Doing Business 2009: How to change the trend for Mauritania

Nouakchott, Sept. 15, 2009 -- The Doing Business report (DB) of the World Bank has become an invaluable promotion tool for countries around the globe. It is a regular decision making resource for investors, development partners, donors, experts and political leaders.

The report provides updated information on the ease of doing business for countries (178 and 181 in 2009) useful for market comparisons and benchmarking which is highly valuable for both private operators seeking business opportunities and political leaders wanting to promote foreign investment and private sector development.

The impacts of such reports are significant for developing economies in need of foreign investment. Indeed, limited public resources along with major infrastructure constraints have demonstrated the relevance of private sector involvement in the development agenda and the crying need for capital access for economies. Private Sector led economic growth has been identified as one key to poverty reduction and development objectives for those countries.

It is very difficult to refute the poor ranking of Mauritania in the 2009 Doing Business sixth annual IFC and World Bank report released September 10 , particularly when one knows the challenges of national private sector activities and in light of recent trend of real foreign investment flow in the country. Add to that the aggressive reform trend of various countries included in the DB, particularly in Asia and Africa. Mauritania remains at average in the sub-Saharan Africa region which unfortunately is the worst ranked region in the world.

Indeed, the awareness for the need for action is now shared by both the public and private sector which is a historical position in itself. Recent government programs have been more ambitious, and have incorporated the relevancy of private sector participation in development, putting some civil responsibility on business actors and improving the image and relationship between the two sectors. Openness to public-private partnerships and the welcoming of investors in various industries are proof of the new policy trend.

Major framework accomplishments, institutional and legal, remain to be made for success, but the outlook is positive. It is important to recognize the leadership taken by the Delegation Generale a la Promotion de l’Investissement Prive (DGPIP), an organization designed to promote private investment in Mauritania, as a coordinator and dialogue forum.

On the other side, private sector operators facing international competition and new market demand have engaged in more constructive dialogue and participate in reform discussion that would improve business environment and country image. Involvement of end users in policy discussions is an important implementation factor. There are certainly important internal resistances to the change but mentality improvement across industries are tangible. The reality of global market and dynamic changes created by new international entrants has shifted the bargaining power and leave only one option for business success and survival-improvement.

This being said, there is a difference between shared willingness and action. International reports such as the DB tend to measure business environment in terms of implemented reforms within the reviewed period and not those being elaborated. For example, working closely with the DB team, Mauritania has identified various reforms responding to each indicator but only two were implemented in the DB 2009 period. Others may be advanced but not effective. In comparison, the two top reformers of the region, Sierra Leone and Burkina Faso, implemented reforms related to four indicators. Burkina Faso adopted a new Labor Code, a major reform on property rights and a significant tax reform effective January 2008. These actions demonstrate the dedication of the country and have already started to take effect among foreign investors and national operators.

Finally, it is important that countries don’t get lost in the reform fight for the sole sake of ranking and or to reform. Behind such activity there has to be a clear understanding of the main economic objectives which are to improve the business environment by making the country an attractive destination for foreign operators without forgetting the promotional strategy of national private sector. The focus should not be only foreign investment but the development of local private sector, the backbone of national economy. Along with DB work, the authorities should search for Small and Medium Enterprise promotion, implementation of action fostering public-private dialogue and the creation of employment and training means. Productivity cost is an attractive indicator, especially in a country with serious infrastructure challenges and in a world of global competition.

Mauritania should learn from top reformers and understand that it cannot isolate DB work from private sector development agenda. It is only when one sees the big picture that real assessment on policy soundness can be completed and success of reform validated. Quick wins are certainly a way to improve ranking but should not hide the real challenges that ought to be faced sooner or later. Better sooner.