Document of The World Bank FOR OFFICIAL USE ONLY Report No: 75030-MR INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION AND MULTILATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY (FY2014-2016) FOR THE ISLAMIC REPUBLIC OF MAURITANIA September 5, 2013 Country Department AFCF1 Africa Region International Development Association International Finance Corporation Africa Region Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipient only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. The date of the previous IDA Country Assistance Strategy for Mauritania (Report No. 39532-MR) was June 14, 2007. CURRENCY EQUIVALENTS (As of 30 November 2012) Currency Unit: Mauritanian Ouguiya UM 1 UM = US$0.0033 1.52US $ = SDR1 0.654950 FISCAL YEAR 01 January – 31 December WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities ACE Africa Coast to Europe Submarine Cable AFD Agence Française de Développement (French Development Agency) AfDB African Development Bank AIDS Acquired Immune Deficiency Syndrome APL Adaptable Program Loan AQMI Al Qaeda in the Islamic Maghreb BCM Banque Centrale de Mauritanie (Central Bank of Mauritania) BEEP Business Environment Enhancement Project CAS Country Assistance Strategy CASCR Country Assistance Strategy Completion Report CBO Community-Based Organizations CDD Community-Driven Development CEM Country Economic Memorandum CO Country Office CPS Country Partnership Strategy CS Civil Society CSP Country Strategy Paper DPO Development Policy Operations EC European Commission ECF Extended Credit Facility ECOWAS Economic Community of West African States EIB European Investment Bank EITI Extractive Industries Transparency Initiative ESW Economic and Sector Work EU European Union FDI Foreign Direct Investment FIRST Financial Sector Reform and Strengthening Initiative FY Fiscal Year GAC Governance and Anti-Corruption GDP Gross Domestic Product GEF Global Environment Facility GFRP Global Food Crisis Response Program GNI Gross National Income GTFP Global Trade Finance Program GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German International Cooperation Agency) HCE High Council of State HIPC Heavily Indebted Poor Countries HIV Human Immune Deficiency Virus IBRD International Bank for Reconstruction and Development ICT Information and Communication Technology IDA International Development Association IDB Islamic Development Bank IEG Independent Evaluation Group IFAD International Fund for Agricultural Development IFC International Finance Corporation IGG Inclusive Green Growth IMF International Monetary Fund JICA Japan International Cooperation Agency JSDF Japanese Social Development Fund KfW Kreditanstalt für Wiederaufbau (Bank implementing German Financial Cooperation) MAED Ministère des Affaires Economiques et du Développement (Ministry of Economic Affairs and Development) MAP/AIDS Multi-Sector AIDS (Control) Project MDG Millennium Development Goal MDRI Multilateral Debt Relief Initiative MEMAU Modèle de l’Economie Mauritanienne (Model of Mauritania’s Economy) MEF Ministère de l’Economie et des Finances (Ministry of Economy and Finance) M&E Monitoring and Evaluation MF Ministry of Finance MIC Middle Income Countries MIGA Multilateral Investment Guarantee Agency MR Mauritania MTDS Medium-Term Debt Management Strategies NSDS National Strategy for the Development of Statistics NSS National Statistical System ODA Official Development Assistance ONS Office National des Statistique (National Statistical Office) OMVS Organisation pour la Mise en Valeur du fleuve Sénégal (Organization for the Development of the Senegal River) PDIAIM Projet de Développement Intégré de l’Agriculture Irriguée en Mauritanie (Integrated Development Program for Irrigated Agriculture in Mauritania) PDRC Projet de Développement Rural Communautaire (Community-Based Rural Program) PDU Programme de Développement Urbain (Urban Development Program) PEs Public Enterprises PEFA Public Expenditure and Financial Accountability PER Public Expenditure Review PFM Public Finance management PPP Public-Private Partnerships PRECASP Projet de Renforcement des Capacités du Secteur Public (Public Sector Capacity Building Project) PREM Poverty Reduction and Economic Management PRISM2 Projet de Renforcement Institutionnel du Secteur Minier 2 (Second Mining Sector Capacity Building Project) PRGF Poverty Reduction and Growth Facility PRSP Poverty Reduction Strategy Paper PSD Private Sector Development ROSC Report on the Observance of Standards and Codes SDV Social Development Department SME Small and Medium Enterprises SNIM Société Nationale Industrielle et Minière (Mauritanian State Mining Company) SOMELEC Société Mauritanienne d’Electricité (Mauritania National Electricity Company) TA Technical Assistance TVET Technical and Vocational Education Training TF Trust Fund TFP Technical and Financial Partner TFSCB Trust Fund for Statistical Capacity Building TVTF Technical and Vocational Training Fund UN United Nations UNCACEM Credit and Savings Co-operatives of Mauritania (AFD) UNDP United Nations Development Program UNICEF United Nations Children's Fund UNESCO United Nations Educational, Scientific and Cultural Organization UNFPA United Nations Population Fund UNS United Nations System USAID United States Agency for International Development WAPP West Africa Power Pool WB World Bank WBG World Bank Group WBI World Bank Institute y-o-y year-on-year IDA Vice President: Makhtar Diop (AFRVP) Country Director: Vera Songwe (AFCF1) Task Team Leader: Moctar Thiam (AFMMR) IFC Vice President: Jean Philippe Prosper (CXAVP) Regional Director: Yolande B. Duhem (CAFWO) Principal Country Officer: Jerome P. Cretegny (CAFW3) MIGA Vice President: Michel Wormser (MIGCO) Advisor: Mansour Elimane Kane (MIGEA) REPUBLIC OF MAURITANIA COUNTRY PARTNERSHIP STRATEGY TABLE OF CONTENTS EXECUTIVE SUMMARY ........................................................................................................... I I. COUNTRY CONTEXT AND DEVELOPMENT AGENDA ........................................... 1 1.1. Political and Social Context................................................................................................. 1 1.2. Poverty Profile and Trends ................................................................................................. 3 1.3. Recent Economic Developments ........................................................................................ 6 1.4. Economic Prospects ............................................................................................................ 8 1.5. Major Development Challenges ....................................................................................... 10 1.6. Government Priorities and Poverty Reduction Strategy 2011-2015................................. 17 II. BANK GROUP ASSISTANCE STRATEGY .................................................................. 19 2.1. Experience and Lessons Learned from Previous CAS and from Stakeholder Feedback . 19 2.2. The Current World Bank Group Portfolio ........................................................................ 23 2.3. Looking Forward: Proposed World Bank Group Strategy for FY2014-16 ...................... 24 2.4. Expected Results and Program of Lending and Non-Lending Activities ......................... 25 III. IMPLEMENTING THE FY14-16 COUNTRY PARTNERSHIP STRATEGY ........... 36 3.1. Managing Program Implementation ................................................................................. 36 3.2. Partnerships and Donor Coordination............................................................................... 36 3.3. Monitoring and Evaluation ............................................................................................... 37 IV. MANAGING RISKS .......................................................................................................... 37 List of Tables Table 1: Current Active WB Portfolio in Mauritania ................................................................... 23 Table 2: Proposed Lending and Non-Lending Activities ............................................................. 35 Table 3: Summary of CAS Program Self-Evaluation ................................................................... 57 Table 4: Planned Lending Program and Actual Deliveries (Base Case of CAS Plan) ................ 69 Table 5: Planned Non-Lending Services and Actual Deliveries .................................................. 70 Table 6: Lending operations and implementations ....................................................................... 72 Table 7: Inventory of Mauritania Surveys .................................................................................... 78 List of Figures Figure 1: GDP Growth by Sector, 2007-12 .................................................................................... 6 Figure 2: Public Investment by Sector, 2012-15 ............................................................................ 8 Figure 3: Global Competitiveness of the Mauritanian Economy (Min = 0, Max=7) ................... 14 Figure 4: Ease of Doing Business Index 2013(ranking) ............................................................... 14 Figure 5: Doing Business 2013: Areas of concern for Mauritania ............................................... 14 Figure 6: Most Problematic Constraints ....................................................................................... 15 List of Boxes Box 1: Social and Political Challenges ........................................................................................... 2 Box 2: Fiscal Operations, 2008-13 ................................................................................................. 8 Box 3: New Bank Lead Sahel Initiative ......................................................................................... 9 Box 4: Mining in Mauritania – A Growth anchor ........................................................................ 11 Box 5: Agriculture for Food Security and Employment ............................................................... 12 Box 6: Local Government Development Program ....................................................................... 13 Box 7: Gender Focus in WBG-Financed Projects ........................................................................ 22 List of Annexes Country Specific Annexes Annex 1: Mauritania CPS Results Matrix .................................................................................... 39 Annex 2: CAS Completion Report ............................................................................................... 43 Annex 3: Ongoing and Proposed New Operations ....................................................................... 74 Annex 4 : Country Partnership Strategy Donor Positioning......................................................... 75 Annex 5: Millennium Development Goals and Trends ................................................................ 77 Annex 6: Country Partnership Strategy Consultations - Feedback Summary .............................. 79 Annex 7: Political & Social Analysis ........................................................................................... 84 Annex 8: Gender in Mauritania .................................................................................................... 86 Annex 9: Mauritanian Statistics and World Bank support ........................................................... 89 Standard CPS Annexes CPS Annex 1: A2 - Mauritania at a Glance .................................................................................. 90 CPS Annex 2: B2 - Selected Indicators* of Bank Portfolio Performance and Management ....... 92 CPS Annex 3: B2 - IFC Program .................................................................................................. 93 CPS Annex 4: B4 - Summary of Non-Lending Services .............................................................. 94 CPS Annex 5: B6 - Key Economic Indicators .............................................................................. 95 CPS Annex 6: B8 - Operations Portfolio (IBRD/IDA and Grants) .............................................. 97 CPS Core Team: The CPS Core Team was composed of: Alexandre Arrobbio (AFTP4), Alexandre Marc (OPSFN), Julia Lendorfer (SDV), Yves Duvivier, Philip English (AFTP4), Linda K. English (AFTHD), Peter Nicolas Materu (AFTEW), Setareh Razmara (AFTSW), Gianluca Mele (AFTP4), El Hadramy Oubeid (AFTP4), Salamata Bal (AFTCS), Dahlia Lotayef (AFTN2), Michel Rogy (TWICT), Mohamed El Hafedh Hendah (AFTPW), Korotoumou Ouattara (AFTFW), Jean Michel Marchat (AFTFW), Demetrios Papathanasiou (AFTSN), Christian Berger (AFTA1), Ibou Diouf (AFTTR), Ahmed Ould Cherif Hamahoullah (AFMMR), Antoine A. Simonpietri (AFRCE), Ndeye Magatte Fatim Seck (AFCF1), Mademba Ndiaye (AFRSC), Thiane Dia (AFMMR), Marie-Chantal Uwanyiligira(AFCSN), Anta Loum Lo (AFCSN), Upulee Dasanayake (AFCF1), Moez Cherif (AFTG2), Mohamed Khatouri (AFTDE), Berengere P. C. Prince (AFTN3), Brahim Sall (AFTA1), Jerome P. Cretegny (CAFW3), Frank Douamba (IFC),Andrew Osei Asibey (AFTDE), Brahim Ould Abdelwedoud(AFTU2). IFC: Abdellatif Kabbaj (CAFW3), Allen Forlemu (CF2S6), Yasmin Saadat (CTGPD), Olivier Buyoya (CTGBD), Houria Sammari (CAFAL), Jerome P Cretegny (CAFW3), Nicolas Felix Souche (CN6S2), Stefan Rajaonarivo (C3PAF), Sylvia Solf (CICBR), Mahamoud Magassouba (CAFIC), Valerie Erica Marechal (FGISI), Oscar Madeddu (CAIFI), Charlotte Ndaw (CAFSF), Sara Ann Clancy (CAFAL), Alejandro S Alvarez de la Campa (CAIFI), Agata Szydlowska (CAIFI), Frank Douamba (CAFSC). EXECUTIVE SUMMARY i. Mauritania is one of the high-growth countries in the region and with the right policies and political stability can substantially reduce poverty, accelerate growth and boost prosperity over the next decade. Mauritania is mostly a desert country, with a population of about 3.5 million and a GDP per capita of about US$1,160 (2012). As in many African countries, Mauritania’s recent mineral discoveries have buttressed growth and raised incomes. The mining sector has very strong potential. With more than 11 million tons exported in 2011 (valued at about US$1.5 billion), the country is one of the largest exporters of iron ore in Africa, and output is expected to increase to 18 million tons by 2015. Mauritania also exports gold and copper and has significant potential for more mineral production. In addition, Mauritania has become a modest offshore oil producer, and there are other prospects, for more gas in particular. Mauritania’s waters have some of the most abundant fish stocks in the world. Industrial fishing exports 800,000 tons of fish per year and artisanal fishing catches are about 80,000 tons per year. Mauritania is also a significant livestock-producing country and has a strong potential for irrigated agriculture along the Senegal River under the regional Senegal River Basin Organization (OMVS). Mauritania’s ability to manage these resources and use the corresponding revenues in an inclusive manner will be key for its economic and social development. ii. Mauritania is slowly emerging from its internal governance crisis. Following the successful presidential elections of July 2009, the international community lifted sanctions imposed following the 2008 coup, and the new transitional national unity government has articulated its growth and poverty reduction agenda in the country’s third Poverty Reduction Strategy Paper (PRSP-3) for 2011-2015. GDP growth is estimated at 6.9 percent in 2012, compared to an average of 4.15 percent in 2010-2011. The outlook for 2013 and the medium term is positive, with GDP growth projected at 6.2 percent. Reserves stand at 6.7 months of imports (end-2012). Recent debt sustainability analysis shows that Mauritania has a moderate risk of debt distress, with total public debt at 84 percent of GDP. iii. For Mauritania to realize its full potential, it must confront a number of severe domestic and external challenges. There are important disparities between urban and rural areas, but overall inequality is moderate. In rural areas, where 78 percent of the poor reside, the poverty rate remained deeply entrenched at 59 percent between 2004 and 2008. In urban areas, by contrast, poverty declined from 28.9 percent to 20.8 percent. In absolute terms, the number of poor remained constant at 1.3 million because of population growth. Poverty incidence varies significantly across regions. It is lowest in the main towns of Nouakchott and Nouadhibou (16-19 percent) and the surrounding regions (32-37 percent). Poverty is highest (above 60 percent) in two of the regions bordering the Senegal River, Gorgol and Brakna, which together account for 30 percent of the poor. However, inequality is only moderate; the Gini coefficient was estimated at 0.38 in 2008, essentially the same as in 2004 (0.39). The bottom 20 percent enjoyed significant increases in consumption – higher than increases for the non-poor – between 2000 and 2004, suggesting an inclusive pattern of growth. However, this pattern was reversed in the 2004-08 period, as growth was driven more by extractive industries. iv. Vulnerability to external shocks remains a threat. More than 70 percent of current cereal consumption is imported. Mauritania’s environment, land and fishery resources are under increasing pressure as droughts become more frequent. In addition, Mauritania has yet to reap the benefits of its unique geographic and cultural location, sandwiched between the Sahelian i countries of Sub-Saharan Africa and the Maghreb. Strong ethnic and tribal linkages are often a source of tension, and the population remains fragmented into three main groups. More recently, the country has been affected by global security threats. Starting in 2006, terrorist attacks and hostage taking by Al Qaeda in the Islamic Maghreb (AQMI) began to affect Mauritania – adding to the problems resulting from illegal immigration and drug trafficking through the Sahara desert. The recent crisis in neighboring Mali has further compounded these security concerns. v. With both increasing discoveries of mineral resources and some political stability, now is the time for the new Government to translate its natural resource wealth into inclusive growth. If well managed, Mauritania’s natural and mineral resources could provide the means to increase incomes at an accelerated pace, reduce inequality, and boost prosperity. However, achieving this will require that Mauritania builds its road, energy and irrigation infrastructure; improve the business climate to attract private investment; and develop a labor force with the skills to make the mining, fishery, and agriculture sectors more globally competitive. Mauritania will also have to build stronger ties with its neighbors. The five years of the PRSP-3 period, which largely coinciding with the CPS period (2014-2016), will be a critical opportunity to deepen some of the essential reforms needed to create jobs and improve resilience. vi. The FY14-17 CPS supports the areas of the PRSP-3 in which the Bank Group has a comparative advantage. The program will be organized along two main pillars, which include both ongoing Bank Group activities and proposed new operations: a. Pillar 1 – Growth and Diversification would aim at increasing productivity and expanding the productive base of the economy by supporting infrastructure development, promoting the private sector, and strengthening the financial sector. It would also identify ways to trigger more inclusive growth linked to the thriving mining industry, and help to unleash the potential of the fishery and agriculture sectors. b. Pillar 2 – Economic Governance and Service Delivery would focus on improving public sector performance, with special emphasis on local government performance strengthening and food security. In addition to continuing efforts in the area of education and skills formation, the Bank would promote increased access to basic social services, and greater efficiency of safety net programs. vii. The CPS is informed by the WBG’s overall strategic goals. In a country like Mauritania where extreme poverty is still at 23 percent, the WBG aims at promoting the eradication of poverty. Given the predominantly rural nature of poverty, agricultural productivity improvement and strengthening enrollment in basic education will be a cornerstone of any poverty reduction strategy. However, ultimately many people will have to move to urban areas, so private sector development will also be key. A vital complement will be judicious use of natural resource rents in education, social safety nets and infrastructure. The proposed CPS will play an important role in this effort, notably through support to agriculture and fishing, the creation of a targeted safety net system, and the decentralization of service delivery. Capacity- building on statistics, including support for the next household poverty survey and the poverty assessment study will improve understanding of the causes, characteristics, and spatial distribution of poverty. ii viii. IFC will support private sector initiatives, especially in the infrastructure, banking, and agribusiness sectors. To ensure that economic growth is inclusive and sustainable, the focus will be on SME capacity building. In this regard IFC has started rolling out Business Edge training programs in Mauritania. IFC will also support investment climate reforms alongside the Business Environment Enhancement Project (BEEP), with a focus on simplifying the procedures for starting a business by implementing a one-stop shop, by paying taxes, and improving SMEs’ access to credit, including by supporting creation of a credit bureau. In addition, IFC has identified other financial institutions that could increase SME and trade financing. IFC also plans to finance the expansion and diversification of a local dairy company, which will have a direct impact the revenues of more than 2500 MSMEs. In the past, MIGA’s activities have mainly focused on TA in the financial sector. Going forward, MIGA will use its guarantee products, joining IFC and the Bank across the private sector, with particular attention given to developing PPPs in key sectors such as energy and transport infrastructure. ix. The proposed program design is based on the assumption of an IDA-16 allocation of SDR43.2 million, equivalent to US$65 million, followed by (anticipated, approximate) IDA-17 annual allocations for FY15 and FY16 of US$20 million for each year (assuming the IDA-17 allocation remains the same as the IDA-16 allocation). This would amount to a total CPS envelope for new IDA lending of US$102 million, supplemented by additional IDA allocations for regional projects, and other WBG products where possible. Additional resources would be leveraged through other donors. It should be emphasized that IDA’s role is shifting from a primarily financing one to more of a catalytic role, using IDA resources to leverage government financing and other development partners’ participation in sectors where IDA is present. x. The CPS has been prepared in close collaboration with the donor community, and will be complemented by renewed efforts on donor coordination, including: (a) sharing information on sector strategies, with joint funding of programs and projects; (b) providing feedback on implementation and generic portfolio issues for ongoing operations; and (c) undertaking joint coordinated efforts in communicating with the Government and other stakeholders. xi. Implementation of the new CPS could face three major risks: (a) regional political instability; (b) lack of implementation capacity in the Government; and (c) vulnerability to external shocks. The second and third risks would be mitigated by continuing to build consensus throughout Mauritania on the objectives, content, and approach of the specific programs supported by ongoing Bank activities and by proposed new operations, complemented by support from other development partners, including the IMF. The risk of political instability would be monitored closely in cooperation with the regional and international entities, such as ECOWAS, the African Union and EU, all of which are involved in regional stability, in particular with respect to the conflict in Mali. All operations would include a capacity-building component. iii I. COUNTRY CONTEXT AND DEVELOPMENT AGENDA 1.1. Political and Social Context 1. Mauritania is currently recovering from a succession of internal shocks over the past several years that deeply affected its political environment and economic performance. After a bloodless military coup in 2005 followed by a democratic transition in 2006-2007, the new Government engaged in a constructive dialogue with development partners to launch its development program. With an agenda focusing on economic governance – a clear break from earlier practices – Mauritania was granted debt relief under the Highly Indebted Poor Country Initiative (HIPC) and the Multilateral Debt Relief Initiative (MDRI), and a new Poverty Reduction and Growth Facility (PRGF) was approved by the IMF, all in 2007. However, in August 2008, the new civilian president was removed from office by another military coup. The political crisis led the international community to put most of its activities in Mauritania on hold. The World Bank, in accordance with OP/BP 7.30 (Dealings with De Facto Governments), also suspended its activities, and only started reengaging in September 2009, following the successful presidential elections 1 of July 2009, which led to the establishment of a national unity government and the lifting of international sanctions. In March 2010, the IMF approved a three- year Extended Credit Facility (ECF) agreement for about US$118.1 million. Economic recovery was discussed at the Brussels Round Table in June 2010, at which time total pledges of US$3.2 billion (including US$365 million from the World Bank Group) were made for 2010-2015. As of end 2012, roughly three quarters of this amount had materialized. 2. The country nevertheless remains vulnerable to political instability. Lingering questions about the legitimacy of past elections, domestic social tensions, and the rebellion in northern Mali all combine to create a high degree of political risk. The opposition of groups of African-Mauritanians 2 to the civil census launched in 2011 has added to the tensions. The municipal and legislative elections initially scheduled for end-2011 have been postponed, but an agreement has been reached between the Government and the opposition on the creation of an independent electoral commission and more liberalization of the media. 3 3. Mauritania is also affected by global security threats. Starting in 2006, some terrorist attacks and hostage-taking by Al Qaeda in the Islamic Maghreb (AQMI) began to affect Mauritania, adding to the problems resulting from illegal immigration and drug trafficking through the Sahara desert. These security problems have damaged Mauritania’s image as a safe country for foreigners – investors as well as tourists. The Government has started to devote more resources to addressing those issues, cooperating actively with other countries of the region and the international community. The recent crisis in neighboring Mali has further compounded the security concerns. The north of the country, especially at the Mali border, remains tense. This region has a high concentration of mercenary factions involved in the Arab Spring, insurgent groups, and refugees, mainly Tuareg. There were more than 65,000 refugees registered in the country as of September 2012. 1 The Constitutional Court and the international community recognized the results of the elections, which had been monitored by international observers. Former general Ould Abdel Aziz won with 52 percent of the votes. 2 Moors (Beydane Arabic speaking), black African Mauritanians (speaking a variety of other languages), and Haratins (descendants of former enslaved dark-skinned Africans speaking Arabic, culturally closer to the Moors). 3 Notably, Mauritania has significantly improved its ranking on the Press Freedom Index to 67 out 179 countries for 2011-2012. 1 4. The country has also experienced significant structural changes – a sharp decline in the importance of agriculture, due mostly to repeated droughts; and a massive rural-urban exodus, which has drastically reduced the share of nomads in the population and increased the share of the urban population to more than 40 percent. 4 Urbanization has compounded demands for educational, housing, employment, health, administrative, and other services, and led to the breakdown of traditional social protection structures. Moreover, the population remains fragmented along ethnic and tribal lines among three main groups. 