convention , and -- The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards . Performance Requirements and Investment Incentives 5. 6

7 Department of State: 2014 Investment June 2014 Climate Statement WTO/TRIMS Mauritania is in a transitional stage with respect to application of its World Trade Organization commitments. It is currently negotiating with the WTO to ensure progress tow ards (WTO) may be a prolonged process. complete compliance, which Mauritania has been a mem ber of WTO since May 31, 1995. Investment Incentives Investment incentives such as free land, deferred or reduced taxes, and tax - free importation of materials and equipment are available to encourage foreign investors. The government has offered tax benefits, including exemptions in some instances, to enterprises in Special Economic Zones and some companies in priority sectors throughout the country. The Investment Code gn investors may negotiate others directly with outlines standard investment incentives, but forei the government. Performance Requirements The government has been known to impose p erformance requirements as a condition fo r establishing, maintaining, expanding an investment, or for access to tax and investment and incentives lack oreign investors still report that government - sponsored requests for tenders . F purchase from to coherence and transparency. T he revised Investment Code requires investors local sources if the good or service is available locall y and is of the same quality as that which There is no requirement for investors to export a certain percentage could be purchased abroad. to have of output or access to foreign exchange only in relation to their exports. If imported “dumped” goods are d eemed to be competing unfairly with a priority enterprise, the government will respond to industry requests for tarif providing some potential protection f surcharges, thus from competition. Companies may employ expatriate staff in up to 10 percent of key managerial staff positions in accordance with the Labor Code. Expatriate staff may be hired in excess of 10 percent with authorization from the appropriate industry authority by establishing that no competent Mauritanian national is available for the vacancy. Foreign companies are required to transfer - skills to local employees by providing free training for lower skilled jobs. Expatriate staff working for companies in accordance w ith th e Labor Code are eligible members to import, free of customs duties and taxes, their personal belongings and one passenger vehicle per household, under the regime of exceptional temporary admission ( Admission Temporaire , or ATE). Exceptionelle All sales, tr ansfers, or withdrawals are subject to permission of customs officials. As a matter of law, there are no discriminatory or excessively onerous visa, residence, or work However, some U.S. compani es have permit requirements inhibiting foreign investors’ mobility. expressed frustration at the length of time required to obtain visas and their short duration. A visa from the Mauritanian Embassy may take up to three months to be issued . Length of validity and number of entries are inconsistently recorded . Right to Private Ownership and Establishment 6. 7

8 Department of State: 2014 Investment Climate Statement June 2014 The Mauritanian government guarantees any individual or legal entity wishing to undertake business activities in the country the freedom of establishment in accordance with the laws and The revised Investment Code greatly expanded the guarantees of regulations in force. establishment. Previously, guarantees were limited to freedom of establishment and investment of capital. Now any company can benefit from full economic freedom and competitiveness in as well as goods and concessions of any kind necessary for operations, acquiri ng property Companies particularly in finance, commerce, industry, forestry, construction, and real estate. ; may choose their technical , industrial, may participate in any professional organization commercial, legal, social and financial management styles; may independently select suppliers, service providers and partners; may participate nationwide in tenders for public contracts; may d may independently recruit senior staff dictate their human resources management policy; an within the provisions of the Investment Code. Protection of Property Rights 7. Real Property Property rights are protected under the Mauritanian Civil Code, which is modeled on the French code. n practice it can be difficult to gain redress for grievances through the courts. However, i There is a well Mortgages exist and are extended by commercial banks. developed property - registration system for land and real estate in most areas of the country, but land tenure issues in southern Mauritania, particularly the area along the Senegal River, are the subject of much é rural communities around Bogh controversy. For example, in January 2014, (300 kilometers southeast of Nouakchott) denounced as expropriation the signing of an agreement with the Saudi Bank Arabian Al Rajhi that grants permission for the 31 ,000 hectares in Brakna Bank to cultivate . Investors should be fully aware of the history of the lands they are and Trarza provinces hould verify that the local partner has the proper authority to sell/rent purchasing or renting, and s , particularly in that large tracts of land region , before agreeing to any deals. Intellectual Property Rights The legal protection of intellectual property rights (IPR) is still a r elatively new concept in Mauritania, and those seeking legal redress for IPR infringements will find very little historical record of cases or legal structures in place to support such claims. Mauritania is a member of the e Agency (MIGA) and the African Organization of Intellectual Multilateral Investment Guarante In joining the latter, member states agree to honor intellectual property rights Property (OAPI). principles and to establish uniform procedures of implementation for the following international agreements: the Paris Convention for the Protection of Industrial Property, the Berne Convention for the Protection of Literary and Artistic Works, the Hague Convention for the Registration of rotection and International Designs and Industrial Models, the Lisbon Convention for the P Registration of Original Trade Names, the World Intellectual Property Organization, the Washington Treaty on Patents, and the Vienna Treaty on the Registration of Trade Names. Mauritania signed and ratified the WTO TRIPS (Trade Role on Intellectual Property and Service) agreement in 1994, but it has yet to implement it. The government also signed and ratified the WIPO (World Intellectual Property Organization) treaties in 1976. It has not signed or ratified the WIPO Internet tr eaties. Resources for Rights Holders 8

