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Mauritania’s Banking Compliance Regulations Under Scrutiny: Foreign Investors Face Challenges in Nation’s Financial Sector

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In a bid to boost economic growth, Mauritania’s government has been working tirelessly to strengthen its banking sector. However, foreign investors have been facing challenges in navigating the country’s complex financial regulations.

An Informal Economy with Limited Banking Penetration

The World Bank estimates that only 21 percent of Mauritanians have bank accounts, making it a largely informal economy. Despite this, modern methods of payment such as credit cards are available, albeit mainly in major urban areas.

Opening a Bank Account in Mauritania

To open a bank account in Mauritania, companies need to provide proof of a physical address, local registration documents, a copy of photo ID and two photos. There are no restrictions on foreigners opening individual or business accounts, making it an attractive destination for foreign investors.

International Monetary Fund’s Role in Stabilizing the Banking Sector

The International Monetary Fund (IMF) has played a crucial role in stabilizing the banking sector, making access to domestic credit easier and cheaper. A proliferation of banks has led to increased competition, resulting in declining interest rates from 30 percent in 2000 to 10 percent in 2018.

Challenges Faced by the Banking Sector

Despite these efforts, Mauritania’s banking system is facing challenges. The country has not had any correspondent banking relationships with US banks since 2018 due to de-risking policies adopted by US financial institutions. This has led to delays and complexities in international transactions.

Central Bank of Mauritania and Compliance Reforms

The Central Bank of Mauritania oversees the nation’s banking industry and has implemented reforms to streamline compliance with international standards. The Ministry of Finance requires the Central Bank to conduct yearly audits of Mauritanian banks, ensuring transparency and accountability.

Foreign Exchange Controls

Foreign exchange controls are also in place, allowing for the free transfer of convertible currencies at the legal market rate, subject to availability. Investors are guaranteed prompt transfer of professional salaries, but regulations can be complicated in practice.

Local Currency and Hard Currency

  • The local currency, the Ouguiya, is freely convertible within Mauritania.
  • Hard currencies can be obtained from the Central Bank and commercial banks, with regular foreign exchange auctions allowing market forces to fix the value of the Ouguiya.
  • Individuals and companies may obtain hard currency through informal markets or commercial banks for purchases or dividend repatriation.

Challenges in International Transactions

The lack of US correspondent banking relationships has led to increased complexity in international transactions. Only one international bank, Attijari, maintains a relationship with US banks, while Société General exited the market in June due to global divestment plans.

Conclusion

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Despite these challenges, Mauritania’s government is committed to strengthening its financial sector and attracting foreign investment. The country’s banking system remains stable, but further reforms are needed to improve liquidity and reduce regulatory complexities.