5 Income disparities have grown between privileged groups (anchored on a class of traders and the military) and the rest of the population, and have fostered wealth redistribution within a clientelistic system (see Box 1). Box 1: Social and Political Challenges One of the major challenges in Mauritania is to ensure that recent macroeconomic success leads to broad-based and equitable growth, and does not exacerbate the social and political tensions arising from: • Cultural identity and social relations built around clans and families; • A history of violent change of power and limited democratic processes; • Insecure land tenure; • A rent-driven economy that favors economic clientelism and patronage; and • Rapid urbanization, which has created pauperization; and • Spatial division along ethnic and religious lines. To achieve inclusive growth, the Government must pay special attention, in its policies and programs, to (a) marginalized groups and ethnic/tribal complexities; (b) traditional conflict resolution mechanisms and local justice, as these are the mechanisms most used by the local population especially the poor; (c) access to justice in land disputes in a manner that combines respect for traditional rights with a modern land registry system; (d) issues of youth exclusion and unemployment, especially in urban areas, which have the potential to increase religious extremism and violence among marginalized groups; and (e) the inclusion of civil society in decision-making, to increase citizens’ stake in democratic governance. Source: Social and Political Analysis of Mauritania, World Bank 2012. 5. Mauritania’s Human Development Index improved from 0.42 in 2007 to 0.45 in 2011 (compared to an average of 0.46 for Sub-Saharan Africa), and it now ranks 159th out of 187 countries. The rate of population growth declined to an estimated 2.5 percent in 2011, from 2.7 percent in 2005. There has been progress in the social sectors, but overall results in achieving the Millennium Development Goals (MDGs) have been mixed (see Annex 5). MDGs regarding universal primary education and gender equality in primary education appear achievable in light of the significant progress already realized in school enrollment. The gross primary enrollment rate has reached 100 percent, and gender balance has been attained in primary and secondary schools. The MDG related to access to water is within reach if stronger efforts are made. 6. Important deficiencies in achieving the health-related MDGs persist. MDGs related to child and maternal health will not be within reach under current policies; infant-child mortality is still at 122/1000 versus a target of 45/1000, and maternal mortality is at 560 per 100,000 live births against an MDG target of 232. Only 60 percent of births are assisted, and child vaccination coverage is 64 percent. Performance in the sector has been compromised by the underfunding of priority interventions (tuberculosis, malaria, reproductive health, infectious disease control, 4 The capital city, Nouakchott, has approximately one-third of the total population. 5 See footnote 2. 2 maternal and child health and nutrition), weak expenditure management, poor inter-sectoral collaboration (in water, sanitation, and nutrition), insufficient community participation, and no real strategies to stimulate demand for preventive and basic health services. 7. While some gender indicators have improved, progress has been constrained by cultural, social, and economic barriers and by the failure to use human rights approaches to respond to the strategic and practical needs of women and men. In recent years, the Government has shown strong commitment to gender equality. It has ratified most international juridical instruments relating to women; set up an institutional framework to maintain women’s fundamental humans rights (Personal Status Code); and approved a new Gender-Based Violence Law in 2011. However, much more needs to be done to foster women’s economic empowerment. 8. Mauritania’s environment and natural resources are under increasing pressure from climate change, urban population growth, and economic development. Mauritania has a fragile climate, with inadequate rainfall to support crop production in most of the country. This situation is aggravated by poor environmental governance; Mauritania was ranked 161st out of 163 countries in the 2010 Environmental Performance Index. The degradation of ecosystems and decrease in biodiversity are harming rural populations and affecting their income-generating activities. The poorest people, who are already the most severely affected, will become increasingly vulnerable to floods and droughts. The recent droughts have brought to the forefront the need to move from crisis response to the sustainable and resilient development of dry lands. Coastal zones are also extremely vulnerable to natural hazards, particularly storm surges, floods, and coastal erosion. This may affect the prospects of the existing oil and the new gas fields off the coast of Nouakchott, the capital. Rapidly growing coastal urban centers, critical infrastructure, and economic activities in ecologically sensitive areas tend to increase the risks. Despite these challenges, Mauritania’s significant natural resources can be used to support progress toward its development and poverty reduction goals. 1.2. Poverty Profile and Trends 9. The dual structure of Mauritania's economy presents a formidable challenge to poverty reduction, with (a) a natural resource-based, capital-intensive modern enclave economy serving as an engine for export growth but having little direct impact on the population; and (b) a subsistence economy supporting half of the population, based mainly on rain fed livestock raising, some farming and related activities, traditional fishing, and small-scale commerce. The enclave economy has generated high and consistent rents, providing finance for development and infrastructure, but has only limited links with the subsistence economy. Raw mineral exports involve limited linkages to the domestic economy, and given the capital-intensive nature of extraction activities, the sector’s demand for labor is modest. 10. Poverty still affects a major part of Mauritania’s population, particularly in rural areas. According to the most recent poverty assessment (2008 household data), poverty remained at about 46.5 percent between 2000 and 2004 before declining to 42 percent in 2008. Extreme poverty, as measured at the US$1.25 per day line, was estimated at 23 percent in 2008. Poverty incidence is unlikely to have improved much since 2008, given the slow rate of GDP growth resulting from the 2009 political shock and the 2011 climatic shock. Using the growth elasticity of poverty for the 2004-08 period, poverty incidence would be 41 percent in 2012; therefore, the 2015, MDG poverty target for Mauritania of 25 percent appears to be out of reach. 3 11. There are important disparities between urban and rural areas, but overall inequality is moderate. In rural areas, where 78 percent of the poor reside, the poverty rate remained deeply entrenched at 59 percent between 2004 and 2008. In urban areas, by contrast, poverty declined from 28.9 percent to 20.8 percent. In absolute terms, the number of poor remained constant at 1.3 million because of population growth. Poverty incidence varies significantly across regions. It is lowest in the main towns of Nouakchott and Nouadhibou (16- 19 percent) and the surrounding regions (32-37 percent). Poverty is highest (above 60 percent) in two of the regions bordering the Senegal River, Gorgol and Brakna, which together account for 30 percent of the poor. The districts affected by the most extreme poverty are Monguel (71 percent), Moudjéria (65 percent), M’bagne (61 percent), Barkjéwol (60 percent) and M’bout (60 percent) 6. However, inequality is only moderate; the Gini coefficient was estimated at 0.38 in 2008, essentially the same as in 2004 (0.39). The bottom 20 percent enjoyed significant increases in consumption – higher than increases for the non-poor – between 2000 and 2004, suggesting an inclusive pattern of growth. However, this pattern was reversed in the 2004-08 period, as growth was driven more by extractive industries. The creation by the government in March, 2013, of a special agency (National Agency Tadamoun) to fight poverty and the legacy of slavery which will consolidate previously scattered social protection programs in various government agencies is a good start for better targeting the most vulnerable and the living conditions of the Haratines 7. 12. The main constraints to poverty reduction are weakness of the rural economy, dependence on capital-intensive sectors such as mining and industrial fishing, and vulnerability to both environmental and economic shocks, which put the poor at even greater risk of food insecurity and malnutrition. It is known that drivers of poverty reduction and shared prosperity largely rely on economic diversification, social protection and employment generation; however, growth poles in Mauritania are typically concentrated in sectors with negligible diversification, limited job creation, and which are mostly poorly organized and marked by high seasonality, such as the mining cluster, fishery and constructions. In 2007, rising oil and food prices directly affected the food security of about 30 percent of the population; and in 2011, the drought caused significant losses of cattle, with severe wealth and income loss for farmers. In December 2011, an estimated one quarter of rural households were food insecure, and half of these, severely so. In summary, for the poor and destitute, the stakes are high: any environmental or economic shock could have an immediate and direct impact on their food situation. As of end-2012, food insecurity – as a share of population – appears to be worst in the northern regions of Mauritania (Figure 1). Due to the higher population density in the southern and eastern regions, however, the number of people concerned is significantly larger in those areas. Multiple factors underpin the worsening of food insecurity in the North, the main one being a severe vulnerability of agricultural and pastoral activities to rainfall deficits. Inadequate humanitarian response in these remote areas, which are hard to reach by development partners, coupled with the effects of higher food prices, contribute to this scenario. 8 6 Data refers to the latest Household survey, 2008. In addition to this, more recent Vulnerability Analysis and Mapping (VAMs) produced by the World Food Program (WFP) are presented in paragraph 12 as a proxy for regional poverty incidence based on food insecurity. 7 Haratins are the sub-groups composed of former slaves. 8 Source: Vulnerability Analysis and Mapping, World Food Program (WFP), vam.wfp.org. 4 13. The data that inform the Government’s recent food security strategy (2011-12) and poverty reduction strategy (PRSP III, 2011) show that 26 percent of the population is affected by food insecurity. This situation is related to the overall level of poverty; lack of investment in the social and productive sectors, in particular agriculture; and the harsh climate. Food insecurity was recently further aggravated by the recent rise in the price of food staples and by the 2011 drought. Food insecurity is now affecting cities, but it remains most significant in rural areas, and can affect any region of the country in a given year. The most vulnerable groups are women and children, 25 percent of whom are less than 5 years old. In 2012, the Government prepared an emergency program (called EMEL) of about US$157 million to mitigate the effects of the drought. This program, financed by donors (including the Bank) and the government budget, included three main components: (a) preventing human food insecurity through free food distribution and access to subsidized food from boutiques de solidarité; (b) providing health care for vulnerable groups and children; and (c) preserving livestock through imported feed supply, animal health measures, and access to water points. 14. The need for such emergency measures will likely increase, because the country’s safety nets are unable to protect the poor and neediest. Existing safety net and nutrition programs (about 0.2 percent of GDP) are small, fragmented, and poorly targeted; and do not have the flexibility to address chronic food insecurity, respond to shocks, or be scaled up during a crisis. Weak capacity to adapt safety net programs to changing population needs, and the country’s vulnerability to exogenous shocks, limit the effectiveness of these programs. Moreover, their focus on short-term emergency relief does not contribute to poverty reduction. 15. It will be difficult for Mauritania to achieve the MDG poverty target without concerted effort on the key drivers of poverty reduction. However, if Mauritania can maintain currently projected per capita income growth rates of 3.5 percent per annum, it could cut extreme poverty in half 9 by 2030. This will require a more inclusive growth model, and a strong social safety net to protect the poor from the increasingly frequent climatic shocks. Given the predominantly rural nature of poverty, agricultural productivity improvement will be a cornerstone of any poverty reduction strategy. However, ultimately many people will have to move to urban areas, so private sector development and job creation will also be key. Improved social services delivery and access to basic infrastructure will be also essential to support the rapid urbanization. A vital complement will be judicious use of natural resource rents in education, social safety nets and infrastructure. The proposed CPS will play an important role in this effort, notably through support to agriculture and fishing, creation of a targeted safety net system, and the decentralization of service delivery. Capacity-building on statistics, including support for the next household poverty survey and the poverty assessment study will improve understanding of the causes, characteristics, and spatial distribution of poverty. 9 According to the latest household survey (2008) and to recent World Bank staff (2012), extreme poverty in Mauritania to date would be 41 percent. 5 1.3. Recent Economic Developments Economic growth 16. Mauritania’s growth recovered rapidly following the 2008-9 food and financial crisis in spite of a number of exogenous Figure 1: GDP Growth by Sector, 2007-12 shocks (see Figure 2). After falling to -1.2 percent in 2009, overall GDP growth 8 8 GDP Growth averaged 4.15 percent in 2010-11, and is (y-o-y contributions; percent) 6 6 estimated at 6.9 percent for 2012. GDP per capita in 2012 is estimated at US$1,160, 4 4 making Mauritania a lower-middle-income country. Inflation has gradually fallen from 2 2 6.3 percent in 2010 to an estimated 3.4 0 0 percent in 2012. The rising international prices of raw materials, combined with -2 -2 prudent policies, have helped the country to Services Manufacturing consolidate macroeconomic stability, -4 Other Construction -4 strengthen international reserves, and increase Mining Agriculture -6 -6 fiscal space. The main growth sectors have 2007 2008 2009 2010 2011 2012 been construction, services, and agriculture (which rebounded in 2010 and 2012) – all supported indirectly by mining exports, which stagnated in volume terms but boomed in value terms due to rising prices for iron ore and gold. Thus the total value of exports doubled between 2009 and 2011. This contributed to a significant expansion in public revenues and spending, including major expansion plans by the state-owned mining company, Société Nationale Industrielle et Minière (SNIM). At the same time, substantial foreign direct investment has financed further expansion in mining, a power plant, and a new airport. Job creation 17. Despite this growth, unemployment, broadly defined, affects an estimated 10 percent of the population and almost 17 percent in urban areas. 10 However, there is also significant under-employment, as well as many who are no longer looking for work. One-third of youth (15-34 years old) are inactive, neither working nor in school. Capital-intensive mining projects are unable to absorb this rapidly growing and low-skilled population. The informal economy and low value-added activities have contributed significantly to job creation in recent years, and account for 85 percent of the total labor force. However, construction, transport, and trade, while expected to absorb a portion of the unemployed workforce, remain poorly organized and marked by high seasonality. The attractiveness of doing business in the country remains low, especially with respect to taxes and access to credit. For both these indicators, Mauritania ranked in the lowest decile in the 2013 Doing Business report, which analyses 185 economies. Balance of payments 18. The trade balance in 2011 registered a US$270 million surplus, driven by record commodity prices. The value of exports increased by 52 percent in 2010 and 35 percent in 2011, but no further increase was projected for 2012 as world mineral prices moderated. Three sectors 10 National Statistics Office, Enquête sur l’Emploi en Mauritanie, 2013. 6 (minerals, fishing, and oil) account for virtually all exports, with iron ore alone representing half of the total. China accounts for about 50 percent of total export sales. Imports rose dramatically due to the expenses associated with the EMEL emergency program and major mining, energy, and construction projects. As a result, the trade balance turned negative in 2012 and the current account deficit was projected to soar to 31.6 percent of GDP. However, foreign investment was also booming, and was estimated at roughly US$1.4 billion in 2012, equivalent to 34 percent of GDP. Consequently, international reserves reached a record level of 6.2 months of imports as of end 2012 and are expected to reach 7.4 months in 2013. Fiscal developments 19. The overall fiscal deficit has improved significantly; from 7 percent of GDP in 2008 to 1.5 percent in 2011 (see Box 2). This trend continued in 2012, with an estimated surplus of 2.8 percent. Expenditures rose by 6 percent of GDP due to emergency spending to address the impact of the food crisis, and to increased investments in the energy and infrastructure sectors. However, this was more than offset by a large increase in grants and revenues, from 26 percent of GDP in 2011 to 38 percent in 2012, due to the food emergency, the booming mining sector, and improvements in tax receipts. The fiscal deficit does not include a small oil fund, which remained at 2.4 percent of GDP in 2012 after a partial drawdown to help finance the emergency program. 20. Rising subsidies and transfers, and a high wage bill, remain a challenge. The government subsidizes gas, electricity, and petroleum, which altogether represent approximately 2.6 percent of GDP (2012). A significant share of this consists of arrears payments to fuel retailers, as electricity and gas subsidies were reduced (in nominal terms) by roughly 50 percent, and subsidies on petroleum products by more than 60 percent, between 2011 and 2012. The authorities hope to raise domestic energy prices to international levels in 2013, providing there is no further rise in international prices. Transfers to the 123 state agencies and state-owned enterprises have also risen, mainly as a result of the lack of effective control over their performance. Progress has been made on the wage bill, which was among the highest in Sub- Saharan Africa at 10 percent of GDP, but dropped to 8 percent in 2012. However, these savings will be partly reversed by the wage increases in the 2013 budget. Debt management 21. According to a recent World Bank-IMF Debt Sustainability Analysis, Mauritania is at moderate risk of debt distress. As of end-2011, Mauritania’s total public debt stood at 84 percent of GDP. Only 9 percent of this was domestic debt. The country has not accessed the international bond market to date, and 85 percent of its external debt is owed to multilateral and bilateral creditors. The composition of debt has been relatively stable over time, shifting slightly toward multilateral donors. A loan with the Kuwait Investment Authority (KIA), which was not included in HIPC debt relief in 2002 (as it was considered passive at the time), has increased from around US$40 million in the 1980s to US$1 billion in 2013 due to compounded interest on arrears, and now represents 40 percent of total external debt stock. Negotiations have dragged on for years, but the Mauritanian authorities expect a resolution in the near future, likely with a 80- 90 percent cancellation of the stock (including arrears) and a concessional rescheduling of the remainder. This would significantly improve the country’s debt dynamics but not change the level of risk of debt distress. 7 Box 2: Fiscal Operations, 2008-13 Mauritania: Fiscal Operations, 2008–13 2008 2009 2010 2011 2012 2013 Est. Proj. Proj. Total revenue and grants 23.7 24.9 25.8 26.2 37.2 28.5 Tax revenue 14.4 14.1 15.0 16.0 21.1 18.1 Non-tax revenue 8.5 10.0 8.6 9.6 10.4 8.5 Grants 0.8 0.8 1.2 0.7 5.7 2.0 Total expenditure and net lending 32.9 32.1 29.1 29.7 36.2 35.3 Current expenditure 25.9 24.6 21.1 21.5 24.7 20.2 Wage bill 8.9 10.2 8.6 7.8 8.0 7.5 Subsidies and transfers(*) 5.4 2.7 2.8 5.7 8.9 5.2 Of which : Emergency program expenditures 1.4 0.0 0.0 0.7 2.8 0.0 Energy subsidies 1.0 0.8 0.0 1.7 2.6 1.1 Capital expenditure 7.0 6.8 6.7 8.0 11.5 15.1 Basic balance (oil excluded) -7.7 -5.3 -2.4 -0.2 0.4 -1.2 Overall balance including grants (oil excluded) -9.2 -7.2 -3.4 -3.5 1.0 -6.7 Overall balance including grants -7.0 -5.4 -2.0 -1.5 2.8 -5.3 Net borrowing 0.2 1.2 0.3 2.7 4.5 4.5 Oil fund balance (in billion of ouguiya) 11.7 8.8 9.7 23.2 24.6 25.5 Sources: Mauritanian authorities; IMF and WB staff estimates. All figures are expressed as percent of non-oil GDP, unless differently specified (*) Including transfers to public entities outside the central government. 1.4. Economic Prospects 22. In the PRSP-3, the Government stated its macroeconomic objectives for the 2011-15 period as: (a) average annual real GDP growth of 5.8 percent for the entire period; (b) average inflation below 5 percent for the period; (c) budget deficit below 2.6 percent of non-oil GDP by 2015; and (d) international reserves close to 4 months of imports by 2015. All but the first have already been achieved and should be sustainable. Achievement of the first objective is also feasible, given current plans for expansion in the mining sector, as long as authorities continue to put in place prudent fiscal, monetary, and exchange rate policies while pressing ahead with the structural reform agenda. 23. The outlook for 2013 and the Figure 2: Public Investment by Sector, 2012-15 medium term is positive. GDP growth is projected to be sustained at 6.2 percent in Fishery 2013 – driven by the mining industry, Rural 2% Other Developmen construction, and foreign investment – Health sectors t 2% (under 2%) and to average 6.5 percent over the 3% 10% medium term (2014-2017). At the same Capacity Energy building 28% time, public spending is expected to fall Access to 4% drinking as a share of GDP. The non-oil fiscal water deficit (including grants) is expected to 4% average less than 2 percent over the next Education 5% 5 years. Mining revenues should continue Housing and to grow significantly, notably through habitat Transport dividends from the state-owned SNIM as Water and 5% 22% it expands production by 50 percent. Gas, Sanitation Agriculture 9% 6% gold, and other minerals will also 8 contribute to GDP growth. There are plans to create a mining fund in addition to, and possibly merged with, the existing oil fund, to help manage volatile revenue flows. Capital expenditures will remain stable in the medium term, at about 9-10 percent of GDP. A large portion of public investment over the medium term is expected to focus on energy and transport (see Figure 3). Current expenditures are expected to return to more normal levels in 2013 and then fall by 5 percent of GDP by 2017, as subsidies are phased out and the wage bill is controlled. State-owned enterprises and agencies have contingent liabilities, but efforts are under way to strengthen controls. The rationalization of the public sector may, however, prove challenging, given current political and social tensions. Box 3: New Bank Sahel Initiative The Sahel sub-region (Mauritania, Mali, Niger, Burkina Faso and Chad) faces grave threats to its security and development, exacerbated by the current crisis in Mali, but rooted in decades-long, regional economic, political, demographic and ecological stresses. The country-focused development lens of the World Bank Group and international partners has in many ways failed to identify and respond fully to these inter-linked, regional drivers of fragility and instability. A new, regional approach to development is needed to prevent insecurity and economic stresses in Mali from spilling over the Sahel in the short term and to ensure the region avoids a fragility trap in the longer term. Instability in the Sahel derives from a complex web of factors. Land pressures from rapid population growth, combined with deteriorating and ever more extreme climate conditions—droughts, desertification and flash floods— have induced significant migration and adoption of alternative survival means such as smuggling, trafficking or joining radical groups. Weak institutions and lack of state presence in remote regions has undermined the formation of national identity and hence the legitimacy of central governments. The return of hundreds of thousands of immigrants as well as militants to their countries of origin in the Sahel following the Libyan crisis has further aggravated prevailing food insecurity and malnutrition problems, cut the flow of remittances and contributed to the radicalization of previously non-violent liberation movements in Mali. The Sahel region is at risk of falling into a ‘fragility trap’—with the region and its economies caught in a low growth, high poverty and insecurity equilibrium. Individual countries in the region—or at least large segments of them—would find it difficult to exit this vicious circle as the stresses and conflict in neighboring countries continue to spill over and buffet their economies. Addressing a region-wide fragility trap will require a coordinated, regional response. Key aims of the proposed regional approach are: First, substantially expand irrigation coverage by developing the potential of the Niger and Senegal River Basins. Second, expand access and lower the cost of energy. Third, support the resilience and productivity of pastoralism across the region. Fourth, strengthen safety nets and early warning systems. Fifth, improve natural resource management to support sustainable and climate resilient development. Sixth, reduce barriers to regional trade and integrate markets across the region, including improving transport links and creating a fully integrated ICT network. Seventh, eliminate the seven Neglected Tropical Diseases, which are a major cause of vulnerability throughout the Sahel. Eighth, adopt gender as a cross-cutting theme. Ninth, work in partnership, especially with regional institutions and programs, and support their capacity building. Mauritania will benefit from this Initiative, including through the Regional Pastoral Livelihoods Program for the Sahel, the Regional Safety Nets Support Program for the Sahel, Banda Regional Gas to Power PRG and Senegal River Basin Water Resources Development Program Phase II. 24. Macroeconomic prospects remain vulnerable to external shocks, such as commodity price volatility, drought and political instability in the Sahel. The current robust position is largely due to recent exceptional world prices for iron ore. Current fiscal projections assume a modest fall in this price, but a major drop could have negative impacts. The last drought in 2011 led to rising poverty and to a direct fiscal response equivalent to more than 2 percent of GDP, not 9 including the indirect impact through slower growth. Another source of vulnerability is related to the current instability in the sub-region. This has led to higher expenses for security and the care of refugees. These risks have been somewhat mitigated in the past through the oil fund, which helped finance the response to the 2011 drought. Current proposals to create a mining fund would help smooth out fluctuations in mineral prices. Agriculture programs, including irrigation, supported under this CPS, will mitigate some of the risks related to droughts. Political instability will be addressed through close collaboration with regional and international bodies, including the new Bank-led Sahel initiative (see box 3). 1.5. Major Development Challenges 25. Mauritania faces three major and interrelated development challenges: (a) inclusive growth; (b) competitiveness; and (c) governance. Inclusive growth 26. The lack of consistently inclusive growth has two main features: First, the country’s current growth drivers – the extractive sectors – primarily benefit the public sector while producing little private sector employment. Government revenues from the mining sector have a high likelihood of growing because of (a) the projected 100 percent increase in volume over the next five years; and (b) termination of the Kinross and Mauritanian Copper Mines (MCM) tax holidays. While gold prices have fallen some 15 percent in the first quarter of 2013, the resulting loss of revenues will be more than offset by the end of tax holidays, so overall revenue is expected to remain high. Prices for gold as well as iron ore and copper are expected to trend downwards over the coming years, but there are no indications that a negative price effect will outweigh the growth in output. Second, the agriculture sector accounts for a large share of the workforce, but has low productivity and is vulnerable to climate shocks, which has led to an increase in food insecurity in rural areas, and to the expansion of urban slums populated with unemployable rural migrants. 