9 Department of State: 2014 Investment June 2014 Climate Statement NAME Scott Clayton  TITLE Political and Economic Officer  TELEPHONE NUMBER (222) 4525 - 2660, ext. 4404  EMAIL ADDRESS [email protected]  For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ . attorney s list: Local http://mauritania.usembassy.gov/lawyersinmauritania.html 8. Transparency of the Regulatory System In practice, ownership in many sectors of the economy is concentrated among a few families. They have significant power, which is reinforced by formal and informal regulatory oligopolistic barriers. Tax rates on businesses in the formal sector are complica ted, but begin at 25 percent on profits and two percent on revenue . P rocedures required to pay taxes lack transparency and are and time - consuming. Recent efforts to combat corruption have resulted in businesses faced with through bribes paid to tax ed extraordinary tax bills that they previously could have avoid inspectors and assessors. Labor laws and conditions of employment are complex. There are limitations on hiring, duration th and safety laws of work, and dismissals. Likewise, potentially costly environmental and heal and policies exist but remain largely unenforced. While the government is moving to streamline bureaucratic procedures for investment, difficulties still remain. There is a complex and often overlapping system of permits and licenses re quired to do business. In the “ Ease of Starting a Business ” portion of the World Bank’s 2014 Doing Business profile, Mauritania ranked 173 out of 189 countries. continue s There to be a lack of transparency in the legal, regulatory, and accounting systems , which do not meet international norms. Proposed laws and regulations are supposed to be published in draft form for public comment before being sent to Parliament, but this does not always occur. There are governmental organizations or private sector no informal regulatory processes managed by non associations. In 2011, the government promulgated two orders to regulate accounting practices of nongovernmental and private entities, which must now have reliable financial management and submit periodic repor All such entities must also have a local bank ts of financial transactions. account with an identifiable account number and address. In practice, these orders have so far had little impact. 9. Efficient Capital Markets and Portfolio Investment In pri nciple, government policies encourage the free flow of financial resources and do not place restrictions on access by foreign investors. However, m ost foreign investors prefer external financing due to the high interest rates and procedural complexities t hat prevail locally. Credit is is dependent upon special relationships with bank owners and often difficult to obtain and 9