27. The extractive industries are creating significant revenues; however, with few linkages to other sectors, they have had little effect on private sector job creation (see Box 4). As a result, youth unemployment is high, creating the potential for social unrest. To address this challenge, Mauritania will need to evolve from a rentier economy dependent on raw material exports, to an economy that creates jobs through activities that add value to natural resources, provide greater linkages to the rest of the economy, and give rise to new growth sectors. The Government has taken some important steps in this direction by (a) providing targeted support to skills development (e.g., the newly established School of Mines, and modernization of vocational training programs in line with the needs of investors); and (b) making plans to use gas resources to improve domestic electricity supply. Creating the foundation for broader growth, however, will also require that mineral rents be used to diversify the economy and develop cheaper and more reliable electricity, better roads, and modern communication systems, for the benefit of commercial agriculture and small and medium enterprises (SMEs) as well as investors. This CPS, through its pillar 1, will help improve competitiveness and foster inclusive growth. 10 Box 4: Mining in Mauritania – A Growth Anchor Mauritania has a long tradition of mining. The national iron ore mining company, SNIM, was established in 1952, before independence, to construct and operate facilities to mine the large iron ore deposits identified in the northern part of the country. The first shipment of iron ore took place in 1963. Since that time, SNIM has evolved into a conglomerate with stakes in tourism, transport, and construction, although mining remains the dominant part of the company’s operations. In 2006, important gold and copper mining operations were launched by well-established international mining companies. Since then, production volumes have gradually increased for all three commodities. Moreover, the “commodity super-cycle” of rapidly increasing prices has greatly benefited the Mauritanian mining sector. In dollar terms, the combined annual export value of these commodities has gone from approximately US$300 million in 2005 to US$1 billion in 2008 and more than US$2 billion in 2011. The production volume is expected to double within the next five years, as various development plans, which are either under construction or at advanced stages of design, come on line. The total investment costs for these developments are on the order of US$5-10 billion. The mining operations have had significant and visible impacts on surrounding areas. Mine developers have invested heavily in infrastructure facilities (roads, water, electricity) that supply mine sites, as well as in health clinics, schools, and other local needs. Nevertheless, these operations have had little local economic impact in terms of either direct employment or the emergence of local subcontractors. In response, the Government, in collaboration with the mining companies and through Bank co-financing, has established a School of Mines which admitted its first class of 24 students in 2011. At the time of their academic graduation in 2016, they will be joined by about 100 students who will, by then, have completed their three-year technical education in mine-related subjects. It is expected that the annual batch of graduates from both academic and technical programs will double in size before 2020. These graduates are expected to be the foundation of mining-related industries. 28. Inclusive growth will also require targeted support for agriculture and fisheries. Mauritania’s rich marine fish resources contribute roughly 6 percent to GDP, and provide more than one fourth of the country’s public revenues and roughly one third of export revenues. However, the level of local employment in fishing is relatively low, and some 95 percent of the fish caught in the country’s waters are taken by foreign fleets, only a share of which are landed or processed in the country. The new EU fishing agreement would probably improve this. 29. A much more serious problem is weak agricultural productivity, which is the main cause of rural poverty. Almost all rural communities in Mauritania are food insecure, as are a large proportion of poor people in peri-urban areas. This low productivity sector provides the main source of income for a large share of the poor population. 11 The sector’s contribution to GDP is limited by harsh climatic conditions, low and unreliable rainfall, poor agricultural water management systems, and a very low level of irrigation development compared to potential. 12 30. Despite limited arable land (0.5 percent of total land area), the sector has the potential to guarantee the country a reasonable level of food security and reduce poverty in rural areas (see Box 5). The potential for irrigated agriculture (140,000 ha) alone could satisfy all the country’s needs for rice and a significant part of its needs for vegetables and other crops. The sector already meets 30 percent of country’s requirements for cereal and milk production, and 100 percent of its requirements for red meat production. About 75,000 tons of meat (live animal) exports per year account for 70 percent of agricultural GDP. An important focus of this CPS is 11 Estimates range from 50 percent in the last census (2000) to 23 percent in the 2008 household budget survey. 12 Agriculture is underperforming and declining in importance relative to mining and other sectors. The share of agriculture (including livestock) in GDP fell from 37.4 percent in 1995 to 12.5 percent in 2007, with an average of 16.7 percent (3.7 percent crops and 13 percent livestock) during the 1991-2008 period. 11 improving agriculture and fishery productivity which are seen as key drivers of poverty reduction. 31. An important consequence of agriculture sector weaknesses is rapid urbanization, which has made Mauritania one of the most urbanized countries in Sub-Saharan Africa (40 percent in 2011). This economic and demographic transformation has helped reduce rural poverty, but has increased urban poverty and led to new challenges for urban service delivery. More than 50 percent of the urban population now lives in informal settlements, and less than 27 percent is connected to electricity, 48 percent to water, and only one percent to sanitation networks. These problems are compounded by lack of capacity at the local government level (due to low revenues, insufficient and unqualified staff), posing key challenges for city planning, economic integration, and the provision of basic services and key infrastructure. While rural areas do not face similar population pressures, dispersed rural settlement patterns have resulted in extremely low standards of rural service delivery, including transport and electricity, leaving the rural poor disconnected from the growing economy. Box 5: Agriculture for Food Security and Employment Food imports are equivalent to ten percent of GDP in Mauritania. The Government and the Bank signed a US$10m grant in September 2012 to mitigate the impacts of the 2011-2012 drought, combining IDA and GFRP resources. In 2012, with the assistance of the Bank, the country prepared a new Rural Development Strategy (horizon 2025), together with a new legal framework for agriculture (LOA-loi d’Orientation Agropastorale) which is about to be ratified in 2013. Simultaneously, the CAADP process in Mauritania led to the adoption of the country national agricultural and food security investment plan (PNIA/SA). Within this context, a priority agricultural investment program (called Programme de Développement Rural Intégré - Integrated Rural Development Program, PDRI 2014-2019) was set at the end of 2012 for the forthcoming five-year period. The Program consists of six sub-programs within which priority investments totaling US$417 million have been identified. With strong private sector involvement, the Government expects this program will contribute to a gradual increase of agricultural production leading to at least 234,570 metric tons of grain. Irrigations schemes are expected to provide 170,000 T of cereals. About 19,200 tons of milk (26 percent of current milk import in 2011) are expected to be produced by 2018. The PDRI is expected to benefit around 73,500 farm households and to boost employment in rural areas. The Government has asked the Bank to help organize donors’ support through a limited number of large projects including pool funding and/or parallel financing. Following the principles of the Paris Declaration on aid effectiveness for donor coordination, alignment and harmonization, the Bank is currently in the preparation process of preparing an agriculture sector support project. It is using limited IDA resources to leverage funds from a number of other financial and technical partners (Islamic Development Bank, AFD, the EU, GEF) in order to contribute to solve key issues like poor sector governance and coordination, mismanagement of productive investments, lack of capacity of regulatory, advisory and productive services, low competitiveness of key value chains, etc. Some encouraging early results have been achieved. In addition, the Bank and the Food and Agriculture Organization (FAO) assisted the Government in the preparation of a new GAFSP proposal in June 2013. It is expected that this will lead to transformational investment operations within the PDRI framework program, as early as FY14. New operations are designed to avoid overlaps and ensure complementarity with two other Bank supported regional operations currently under preparation for IDA financing (i.e. the West Africa Agricultural Productivity Program for Mauritania – WAAPP/MR which will be done through CILS and the Integrated Water Resources Management Program - PGIRE/OMVS-phase 2). 32. Following successful slum rehabilitation in Nouakchott, financed by the Bank, the Government launched a broad slum restructuring program in Nouakchott and around the 12 country. The program is progressing well, but the level of access to basic infrastructure and services is still insufficient in the rehabilitated and newly built areas. The large proportion of youth among the slum population (60 percent are under 25), and the high youth unemployment rate in the slums (60 percent for youth between 15 and 24), have become pressing challenges in recent years. Addressing these challenges will require targeted efforts to strengthen local governments, through: (a) short and medium-term policies to reinforce local governments, including significant fiscal transfers and efficient capacity building; (b) policies to improve access to basic services and infrastructure in cities; (c) access to decent housing for low and below-average income earners; (d) investment climate reforms and economic diversification; and (e) improved education and skills, particularly for slum-dwelling youth (see Box 6). The recently approved local government development program will be a critical part of government’s strategy of improving service delivery to its population. Box 6: Local Government Development Program Mauritania Local Governments Development Project (LGDP) is an integrated, multi-sectoral project that aims to strengthen the capacity of local governments (LGs) to reduce poverty and strengthen inclusion. In addition to capacity building, the project provides significant resources to finance local investment priorities. Improving access to basic infrastructure and services: Investment priorities are identified in a participatory manner and correspond to the real needs of local populations. They cover the entire field of competence of LGs, including, among others, education and skills development, health, transport, water, sanitation, solid waste management, power, youth, and sports. Targeting poverty and areas with specific stress: The LGs to be covered by the program have been chosen with great care to ensure both a wide geographic coverage and good poverty targeting. Apart from the LGs of regional capitals, which have already benefited from the Urban Development Program (UDP), all LGs of department capitals will be covered, which provides coverage of almost the entire country. In addition, rural LGs in the area known as the "triangle of poverty," and all rural municipalities bordering Mali, will be covered by the project. Search for greater inclusiveness: Funds will be allocated on an annual basis. The amount allocated to each LG will depend on its performance in a number of pre-defined areas, as assessed annually by an independent auditor. The project places great emphasis on the participation and involvement of the population, especially vulnerable groups, in local-level decision making. The LGs, for their part, see the project as helping to develop and encourage social responsibility. Ensured sustainability and an open door for aid harmonization: The project is supporting the National Integrated Program, largely funded by the Government, which wants it to become a permanent support program for LGs. The main component of the program, the performance-based grant, which allocates funding for investment priorities, is designed as a basket fund to which all interested partners can contribute. In addition to the Government and the Bank, the European Union has already confirmed its participation in this program, and other partners are expected to join. Lack of competitiveness 33. Mauritania’s competitiveness is hampered by a small formal economic base, declining manufacturing sector, limited diversification, and a weak legal environment (figures 4-6). By the mid-2000s, fewer than 250 formal firms with more than 5 employees were active in manufacturing/handicrafts and retail trade (World Bank 2007). Manufacturing and handicrafts accounted for 3.7 of GDP in 2011 (against about 8.5 percent in the mid-1990s), and were concentrated in Nouakchott and Nouadhibou. The narrow manufacturing base has further reinforced the dominance of large business groups, which have crowded out most SMEs. 13 Monopolies also dominate bank credit at the expense of SMEs. In effect, most local banks behave as if they were departments of commercial and industrial groups, and deal mainly with the members of those groups; customers that do not belong to a group have difficulty obtaining financial services. Large firms with political connections continue to dominate state procurement contracts and import markets, even in the presence of cheaper local producers. These monopolies, whether public or private, are indifferent to inflation and the exchange rate because they can pass costs on to their captive markets. At the same time, the environment remains difficult for SMEs and investors in non-monopoly sectors because of serious deficiencies in terms of taxation, access to credit, starting a business, resolving insolvency, and trading across borders. Mauritania is ranked 167th out of 185 countries in terms of business environment. A key feature of this WBG CPS, supported by IDA, IFC and MIGA, will be to improve the competitiveness of the economy, hence fostering the creation of jobs by small medium enterprises, a key driver for poverty reduction and sharing prosperity among the population of Mauritania. Figure 3: Global Competitiveness of the Mauritanian Economy (Min = 0, Max=7) Source: World Economic Forum (2012). 2013 Global Competitiveness Report, Geneva. Figure 4: Ease of Doing Business Index Figure 5: Doing Business 2013: Areas of concern for 2013(ranking) Mauritania (rank per item) Central African Republic 185 Paying Taxes 177 Mauritania 167 Getting Credit 167 Senegal 166 Starting a Business 160 Algeria 152 Resolving Insolvency 153 Mali 151 Trading Across Borders 150 Morocco 97 Protecting Investors 150 South Africa 39 Getting Electricity 121 France 34 Dealing with Construction Permits 115 Mauritius 19 Enforcing Contracts 77 USA 4 Registering Property 65 Singapour 1 0 50 100 150 200 0 50 100 150 200 Source: Doing Business 2013, World Bank. 14 34. Access to finance is the top constraint for the Mauritanian private sector (Figure 7). Mauritania stands at 167th in the ranking of 185 economies on the ease of getting credit, which is below the regional average for Sub-Saharan Africa and for comparable economies such as Mali and The Gambia. One of the main reasons for limited access to financial services, especially for SMEs, is the lack of financial statements, itself a result of a weak accounting profession. The credit information system and collateral and bankruptcy laws also do not facilitate access to credit. Figure 6: Most Problematic Constraints Access to financing Corruption Inadequately educated workforce Policy instability Government instability/coups Inadequate supply of infrastructure Inefficient government bureaucracy Restrictive labor regulations Foreign currency regulations Poor work ethic in national labor force Inflation Tax rates Tax regulations Insufficient capacity to innovate Crime and theft Poor public health 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Source: World Economic Forum (2012). 2013 Global Competitiveness Report, Geneva. 35. A shortage of skilled workers is also a key constraint. Inadequate education of the workforce is the third most important constraint to firms in Mauritania (WEF 2012). Many workers have limited or no education and very few firms provide formal training for their employees. With World Bank support, progress has been made in increasing the access to and relevance of technical and training programs, using competency-based approaches and on-the- job training. In addition, seven training institutions have signed performance contracts with the Government. 36. Weak human resource capacity is a pervasive and cross-cutting issue that affects not only large and small private enterprises, but also public administration and civil society. Progress has been achieved in recent years through improvements in education, and further progress is expected with the strengthening of the higher education and technical and vocational education and training (TVET) systems. Much remains to be done, however. Training in the public sector is still sporadic and does not provide the skills needed to modernize the administration and support accelerated growth. Furthermore, a succession of changes in key ministries (including the Ministry of Finance), which continued until early 2011, led to the loss of many high-level civil servants and consequently, of institutional memory, which hurt reform efforts. Monitoring and evaluation (M&E) capacity was also lost in many areas, and the capabilities of the National Statistical Office (ONS) declined sharply. Human capacity weaknesses also amplify Mauritania’s governance challenges. 15 Poor governance 37. Corruption remains important and has broad economic and social impacts. Governance is also a challenge in key sectors such as land management and natural resources management. These challenges, compounded by public administration capacity limitations, are also affecting state effectiveness in delivering services, implementing public policies, and ensuring adequate corporate governance of SOEs, whose role in the economy has been growing over the last five years. A major focus of his CPS, through its pillar 2, will be on improving economic governance and service delivery, through support to improved services in education, health and social protection sectors. 38. Despite its impressive 20-point rise in Transparency International’s Corruption Perception Index, Mauritania still ranks 123rd out of 176 countries and territories in level of corruption. For firms, corruption generates instability in the business environment and increases operating costs, which further undermines the country’s competitiveness. In the mid-2000s, an estimated 6.4 percent of manufacturing turnover was devoted to informal payments (World Bank 2007). The Government has taken concrete steps to strengthen transparency and accountability and combat corruption, including adoption of a National Anti-Corruption Strategy, formulated with UNDP support, and a Code of Ethics for civil servants. Several cases of corruption have been prosecuted. 39. Social cohesion and resilience in both urban and rural areas are also affected by poor land governance. In urban areas, land speculation and illegal land occupation have created social divisions, marginalization, and a growing sense of injustice. In rural areas, land distribution and management have serious implications for stability and development. Property rights are a serious source of conflict for smallholders and for returnees, who often are allocated land with limited agricultural value. The potential for conflict is magnified by the lack of access to formal justice and redress mechanisms. Land issues are of particular significance in Mauritania because of its historically high number of migrating populations. Further, there are no land-use management plans that would allow for the rational, balanced, and equitable development needed to reduce regional inequalities. 40. Governance is also critical to strengthening social resilience to shocks, in particular through improving service delivery. Critical areas for service delivery include the MDG areas of maternal health, child mortality, and hunger alleviation. There have been slight improvements in access to health services, but the quality of health services, especially for the poor, have yet to improve. Utilization of public health facilities, especially in the poorest areas, has not increased despite the support of the World Bank and other donors. MDG targets for maternal health, child mortality, and hunger alleviation are off track. Access to electricity also remains limited, with an estimated 60 percent of the population still using solid fuels. Overall, the Government recognizes that general subsidies on energy products mostly benefit the rich, while the poorest households allocate less than two percent of their total spending to energy products. There is poor coordination and little monitoring of the safety net programs, and their effectiveness is diminished by significant leakages to the non-poor. 41. Natural resources management is also facing important governance challenges despite progress in terms of transparency. Mauritania qualified as a compliant country under the Extractive Industries Transparency Initiative (EITI) in 2012, and since that time, Government 16 revenues from the sector have been regularly published. However, other parts of the extractive industry value chain, including license allocation and the investment of natural resource revenues, are considerably less transparent, as noted in the country 2012 EITI report. In addition, despite the introduction of a rules-based and digitized licensing system for mining and hydrocarbon rights, there is strong political interest in retaining close control of the licensing process. Capacity building in license management and monitoring of investor performance has already contributed to improvements, but further strengthening is required. It is expected that new EITI requirements concerning license disclosure will strengthen governance in this area. 42. In 2007, some failed privatizations and private ventures 13 led the Government to create a number of SOEs to provide services and employment. 14 However, this expansion of the state’s role in the economy was not accompanied by sufficient strengthening of the SOE governance framework, which allowed for ineffective financial management, making it necessary to increase subsidies and transfers, and negatively impacting the fiscal situation. Further, the lack of performance monitoring and evaluation has led to entrenched managerial weaknesses and poor service delivery, which hurts social resilience and increases the potential for social unrest. Improving the governance and oversight of these SOEs is critical, and the rationale for their creation needs to be reviewed. There is also insufficient governance of the financial management and human resources systems of public agencies, which limits the agencies’ effectiveness and presents a fiscal risk. 43. All of these governance challenges are compounded by public administration limitations. It is clear that revenue collection has increased, Treasury management has been strengthened, automatic expenditure chains have been introduced, and sector-level medium-term expenditure frameworks (MTEF) are being developed. However, the financial situations of SOEs and public agencies, and lack of effective oversight, represent a substantial fiscal risk. Further, the recently initiated public procurement reform appears to be highly complex, and human resources management still represents a significant challenge. The human resource management system is poorly integrated, and the wage bill is significant by regional and international standards, representing around 7 percent of GDP, or 72 percent of domestic revenue. 15 Statistical capacity also remains limited, constraining the Government’s ability to use data as a basis for decision-making. 1.6. Government Priorities and Poverty Reduction Strategy 2011-2015 44. Following the general vision for 2015 articulated in the Poverty Reduction Framework Law of 2001, the Government has adopted its third PRSP for 2011-2015. PRSP-3 follows and builds on PRSP-1 and PRSP-2. The PRSP-3 provides a comprehensive framework for implementing an ambitious growth and poverty reduction agenda over 2011- 2015. It has the same five principal objectives as PRSP-2 and is articulated around the same five pillars: (a) accelerating economic growth and maintaining macroeconomic stability; (b) making growth more inclusive by developing the growth potential and productivity of the poor; (c) 13 The failed privatization of the power utility SOMELEC and recent bankruptcy of the privately owned domestic airline. 14 This includes the creation of SOEs handling public transport and housing, a public bank, a national airline and the planned expansion of energy production that is not backed by the private sector. 15 The wage bill is among the highest in Sub-Saharan Africa. In particular, it is above the recommended target rate of 35 percent of the West African Economic and Monetary Union (WAEMU). 17 improving the potential of the Mauritanian people and expanding their access to basic social services; (d) enhancing governance and institutional development; and (e) improving planning and M&E systems. The PRSP-3 was prepared through a wide participatory process with the private sector and civil society. Moreover, in 2012, the Government, with technical support from UNICEF, prepared a comprehensive National Social Protection Strategy to complement the PRSP-3, and this strategy is expected to be adopted before the end of 2013. Together, these strategies provide a solid basis for donor coordination and resource mobilization. While the PRSP-3 is quite comprehensive, the pillars do not clearly prioritize the proposed actions. The pillars are summarized below. Pillar I: Accelerating Growth and Maintaining Macroeconomic Stability 45. PRSP-3 is built on a macroeconomic framework that aims to unlock Mauritania’s growth potential while safeguarding stability. The strategy recommends three key sets of actions: • The first set of actions are focused on stimulating the private sector, including SMEs and agriculture; improving the business environment and investment incentives; modernizing the financial sector; liberalizing the business and services sector; and improving the competition framework in order to stem non-competitive practices. • The second set of actions aim at developing and expanding growth-supporting infrastructure, including transport, electric power production, and ICT. 16 • The third set of actions aim at making more productive use of the country’s sources of growth – mining and hydrocarbons, fisheries, tourism, and manufacturing, as well as agriculture and rural development. Actions in the area of rural development include policies and investments to modernize the sector and support the development of rain-fed agriculture, irrigation, and livestock raising, with the aim of increasing productivity and reducing dependency on food imports (particularly cereals). Pillar II: Making Growth More Inclusive 46. Extending growth to the poor is a critical challenge, since growth is typically not driven by the labor-intensive sectors that employ most of the poor, in particular agriculture and fishery. In recognition of this fact, the PRSP-3 aims at a rural sector contribution to growth of 0.7 percent of GDP – greater than the 0.6 percent achieved under PRSP-2, but considerably less than the 2 percent planned for industry and mining, and the 2.4 percent for services. Acknowledging that improving the productivity of agriculture is key to poverty reduction, the PRSP-3 aims under Pillar 1 to make the sector more modern and productive. Pillar 3 adds to these efforts by also targeting (a) food security; (b) urban (including peri-urban) development; (c) microfinance and microenterprise; (d) development of the economic potential of the environment (particularly to benefit migrating populations); and (e) social protection. In support of the latter, the recently adopted National Social Protection Strategy aims at putting in place a medium term framework to protect the poor. This framework will improve the efficiency of existing safety net programs, and introduce new programs (such as cash transfers) targeted to the chronic poor and vulnerable, which could be scaled up as needed to respond to crises. 