10 Department of State: 2014 Investment June 2014 Climate Statement officials. Commercial bank loans are virtually the only type of credit instrument. There is no stock market or other public trading of shares in Mauritanian companies. Individual proprietors, family groups, and partnerships generally hold companies, and portfolio investment is accordingly quite limited. Money and Banking System of the banking sector, and in recent years, The IMF has assisted Mauritania with the stabilization access to domestic credit has become easier and cheaper to obtain. Competition has contributed to the decline of the interest rates on loans from 30 percent at the beginning of the past decade to 11 or 12 percent in 2009, not including origination costs and other fees. These rates have remained stable since 2009 , ranging between 10 to 14 percent as of April 2014 . The country’s five largest banks are estimated to have $100 million in combined reserves; however, these figures cannot be independently verified, making an evaluation of the banking Seventeen system’s strength impossibl e. currently operate in Mauritania , but only four banks percent of the population holds bank accounts. The Central Bank of Mauritania is charged with regulating the Mauritanian banking industry, but it has exercised little power to demand mation or compliance from family - owned banks. The Ministry of Finance mandates that infor the Central Bank perform yearly audits of Mauritanian banks, but auditors have sometimes been refused entry and access. 10. Competition from State - Owned Enterprises , mining & energy Sta te - owned enterprises in Mauritania are most active in the fields of hydrocarbons, and public utilities. According to the Public Procurement Code, there are no - barriers such as However, informal formal barriers to competition with state owned enterprises. denial of access to credit may exist. Hard budget constraints for state - owned enterprises are written into the Public Procurement Code, but not enforced. SOMELEC, the state - owned electricity company, has been operating in a precarious s The company relies on government subsidies to remain ituation for many years. solvent. Most state - owned enterprises in Mauritania have independent boards of directors. The directors typically are usually appointed based upon political affiliations ; nevertheless, they are qualified for their positions. Mauritania is making progress in disclosing information in the oil sector and for the national hydrocarbon company (SMH), but the Mauritanian government does not disclose mining sector tures in its budgets. revenues and expendi Sovereign Wealth Funds T he Central Bank administers the National Fund for Hydrocarbon Reserves , a sovereign wealth fund E stablished in 2006 , it receives funding from . revenues that the government receives from companies extracting oil, royalties and taxes that oil companies must pay in order to operate in Mauritania, and from the profits made through the fund's investment activities. The fund seeks to create macroecon omic stability by setting aside oil and gas revenues for developmental projects. However, the fund's management practices are considered less transparent than those 10

11 Department of State: 2014 Investment June 2014 Climate Statement of other sovereign wealth funds Moreover, the fund is being used to cover shortfalls in the . In 2011, the IMF recommended to the Mauritanian government that it establish national budget. a sovereign wealth fund for mining - related revenues, but the government has not taken action to create such a fund. The Ministry of Finance requires - owned enterprises to publish annual reports and to submit state their books for independent audit. H owever, th e s e requirement s are not enforced ; the last available report from any entity was published in 2006 . 11. Corporate Social Responsibility e is little local awareness of corporate social responsibility in Mauritania with respect to Ther producers or consumers. However, awareness is growing, particularly as more foreign - owned companies enter the Mauritanian market. Certain state - run industries ha ve been active in providing basic educational opportunities for the children of their employees and scholarships for their employees to study abroad, but this is usually the extent of social responsibility initiatives. Companies in the mining and hydrocarb on industries send young Mauritanians overseas to complete their studies on scholarship programs; many of the scholarship recipients have family ties to powerful individuals in the companies. The larger fishing companies have recently started to provide m ore opportunities for qualified youth to study at the fishing and naval training school in Nouadhibou to prepare them for careers in the fishing industry. Current projects by foreign - owned companies include providing free water to local communities; building vocational training centers, health clinics, and roadways; and providing healthcare equipment and medicines to towns near company operations. – fund Since 2011, t hree of Mauritania’s la rgest mining companies – Kinross, MCM, and SNIM a School of Mining with the goal of increasing the number of qualified Mauritanians to serve in the École Polytechnique in Montreal and the mining industry. The school has a partnership with mining companies . The school is considered a public entity with the under the Ministry of Oil, Energy, and Mines . 12. Political Violence There have been two coups d’état in Mauritania since 2005. Both were bloodless and non - violent. The most recent coup, which occurred on August 6, 2008, removed Mauritania’s first democratically elected president, Sidi Mohamed Ould Cheikh Abdallahi, from power. For the coup first time in Mauritania’s history, ther e was political opposition to a , so the new president , Moha agreed to an official dialogue with the opposition . The , dialogue med Ould Abdel Aziz that resulted in the Dakar Accords paved the way for a presidential election in July 2009, which Abdel Aziz won and which w as deemed free and fair according to internati onal standards . fire incident at a Abdel Aziz was accidently shot in a friendly - In October 2012, President checkpoint just outside of Nouakchott. The President was seriously injured and treated in France for six weeks. During his recovery in France, the political opposition organized many rallies and called unsuccessfully for the President’s resignation. There were rumors of terrorist attacks or . throughout this period co ups as well, but the country remained calm and normal 11

12 Department of State: 2014 Investment June 2014 Climate Statement again engaged in a national The governing majority coalition and several opposition parties dialogue in October 2011 in an effort to resolve the political impasse stemming from postponed municipal elections. Although National Assembly and Senate, National Assembly, and municipal elections were held over two rounds in November and December 2013, the last Senate elections were in November 2009, no firm timetable for the next S enate elections has been and established. Civic unrest associated with the controversial national registration program resulted in one death in September 2011 in Maghama, a provincial capital near the border with Senegal. Sporadic protests for other reasons , and 2013 occurred in Nouakchott and elsewhere frequently in 2012 but did not disrupt business activity. In March 2014, protests erupted in Nouakchott after early the alleged desecration of a Koran. These protests resulted in the death of one Mauritanian . Al - Qaeda in the Islamic Maghreb (AQIM) has perpetrated terrorist attacks in recent years, including the murder of a U.S. citizen in Nouakchott in 2009 and kidnappings and murders of European citizens. Mauritania successfully prosecuted and sentenced the terrorists involved in the 2009 murder of the U.S. citizen. Also, in 2009, there was a suicide bombing outside the French Embassy and another in 2010 against a military base in the southeastern city of Nema. However, the Mauritanian government has remained firm in its efforts to counter terrorist threats. In February 2011, the Mauritanian military interdicted an attempted truck - bombing ons against AQIM conducted operati attack near Nouakchott, and in July and October 2011, it militants in neighboring Mali. Mauritanian authorities have also arrested and prosecuted terrorists. five Salafist terrorists in 2013 and 2014 , bringing The Mauritanian judiciary convicted 9 since 2009. total convictions to 14 The Uni ted States, France, NATO , and others provide assistance and training to Mauritania’s security forces. 13. Corruption corruption and In the July 2009 presidential election, President Abdel Aziz ran on an anti - ever Mauritanian anti - populist platform . D onor partners applauded the release of the first - corruption strategy in November 2009 a number of high - profile anti - corruption cases have , and demonstrated a t least an effort to fight corruption. Although progress has been made, laws and regulations are sti ll not evenly and effectively enforced, largely because corruption has historically been so prevalent at every level of Mauritanian society and governmental affairs. Corruption is an obstacle to foreign direct investment in Mauritania, but firms generally rate high taxes, access to credit, underdeveloped infrastructure, and a lack of skilled labor as greater impediments. Corruption is most pervasive in government procurement, bank loans, fishing license attribution, land distribution, and tax payments. G iving or accepting a bribe is a criminal act punishable by two to ten years imprisonment and fines up to $700, but there is little application of this law. Firms commonly pay bribes to quicker obtain telephone, electricity, and ruction permits. water connections and const 12

13 Department of State: 2014 Investment June 2014 Climate Statement Since assuming office, President Aziz has embarked upon a program to reduce privileges Abdel for government employees and to identify and punish those guilty of financial crimes. The current anti - corruption push began in November 2009 when the Bureau of Economic Crimes arrested the former gover nor of the Central Bank for alleged crimes committed between 2000 His arrest was quickly followed by the arrest of the former deputy governor of the and 2001. Central Bank and the launch of an investigation into the business practices of 12 other prominen t businessmen and bankers. The former Central Bank governor was accused of laundering approximately $95 million over the course of two years, the equivalent of nearly 10 percent of All of the individuals arrested in this first a Mauritania’s 2010 budget. - corruption push were nti released in January 2010 and ordered to repay the entire amount. Mauritania’s Office of the Inspector General of the State handles financial investigations in the public sector. This reports to the Prime M inister and has the authority to agency, created in 2005, From 2013 investigations in conduct all government offices and departments. to - 2014, there were four investigations and dismissal s of senior governmental officers and managers of public institutions because of corruption or mismanagement. The former Human Rights Commissioner was relieved of his duties and imprisoned in August 2010 on grounds of mismanagement. His trial concluded i n December 2012 with time served, a $253,333 fine, and an order to reimburse $934,482 to the Mauritanian government. Mauritania has also reimbursed funds diverted under the previous administration from Global Fund programs intended to benefit those living with HIV/AIDS, and the international organization has now resumed support to the country. These most recent investigations highlight the degree to which corruption in both the public and While most people do not dou bt that the accused did in fact private sectors continues to occur. engage in corrupt practices, these investigations are controversial as critics claim they are being , conducted to settle political scores. officials Despite the current push to fight corruption, wealthy business groups and government reportedly receive frequent favors from authorities, such as unauthorized exemption s from taxes, special grants of land, and favorable treatment during bidding on government projects. Mauritanian and non - Mauritanian employees at every level and in every organization are believed to flout Mauritanian tax laws and filing requirements. The only exceptions are civil servants, whose income taxes are automatically deducted from their pay. Such widespread corruption has deprived the government of a si gnificant source of revenue, weakening its capacity to provide necessary services. Recent efforts to increase tax collection have proven controversial as business owners for the first time face tax obligations that reflect the relatively high level of formal taxation for businesses that are not eligible for specialized exemptions. Tax collection efforts frequently incur criticism for their lack of procedural transparenc y . There are severa l organizations that track corruption within Mauritania. Transparency International has a representative which reports on local corruption policies and events. several local nongovernmental organizations worked with a UN , Additionally, in 2008 13