16 Penetration of telephony services reached 100 percent in 2011, matching the levels of Morocco and Algeria, with some remaining challenges in terms of rural coverage, especially in the eastern part of the country. However, broadband services have so far achieved only 2 percent penetration. 18 Pillar III: Developing Human Capital and Enhancing Access to Basic Services 47. PRSP-3 underscores the importance of investing in human capital as a key development priority, and sets out a program covering six areas: (a) education and training; (b) healthcare and nutrition; (c) employment promotion; (d) universal access to basic services, including access to drinking water in rural areas; (e) gender equity and protection of children; and (f) population policy. The comprehensive education agenda covers primary, secondary, and higher education, as well as TVET and literacy. It focuses on improving the quality of education at all levels; gearing curricula towards meeting market demands for advanced and technical jobs; and closing educational disparities based on gender, socioeconomic characteristics, and region. Pillar IV. Improving Governance and Capacity Building 48. PRSP-3 prioritizes governance reforms in six separate areas. First, a set of political and judicial reforms will strengthen democratic processes, human rights and national unity, and redress the effects of slavery. A second set of governance reforms will aim at accelerating institutional decentralization, modernizing local government, and promoting spatial planning and regional development, including through growth poles. Third, in the area of public administration, the Government will implement the comprehensive finance reform program, the new public procurement framework, the new anti-corruption strategy, and the statistical development strategy. Additional reforms will strengthen accountability and improve oversight and management of state property and assets, in particular SOEs and public agencies. Fourth, an environmental governance framework will be developed and climate change risks integrated into development strategies and programs. Fifth, the development of civil society will be encouraged. And sixth, an ambitious program will be carried out to improve public sector capacity in the areas of administrative processes, human resources management, and information technology. Pillar V. Improving Monitoring and Evaluation 49. The M&E framework under PRSP-3 is stronger than it was under PRSP-2, and uses fewer and more relevant indicators (74 indicators, including 19 MDG indicators). Monitoring will be carried out by Sectoral Technical Committees, and coordinated by the Ministry of Economic Affairs and Development (MAED) and its dedicated PRSP monitoring unit. The reporting system will include input reports (budget execution), quarterly technical committee reports on monitoring actions taken, bi-annual summary reports by MAED, and comprehensive annual progress reports. Bi-annual coordination meetings are planned between the Government and financial and technical partners, and regular consultations will be held with the private sector and civil society. II. BANK GROUP ASSISTANCE STRATEGY 2.1. Experience and Lessons Learned from Previous CAS and from Stakeholder Feedback The 2008-2011 CAS Completion Report 50. The Bank’s objectives and planned activities in Mauritania over the past five years were articulated in the 2008-2011 CAS presented to the Board on July 17, 2007. This was the Bank’s third CAS for Mauritania. Results and lessons from that CAS are assessed in the 19 CAS-3 Completion Report (CASCR), attached as Annex 2. The CAS-3 was closely aligned with PRSP-2 pillars I to IV. A major constraint in preparing that CAS was the limited new IDA financing expected to be available – only US$43 million for the whole period. However, the CAS-3 anticipated that, with Mauritania’s GNI boosted by oil revenues, the country might be transitioning from low-income to middle-income country (MIC) status, and therefore suggested introducing IBRD instruments (loans and guarantees) as alternative sources of financing to support private enclave projects (ports and power plants). The CAS-3 priority areas were: (a) private sector and basic infrastructure development; (b) urban development; (c) rural development; (d) governance (strengthening of public administration and economic governance); and (e) the social sectors. 17 Priority areas were targeted through ongoing operations approved during CAS-2, as well as through new operations. 51. CAS-3 implementation, as well as Mauritania’s economic performance, was negatively affected by the political events of 2008-2010 and the resulting disruptions, including the suspension of external aid (and World Bank activities) for more than a year. Overall, the performance of the CAS program was assessed as moderately unsatisfactory. Bank performance was also assessed as moderately unsatisfactory. A detailed assessment is included as part of the CASCR in Annex 2. 52. Important lessons learned include, first, that development impact can be achieved with sustained engagement; and second, that the pervasive problem of Mauritania’s weak capacity can be mitigated through the Bank’s long-term involvement with a program of reforms with realistic objectives, combined with sustained capacity building efforts. A third lesson is that development results – particularly transformational change – is not necessarily linked to the amount of financing provided by the Bank. Rather, a key factor is the Bank’s strong convening role, as other donors will engage in a sector along with the Bank, as is currently happening in the agriculture sector. The Bank’s ability to leverage change is strengthened by the widespread perception that it is an honest broker whose participation brings unique global know-how. In the future, if Mauritania realizes the expected increase in natural resource revenues and is able to finance a larger share of its development programs, the Government will be increasingly interested in working with the Bank as a source of knowledge and worldwide experience that other donors may not have. 53. Despite progress achieved in public sector capacity building, more needs to be done in areas such as SOE corporate governance. Tax administration has been strengthened, with a fiscal census which increased the number of identified taxpayers and generated a significant increase of tax collection in 2012. Expenditure management was also reinforced with the successful introduction of an expenditure tracking system, the recent public procurement reform, and the reconciliation between payroll and human resources data. 54. At the end of the CAS-3 period, in December 2011 and January 2012, a country survey was carried out to collect perceptions and advice on the Bank’s work in Mauritania. The survey, which collected responses from 110 stakeholder representatives, revealed a clear split in stakeholder perceptions: (a) stakeholder groups, which were more familiar with the Bank, had a mostly positive view of its work and, (b) NGOs/CBOs which were unfamiliar with the Bank, had very negative perceptions of its work in the country. Government effectiveness, 17 Despite the number of donors already active in the social sectors, the Bank played an important catalytic role, and has a relatively strong comparative advantage. 20 governance, and education were top priorities for all stakeholders. Non-NGO groups were much more concerned about economic growth, whereas NGO respondents voiced concern about corruption. During the upcoming CPS, the Bank will reach out more to stakeholder groups that are unfamiliar with the Bank’s work. 55. Across all respondents, the Bank’s overall effectiveness in Mauritania received a mean rating of 4.7 on a 10-point scale, lower (driven significantly by NGOs) than the ratings in FY08 (5.3) and FY05 (6.8). The majority of all respondents indicated that the Bank should: (a) be more involved in Mauritania’s development strategies; and (b) focus more attention and resources on the regions outside of Nouakchott. Respondents also indicated that the Bank’s greatest weakness in its work in Mauritania is the tendency to impose technocratic solutions without regard to political realities. Lessons Learned from the Political and Social Analysis 56. A Political and Social Analysis (PSA) of the conflict and fragility risks, based on in- country interviews and seminars with opinion leaders, was carried out in early 2012. The PSA concluded that: (a) the Bank faces a reputational risk from engaging in Mauritania, given its social and political instability; (b) the Bank needs to address the issue of land tenure; (c) there is a need to improve access to justice and formal conflict resolutions mechanisms; (d) youth exclusion is a major issue, especially in urban areas; (e) urbanization and the ethnic-social divide are leading to the creation of ghettos and a perpetual cycle of marginalization; (f) the Bank should support and reinforce the Government’s communication with civil society, encourage cultural dialogue, and promote transparency through better access to information; and (g) given the high level a distrust towards the Government, it is essential to put a strong emphasis on governance and anti-corruption (GAC) programs. Gender Assessment 57. As a follow up to the 2007 Strategic Country Gender Assessment, the Bank conducted the 2012 Gender Portfolio Review 18. This report concluded that over the last decade, Mauritania has been made significant progress in many gender-related areas, including reducing gender disparities in primary education, improving access to clean water, reducing adolescent fertility, reducing the prevalence of female genital mutilation (FGM), and increasing women’s voice in public decision making, including through the introduction of a quota for women’s representation in parliament. However, key challenges remain, especially with regard to achieving the MDG target to improve maternal health, gender inequalities in secondary education; rural women’s low access to productive inputs and consequent low agricultural productivity. 58. The Bank’s 2012 Gender Portfolio Review for Mauritania found that 65 percent 19 of all portfolio activities are gender informed (11 out of 17 active projects at the time of the review, in the first semester of 2012). This means that 63 percent of the currently active IDA portfolio, 100 percent of the pipeline IDA portfolio, 100 percent of trust-funded projects, and 25 18 The 2012 Gender Portfolio provides an overview of the current state of gender in Mauritania as well as an assessment of the coverage of gender work in the World Bank portfolio. 19 This rate surpasses the IDA-16 target of 60 percent for gender-informed activities. 21 percent of economic and sector work (ESW) and technical assistance (TA) in Mauritania are gender-informed on at least one of the following dimensions: analysis, actions, and M&E. At the time of the review, the portfolio was supporting a range of gender-related outcomes, including (a) expanding women’s access to basic social and economic infrastructure and services; (b) increased agricultural productivity and food security for rural women; (c) improved economic opportunities for women entrepreneurs; (d) job creation for women; (e) more effective participation of women in community decision-making; and (f) increased capacity of women to be aware of and engage with key issues in extractive industry governance. (See Box 7.) Box 7: Gender Focus in WBG-Financed Projects Community-based Watershed Management Project is helping to increase rural women’s revenues by funding income generating activities. The project also supports women’s access to various agricultural inputs and techniques to improve productivity. Irrigated Program for Agriculture and Food Security Project, and the Senegal River Basin Multi-purpose Water Resource Development Project, support women’s access to various agricultural inputs/techniques to improve productivity and improve food security. Further, the project addresses fundamental issue of women’s legal rights and secures their access to land which in turn could allow the Bank to build on its current activities and ensure that gains in female agricultural productivity and food security are sustainable and secure over the long-term. Urban Development Project address women’s needs in term of basic social infrastructure and services in urban areas. The project applies the issue of access to land with a component in land tenure-regularization, as most of the beneficiaries in this area are female headed households. 59. The proposed CPS aims to further increase the gender sensitivity of the portfolio, with a focus on: (a) inclusion of appropriate gender-sensitive indicators in project results frameworks; and (b) increasing the use of gender-relevant analysis in ESW and analytical and advisory activities (AAA), in order to build the gender knowledge base and provide critical inputs to current and further operations. In terms of substance, the CPS will emphasize the following priorities, in line with the PRSP-3 and the Government’s gender strategy documents: • Increase women’s participation in the economy • Increase women’s access to basic social services and infrastructure • Promote gender equality in secondary education • Increase gender equity in the agriculture sector. 60. During the CPS period, the gender focus will be on issues in agriculture, environment, education, mining, and health, especially maternal mortality. The CPS will support a more detailed mapping of women's poverty and role in the economy, looking in particular at employment opportunities in the extractive industries, and at other economic activities under the Bank’s current and planned operational portfolio. The social protection and sustainable livelihood operations will also focus more on gender issues. 22 2.2. The Current World Bank Group Portfolio 61. The current IDA portfolio for Mauritania consists of eight active operations (including two regional projects), representing a total commitment of US$125.1 million. The IDA portfolio is complemented by a number of trust funds, for a current total committed amount of US$31.3 million (Table 1). Table 1: Current Active WB Portfolio in Mauritania Project / Activity Funding IDA Funding TF TF (US$m) (US$m) Agriculture Development and Food Price Response – AF to the second 5 5 GFCR Integrated Development Program for Irrigated Agriculture (PDIAIM2) West-Africa Regional Power Pool – OMVS Felou Hydroelectric P. (APL 25 2) / Mauritania Regional Senegal River Basin Multi-purpose Water Resources 34 Development Project Public Sector Capacity Building Project. (PRECASP) 13 Higher Education Project. 15 Second Mining Sector Capacity Building (PRISM2) 12.1 EITI Implementation – Phase II 0 0.275 EITI MDTF Business Environment Enhancement Project. (BEEP) 5 Skills Development Project. 16 Mauritania Road Corridor Project 0 20 AGCF Community Based Watershed Management 0 6 GEF 125.1 31.3 62. In addition to the lending program, the Bank is engaged in a range of analytical work and technical assistance focused on accounting, land governance, and SOE governance. This work includes: • Support to the General Directorate to implement recommendations of the Report on the Observation of Standards and Codes (ROSC) for the private sector accounting and auditing profession. • A land governance study in support of the Land Governance Assessment Framework (LGAF). The study focuses on five key areas: rights recognition and enforcement; land use planning, land management, and taxation; management of public land; public access to land information; and dispute resolution and conflict management. The study is part of a process aimed at establishing consensus about priority actions to address gaps in existing information, areas for regulatory or institutional changes, and criteria to assess the effectiveness of mitigating measures. • A study on SOEs and public agencies. Both a diagnostic of the current governance framework, with a focus on state oversight and monitoring of fiscal risk and service delivery performance; and a knowledge product that transfers international experience, the study is expected to lead to a series of policy changes and measures to improve state oversight. 23 63. MIGA’s activities in the past have focused on TA in the financial sector; it has not yet issued coverage for any investments in Mauritania. 64. IFC’s advisory services have included a fee-for-service contract with the Government to structure a public-private partnership (PPP) for development of a new container terminal in the port of Nouakchott; and the promotion of leasing as an alternative source of financing under its Africa Leasing Facility. IFC has also pursued projects in the mining, energy, non-bank financial institution (NBFI), and agribusiness sectors. IFC’s investments in Mauritania during FY13 included US$13.8 million with two commercial banks under its Global Trade Finance Program (GTFP); and a two-year, US$127.5 million trade facility for BB Energy to purchase and import refined petroleum products to Mauritania. The facility will ensure no supply interruption in the flow of energy products. 2.3. Looking Forward: Proposed World Bank Group Strategy for FY2014-16 65. The design of the FY 2014-16 CPS is guided by the following principles: • Selectivity based on the comparative advantage of the Bank Group. • Complementarity with other donors, with preference given to new operations in which the convening power of the Bank leverages financing from other donors for transformative change. • Program and project design that takes into consideration the need to strengthen the population’s resilience to shocks; gender equity issues; and the social fabric and political economy of the country. 66. The CPS will selectively focus on areas that are acknowledged as key constraints to development, and where (a) there is a window of opportunity for growth and job creation; and (b) the Government, private sector, or other donors seek to work in partnership with the WBG. These selectivity criteria will help to focus the Bank’s engagement and build stronger teams for results. The CPS will participate in area in which long-term Bank involvement is essential, and where Mauritania itself will finance a larger share of its development programs out of expected natural resource revenues. The Government is increasingly interested in the participation of the Bank as source of knowledge, bringing worldwide experience that other donors may not have. Leverage for change is particularly strong when the Bank is perceived as an honest broker and a source of unique worldwide know-how. Financial Envelope 67. The proposed program design is currently based on the assumption of an IDA-16 allocation of SDR43.2 million, equivalent to US$65 million, followed by (anticipated, approximate) IDA-17 annual allocations for FY15 and FY16 of US$20 million (assuming the IDA-17 allocation will remain at the same level as the IDA-16 allocation). This would amount to a total CPS envelope for new IDA lending of US$102 million, supplemented by additional IDA allocations for regional projects, IBRD enclave loans, and trust fund resources. IDA allocations for the years beyond FY14 are indicative. Actual allocations may vary depending on: (a) total IDA resources available, (b) the country’s performance rating, GNI per capita, and population; (c) the terms of IDA assistance (grants/credits) and the allocation deductions associated with MDRI annual debt service foregone; (d) the performance, other allocation parameters, and IDA 24 assistance terms for other IDA borrowers; and (e) the number of IDA-eligible countries. Also, IDA allocations are provided in SDR terms, while the US dollar equivalent amount is provided at the exchange rate of US$1.50233/SDR (applicable for IDA16), the exchange rate for each operation depends on the applicable prevailing rate at the time of approval. Additional resources would be leveraged through other Donors (such as the Islamic Development Bank and the French Development Agency in the agriculture sector, for example), trust funds (TF, including the Global Agriculture Food Security Program - GAFSP), the Institutional Development Facility (IDF), the Global Environment Fund (GEF), the Global Partnership for Education (GPE), and Bank-executed trust funds for technical and analytical work. 68. During implementation of the previous CAS, the team was successful in leveraging some additional trust fund resources (equivalent to about one quarter of the currently active IDA commitments). Under the proposed CPS, the team is also expected to leverage resources from the Islamic Development Bank, AFD, the Global Agriculture Food Security Program, (GAFSP), IDF, GEF, GPE, and Bank-executed trust funds for technical and analytical work as well using the instruments to mitigate country risks for private sector financing such as WB PRGs, and MIGA insurance instruments. 2.4. Expected Results and Program of Lending and Non-Lending Activities 69. The Bank’s proposed CPS work program for FY 2014-16 is fully aligned with the Government’s PRSP-3 pillars I-IV, and proposes to respond to Mauritania’s development challenges by concentrating on two main pillars. • Pillar 1 – Growth and Diversification • Pillar 2 – Economic Governance and Service Delivery Pillar 1 – Growth and Diversification 70. Under Pillar 1 of the new CPS, the World Bank Group will support infrastructure development, private sector development, and strengthening of the financial sector. In supporting these main drivers of poverty reduction and improving shared prosperity, this CPS will contribute towards inclusive growth and a more competitive economy. Additional activities will identify ways to trigger shared prosperity linked to the thriving mining industry, and to help unleash the potential of the agriculture and fisheries sectors. In particular outcomes 1A, 1B, 2, 3A and 4 will contribute to the goal of shared prosperity while outcomes 5, 6, 7 will contribute to both poverty eradication and shared prosperity. Capacity building and institutional strengthening will continue in the mining and oil sectors. Outcomes and associated operational and analytical activities are as follows: 71. Outcome 1.A: Improved financial services for micro, small and medium enterprises (MSMEs). Although large business groups dominate the market, MSMEs comprise the largest share of firms in Mauritania, and a key constraint is their access to finance. Interventions in this area will be carried out jointly by the IFC and the World Bank. Analytical and Advisory Activities 25 - TA on implementation of the financial sector strategy. Financial Sector Reform and Strengthening (FIRST) Initiative funding in FY13 supported the development of a financial sector development strategy. Technical assistance in this area would focus on assisting the Government in finalizing its strategy and a roadmap for implementation. Operational Activities - As indicated in para 34, access to finance is the main constraint for the Mauritanian private sector. IFC will contribute to improve SMEs’ access to finance through TA to support creation of a credit bureau. In addition to promoting trade via two commercial banks under its Global Trade Finance Program (GTFP), IFC has identified other financial institutions to increase trade and SME financing. It is expected that one or more commercial banks will be provided with IFC’s MSME advisory services to build their SME lending capacity. - IFC expects to finance the expansion and diversification of a local dairy company, to support the production of affordable protein sources and increased domestic food production. The project will provide better livelihoods and incomes to up to 2,000 nomadic herders and more than 2,500 MSMEs. 72. Outcome 1.B: Improved regulatory climate. The business environment in Mauritania suffers from significant deficiencies, and the CPS will provide a structured program of analytical work and lending to support its improvement. Under this CPS, the Bank will provide the analytical and advisory services as well as lending. Analytical and Advisory Activities - An Investment Climate Assessment (ICA) will provide an up-to-date analysis of investment climate issues based on results from a firm-level survey. In addition to the usual analyses of constraints to growth and productivity, specific attention will be devoted to sector competitiveness and firm taxation; access to finance; and gender-aware employment generation. - An assessment of linkages and clusters in the extractive sector in Mauritania will be the basis of a policy note on the mismatch between the procurement needs of extractive companies in Mauritania and the capacity of local SMEs to meet those needs. This work will contribute to identifying a roadmap of interventions and institutional reforms to address these constraints. - TA to assist the Government in operationalizing the Nouadhibou Special Economic Zone (SEZ) and other SEZs in the country. Operational Activities - The Competitiveness and Enterprise Development Project: A Special Economic Zone Approach (FY15) will improve firms’ competitiveness and support Government efforts to create SEZs in the country. The Bank will support the SEZ of Nouadhibou. 26 - The Business Environment Enhancement Project (BEEP) is an ongoing project aimed at improving the financial, legal, and regulatory environment for business. The project will receive additional financing in FY15. - Complementary to the BEEP investment climate reform project, IFC will focus on simplifying the procedures for starting a business and paying taxes. - To ensure that economic recovery is inclusive and sustainable, IFC will also focus on SME capacity building, and has started to roll out its Business Edge training programs in Mauritania. - IFC and the Bank will continue engaging with the Government in develop PPPs in infrastructure that are in the best interests of the country like the extension of the Gas to Power initiative, roads and infrastructure for the SEZ of Nouadhibou. MIGA guarantees can also be used to reassure private investors at an early stage in the PPP process, and can be used to complement other WBG products to maximize the chances for PPP success. - MIGA will provide political risk insurance product lines, in the traditional covers of Transfer Restriction, Expropriation and War and Civil Disturbance to encourage foreign investors into the Mauritanian market, thereby improving local competitiveness, growth and efficiency. 73. Outcome 2: Improved mobility in targeted inter-urban roads. Under this CPS, the ongoing rehabilitation of Nouakchott-Rosso road 20 will contribute to reducing two of the major barriers to growth and the very high cost of transport service provision, while consolidating Mauritania’s access to Senegal and its position as a link between Morocco and the rest of Sub- Saharan Africa. The objective is to reduce physical barriers to road transport along the corridor from Nouakchott to Rosso. The project will reduce transit times and vehicle operating costs along the corridor. The other important obstacle to inter-urban mobility is the need for a bridge across the Senegal River, which can now be crossed only by ferry. This is particularly important for the regions of Gorgol and Brakna which together account for 30 percent of the poor in the country. A bridge project is being considered by the AfDB and European Commission (EC). Operational Activities - In addition to the road project, the Bank will support a Local Government Development Project aimed at developing the capacity of urban local governments to ensure better city planning, promote economic and social integration, and provide high-quality basic services and key infrastructure. In its first phase, the project will cover all municipalities which are capitals of departments, as well as a group of rural local governments in the more vulnerable areas (borders regions and the “poverty triangle,” now called “Hope Triangle”). The participation of the department capitals will ensure good geographical coverage, and the participation of the select rural local governments will ensure better inclusion and poverty targeting, and help to strengthen social cohesion and stability 20 The road will be part of the reconstruction of two major road corridors to Mali (Route de l’Espoir) and Senegal (Nouakchott-Rosso road). 27 around the country. The project will set up a new fund to provide performance-based grants to local governments. It will also include a capacity building component to support all actors, using a results-based approach. The project will be mainly funded by the Government, ensuring strong ownership and likely sustainability. It will also provide an opportunity for aid harmonization, as the performance-based fund will be designed to receive contributions from other donors. The EU has already decided to contribute, and other donors are expected to do so. 74. Outcomes 3.A and 3.B: Increased cost-efficient and environmentally sustainable electricity supply for Mauritanian households and industry, and increased electricity exports to Senegal and Mali. The Government of Mauritania is developing a large energy investment plan that includes a gas-to-power project (350 MW), a wind power plant (30 MW), and a solar power plant (15 MW). This investment plan, particularly the gas-to-power project, could more than double power generation in Mauritania and exports to Senegal and Mali, while substantially reducing costs. This will help improve electricity connectivity for more than 50 percent of the urban population living in informal settlements. The gas-to-power project, which will be structured as a PPP, is being developed in two phases. The first phase includes the offshore Banda gas field production facility and pipeline (upstream sub-project); 295 MW of generation in Nouakchott, including 80 MW of power exports to Senegal through the existing transmission line managed by the Organization for Development of the Senegal River (OMVS); and a transmission line to the north of the country with a target completion date of end 2015. The second phase includes additional power generation capacity, an onshore gas pipeline to the Tasiast mining area, and a new transmission line between Mauritania and Senegal which would allow additional exports after its completion by end 2016. Operational Activities - The Banda gas-to-power project (PRG) is currently under preparation for delivery during the first half of the CPS period. Following its approval, efforts to develop the project as a PPP, with IBRD and MIGA support, would be pursued. In addition, a regional project under OMVS will upgrade the transmission line to help Senegal and Mali take up to 200MW from the gas-to-power capacity. IFC is considering financing the gas-to-power project, subject to the structuring of an appropriate PPP. 75. Outcome 4: Increased access to internet services. Mauritania has shown a strong commitment to opening telecommunications to competition, and the market at the local level is dynamic and competitive. The mobile penetration rate is with 93 percent – almost at the top of the ECOWAS average – but the broadband market remains underdeveloped, with less than 2 percent penetration, which prevents the country from reaping the benefits of the ICT revolution in terms of growth, job creation for all, including the unemployed youth in slums in particular, and regional integration. The World Bank will provide both policy and lending services. Analytical Activities - ICT policy notes: A programmatic sector dialogue will assist the line ministry and regulatory agency in charge of ICT in drafting a new sector policy note 21 and action plan to promote investments by telecom operators and internet service providers. 21 The new telecom sector policy note was approved in January 2013. 28 Operational Activities - West Africa Regional Communications Infrastructure Project (WARCIP). This FY13 regional project will boost regional connectivity and support a new wave of ICT reforms, to accelerate broadband internet coverage, reduce the digital divide in Mauritania, and pave the way for successful development of e-government and a digital economy. A key outcome of WARCIP will be increased access to internet services (from 2 subscribers per 100 people in 2011 to 10 by 2016) through focused PPP investments in: (a) the rollout of crucial fiber optic links to create a reliable regional and national backbone, with a ring covering most of the population in Mauritania, and links to newly available low-cost international capacity via the Africa Coast to Europe Submarine Cable (ACE); and (b) a national and regional internet exchange point (IXP) and data center where e-applications and content will be developed to transform service delivery across sectors. 76. Outcome 5: Improved management of fishery resources. In the fisheries sector a twin track approach is proposed with GEF/IDA on sector governance reform and port infrastructure to increase local value added in fisheries. It would combine IBRD enclave funds for infrastructure and GEF grants via the West Africa Regional Fisheries Program (WARFP). Analytical Activities - The assessment of the potential value of the sector will be updated. Operational Activities - As part of the West Africa Regional Fisheries Program, the Bank is preparing a US$49 million Adaptable Program Loan (APL) for FY 13, with financing from IBRD, IDA, and GEF. The project aims at strengthening the capacity of Mauritania to govern targeted fisheries, to increase the contribution of these fisheries to the local economy in terms of employment and government revenue. The project includes investment in port construction at Tanit, 60 km from Nouakchott, which would be managed in partnership with the private sector. 77. Outcome 6: Improved crop yield. The Government’s Integrated Rural Development Program (PDRI 2014-2019) will be the basis for preparation of the Bank’s new intervention in the agricultural sector. 22 The PDRI will produce 230,000T/year by secured water management (40,000 ha) of cereals (mainly rice). The new intervention will also increase the agricultural intensification rate to substantially increase domestic coverage of food demand for a number of additional value chains (milk, meat, horticultural crops). The financing requested by the Government to support this program amounts to US$417 million over five years, to cover (a) livestock value chain development; (b) irrigation development; (c) rain fed agriculture and traditional livestock development; (d) wetlands agricultural development; (e) research, training 22 The Government adopted a renewed Rural Development Strategy in December 2012, and is in the process of significantly enhancing its budget support to the sector. It is also modernizing the legal and institutional framework for agricultural development. The Government adopted its first "Loi d' Orientation Agropastorale” (Agriculture Sector Modernization Law, which includes livestock), and the Comprehensive Africa Agriculture Development Program (CAADP). Investments in the sector are being prioritized within a streamlined PNIA-SA (National Agriculture and Food Security Investment Plan), of which the PDRI is one component. A longer-term national livestock and agriculture development program (Programme National de Développement de l’Elevage et de l’Agriculture – PNDEA 2025) is also being developed. 29 and extension services; and (f) institutional support and capacity building. Analytical Activities - ESW on Land Tenure Policy - Economic sector work,-irrigation (ESW) analysis Operational Activities - Integrated Water Resources Management Program (OMVS/PGIRE2)- regional - West Africa Agriculture Productivity (WAAPP) - Support Project to PDRI (PA-PDRI) 78. The Bank response will come through a large project to support PDRI, complementing two regional projects, namely the West Africa Agricultural Productivity Program (WAAPP) and the Integrated Water Resources Management Program (PGIRE/OMVS). All three operations are either currently under preparation (PA-PDRI and PGIRE-OMVS) or about to be prepared (WAAPP). Preparation of the larger PA-PDRI project (projet d’appui au programme de développement rural intégré) is underway for Board presentation in FY14. It will include productive investments (irrigated agriculture, rain fed agriculture and livestock development) and strong capacity building and sector coordination activities to address the issue of low productivity which led to the large urban migration. Co-financing from GEF and GAFSP are expected. 79. Outcome 7: Resilience to climate change integrated in Mauritania’s overall development agenda. Mauritania’s environment and natural resources are steadily deteriorating under the increasing pressures of climate change and economic development. A rapidly growing population, large coastal urban centers, critical infrastructure, economic activities, and ecologically sensitive areas tend to increase the risks. With its poor environmental governance, Mauritania was ranked 161st out of 163 countries classified under the 2010 Environmental Performance Index. The degradation of ecosystems and the decrease of biodiversity are harming rural populations and affecting their income generating activities. The poorest people, who are already the most severely affected, will become increasingly vulnerable to natural disasters such as floods and droughts. Coastal zones are extremely vulnerable to natural hazards such as storm surges, floods, and coastal erosion. Climate change will make coastal zones more vulnerable to storms, extreme precipitation, sea level rise, and associated impacts such as salinization of water and soils and degradation of ecosystems. Existing national and local institutional capacity and technical knowledge are insufficient to deal efficiently with these challenges. Analytical Activities - A report on inclusive green growth (IGG) in Mauritania (FY14) will provide a rapid socioeconomic analysis of Mauritania’s priority economic sectors and a review of existing sector-specific economic data. It will also provide examples of IGG policies from other countries; and make country-specific recommendations for the adoption an IGG agenda. The report will focus on: (a) the priority sectors contributing to the country’s economy and people’s livelihoods – mining, industrial fisheries, and agro- pastoralism; and (b) macroeconomic and governance policies. The purpose of this review is to identify the mechanisms necessary to convert rents into sustainable investments, and the main constraints to adopting those mechanisms. This will involve an analysis of the 30 legal, institutional and regulatory frameworks, public expenditures, re-distributional effects, efficiency, sustainability, and resilience issues for each sector. Operational Activities - The Bank will support a Mauritania Dry Lands Management Project as part of broader sub-regional Dry Lands Program (Mauritania, Mali, Niger, Chad, Sudan and Somalia). The overall project/program objective is to enhance the resilience of dry lands in order to improve livelihoods, food security, employment, and social stability in dry areas. It will follow a multi-sectoral approach, with activities focused on agriculture, natural resources and water resource management, disaster risk management, infrastructure, and social development. In addition to IDA resources, the Bank plans to leverage additional funds from climate finance resources and the Global Environment Facility (GEF). - A separate GEF/Mauritania project was approved in FY11 under the Sahel and West Africa Program (SAWAP) in support of the Great Green Wall Initiative (approximately US$6 million from Mauritania GEF STAR Allocation), and is planned for delivery in FY14. Pillar 2 – Economic Governance and Service Delivery 80. Pillar 2 activities will aim at enhancing public sector capacity to: (a) promote effective use of the resources generated from growth; (b) support job creation through education and skills development; and (c) address vulnerability at the household level. The Bank will aim at consolidating and expanding the gains of the 2008-2011 CAS in improving transparency and accountability in the management of natural resources (extractive industries and fisheries), strengthening the performance of the civil service, and enhancing public service delivery, particularly in the MDG-related areas of health and education. On the latter, a two-prong approach will be supported by the Bank and introduced in the CPS: (i) a TA on health financing, with the primary objective of helping the Government to improve the efficiency of its health expenditures (especially through the development a strategy for result-based financing); and (ii) a lending project in the health sector that will also leverage additional financing from the Results-Based Financing Trust fund. Outcomes under pillar 2, including outcomes 8A, 8B, 9, 10 and 11 will contribute to the goal of poverty eradication. 81. During the first part of the CPS period, public sector capacity building activities started under the previous CAS will continue: PRECASP, EITI and TA/ESW (TA on public enterprises and agencies, sector public expenditure reviews (PERs), and a Service Delivery Indicators assessment). Given the long-term efforts necessary to deepen the reforms and advance the institutional and capacity building programs to a point where sustainability would not be endangered, these activities should also be pursued under the proposed capacity building. 82. Outcome 8.A: Improved quality of basic education. The Bank will continue its efforts in the areas of education and skills development, with a focus on improving the quality and relevance of programs, the quality of teaching, and equity of access, particularly for middle school students in Tagant, Hodh Charghy, Hodh Gharby, Assaba, Gorgol, and Guidimagha regions where a large portion of the population lives in rural areas and where the transition rates among girls from primary to lower secondary school are the lowest. These regions are the poorest areas and are also densely populated. 31 Operational Activities - Basic Education Support - A new Basic Education Project is proposed to be funded under the Global Fund for Education and will be a continuation of the basic education projects started under the previous CAS Pillar 2. . 83. Outcome 8.B: Improved access to technical and vocational training. As Mauritania improves its private sector growth potential, there is a need to align vocational and professional training of the youth and rural migrants to the needs of the labor market. A major focus will be to modernize the management of training institutes and improve the quality of programs. Seven technical training institutions have already negotiated performance contracts, and by 2016 at least three programs should be certified as meeting international standards. A new regulatory framework for private sector training institutions will also be in place, thereby increasing the supply of programs aimed at meeting enterprise demand. Operational Activities - Skills Development Support Project (FY11), approved towards the end of the previous CAS period, will continue through the new CPS period. Its objective is to improve the relevance and efficiency of vocational and technical training, making the labor force more responsive to market demands. An additional US$8 million in financing, made available by cancellation of part of the Higher Education project, will allow for an expansion of this training project. 84. Outcome 9: Better targeting of safety net programs. Through this CPS, the Bank will provide TA for the design of a social protection strategy and social protection policies to meet the needs of the chronic and transitory poor. In addition, through the proposed lending operation on health and social safety nets, the Bank will support the Government with the provision of tools and procedures that are part of a well-functioning safety net system, including registration and payment systems, and procedures to identify eligible beneficiaries and monitor food-insecure populations. Analytical Activities - Social Safety Nets (FY14) - This TA will (a) inventory the targeting mechanisms of the existing safety net programs, with the aim of developing a unified national mechanism; and (b) assess the feasibility of developing a national cash transfer program. This activity will form the basis of the social safety net operation planned for FY15. It would also contribute to design of the health sector support operation. - TA - Assessment of population in need of safety nets (based on available micro data) (FY14) Operational Activities - Health/Social Safety Nets Operation (FY15) 23. 85. Outcome 10: Efficient management of public financial resources. The CPS aims to build upon the activities supported by the previous CAS, Bank assistance and response to 23 The project outcomes will be specified at the time of the progress report. 32 Government request will include support to statistics, SOE and Public Agencies Governance, and fiscal revenues from the mining sector. The capacity of national statistical system (NSS), including the National Statistical Office (ONS), has declined sharply in recent years, leading to lower production of basic socioeconomic data. The Statistical Capacity Index (SCI) 24 went from 68 (2009) to 58 (2012). The implementation of the National Strategy for the Development of Statistics (NSDS) has been delayed due to the low level of funding of NSDS action plans. The production of and open access to good quality, relevant and timely data are the prerequisite for (a) a deeper understanding of Mauritania, society; (b) a closer monitoring of projects and programs and the overall socioeconomic situation; (c) a serious evaluation of the impact of projects and programs and external shocks; and (d) forecasting and modeling of future events. Statistical development in the country is hindered by several bottlenecks, related to human resources, governance and coordination practices, and dissemination challenges. The World Bank Group’s support in this area materializes in a number of projects, which leverage on technical assistance and financing instruments; more details on these activities as well as on the Mauritanian Statistical system are available at the Annex 9 of this document. Management of fiscal matters in the mining sector has been constrained by lack of coordination across ministries as well as training of a dedicated team of specialists. An inter-ministerial committee has been proposed but has yet to become operational. SOEs and public agencies are critical to Mauritania’s economic development and service delivery, with more than 150 entities contributing to 14 percent of GDP. However, they represent a growing fiscal risk for the country, and there is considerable scope to improve their service delivery performance. Addressing service delivery and fiscal risk challenges requires the introduction of reforms to improve their governance framework. Analytical Activities - A State-Owned Enterprises and Public Agencies study will combine (a) a diagnostic of the current governance framework for these institutions, with a focus on state oversight and monitoring of fiscal risk and service delivery performance; and (b) the transfer of knowledge and international experience. It is expected to lead to a series of policy changes and measures to improve state capacity to improve oversight of SOEs and public agencies. - A Service Delivery Indicator study will establish baseline indicators on service delivery in basic health and education, including the competence and absenteeism of health practitioners and teachers. The review is part of an Africa-wide human development study that has already been carried out in Senegal, Tanzania and Kenya. It will provide a baseline for future interventions aimed at improving the quality of social service delivery, and will complement future public expenditure reviews. - A Public Expenditure Management and Financial Accountability Review (PEMFAR) will assess implementation of the BOOST methodology, designed to help organize public expenditure data for easy analysis and dissemination to the public. The Bank team will work with local authorities to conduct the review, which will focus on broad trends and at least one social sector. It will be complemented by assessments of public financial management and procurement policies and procedures. Particular attention will be given to the way in which mineral revenues are managed. 24 From Bulletin Board of Statistical Capacity (BBSC), World Bank. 33 - Strengthening the Accounting Profession and Enhancing Accounting and Auditing Practices. ROSC action plan implementation. Weaknesses in accounting and auditing practices are a significant constraint on private sector development. Both local and particularly foreign investment is strongly linked to the reliability of financial reporting and audit and use of internationally comparable accounting and auditing standards. A ROSC accounting and audit exercise was undertaken in Mauritania. The report have been approved by the Government and published. Operational Activities - Public Sector Capacity Building. The Bank’s involvement in public sector capacity building has included co-financing of the population census through the Public Sector Capacity Building Project (PRECASP, FY07, ongoing); as well as preparation of the Trust Fund for Statistical Capacity Building (TFSCB) grant to support improvement of NSS and ONS management, data collection (national accounts, enterprises, livestock, and swamp management), and data dissemination. Harmonized partner support to the whole statistical system will be organized through implementation of the NSDS. - The proposed IDA-funded capacity building operation will focus on SOE governance, management of fiscal revenues from the mining sector, and statistical capacity development. This operation aims to (a) improve the corporate governance of SOEs and public agencies by strengthening oversight capacity, improving the availability of consolidated financial data, and enhanced internal control and board management of SOEs and public agencies; and (b) increase the statistical capacity of NSS and ONS, including the production and dissemination of basic statistics. Open access to data (anonymized) will also be the subject of policy dialogue between the Bank and the Mauritanian authorities. - The existing PRISM-2 is supporting capacity building on taxation and fiscal issues related to the extractive industries. Moreover, the proposed Capacity Building Project will further support institutional strengthening as well as training of staff of the ministries involved in extractive industries including the Ministry of Finance, Ministry of Petroleum, Energy and Mines, Ministry of Economic Affairs, and possibly the Treasury. Outcome 11: Improved financial management at decentralized/local government levels. Operational Activities - Local Government Development Project will set up a new fund to provide grants to local governments, based on their performance in the areas of accountability and participatory planning and budgeting. The project will also include a results-based capacity building component that will support all actors involved in decentralization and local NGOs. The project is being prepared and funded mainly by the Government, ensuring strong ownership and likely sustainability. It will also provide an opportunity for aid harmonization, as the performance-based grant fund is designed to receive contributions from other donors, including the EC. Cross-Cutting Issue: Gender 86. All CPS activities will include a gender component, making gender an integrated consideration in all lending and advisory activities. In addition, an ESW on gender indicators is currently being carried out on a regional basis, it includes Mauritania. Further, the inclusion of 34 dedicated new activities on gender in the CPS through capacity building/TA operations as part of a “high reward/high risk approach” (high risk due to Mauritania’s socio-cultural environment) will also be exploded. Table 2: Proposed Lending and Non-Lending Activities Fiscally Project Name IDA TF/Other Technical Assistance and Notes Year FY14 Agriculture Development 10 14 GEF ESW Land Tenure Inclusive Green Growth in Mauritania 15 AFD TA for Special Economic Zones 35 GFRP Irrigation development Subsistence agriculture, including livestock development SOEs Governance Study Banda Gas to Power (PRG) 8 3 Regional IDA Public Expenditure Management and Financial Accountability Report Basic Education Project 0 12 GPE Risk-Based Audit Approach TA - Social Safety Nets OMVS Agriculture Regional 7 10: Regional IDA (PGIRE2) Total 25 IDA-17 FY15 10 20 Regional IDA Investment Climate Assessment (ICA) 8 Regional IDA WA Regional Fisheries/Mauritania 4 9 GEF TA on a financial sector strategy 30 IBRD implementation Health / Social Safety Nets 10 Service Delivery Indicators assessment Report on the Observation of Capacity Building Project in Standards and Codes support of statistics, SOEs and 11 Optimizing the mining benefits public agencies, and extractive industries. accruing to government as well as local economic and social development FY16 Competitiveness and Enterprise Development Project: A Special TBD Economic Zone Approach Agricultural technology innovation and dissemination Agriculture Productivity Regional 5 10 Regional IDA project 10 IDB 40 35 III. IMPLEMENTING THE FY14-16 COUNTRY PARTNERSHIP STRATEGY 3.1. Managing Program Implementation 87. The proposed FY14-16 CPS program will be implemented by Government implementing organizations (IOs) and project implementation units (PIUs), with close support from WBG teams. Due to existing capacity limitations and other structural issues of the public administration, most PIUs still are not fully mainstreamed into the respective IOs. It will be crucial to build mechanisms that allow for the transfer for knowledge and skills related to project management, including strategic planning, fiduciary management, and monitoring and evaluation, from PIU staff to respective IO staff. This can be done by including IO staff in training events, creating opportunities for knowledge transfer, and twinning arrangements. Further, terms of reference for externally hired technical consultants should include the requirement to make appropriate arrangements for capacity development of local counterparts. 88. In addition to close follow-up on implementation by sector teams, program implementation will be regularly reviewed through annual Country Program Performance Reviews. Progress on the implementation of the proposed CPS will be assessed in the course of a mid-term review and subsequent elaboration of a CPS Progress Report. 3.2. Partnerships and Donor Coordination 89. The content of this CPS concept note is based on preliminary discussions with the Government; consultations with other donors in Mauritania; exchanges with the authorities during the visit of the new Country Director to Mauritania in early 2011; and further exchanges with the Government during the Spring Meetings and Annual Meetings in Washington in 2011. Additional consultations were held in Nouakchott from 25-27 September 2012 with civil society and religious leaders, parliamentarians, representatives of the private sector, donors, and Government officials. All stakeholders expressed overwhelming support for the two pillars of the proposed CPS. The following guiding questions were posed to participants: Question 1: Do you think that Bank intervention in Mauritania is pertinent? Question 2: In relation to the positions of other donors, do you think the Bank should be more selective in its positioning? Question 3: What do you think about the positioning of the Bank in relation to the Government’s priorities as defined in the PRPS for 2011-2015? 90. Numerous recommendations were voiced and additional interventions proposed (for a detailed summary, see Annex 6). The following were mentioned by all stakeholder groups: • Professional training of civil servants; • More TA and advisory assistance by the Bank; • More interventions in the health sector, particularly related to HIV/AIDS and food safety; • More support for implementation of governance reforms; • Engagement in the justice sector, particularly training of judges and judicial staff; • More attention to gender and social protection; • Improved capacity for statistics and data collection. 91. Aid harmonization is an important issue in Mauritania. In addition to significant assistance from the AfDB, EC, UN organizations, and bilateral donors, Mauritania benefits from 36 substantial assistance from Arab funds and from China, which recently increased its support. The Bank has several ongoing operations in Mauritania with these partners, and others are proposed for FY14. The 2008-2009 events had a negative impact on the strong coordination arrangements that existed at the start of the previous CAS. To reestablish their harmonization and alignment framework, the donors agreed, at a meeting held in Brussels in June 2010, to come together around the key themes of the PRSP-3. The Ministry of Economic Affairs and Development (MAED) is playing role in those arrangements, which are summarized in section 1.6 above. Collaboration with the private sector is also increasing under the PRSP-3, in the context of EITI implementation, support for the School of Mines, vocational training for mine workers, and potentially transformational public-private partnerships for infrastructure development. 3.3. Monitoring and Evaluation 92. On the Government side, detailed arrangements for monitoring and evaluating the progress of the PRSP are laid out in its Pillar 5. On the World Bank side, a CPS implementation monitoring system similar to that used for the 2008-11 CAS will allow for adequate review of World Bank contributions toward Mauritania’s development. Indicators to be used to track outputs and outcomes will be incorporated in the CPS results matrix, which will also include a list of milestones and intermediate outcomes. The CPS implementation monitoring system will be closely linked to the Government’s PRSP monitoring system. IV. MANAGING RISKS 93. Implementation of the new CPS could face three major risks: (a) political instability; (b) low capacity of the administration; and (c) vulnerability of Mauritania’s economy to external shocks. 