14 Department of State: 2014 Investment June 2014 Climate Statement representat ive and the Mauritanian government to draft a national action plan to fight corruption. The plan was drafted and submitted in May 2010, but no anticorruption law has been issued as of yet. ry UN Anticorruption Convention, OECD Convention on Combatting Bribe Mauritania acceded to the UN Anticorruption Convention on October 25, 2006. The country is - corruption not a signatory to the OECD Convention on Combating Bribery or any regional anti nternal codes of conduct. initiatives, and there is no requirement for companies to establish i 14. Bilateral Investment Agreements Bilateral Taxation Treaties Mauritania has bilateral investment agreements and investment protection with member countries of the Arab Maghreb Union (Algeria, Libya, Morocco, and Tunisia) as well as with Saudi Arabia, France, Belgium, and Romania. Agreements exist with Burkina Faso, Cameroon, Gambia, Ghana, Mauritius, Italy, Lebanon, Qatar, Yemen, Korea, Egypt, and the Arab League as eaties with the United States. well. Mauritania has no bilateral investment or taxation tr Mauritania is a signatory to the Cotonou Agreement between the European Union (EU) and the group of African, Caribbean and Pacific (ACP) countries, and thus enjoys free access to the EU market. As a “least developed country, ” Mauritania also benefits from duty - free access to the - European market under the Everything - But - Arms initiative. Furthermore, Mauritania benefits from the African Growth and Opportunity Act (AGOA) and thus enjoys substantial trade with those under the Generalized System of Preferences (GSP) allow preferences that, along virtually all marketable goods produced in Mauritania to enter the U.S. market duty - free. 15. OPIC and Other Investment Insurance Programs Mauritania currently qualifies for Overseas Private Investment Corporation (OPIC) coverage, but its program is limited. Potential investors should contact OPIC directly for guidance. Mauritania is a member of the Multilateral Investment Guarantee Agency (MIGA), which protects foreign direct investment against political risk. A British - Mauritanian insurance company, Atlantic Londongate, offers broad commercial coverage. The ouguiya has been fairly stable over the last few years, but could devalue if ther e is further political or economic instability. 16. Labor While labor is abundant, there is a shortage of skilled workers and well - trained technical and managerial personnel in most sectors of the economy. As a result, there are few sectors of the omy that use advanced technologies , econ because the skilled labor required to operate them is not readily available. While labor is relatively inexpensive, labor productivity is very low, even compared to neighboring countries. The mining sector is an except ion, where the national company Kinross mining company (SNIM), the subsidiary of a Canadian gold mi ning - Tasiast, and the subsidiary of a Canadian company Mauritanian Copper Mines (MCM) provide advanced Additionally, responding to the dire need for human capacity training for their employees. 14

15 Department of State: 2014 Investment June 2014 Climate Statement development in Mauritania, representatives of signed an agreement with these three companies an $18 million fund for the construction of a to establish the Ministry of Oil, Energy and Mines g school in Akjoujt. minin Labor - management Mauritania is a signatory to the ILO conventions protecting worker rights. , there has been an increase in the incidence relations are generally good in Mauritania; however ing industry. In July 2012, a weeklong strike at MCM of strikes recently, particularly in the min - based National Guard unit being dispatched to the mine site. They used resulted in a Nouakchott detained several protesters, and batons and tear gas to disperse striking workers, beat and severely inju red one, who died as the National Guard transported him to the police station. Following the death, MCM temporarily suspended its operations and the government launched an investigation. MCM was not implicated in the death or investigation. The Mauritani an government provided As companies expand $10,000 in compensation to the victim’s family. their operations and perceived profit margins, unions are increasingly trying to negotiate improved contract terms for their members. Most recently, i 13, Kinross - Tasiast laid off 293 employees. Protests occurred for n December 20 months after the layoffs at the presidential palace and at the Kinross - Tasiast headquarters in Nouakchott . 17. Foreign Trade Zones/Free Ports The new Investment Code creates S pecial E conomic Z ones (Free Export Zone or Cluster of Development in the Interior) by decree. Each decree specifies the restri ctions of each target area, economic activities, th encouraged e structure responsible for the name of the zone , the subject of Zones are subject to continuous its and the period for which it is established. Free , ment manage in the decree. Nouadhibou, the monitoring by the Customs Service in a manner specified e by the MAED and differs commercial capital, has been designated as a Free Economic Zon created under the revised Investment Code . The Nouadhibou from the Special Economic Zones Free Economic Zone has its own regulatory structure , which is still being implemented. l tax re gimes: Small and Medium The revised Investment Code provides three main preferentia Enterprises Regime, which applies to any investment between $167,000 and $667,000; Free includes agriculture, Zones/Clusters of Development ; a nd Targeted Industries, which Export In the previous Code artisanal fishing, tourism, ren ewable energy, and raw material processing . only one Customs der the control of the “Free Point” existed for certain imports, which was un Administration. The revised Code has several other new beneficial provisions. Basic infrastruc ture will be provided through public - private partnerships between the government an d responsibility of the private company the interested company, which previously was solely the . Land concessions allocated to will follow a rental companies located in Free Economic Zones rate determined by joint decision of the relevant Minister and the Minister of Finance, who will control land prices. For tax advantages, companies will be exempt from taxes, excluding personnel taxes such as for retirement and social sec urity, if they have invested at least $1.6 generated at least 50 permanent jobs and show a potential to export at least 80 million and percent of their goods or services. 15

16 Department of State: 2014 Investment Climate Statement June 2014 Additionally, companies will not be taxed on patents, licenses, property or land bu t rather , municipal tax which cannot exceed an annual amount of $16,000. Companies assessed a single exempt from taxes on profits for the first five years in which they established in free zones are Additionally, companies show a profit, after which they are subject to the rate of ordinary law. established in free zones benefit from a total exemption of customs duties and taxes on the and vehicles intended for production (the list of eligible assets is importation of goods, materials, der and exemption from customs duties and taxes on fixed by or of the Minister of Finance) exports. 18. Foreign Direct Investment and Foreign Portfolio Investment Statistics TABLE 2: Key Macroeconomic data, U.S. FDI in host country/economy USG or USG or international Host Country Source of data international Statistical statistical source sou rce* (Source of Data: BEA; IMF; Eurostat; UNCTAD, Other) Amount Year Year Amount Economic Data Host Country Gross http://www.worldbank.org/en/country $4,199 2012 20 11 $ 4,552 Domestic Product (GDP) ( Millions U.S. Dollars) Host Country USG or USG or international Foreign Direct Statistical Source of data: BEA; IMF; international Eurostat; Investment statistical source source* UNCTAD, Other ) 3 ($ N/A U.S. FDI in partner N/A 2008 (BEA) Millions country ( U.S. Dollars, stock positions) (BEA) Host country’s FDI 0 $ 2012 N/A N/A in the United States Millions U.S. ( Dollars, stock positions) 16

17 Department of State: 2014 Investment June 2014 Climate Statement Total inbound stock IMF 8.7% N/A N/A 2012 2 of FDI as % host GDP * Source: National Office of Statistics, ONS TABLE 3: Sources and Destination of FDI No data available on Mauritania. TABLE 4: Sources of Portfolio Investment No data available on Mauritania. 19. Contact Point at Post for Public Inquiries  NAME Scott Clayton  TITLE Political and Economic Officer  ADDRESS OF MISSION 288, Rue 42 - 100 Abdallaye, Nouakchott, Mauritania TELEPHONE NUMBER (222) 4525 - 2660, ext. 4404  [email protected] EMAIL ADDRESS  17

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