94. On the first point, Mauritania’s recent history has demonstrated that internal political risks are high, and are not likely to disappear during the CPS period, particularly during and immediately following the next presidential election, scheduled for the first half of 2014. In addition, the Sahel region is threatened by expanding AQMI activities, and there is a risk of more spillover effects from the crisis in Mali. Given these circumstances, the risks are not negligible that some WBG development programs and current reform efforts could be stalled. On the other hand, the strong momentum for development and poverty reduction in Mauritania has been maintained since 2000 despite political disruptions. There is a continuing and broad consensus throughout Mauritania that the objectives, content, and approach of specific Bank-supported programs are appropriate. As the proposed new operations are understood to be a continuation of ongoing efforts, they are likely to be relatively immune to political developments. 95. Improvements in governance are crucial to avoiding risks of further corruption in the mining and fisheries sectors, which are also key areas of intervention in this CPS. In addition to the fiduciary mitigation measures embodied in each of Bank-funded operations, this CPS will provide support to improve governance in the fishery sector as well as a capacity building program to improve governance of SOEs and public agencies, and extractive industries. The Bank will continue to support reforms on public procurement. The reforms set up the institutional framework and support capacity building and (i) further integrate procurement as part of budget preparation and budget execution, (ii) all procurement plans prepared during budget preparation, (iii) strengthen procurement oversight through regular audits and (iv) annual technical audit of 37 procurement implemented by contracting Authorities. The importance of fully achieving the governance agenda cannot be minimized, given the existence of entrenched interests and the temptation to try and capture the rents from natural resources. However, the current authorities have shown a strong commitment to advancing the governance agenda, as evidenced by the progress made on the EITI validation process. There is broad consensus among the political parties and civil society to keep governance at the forefront of the development agenda. 96. The proposed dual approach – combining (a) low-risk/good-return ongoing and follow-up operations with (b) some new high risk/high return actions –is appropriate to achieve development objectives (including some transformative change) while mitigating risks. The mid- term review of PRSP-3 implementation, which will coincide with the timing of the CPS Completion Report and the next presidential election, will provide an opportunity for stocktaking and for launching new initiatives, possibly including high-risk/high reward activities consistent with WBG goals. A close analysis of the country’s political economy during the next three years will be essential to identify and prepare the most appropriate activities going forward. 97. In terms of insufficient capacity of the administration, the Government is fully aware of the challenge, as highlighted in PRSP-3, and has requested capacity-building support from all key development partners. Most development partners, including the Bank Group in this CPS, have responded by including capacity building in their assistance strategies, either as a specific pillar or as a cross-cutting theme. The continuing emphasis on capacity building and improving governance should also reduce the risks to sustainability of the reform efforts. 98. In terms of vulnerability to external shocks, which the PRSP-3 identifies as a key challenge, the Government aims to build resilience to shocks such as falling revenues from mining and fisheries, and climatic events that threaten agriculture and food security, by pursuing prudent policies. WBG engagement in the sectors vulnerable to external shocks is subject to the same set of risks identified above. The small oil fund, for example, helped to mitigate the effects of the 2011 drought. The Bank and the IMF will advise the Government on establishing a mining fund with even greater potential to provide a buffer against shocks. Most ongoing operations and a number of proposed new operations under the CPS also aim at reducing vulnerability through economic diversification, mitigation, and social protection. 38 Annex 1: Mauritania CPS Results Matrix MR CPS RESULTS MATRIX (2014-2016) PRSP3-Country Issues and Obstacles CPS Outcomes Milestones Program instruments Development Goals Pillar 1: Growth and Diversification 1.1. Financial Sector and Business Environment Financial sector Financial landscape is dense but Outcome 1 (a). Improved Financial services Credit registry at BCM is updated On-going Financing: Increase access to financial shallow and inefficient as it for MSMEs - PACAE-BEEP (FY10) services mainly caters to large businesses 2 local banks benefits from trade facilities under the - Global Trade Finance Program- and monopolies - Level of credits reported in credit registry at Global Trade Finance program IFC BCM increased - Structured trade facility to High political risk environment Baseline: 30% in 2012 New Bank and microfinance Laws as well as prudential purchase and import refined affects the reputation of local Target: 60% by 2016 regulations are adopted petroleum products to Mauritania banks –IFC - MSME Advisory to one (1) Local banks are not in position to bank – IFC provide adequate financing to - Credit Bureau implementation - local corporate and SMEs active IFC in cross-border trade and to support flows of critical Planned Financing: commodities - Business Environment Enhancement Project: BEEP AF (FY15) Absence of reliable credit information system for financial AAA: Business Environment: institutions One-stop-shop to establish a business is created and is - TA for Special Economic Improve the business Outcome 1 (b) Improved regulatory climate functional Zones environment for private sector Insufficiently enabling business - Time required for starting a business investment and development environment characterized by decreased Commercial code is updated administrative barriers and legal Baseline: 19 days in 2012 and judicial issues Target: 8 days by 2016 1.2 Infrastructure 39 PRSP3-Country Issues and Obstacles CPS Outcomes Milestones Program instruments Development Goals Transport : Lack of adequate road Outcome 2. Improved targeted Inter-Urban 192 kilometers of roads rehabilitated ( between On-going Financing: Improve road infrastructure maintenance roads Nouakchott and Rosso) - IDA & EU Road Corridor - Average travel time between Nouakchott and ACGF Rosso-Nouakchott (FY10) Rosso reduced . West-Africa Regional Power Energy : Baseline: 2.5 hours in 2012 Diversify and increase the Over-reliance on expensive Target: 2 hours by 2016 Pool. WAPP APL 2 (OMVS 25) supply of energy imported oil products leads to the Project use of solid fuels by 60 percent of Outcome 3 (a) Increase supply of electricity Install 120 MW of dual fuel (oil and gas) power capacity . Félou Hydroelectric Project) the population to households and industry by end of 2014 and reach financial close on the gas to (FY06) - Increase in gas-fired installed power power project by end of 2013. Poor technical and financial generation capacity Planned Financing: performance of the national power Baseline: 0 in 2013 . Gas to power Project utility Target: 295 MW by 2016 . West Africa Regional Communications Infrastructure Low population density in a Outcome 3 (b) Increased electricity export to Project - APL 2(WARCIP) mostly desert country, making Senegal and Mali (FY13) electrification expensive - Export at least 80 MW of power capacity to . Félou Hydroelectric Project. Senegal and Mali. Phase II (FY14) ICT : Outcome 4. Increased Access to Internet Establishment of Internet exchange point (IXP) with AAA: Improve global connectivity Services datacenter facilities by 2014 - ICT policy notes access to ICT services Access to international - Access to Internet Services (number of connectivity via Senegal and the subscribers per 100 people) increased The legal and regulatory framework for ICT SAT-3/WASC submarine cable is Baseline: 2 in 2011 revised at a high price and vulnerable to Target: 10 by 2016 service interruptions 1577 km of fiber optic network built by 2016 Limited geographical reach of broadband networks and high costs of broadband services 1.3 Natural Resources Fisheries: • Over-fishing of most demersal Outcome 5. Improved management of fishery 80% of communities of fishermen strengthened BY 2016 On-going Financing: Improve the sustainable resources in both biological and resources management of fishery economic terms, and risk exist - Percent of registered foreign and national Fisheries management plans for major fisheries (octopus, Planned Financing: resources for other resources fishing vessels increased artisanal) ) are implemented - West Africa Regional Fisheries • Harnessing of fisheries to Baseline: 30% in 2012 Program APL C1 (FY14) national economy is limited Target: 90-100 % by 2016 By 2015, above 90% of demersal fish caught in Mauritania’s waters are landed locally (baseline: 30%?), AAA: - Direct contribution of fisheries to GDP as above 50% of pelagic fish ESW Update of assessment of doubled in absolute value By 2015, job created by the fisheries sector has increased potential value of the sector (In Baseline: 4% of GDP by at least 25 % (baseline: 40 000) the context of the Planned Target: 8% of GDP Financing) 1.4 Agriculture Productivity 25 OMVS : Organisation pour la Mise en Valeur du fleuve Sénégal 40 PRSP3-Country Issues and Obstacles CPS Outcomes Milestones Program instruments Development Goals Agriculture: • Agriculture sector Outcome 6. Improved crop yield On-going financing: Develop irrigated agriculture contribution to GDP is -Second Integrated Development and improve cereal production limited (3%) by low and - Yield for irrigated rice improved 16,000 ha provided with irrigation and drainage services Program for Irrigated Agriculture to cover at least 50% of unreliable rainfall and the Baseline: 3 tons/ha in 2012 ha by 2020 (PDIAIM2) (FY12) national need of cereals by limited development of Target: 6 tons/ha 2018 - 2020 irrigation At least 12 new agricultural and animal husbandry Planned Financing: • Low yields associated with - Millet and sorghum increased in targeted techniques disseminated by 2020 -OMVS regional (PGIRE2) little use of enhanced areas -West Africa Agriculture agricultural and animal Baseline: 1 ton/ha 2013 Productivity (WAAP) husbandry technologies Target: 2.5 tons/ha 2016 - Support project to IRDP (PA- • Low capacity of public PDRI) administration in charge of -Mauritania Dry Lands agricultural production, Management Project including livestock Planned AAA: -ESW Land Tenure Climate Change: • Increased vulnerability to Outcome 7. Resilience to Climate Change Disasters Risk Management System established -Inclusive Green Growth in Integrate climate change and natural disasters such as integrated in the Mauritania’s overall Mauritania (FY14) sustainable management of floods and droughts development agenda -Coastal management and natural resources in national • Limited knowledge and adaptation to climate change in development strategies and capacity dealing with climate Coastal Cities (FY15) programs to reduce the - Number of sectors mainstreaming climate change and climate resilience in national strategies and program vulnerability of poor variability populations to external chocks budgets increased and improve disaster risk Baseline: 1in 2012 • Target: at least 3 by 2016 management Pillar 2: Economic Governance and Service Delivery 2.1 Education and Vocational, Technical training Improve access and quality of • Learning outcomes at all Outcome 8(a) Improve quality of basic 3,700 additional teachers qualified to teach at the On-going financing: basic education and technical levels of the education system education primary level -Higher Education (FY05) and vocational training remain low, and primary -Skills Dev. Support Project schools register a large amount - Percent grade 5 students passing standardized Grade 5 student learning assessment carried out (FY11) of failures at an early stage. learning test increased disaggregated by sex - 4,100,000 textbooks and teachers’ guides distributed Planned Financing: Baseline: 8.4% in math, and 17.6% in French Basic Education Support in 2012 Target: 13% in math, and 21% in French by At least 3 TVET training programs certified to meet Other donors involved: • Need for professional and 2016 international standards by 2016 Spanish Cooperation, AFD, vocational training as well as Outcome 8 (b) Improved access to technical BAD, UNICEF, tertiary education is growing and vocational training disaggregated by sex Regulatory framework for legal status of private sector UNFPA, PAM, FIDA, AFD, training institutions approved FAD, French Cooperation, BID, - Annual graduates in supported TVET GIZ institutions increased Baseline: 993 in 2012 Target: 1300 by 2016 41 PRSP3-Country Issues and Obstacles CPS Outcomes Milestones Program instruments Development Goals 2.2 Social Protection Reduce vulnerability through Over 40 percent of the population Outcome 9. Better targeting of Safety Net Planned Financing targeted safety nets is poor and nearly 30 percent is Programs An inventory of targeting mechanisms of existing safety - Social Safety Net operation chronically food insecure net programs and an action plan for improving their (FY15) - Monitor number of food insecure beneficiaries effectiveness developed. Existing social protection policies of targeted Safety Nets disaggregated by sex Planned AAA: are unable to meet the needs of - Social Safety Nets TA (FY14) the chronic and transitory poor. Start developing and testing program tools and processes to improve efficiency of safety net programs (including - Assessment of population in Weak strategies to identify the procedures for identification of eligible beneficiaries, need of safety nets (based on neediest population registration, payment of beneficiaries; and monitoring available micro data) (TA FY14) and evaluation system) National Social Protection strategy approved 2.3 Public Sector Development Ensure an efficient and Cumbersome systems of Outcome 10. Efficient management of Public On-going financing: transparent management of expenditures payment and Financial resources A computerized financial management system PRECASP (FY07) public financial resources approval implemented by all sector ministries PRISM 2 - Number of ministries updating and Planned Financing: Budget allocations are not well using MTEFs for budget preparation increases Network connection between Treasury, Central Bank and Capacity Building Project in targeted and specifics from 5 to 10 by 2016. commercial banks is in place. support of statistics, SOEs - Payment time is reduced from 48 to 36 and public agencies, and Weak Public procurement hours by 2016 through a connected payment extractive industries capacity in sector ministries system AAA - Percentage of single source 4 Ministries staffed with procurement commissions to - SOE Governance Study contracting reduced from 6% in 2012 to 3% by ensure the execution of their procurement plan - TA Treasury Fiscal risk related to SOEs and 2016 - PER Public Agencies and limited - PEFA service delivery performance -- Number of meeting held by the inter-ministerial Participation from Ministry of Petroleum, Energy and - Anti-corruption TA accoutrant committee in charge of fiscal matters pertaining to Mines, Min. of Finance, Min of Economic Affairs and (RSOC) the extractive industries from 0 meeting to 4 by Development Limited capacity and inter- 2015 ministerial coordination on fiscal Ministerial Order or other evidence of the committee matters related to the extractive actual functioning e.g. Proceedings of inaugural meeting industries 2.4 Decentralization Strengthen the institutional Inefficient inter-governmental Outcome 11. Improved Financial management On-going financing: aspects of decentralization and fiscal framework and transfer at decentralized/local government level . Public Sector Capacity Building local development system A Performance Based Grant (PBG) to finance Local P. (PRECASP) - Budget transfer to LGs increased from MRO Government is created and abounded by both the national Inadequate own source revenue 3.5billion in 2012 to MRO 6.0 billion by 2016 budget (with significant amount), and from Donors Planned Financing: Improve the Services delivery - 75 LGs under LDG scoring at least 75 of a 100 (2014) . LGDP (supporting PNIDDLE) through Local Governments Low levels of staffing and HR points in annual performance assessment capacity of LGs A new Decentralization law deepening and improving the Other donors involved: UNDP, - 95% of Local Governments (rural and urban) Decentralization framework is approved (2015). EU, French Cooperation and GIZ Inability of municipalities to under LGDP meeting the Mandatory Minimum provide basic services Conditions for access to the performance grant funds for the final year of the project 42 Annex 2: CAS Completion Report REPUBLIC OF MAURITANIA COUNTRY ASSISTANCE STRATEGY COMPLETION REPORT Summary 1. This Country Assistance Strategy Completion Report (CASCR) assesses program performance and World Bank performance with the FY08-11 Country Assistance Strategy (CAS) for Mauritania, which was discussed by the Board of Executive Directors in July 2007 (Report No. 39532-MR); it covers a period up to March 31, 2012. During this time, Mauritania experienced various political events along with economic shocks and setbacks. First, a 2008 military coup led to major political disruptions and external aid was suspended, including that of the Bank, for more than a year, until the return to constitutional order and new elections in 2009. Second, the new off-shore oil production for which Mauritania had high expectations, proved disappointing, with actual production declining rapidly to levels considerably below those anticipated. Third, a drought affected agriculture and high international food prices, in particular, hit a large part of the population. These events affected Mauritania’s economic performance and the implementation of the CAS. 2. Based on staff self-assessment, the performance of the CAS program is assessed as moderately unsatisfactory: out of 23 outcomes, only 10 were achieved (mainly under pillar 2 – Establishing growth in the economic sphere of the poor). The Bank performance is assessed as moderately unsatisfactory. Although the Bank has demonstrated flexibility and agility in adjusting the program to the country context, in particular following the re-engagement in 2009 after a year of suspension under O.P 7.30, it did not prepare a progress report to reflect the changes, including a revised results framework for the CAS. 3. There are lessons learnt from the implementation from the previous CAS, in particular (a) development can be achieved even in the most challenging situation, (b) even if weak human and administrative capacity is a pervasive problem, it can be mitigated in areas where the Bank has long term engagement; (c) development impact – particularly transformational change is not necessarily linked to the amount of financing provided by the Bank; if well directed, limited IDA can leverage additional financing for transformative projects. The design of the upcoming CPS embodies these lessons. The upcoming CPS focus would to use the limited IDA to leverage financing for transformational change, takings advantage of the windfall of revenues resulting from the discovery of mineral resources and political stability to create jobs and improve resilience; thus laying the ground for sustainable and inclusive growth. Context and Objectives of the CAS 4. Mauritania is mostly a desert country, with a population of over 3 million. Its production basis and exports include a small range of commodities (fish, iron ore and gold). While growth had averaged 4 percent from 2000-2005, GDP soared to 11.7 percent 43 in 2006 due to the first oil revenues, with oil production from an off-shore field. While production reached 54,000 bpd in the first three months, it decreased significantly soon after, well below the expected 75,000 bpd, because of technical difficulties. 26 Still, the macro-economic situation continued to improve due to higher iron ore sales by the National Iron Ore Company (SNIM) and increased fish exports. Also, exports increased with the start of private mining operations of copper (Akjoujt) and gold (Tasiast). 5. The country has faced many internal governance challenges. In August 2005, a bloodless military coup ended the 21-year presidency of President Ould Taya. 27 A transition government quickly returned to democracy and approved a new constitution; legislative and presidential elections were held in late 2006 and early 2007. The new government launched a constructive dialogue with development partners and committed to a development agenda that focused on economic governance. It took a number of key steps 28 that broke with earlier practices. First, transition authorities and then the newly elected government moved to re-establish a stable macro-budgetary framework. The IMF approved a new PRGF in December 2006. As a result, Mauritania was granted debt relief under the Multilateral Debt Relief Initiative (MDRI). Overall, the population and Mauritania’s partners had high hopes after these political developments and particularly with the start of a new era marked by oil production. The PRSP -2 (2006-2010) that served as a basis for the 2008-2011 CAS was thus prepared in a highly optimistic environment. 6. The PRSP-2 (for 2006-2010) proposed an ambitious poverty reduction strategy based on a set of sound macroeconomic, structural, and sectoral policies through 2015. It had five key components: (a) accelerating growth and maintaining macroeconomic equilibrium; (b) anchoring economic growth among the poor; (c) developing human resources and providing access to basic social services; (d) strengthening good governance and capacity building; and (e) reinforcing monitoring, evaluation, and coordination. PRSI-2 focused on how to manage the wealth from natural resources transparently. Its objectives were closely aligned with the MDGs. The goal of reducing the poverty rate to 25 percent by 2015 and eliminating hunger were anticipated—if public revenues would be spent efficiently. 7. The 2008-2011 CAS presented to the Board in July 2007 was closely aligned with PRSP-2. It was the first CAS for Mauritania. It was prepared through a highly participatory process and collaborative approach between the World Bank Group, the government and development partners to ensure its objectives were aligned with country needs. Consultations included two workshops with 200 representatives from donor organizations, ministries and civil society. The CAS stressed that Mauritania was at a 26 They quickly declined and remained below 20,000 bl/d after mid-2007. Hydrocarbon reserves were still considered as modest: ie. The country’s proven and probable crude oil reserves were estimated at 310 million barrels in 2008, compared with 2.1 billion for Chad. 27 He come to power under the 1984 coup and faced a failed coup attempt in 2003. 28 (a) treating oil revenues with transparency in the 2006 and 2007 budgets and engaging in prudent fiscal and monetary policies; (b) creating a National Hydrocarbon Revenue Fund (NHRF); (c) adhering to the Extractive Industries Transparency Initiative (EITI) and (d) seeking support and technical assistance (TA) in the oil sector from the Bank 44 critical political and economic crossroads—politically, with a new, democratically elected and reform-minded government, and economically, with the oil revenues as a source of wealth and boost to development. Its overall goal was to strengthen economic governance, build public sector capacity and help improve the investment climate, while continuing to fight poverty and inequalities. 8. A major constraint was the limited, new IDA financing, particularly for the remainder of the IDA-14 period (FY06-FY08) with a high-case scenario IDA resource allocation (including IDA-15) available for the CAS-period estimated at US$41 million only. 29 The CAS thus suggested introducing IBRD instruments (loans and guarantees) as additional sources of funds for projects with private sector involvement (ports and a power plant), ideally combined with IFC/MIGA interventions. Also, a large number (11) of projects started before 2007 continued and significantly required implementation capacity and government attention, as well as WB staff resources. 9. The CAS anticipated that Mauritania might transition from low-income status to that of a middle income country (MIC) status with its GNI boosted by oil revenues. Thus, it proposed preparing the country to reach this point, essentially with an AAA and only one new IDA operation. Through this operation, the Private/Financial Sector Technical Assistance project, 30 the Bank planned to re-engage with the private sector and address the financial and private sector development issues, collaborating with IFC and MIGA. 10. It aimed to maximize its impact by leveraging the Bank’s advantage as knowledge institution with its convening power, by being selective and realistic about what projects to finance and their likely impact and with the AAA. The CAS used a new approach based on assessments of sectoral needs, relative added value/expertise and levels of engagement, to align donor activities and coordination in the spirit of the Paris Declaration. It presented a comprehensive analysis of Mauritania’s major development challenges, 31 as well as specific ones in each of the PRSP components, along with remedial actions. The small number of new IDA operations (due to IDA financing constraints) was meant to leverage other financing, in particular the government own resources , hence increasing the impact of IDA resources. 11. The CAS was articulated around four components, the same as the PRSP-2 pillars I to IV: 32 1. Accelerating growth and maintaining macroeconomic equilibrium; 2. Anchoring growth in the economic environment of the poor; 29 This was due to high levels of lending with aggressive front-loading in FY06 and FY07 (for national projects and Mauritania’s participation in regional projects), plus the impact of netting-out MDRI debt service relief on Mauritania’s allocation, and a mediocre portfolio performance at the time the IDA envelope was calculated. 30 Focussing on increasing non-oil investment in the economy and on improving the soundness and efficiency of the Mauritanian financial system, and providing support to prepare public private partnerships in the energy sector. 31 (a) Mauritania is at critical crossroads where proper management of oil revenues is key; (b) its economy may already be experiencing Dutch disease effects; (c) Mauritania does not take full advantage of its strategic geographic location; (d) Social characteristics hamper equitable growth and could cause tensions; and (e) human resource capacity is weak; (f) gender issues remain a key challenge. 32 Pillar V. Reinforcing strategic oversights of program, M&E, and coordination is not explicitly included in the CAS. 45 3. Developing human resources and broadening access to basic social services; 4. Improving good governance and capacity building. A list of lending and non-lending activities of the CAS is respectively included in Table 2 and Table 3. The CAS included a results matrix that included outcomes against which the CAS achievements will be measured. 12. The CAS pointed to the following risks: (a) a slowing or reversal in government commitment to reform, (b) economic vulnerability to external shocks, and (c) an uncertain transition to MIC status, with insufficient aid to help it. Some of these risks have materialized, and although the political risk was rated as slow in the CPS, it turned out to be a major one that has hampered the implementation of the CAS. Developments and Adjustments during CAS Implementation 13. The 2008-2011 CAS consisted of three different phases with quite different governments and relations with the Bank: (a) the pre-2008 events phase, with a strong dialogue and high (overly optimistic) expectations, during which pre-CAS projects were implemented smoothly; (b) the political crisis, starting with the 2008 coup and the freeze of operations until late 2010; and (c) re-engagement with a completely new government. 14. CAS implementation had barely started when the country was hit by successive shocks which deeply affected the political environment and weighed heavily on its economic performance. Initially, there were two positive developments, with first the Consultative Group meetings in December 2007, jointly prepared by the government, WB, EU and UNDP, and where US$2.1 billion of support was committed. A second event was the January 2008 visit of the Bank’s President during which a MoU for a possible IBRD power generation project was signed. However, by August 2008, the country’s civilian president, elected in 2007, was removed from office by yet another military coup that established a High Council of State (HCE), composed of officers under General Mohamed Ould Abdel Aziz, to head the country. The Mauritanian political community was split between HCE partisans and opponents. This crisis led the international community to put most of its activities on hold. According to OP/BP 7.30 (dealing with de facto governments), the Bank suspended disbursements and missions. 15. After strong condemnation of the coup and sustained international pressure, negotiations lead to the Dakar agreement between the HCE, all political parties and key foreign partner countries and organizations on a date to return to democratic rule and elections. Presidential elections 33 were held in July 2009, a transitional national unity government was created and international sanctions were rapidly lifted. 16. The impact of the 2008-2009 events was significant: (a) the reform process was disrupted; (b) Mauritania’s fiscal situation and economic performance deteriorated sharply. The deterioration was compounded by the effects of the food (2008) and fuel price 33 The Constitutional court and the international community recognized the results of the elections watched by international observers. Former general Ould Abdel Aziz won with 52% of the votes. 46 shocks, and the global financial crisis (2009); (c) non-oil GDP growth dropped from 5.9 percent in 2007 to 4.1 percent in 2008 and –0.9 percent in 2009; 34 (d) on the domestic political front, successive government adjustments included changing ministers in key ministries (including Finance) which continued in 2010, with mergers or splitting of ministries and creating new ones. This also caused a high turnover of civil servants at high levels, which meant a serious loss of institutional memory including about the reforms started in 2007. M&E capacity was essentially lost in many areas and the National Statistical Office (ONS) capabilities also declined sharply; (e) simultaneously, WB teams were also changing, with many key staff having left the country office for other assignments during the crisis and others leaving thereafter. Also, the country’s decreasing attractiveness for WB staff and those of all partner organizations was compounded by concerns for physical security35; (f) Bank operations were also handicapped when its country manager left (in January 2010) and was not replaced for another seven months. 36 17. The impact of the 2008-2009 events on Bank operations has been uneven, but generally negative. For many projects, implementation was interrupted or considerably slowed for 14-24 months. In a few exceptions, it continued slowly, mostly when authorities used their counterpart funds to finance critical actions. This occurred in urban development (a PDU project), Community Driven Development (CDD) in rural areas (PDRC), mining sector project (PRISM), and education sector project (PNDSE), primarily due to stable project implementation units that were created before 2007 with Ban’s suppor. This strongly confirms the need for stability and long-term continuity of Bank operations and teams, particularly in fragile environments. Due to the delays, closing dates for ongoing operations had to be extended—on average by two years—in order for the projects to complete activities and achieve their development objectives by the new date. 18. Table 2 includes all lending activities and Table 4 presents all projects that were under implementation during the CAS period (2008-20011). The IDA 15 envelope reached US$36 million and the WB helped mobilize other funds from the Africa Catalytic Growth Fund (ACGF), Education for All/Catalytic Fund (EFA/CF), Crisis Response Window (CRW) and GEF. Five new projects and two additional financing operations to existing projects were approved in FY08-FY11. Total financing from all sources was US$92.1 million (of which US$58.1 million was from both IDA) compared to the IDA allocation for the CAS-period of US$41 million as projected under the CAS high case scenario. The new projects were: (a) the Business Environment Enhancement project (BEEP, US$5 million from IDA), to support financial and private sector development issues, increase non-oil investments, and make the financial system more efficient; (b) the Education Sector Program (ESDP , US$14 million from the Education For All-Catalytic Fund) to accelerate the implementation of the government's Education Sector Development Program; (c) the Transport Sector and Institutional Development 34 With the fast-declining offshore oil production, overall GDP growth varied from 11.4% in 2006, to 3.7T in 2008 and -1.1% in 2009. 35 Various terrorist attacks and hostage-taking by AQMI started in 2006 to seriously affect the country’s image as a relatively safe country in the region. Also, they have increasingly forced the government to address security concerns, possibly at the expense of long-term development. 36 This followed a similar occurrence in 2004-2005. 47 TA project (US$4.5 million from IDA) to provide institutional support and capacity- building to improve the management of the road, maritime and air transport sectors; (d) the Nouakchott-Rosso Road Corridor Rehabilitation Project (US$20 million, from the Accelerated Catalytic Growth Fund) to rehabilitate the road with parallel EU financing; and (e) the Skills Development Support project (US$16 million from IDA) to improve the quality and efficiency of training institutions and create an enabling environment for a more market-driven technical and vocational training (TVET). Additional financing was approved for (a) the second Mining Sector Capacity Building Project (US$7.1 million from IDA) to scale up ongoing activities and offer new education and vocational training support; and (b) the Urban Development Project (US$25.5 million from IDA including US$15.5 million from the IDA CRW) to scale-up its basic urban infrastructure component. 19. Thus, all but two of the projects proposed in the CAS base-case were launched. Although some were delayed, they were introduced partly due to finances other than from IDA. The exceptions were the two IBRD public-private partnership (PPP) projects (for the ports and energy). Despite significant preparation efforts (involving IFC), the projects did not materialize due to the political events and particularly the complexity of such new operations in the difficult, prevailing environment. No new regional projects involving Mauritania were begun but three ongoing ones37 were actively pursued. The WB mobilized an added US$1.66 in Trust Funds (TF) for five new activities, including EITI implementation, Mineral and Petroleum Institutional Capacity Building and an Extractive Industries/Transaction Advisory Facility, which were critical for the extractive industries. As of end of January 2013, Mauritania portfolio included eight active IDA operations (including two regional projects), representing a total commitment of $125.1 million. Overall, the performance of the portfolio is satisfactory, with one problem project (i.e. the High Education Projects) for which restructuring is ongoing. 20. AAA activities (see table 3) were also delayed or cancelled. The limited analytical work carried out and lack of macro-monitoring during 2008-2009 and the slow resumption afterwards also had some effects. For example, the WB was not able, until the FY010 Public Expenditure Review (PER) completion. , to grasp the results of the post-2008 Government measures that considerably increased the role of the public sector38 in the economy. 21. Regarding the AAAs, work continued on procurement and fulfilled most of the analyses planned under the CAS. Significant non-lending included the policy notes for the new government, the PER, the Source of Growth study, and the Fisheries and ICT sector notes; however, neither the land tenure analysis nor the CAS Progress Report were done. The CAS remained relevant in the context of economic and political turbulence and no major reorientation was considered necessary after 2009. The new government 37 (a) Africa Emergency Locust Project (AELP); (b) the Senegal River Basin Multi-purpose Water Resources Development Project; and (c) West African Power Pool (WAPP) – OMVS Felou Hydroelectric Project. 38 This included creating companies (public transport, housing, a public Bank, and an expansion in the government power supply) 48 remained broadly committed to the CAS orientation which stressed infrastructure, particularly urban works with quick results, and also governance. Program Performance Evaluation 22. Program performance is evaluated in Table 1, around 23 outcomes. As indicated above, it is important to underscore that the implementation of the CAS was negatively impacted by the suspension of Bank’s activities in 20008. Program performance assessed is moderately unsatisfactory; with 8 outcomes achieved, 11 partially achieved and 4 not achieved. 23. In Pillar 1 (Accelerating Growth and Macro-Economic Framework), progress is mixed: Two outcomes achieved (oil and mining), three partly achieved, but with more under way, and three not achieved (with limited progress expected). The PRISM-2 and EITI contributed a great deal to developing institutional capacity and improving governance in the key extractive industry sector. ESW and expanded new dialogue in fisheries are likely to lead to reforming governance and to a new project increasing local value-added. The Business Environment Enhancement Project has improved financial sector regulation and strengthened it in general, but much remains to be done to address problems in the business climate. The transport TA project has significantly improved the sector’s institutional capacity. While the regional power project will soon increase power supply for Mauritania, efforts to develop the IBRD enclave Gas to Power PPP were moving forward only slowly. The PER addressed the fiscal issues and exposed flaws in governance/monitoring and fiscal threats from Mauritania expanded Public Enterprises sector. 24. In Pillar 2 (Establishing Growth in the Economic Sphere of the Poor), progress is much more encouraging: Three outcomes were achieved (particularly improvements in rural communities and basic services & employment in urban areas) and three were partly achieved (with more progress underway for micro-credit). The PDIAIM APL second phase achieved mixed results in irrigation, but not enough restructuring for agriculture credit. The PRDC, with its CDD approach, has greatly succeeded in improving village living conditions, with sustainable income increases, access to basic social and economic services, and improved natural resource management (along with the GEF Community- Based Watershed Management Project). The Urban Development Program has largely succeeded in improving urban management, providing more infrastructures, and strengthening decentralization; it created a momentum upon which the government is building a new major program to be financed in great part by the budget. The Mauritanian component of the regional Locust Project set up a fully operational control system that prevented locust outbreaks in 2009 and 2011. 25. There were good progress under Pillar 3 (Developing Human Resources and Generalizing Access to Services), with three outcomes achieved, 39 three partly achieved with more progress underway, and only one not achieved (gender and social protection). With the PNDSE and EFA-CF, the primary education sub-sector was able to see 39 Outcome 18 being split in two: access to HIV/AIDS treatment (achieved) and maternal health (partially achieved). 49 substantial progress in access and there are good indications that internal efficiency is improving. Mauritania is on track to reach the education-related MDGs for gender equality and enrollment at the primary level. With the Higher Education Project, progress has been good towards improving the quality of teaching and learning, and the relevance of courses to the labor market (it established pedagogic, administrative and financial management systems and improved capacity in the higher education institutions. The recently approved Skills Development Support Project will further improve the relevance and efficiency of vocational and technical training, making them more responsive to market demands and reinforcing their institutional framework. The HIV/AIDS-MAP project has achieved its goals of increasing coverage and using HIV prevention services, of medical treatment and social care, especially for high risk and vulnerable populations. The now closed Health and Nutrition project was instrumental in capacity building, helping the health sector improve performance and prepare its future development. It partly achieved its objectives in increasing access to health services in underserved areas and in improving maternal health. It contributed significantly to improving nutrition and convincing the government to put nutrition on its agenda. The PDU also helped improve access to potable water, sanitation and electricity in urban and peri-urban areas. Specific CAS activities in various projects targeting female beneficiaries (PDU, education, PDRC) were broadly successful. 26. In Pillar 4 (Improving Good Governance and Capacity Building), progress is encouraging, with the two outcomes partly achieved but with more work under way and strong prospects for speedy achievement on all fronts. The PRECASP has greatly helped advance human resources management in public administration. Similarly, it has significantly improved public finance management (progressive PFM reform and reinforcing State-controlled bodies), and helped the government adopt a comprehensive long-term public finance agenda and an anti-corruption strategy. Bank support of the procurement reform created strong momentum for reforming public procurement, with significant achievements already in the production of laws, regulations and institutional building. WB efforts to support the EITI validation process helped Mauritania reach EITI compliance status in early 2012. The PDU has successfully supported the completion of the first decentralization pilots in large cities, and with PRECASP, created momentum for scaling-up decentralization throughout the country. WB Performance 27. The WB overall performance is assessed as moderately unsatisfactory. The design, around the PRSP-2 four components, was well linked to Mauritania’s development priorities and the government strategy presented in the PRSP. It was carried out with the aim of selecting specific strategies to maximize impact, but was constrained by (a) the scarcity of IDA funds and (b) the fact that many operations 40 started under the previous CAS were to be pursued, requiring substantial WB staff resources and government attention. The CAS report provided a sharp analysis 41 of the PRSP-2 challenges and beyond—those that could not all be addressed given the limited resources 40 Notwithstanding the fact those were still fully relevant and overall well designed to address Mauritania’s challenges 41 It is still fully relevant now as a basis for the new CAS. 50 (of the WB and others). The program rightly focused on the areas that were relevant for Mauritania’s development, including developing (a) the private sector and basic infrastructure, (b) urban areas, (c) rural areas, (d) governance, emphasizing public administration and economic governance, and (e) social sectors. The choice of the outcome indicators for the CAS results matrix was adequate. 28. Considering the IDA funding constraints, there were no major shortcomings in the program, except the decision not to continue preparing the urban water supply/sanitation TA project. 42. In areas where the WB had been absent (fisheries, for decades, and ICT for a couple of years), the program correctly proposed preparing re-engagement and deepening the dialogue through ESW/TA—an approach validated by the strong prospects of having two comprehensive operations approved in the near future. The choice of instruments was basically correct and the selection of ESW themes appropriate. The decision to develop IBRD projects around PPPs in transport and energy was logical and not too bold at the time (before the 2008 coup) since the authorities were open to new initiatives of that kind. 43 The related plans to leverage IFC services/investments and MIGA work were also appropriate. 29. The CAS report was broadly correct in identifying most risks. But, impressed by the strong reform signals sent by the post-2006 government, it did not carry out a sharp enough analysis of Mauritania’s political economy, which mirrored that of a fragile state. The WB, like most donors, underestimated the extent of political risk and proposed a weak risk-mitigation approach. Considering the country’s history, the CAS was unrealistic in that area, as it did not account for (a) a one-two year slippage in most projects, (b) delay in reforms, and (c) uncertain prospect for the proposed IBRD projects have shown. 30. The Bank adjusted with flexibility to the country conditions throughout the implementation of the CAS. The WB worked intensely to engage the post-2006 government to prepare a CAS in a participatory manner and setting an ambitious reform and development agenda, which led to the successful 2007 Consultative Group meeting. Likewise, it rapidly re-engaged with the ongoing operations in late 2009. It speedily resumed disbursements on ongoing projects (by September 2009), and conducted a multi- sector assessment mission. Projects for which the closing date had passed during the suspension were extended retroactively. The Country office helped to swiftly reactivate disbursements, including those for critical human development programs and obligations to vendors. It also facilitated early missions to assess the status of the projects, the macro and fiscal situation, and the latest developments in key sectors. However, with limited co- financing or parallel financing for the new CAS operations, the WB has been less successful in leveraging assistance from other donors. The Bank did not prepare a progress report to reflect the changes that occurred following the re-engagement. 42 Well prepared until 2006 and which the critical current situation of SNDE vindicates (as the program for Aftout Saheli water supply financed by other donors did not adequately address institutional, financial and distribution aspects). 43 The recent bankruptcy of Mauritania Airways, a new joint-venture between foreign partners and domestic investors, created public resentment and skepticism towards private investment public services. 51 31. The IDA 15 envelope reached US$36 million and the WB helped mobilize other funds from the Africa Catalytic Growth Fund (ACGF), Education for All/Catalytic Fund (EFA/CF), Crisis Response Window (CRW) and GEF. Five new projects and two additional financing operations to existing projects were approved in FY08-FY11. Total financing from all sources was US$92.1 million (of which US$58.1 million was from both IDA) compared to the IDA allocation for the CAS-period of US$41 million as projected under the CAS high case scenario. The new projects were: (a) the Business Environment Enhancement project (BEEP, US$5 million from IDA), to support financial and private sector development issues, increase non-oil investments, and make the financial system more efficient; (b) the Education Sector Program (ESDP , US$14 million from the Education For All-Catalytic Fund) to accelerate the implementation of the government's Education Sector Development Program; (c) the Transport Sector and Institutional Development TA project (US$4.5 million from IDA) to provide institutional support and capacity-building to improve the management of the road, maritime and air transport sectors; (d) the Nouakchott-Rosso Road Corridor Rehabilitation Project (US$20 million, from the Accelerated Catalytic Growth Fund) to rehabilitate the road with parallel EU financing; and (e) the Skills Development Support project (US$16 million from IDA) to improve the quality and efficiency of training institutions and create an enabling environment for a more market-driven technical and vocational training (TVET). Additional financing was approved for (a) the second Mining Sector Capacity Building Project (US$7.1 million from IDA) to scale up ongoing activities and offer new education and vocational training support; and (b) the Urban Development Project (US$25.5 million from IDA including US$15.5 million from the IDA CRW) to scale-up its basic urban infrastructure component. 32. Thus, all but two of the projects proposed in the CAS base-case were launched. Although some were delayed, they were introduced partly due to finances other than from IDA. The exceptions were the two IBRD public-private partnership (PPP) projects (for the ports and energy). Despite significant preparation efforts (involving IFC), the projects did not materialize due to the political events and particularly the complexity of such new operations in the difficult, prevailing environment. No new regional projects involving Mauritania were begun but three ongoing ones 44 were actively pursued. The WB mobilized an added US$1.66 in Trust Funds (TF) for five new activities, including EITI implementation, Mineral and Petroleum Institutional Capacity Building and an Extractive Industries/Transaction Advisory Facility, which were critical for the extractive industries. 33. Regarding the AAAs, work continued on procurement and fulfilled most of the analyses planned under the CAS. It also included several added tasks (see Table 3). Significant non-lending included the policy notes for the new government, the PER, the Source of Growth study, and the Fisheries and ICT sector notes; however, neither the land tenure analysis nor the CAS Progress Report were done. The CAS remained relevant in the context of economic and political turbulence and no major reorientation was considered necessary after 2009. The new government remained broadly committed to 44 (a) Africa Emergency Locust Project (AELP); (b) the Senegal River Basin Multi-purpose Water Resources Development Project; and (c) West African Power Pool (WAPP) – OMVS Felou Hydroelectric Project. 52 the CAS orientation which stressed infrastructure, particularly urban works with quick results, and also governance. 34. A set of 15 sector policy notes was also prepared by the Bank team with Mauritanian counterparts to help the government and donors identify immediate and medium-term actions to restart the economy and reforms. The Bank was also able to confirm the increase of Mauritania’s IDA 15 allocation 45 to US$36 million. On March 2010, the IMF approved a 3-year Extended Credit Facility (ECF) agreement for about US$118.1 million. 46 Economic recovery was then discussed at the Brussels Round Table in June 2010, at which total pledges of US$3.2 billion were made for 2010-2015 (including US$365 million for the whole World Bank Group). Discussions were based on the sector policy notes (mentioned above) which also laid the foundation for new PRSP priorities. 35. WB staff should be commended for their efforts to pursue challenging work in an uncertain context; but, given the quasi fragile-state nature of Mauritania and requirements of re-engagement, the Bank could have paid more attention to staffing continuity, overlapping and experience.47 The Bank’s Mauritania Country Office had improved portfolio management by developing a systematized portfolio monitoring system accessible to the government and partners. Its quality had gradually increased; however supervisory quality did not return uniformly to pre-2008 levels: For example, restructuring of all projects needing it did not proceed after 2009 as rapidly as was required and, in a few cases, did not occur and indicators were not changed. M&E remained weak in various operations and the need for better monitoring was stressed in the 2011 CPPR. There has been also high turn-over of Mauritian staff, and in some cases, the lack of continuity (sometimes with a time gap in supervision missions) led to a loss of institutional memory, decreased quality of dialogue with counterparts and partners, and contributed to slow project implementation. Lessons Learned and Suggestions for a New CAS 36. A first lesson relates to the impact of the political events and disruptions to the CAS. Some programs/operations were less affected than others, particularly those launched at the start of the previous CAS, where strong capacity was built in the PIUs and counterparts were familiar with the Bank. Also, WB teams remained stable and the government commitment has been genuine, 48 based on a full agreement with the Bank on long-term objectives. 37. The importance of long-term WB involvement in specific areas was again confirmed. Such efforts over two-three CAS periods ensured stable support by the Bank, reinforced government commitment and incentives for changes. A long-lasting development impact is then possible, e.g. in the extractive industries, urban development 45 Mauritania’s low CPIA (evolving between 3.2 in 2005 and 3.3 in 2008) remained a restraining factor. 46 According to the latest (3rd) review of the program conducted in October 2011 progress appears satisfactory. 47 This was observed by counterparts and donors. The difference can be seen with projects where staff continuity was maintained, as re-engagement went smoothly and implementation resumed faster. 48 Such as privatization. 53 and CDDs, PFM and procurement reform, and primary education. This argues for the WB to (a) pursue its engagement in areas where much remains to be done (particularly in long-term reform and capacity building); and (b) re-engage in sectors it left too soon (as in the water sector). As the Bank is often seen as an “honest broker,” many donors are more willing to engage in a sector when the Bank is involved and it also increases leverage for change. 38. A second lesson is the pervasive problem of weak capacity in Mauritania’s administration, 49 e.g. due to the regular, rapid turnover of high officials and other staff, compounded by political events. This reduces institutional memory and the possibility of building of a modern administration, and raises sustainability issues. Strong capacity building is a must in all operations and needs to be sustained over an extended period. 39. However, capacity building in individual operations is not sufficient. Rather, long-term reform and modernization of Mauritania’s administration is needed, not only to increase absorptive capacity and efficiency, but also to produce good governance, transparency, inclusive development and public confidence in the government—and thus, political stability. PFM and administration HR management, capacity building in extractive industries with the WB project have been steps in the right direction. A GAC program will also help, but a comprehensive and phased public program to modernize the administration needs to be elaborated with support from the Bank. 40. A third lesson is that although some operations (particularly the new ones) were constrained by the limited IDA funds (particularly stand-alone TA projects), their impact is significant. Mauritania’s domestic resources are growing, and the government is increasingly interested in WB participation as source of knowledge, bringing experience that other donors do not have and helping leverage more financing from other sources. However, this can only work if (a) the areas of intervention are those where the Bank has a comparative advantage in knowledge and experience, and (b) there are experienced core staff to whom Bank teams can transfer their information. 41. Where countries, such as Mauritania, are emerging from a period of disruption with high turnover in the administration, the Bank should pay particular attention to have stable local staff 50 and to keep experienced international staff engaged in operations for extended periods. Staffing issues have now become more difficult for all donors because of (a) two episodes of political turmoil since 2005, (b) security problems, and (c) the perception that conditions are more difficult and offer lower prospects for achieving fast tangible results, particularly with smaller and less visible projects than in other countries. 42. For the new CAS, a comprehensive analysis of the political economy of change is essential, given the fragile and volatile context, in order to appreciate risks/obstacles and design a realistic CAS with appropriate risk-mitigation approaches. Also, political and other risks should not prevent the WB from designing a program that includes new and 49 There were a few exceptions, such as the Ministry of Finance. 50 Eg., the high turnover of local economists since 2005 has made economic analysis and dialogue more difficult.. 54 bold initiatives—as long as their selection and design take into account the specifics of Mauritania’s environment. 43. The country is at a turning point, presenting opportunities for change but also some risks. Because the booming mining sector is generating increased government revenues, the WB should focus on the issues of governance, management and use of public expenditures. With the huge investments needed in infrastructure, the government could be tempted to devote huge efforts and increased revenues to projects that bring quick, visible results, and to poorly targeted (but visible) subsidies, at the expense of more long-term investments in capacity building, human development, and reforms, particularly those linked to sustainable job creation. Thus, a balanced approach is needed to address immediate problems in ways that can achieve quick results but also maintain a long-term focus on capacity building and reforms that can reduce vulnerability and spur sustainable job creation. 44. The Bank should pursue this approach in the next CAS with various operations plus AAAs. Regarding projects, a good mix could include: (a) operations that scale up those implemented during the last two CAS periods (those with limited risks and substantial rewards), and (b) a few high-risk pilots, with possibly high, long-term rewards and demonstration effects. 45. The development challenges identified in the 2007 CAS, cross-sector challenges remain essentially the same. Some are even more acute now, while others were not sufficiently addressed in the PRSP: e.g. employment generation, inclusiveness, climate change, regional integration, vulnerability and safety nets, statistical and M&E capacity. New challenges regarding oversight, governance and fiscal drain problems have emerged given the large public enterprise (PE) sector. 51 46. In the next CPS, the WB activities should attempt to boost sustained, inclusive economic growth and employment generation, address severe poverty, reduce vulnerability to climate change and other external shocks, diversify the economy, enhance good governance (including natural resources, PFM and governance of PEs) and rebuild statistical and M&E capabilities. 47. The last two CASs focused on rural development and agriculture in the project portfolio. While the CDD approach scaled–up in the PDRC helped bring the population out of the rural poverty trap, irrigation projects in the Senegal valley have been disappointing. Over the last 20 years, the WB, other donors and government have generally failed to modernize and develop sustainable agriculture in this area, where production could increase (but poverty is acute and the risk of social and political tensions are high). These problems must be addressed in the fight against poverty—even 51 This placed Mauritania back to its 1984 situation before a PE reform & scaling down program was launched. 55 more now, with Mauritania’s food crisis. But a new approach should be based on transparent, inclusive agricultural strategies that involve a renewed irrigation policy and land tenure. This will be built in the new proposed agriculture operation under the upcoming CPS. 48. The environment has historically not been high on the government agenda. The WB played a key role in deepening the dialogue in this area and building (with the PRECASP) a Ministry of Environment. This engagement will be pursued under the upcoming CPS, stressing how climate change will affect Mauritania’s agriculture and non-mineral natural resources, and work to prevent those effects (e.g. the risk of catastrophic flooding of Nouakchott). 56 Table 3: Summary of CAS Program Self-Evaluation Lending and Non- Status and Evaluation Summary (with milestones and additional lending Activities Lessons and Suggestions for CAS Outcomes and Indicators indicators ) the assessment of outcomes is based on the following color code: that Contributed to a New CAS (achieved, partially achieved, not achieved) the Outcome PILLAR 1: Accelerating Growth and Maintaining Major Macro-Economic Balances A. Macro-Economic Framework: Outcome 1. Macro-economic Modeling in MoF & MEAD. Partially Lending 1. PER recommended an accelerate economic growth achieved. Public Sector Cap. increase in fiscal space, and (Stabilize the macro-economic Milestones : Building (PRECASP) strengthening of public finance framework ) MEMAU updated FY06. Last PDO & IP and investment management as Other ( Indicators of Stabilization) ratings S & S essential for new PRSP and Outcome 1: Macro-economic Macro-economic situation improved after 20008-2009 crisis: AAA stressed serious fiscal risks modeling capacity in the Ministries • Growth: 3.7% in 2008; -1.2% in 2009; 5.2 % in 2010; 4.8% in 2011 despite PER (FY010) associated with large of Finance and Economic Affairs & disappointing oil production. expanding PE sector. In depth Development is in place . Use of • floating exchange rate appropriately managed and monetary policy geared analysis of PE sector needed. updated MEMAU1 for decision- towards maintaining low inflation: 7% in 2008; 2.2 % in 2009; 6.3% in In addition to subsidies to PEs, making 2010 food crisis, soaring oil prices, % Fiscal deficit: 7% in 2008; 5.4% in 2009; 1.9% in 2010; 2.2% in 2011 high civil servants wage bill are threatening macro- economic outlook 2. New TA program on PEs needed (see Outcome 21). B. Private/Financial Sector and Outcome 2. Institutional framework of Financial Sector strengthened: Lending Implementation of BEEP Competitiveness: develop the Partially Achieved. Business Environment suffered particularly from financial sector. ( Develop Outcome 3. Modern legal & Judicial Framework for business: Enhancement project political events and other competitiveness and stimulate Not achieved, but with some limited progress under way. (BEEP): FY08. Last problems. A number of savings ) Financial market opened to international banks leading to contract competition PDO & IP ratings MS important activities for PSD Outcome 2: The institutional and lower interest rates; micro-finance sector restructured; supervision & MS will not be completed under framework and processes for function of BCM strengthened. AAA: BEEP and should be carried regulating and supervising financial ESW: ICA : FY07 out soon with new operation/or institutions and financial markets . Milestones reached: FIRST Trust Fund: with support of other donors have been strengthened • New BCM internal regulations new financial sector including: one stop shop for • The BCM benefits from increased • New Banking law strategy enterprises, reform of business autonomy and transparency • New micro-finance law registry, improved legal following revisions of its • Financial Sector strategy prepared and validated Drafted framework for pledges on Constitution New Indicators: assets.. • Consolidation at the BCM of the • Number of procedures to establish business reduced from 11 to 9 and supervision of all financial number of days reduced from 65 to 19. 57 institutions • Average total tax as % of gross revenues for typical medium enterprises decreased from 107% to 68%. • Application texts of the Trade Code, Insurance Code, Business Penal Code Outcome 3: A modern legal and adopted by Government judicial framework for business Additional activities underway with BEEP that will have significant impact on PSD:) a study on special Economic Zones; (b) support for the modernization of the Investment code.; (c) preparation of new PSD strategy; (d) setting up a new mediation and arbitration Center in the chamber of commerce But Mauritania still 165 out 183 countries in DB 2011 (157 out 178 in 2008) in ease of doing business C. Growth Potential Outcome4. Oil: achieved ; Lending 1. Through a long-span Oil: optimize management of Outcome5. Fisheries: not achieved but recent progress on dialogue; - PRISM2 additional involvement in the mining resources and fallout on the economy Outcome6. Mining: achieved financing 2-(FY010 ); sector, the Bank has Outcome 4: The judicial and legal Last PDO & IP ratings contributed substantially in environment for the oil sector is S & S building institutional capacity compliant with international and enhancing governance in standards: Milestones: Growth Potential AAA: hard mineral and now in Fisheries: improve the management - EITI hydrocarbons sector. It has and exploitation of the resources; Oil: Implementation contributed to the boom in improve the legal and regulatory • New hydrocarbon law approved; new Production Sharing Contract support: private investment in the framework and strengthen the adopted. - EI-Transaction critical mining sector. With its institutional intervention capacities • Petroleum cadaster established Advisory Facility (EI- Long term support and now an Outcome 5 : Planning and strategic • Strategic Environmental Assessment carried out TAF) optimum tools box (PRISM tools for managing the development • Data management system for concession management designed 2011 and - IFD Minerals & TA, EITI and TFs) the Bank is of the fishery sector are available rolled out early 2012. Petroleum Institutional the leading donor in terms of • A fishery sector policy is Capacity Building strategy/policy, followed by implemented* Mining - ESW: other donors. New • Sustainable development plan are • Time to register mining title by mining cadaster at 21 days (international Fisheries(FY08) cooperation with private available by fishery*1 practices) - ESW Sources of operators in creating the new • New management system of award and tracking of exploration and mining Growth (FY09) school mines (FY011 Skills Mining: - To enhance the titles operational Dvt Project) will contribute to intervention capacities of the mining • Capacity building program for Mining and oil (ministry and agencies) well the mining sector plus crucial sector and improve the regulatory development of TVT. underway framework 2. Follow-up to PRISM-2 • Monitoring reporting regularly investments in and increase of exports of Outcome 6: Increased Government needed in new CAS to taddress mining sector. institutional and technical capacity revenue • Based on revised 2011Validation Report Mauritania was confirmed in to manage the country's mineral collection/management to February 2012,as “EITI Compliant” becoming the 13th country world-wide resources maximize revenue from the to reach EITI compliance status • 100% of the mining related extractive industries (better 58 personnel at the MMI and Mines design of tax instruments and and Geology Directorate (DMG) Other Developments incentives; strengthening and at least 100 representatives of • Under EI-TAF Bank is helping prepare natural gas-to-power PPP and will capacity in tax calculation and local government and NGOs provide assistance in future project transaction. collection, tax audit exercises, actively involved in social • On fisheries, ESW and expanded dialogue have led to proposal for new twin financial modeling, in MoPM development in mining areas have track approach with GEF/IDA on sector governance reform and port and MoF); plus further participated in the project training infrastructure to increase local added value in fisheries (FY13). It would strengthening of monitoring program before project closure. combine IBRD enclave funds for infrastructure and GEF grants via the West and regulatory capacity of • Average time to grant a mining Africa Regional Fisheries Program. The Government recognizes clearly the MoPM and additional hydro- title below 30 days. Bank’s comparative advantage in the sector, with its regional and worldwide geological research to address experience and as a neutral broker. accute water scarcity. 3. New Double track approach in fisheries will finally put Bank back on the forefront of a critical sector from which it has wrongfully been absent for two decades. 4. Scope of EITI should be expanded to fisheries. D. Growth Support Infrastructure Outcome 7. Transport: Partially achieved with more progress underway; Lending 1. Bank presence in transport Transport: -Rationalize efforts aimed Outcome 8. Energy: Not Achieved • WAPP APL 2 sector and coordination with at developing infrastructures; improve (OMVS1 Project EU has lead to significant the economic management of the Milestones: Growth Support Infrastructure Félou Hydroelectric achievements in reforms & transport sector Project) (FY06): last capacity building, and should Outcome7: Enhanced institutional Transport PDO & IP ratings S be pursued. Continued Bank capacity of the transport sector1 • Letter of Sector Policy finalized but not yet approved & MS presence in transport sector • Modernized (OACI standards) • Civil Aviation code Revised and Applied • Transport after closure of this TA project airport infrastructures • National Road Safety Strategy drafted Institutional Dvt TA 2012 is depending on the • Modernized institutional tutelage • ISPS & MARPOL conventions applied ( FY09) ; last PDO actual approval of new of the ports • Draft Engineering study for Nouakchott airport & IP ratings S & S complex PPP port project as • Nouakchott-Rosso IBRD enclave (FY013). If the Outcome 8: Improved supply of and Energy Road Corridor latter is much/delayed or not access to energy services in rural • Commissioning of all three 20MW units of Felou hydropower generation (AGCF) (FY010); carried out, the Bank will need areas targeted by the DRE program project under OMVS scheduled for early 2013 effective since another vehicle to stay Increased supply of inexpensive hydro- • Audit and performance contract proposal of SONELEC drafted under 12/2010; Last PDO involved in this key sector for electric power produced by the Power & IP ratings S & Mauritania. BEEP/ System of OMVS of national MS 2. Rehabilitation of key electricity companies of Mali, AAA Nouakchott –Rosso road with • Development of Decentralized Rural Electrification programs (solar kits Mauritania and Senegal baseline, ESW Growth Sources EU underway; it will improve and mini grids); 30 county towns of Moughataa electrified; 4,000 Slar Kits (FY09) linkages to Senegal and functional in rural areas* (not done) ICT sector note and agriculture areas along river • Adoption of texts aimed at clarifying the institutional framework of the 59 ERD in RIM* (not done) dialogue (FY011) and improve life of ICT (New) communities in this corridor. • ICT sector note reengaged dialogue with Government on draft new New impetus in new CAS for Strategy for ICT and modernization of Public Services; recommended inter construction of bridge on alia adoption of new laws on digital economy. Senegal river needed and as well as deepening dialogue on key Road Maintenance Strategy/Road Fund. 3. Preparation of complex IBRD enclave energy project (new gas-to-power PPP) could not be concluded during CAS. But preparation of progressing; and may lead to actual project in FY013. 4. Dialogue on ICT leading to adoption of new Strategy and possible WARCIP project . Support to new ICT strategy could help modernize Administration and introduce e-Government. PILLAR 2: Establishing Growth in the Economic Sphere of the Poor A. Rural Development : Outcome 9. Irrigation: Partially Achieved; Lending 1. Shift to lower cost irrigation Reduce poverty and inequalities in Outcome 10. Improvements in rural communities: Achieved; • PDRC (FY04): last technology required to increase rural areas; improve the institutional, Outcome 11. Protection against locusts: Achieved. PDO & IP ratings S areas under sustainable organizational framework and & S irrigation. productivity of the sub-sector; Milestones: Rural Development 2. Government preparing new diversify, protect and intensify • PDIAIM 2 ( FY05) ; rural strategy and irrigation agricultural production; improve Irrigation last PDO & IP strategy as basis for new water control and facilitate access to • Increase in the irrigated areas for diversified cropping to 1,058 ha ratings MS & M S project (FY013) together with production zone; develop production • Sustainable irrigation scheme increased only by 700 ha first GPRF /emergency potential; improve access of the poor • UNCACEM self-sufficient but still under restructuring and 25% of its • GEF Community response to new drought crisis. to land and financial capital. portfolio at risk. Based Watershed 3. In the CBRD the Bank Outcome 9 : Sustainable irrigation • Regional registries are accessible nationwide. (FY07); Last PDO particularly contributed its schemes are in place in areas • Strategy for rural finance prepared & IP ratings S & wide experience in knowledge targeted by the Bank interventions MS sharing, capacity building, and • Increase in irrigated areas for Improving Living Conditions in rural communities implementation of CDD- diversified cropping to 1,000 ha • 856 villages ADC trained and with community’s development plans • Locust Project programs with innovations (a) • Improved water control validated and municipal development plans for the 10 targeted rural (FY05): ICR rated designing and honing the 60 following rehabilitation 6,000 ha municipalities validated: 2,521 micro-projects financed /implemented by overall MS (regional interface between community of irrigated lands, 1,000 ha of village communities. outcome) development plans /communal land for flood-recession • 706 new ADCs with legal status. development plans (b) kick- cultivation and 9,000 ha of • Living conditions of 428,000 poor people improved • Senegal River Basin starting a rural road strategy protected lands • New livestock activities for 5,000 beneficiaries (FY06): last DPO & through the treatment of • UNCACEM remains financially • 4 watershed management plans finalized/ under implementation IP ratings S and MS critical points at the village self-sufficient • National Municipal Development strategy prepared level, and (c) addressing rural • 100 % of registered village • National strategy for rural access (désenclavement) widely disseminated areas in their entirety and cooperatives have a “land title” promoting broad-based rural Protection against locusts growth and service provision Outcome10: Improved living • Establishment of an autonomous and operational Locust Control System to by addressing the lack of conditions of project-supported capacity of rural ensure efficient prevention and control: 20 teams created and operational that village communities (access to basic microenterprises provided critical at the early stage of 2009-2011 outbreak, preventing services): Improvement of living 4. Inadequacy and instability of substantial agriculture and pastoral losses. conditions in 850 ADC with the extension services and lack of resumption of investment of at least technical advices support and Note: little progress has been achieved in addressing the key land tenure 10% of the micro-projects; capacity at regional level are a issue, particularly in the Senegal River Valley Outcome 11: Reduced hardships major constraint. Design of imposed on people and the extension services support to environment by current and future be revisited in future Bank locust invasions projects. • Reduction of vulnerability of 5. Bank has so far not been crops to invasions by increasing involved in food security. the rating of the “Early Warning New CAS should include food and Response System” (EWR) to security approach with 35; renewed/refocused • Reduction of the time between involvement in agriculture the alert and the intervention based on new rural strategy against invasions to two weeks and stock-tacking of past failures & successes. Possible support to Livestock/ meat/hides value chain could also be contemplated. 61 B. Urban Development: Outcome 12. Improved access to basic services and employment Lending 1. Overall PDU Reduce poverty and improve living opportunities in urban areas: achieved • PDU (FY02): Last implementation proceeded environment in urban areas; improve PDO & IP ratings S smoothly thanks to strong urban management and monitoring Milestones: Urban Development & S stable Project Unit. Still and strengthen the capacities of • PDU additional institutional reform lagged, institutions in charge of urban • Improvement of urban infrastructures serving 250,000 people financing of US 25 partly with political events and planning. • Generation of 170,000 employment-months (versus target of 40,000) million in FY10 are still not fully achieved. Outcome 12 : Improved access to • 84,165 jobs created (versus 143,000 target) (with GRW) for 2. PDU gave strong impetus to basic services and employment • 46,700 land titles regularized (versus target of 28,000) scaling up municipal/local development opportunities in targeted areas • Funds transferred to municipalities increased more than tenfold (MRO 3,500 improvements in through capacity building and • Improvement of urban million) access to basic FRD. Building on this infrastructures serving 52,000 • Revision of the regulatory/organizational framework of the Urban services and access Government is devoting households in El Mina district and Development Agency (ADU) to micro-finance and significant more resources and 500,000 people in other poor income generation is preparing a new large • Development and adoption of the regulatory provisions governing land use districts (phase 1 and 2 of the planning and development in slums. But Phase national Program for APL) II of PDU APL not Decentralization and local • Revision of the law on property development • Creation of 40,000 jobs / 150 in this CAS yet. Development. The Bank is • Approval of the urban development code and drafting of implementing families benefited from a training provisions • PDRC planning to support this with in the exercise of an income- new a Decentralization, Local • 10 municipalities targeted by the PDRC have a Municipal Development Dvt and Youth Employment generating activity Plan Project in lieu of Phase 2 of the • PDU. Note; However modern land management system/cadastre not yet 3. Coordination with other implemented - undermining taxation reforms, development of transparent donors (PERICLES program) land market and PSD as whole. not satisfactory; renewed efforts from donors and coordination initiatives by Government, needed 4. Creation of badly needed modern Cadastre is key priority. C. Micro- finance and SMEs: Outcome 13. Increased access to micro-credit: Partially achieved, with more Lending Micro-credit supporting To facilitate access of the poor to progress underway activities embedded in several micro-credit ; promote the emergence • PDU investment project have of a fabric of profitable and efficient Milestones: Micro- finance and SMEs • PDRC generally been successful but SMEs. • PRISM 2 with umbrella Outcome 13: Increased access to • 22,340 active micro-finance loans under PDU • BEEP regulatory/financial sector micro-credit • PDU Micro-credit line by Gov to GRET: US$ 13.5 million (above 6 action under the BEEP. • Increase in the number of micro- million target) credits granted 25,000 (habitat + • Outstanding SME portfolio increased to US$ 44.6 million under PDIAIM : IGAs) (US$55 million target) 62 • Emergence of 200 profitable and • Volume of SME line of credit increased to US$ 11.1 million under PEDIAM efficient SMEs* (versus • 18 million target) • New law on micro-finance • Support to BCM for micro-finance enabling environment being provided under BEEP • Support for SME enabling environment under way (training studies) with BEEP • 200 micro-enterprises benefitting from PDRC support • 50 micro-projects carried out under PRiSM2 small grants, benefitting 1200 people, some of which are Revenue Generating activities. • Creation of mutual credit unions in the irrigation schemes. Not done D. Targeted Poverty Alleviation Outcome 14. Abject Poverty reduced: Partially achieved Lending Programs: • Better urban infrastructures for 163,000 people from slums in Nouakchott Reduce abject poverty by improving with PDU • PDRC the productive base and access of the • Major part of 428,000 people impacted by PDRC are from poorest group • PDU poorest groups to basic services (AGR initiated and supported) Outcome 14; Increased access to • Major part of people benefitting from micro-projects under PRISM are basic services in the poorest areas very poor Access to the productive base, income and basic services is improved and • rehabilitation of oasis crops promoted: not done extended to 60% of the vulnerable population in the intervention zones.* Pillar 3: Developing Human Resources and Generalizing Access to Basic Services A. Education and Vocational, Outcome 15. Improving quality primary to tertiary : Achieved; Lending 1. Objectives of EFA were Technical training: Outcome16. Enhanced institutional capacity of the technical education; very ambitious; some activities Improve the access and quality of Achieved; • PNDSE (FY02): ( quality improvement in primary, secondary and higher Outcome17. Improved quality of learning environment and relevance to ICR: outcome rated examination and student education; improve the access and labor market; Partially Achieved and more progress underway with 2 latest S. learning monitoring) not fully quality of technical and vocational projects. • Higher Education carried out and to pursued in education Project (FY04): Last new project under Global Outcome 15 : Improved quality of Milestones: Education and Vocational, Technical training PDO & IP ratings partnership for Education teaching in intervention zones MS & MS 2. Strong coordination among • 100% of teachers in the intervention Improving quality • EFA-FTI (FY08): the many donors involved in zones are trained and apply the • Average achievements of learning objectives in primary education: 58% Last PDO & IP the education sector skill-based approach (versus 45% target ratings S & S underpinned by well- • Repetition rate in primary education reduced from 15% to 2% ; from 16% to • Skills Development articulated Government 10 Outcome 16: Enhanced institutional 8% in secondary education Support Project years PSDN program. Sector 63 capacity of the technical education • Completion rate at primary has reached 73%. (FY011): last PDO wide approach successful. sector • Teachers’ training: 54,900 (versus target of 45,000); and 13, 714 teachers & IP ratings S & S. 3. Success of PNDSE program • 9 professional programs elaborated trained in service (versus target of 14,000); showed outcomes are not and implemented milestone • Reduction of the pupils/teachers in primary education from 47/1 to by 39/1 Phase 2 of PNDSE necessarily impacted by • New general programs according • 100% of teachers retrained to teach in both French and Arabic. APL not in this CAS political instability when the to the skill based approach • Mission, ToR and procedures of each directorate, DREN and system as a (postponed). country is genuinely implemented milestone whole clearly defined and understood by all commitment to a stated • 100% of the DREN and IDEN1 are Increasing access: significant progress also government policy capable of monitoring the • Primary GER increased to 98.9% (universal access almost achieved) underpinning the project. 4. But wide ranging operational activities of the • Retention rate in primary education increase form 55% (2008) to 65% (2011) program and supervising the organizational and institutional • Regional registries are accessible nationwide. schools and CGE/APE in the reforms of ministries should be • % of schools offering complete primary education increased from 43% to implementation of the community effected within the wider civil 80% service framework to ensure approach* • Enrolment at secondary level increase by 60,000 (1999) to 97,000 (2008) that reforms are consistent with Outcome 17 : Improved quality of norms & regulations of public Technical and Vocational Education administration and are the learning environment and the • Number of TVT student increase from 1,795 (1999) to 3,983(2008) acceptable at the highest levels. relevance of courses to the labor • Number of graduated students increased from 889 (2002) to 1761 (2009) . market • Apprenticeship programs established with private sector • Performance contracts with the MESRS are used* • Eight TVET institutions signed a contract with INAP-FTP (Skills Devt. Project) • Proportion of students in professional programs increases from 7 percent in 2003/04 to 12 Higher Education (including improved quality and Relevance) percent • % Students in professional and in science/technology increased respectively to 14% and 12.6% • Employment rate of graduates (short courses and professional program) increased from 20% to 30% in 2010. • 51 Professional and general programs established and renewed (0 in 2008); 28 professional programs started (LMD in 3 departments) • University is now autonomous (budgets, programs, admin. personnel) • Decrees enacting the Higher education Law approved , creating more favorable environment for development of private sector education, to set up standards for academic programs and to organize scientific research B. Health and Nutrition. Outcome 18. Improved maternal health and access to HIV/AIDS treatment: Lending Lessons learned of Health Improve access to and quality of for maternal health Partially Achieved. project: (a) Continuity of the health services; fight against the most • MAP-AIDs (FY02): project team essential, endemic diseases; improve the quality • Percentage of pregnant women who are given 2 doses of SP increased: Last PDO & IP particularly in a difficult of maternal care; intensify the fight from 29% to 55% depending on the region (generally below target) ratings MS & MS. environment; (b) for a country against AIDS; reduce gender • Rate of mass treatment of schistosomiasis increased: 103 to 113% • Health & Nutrition with low capacity project 64 inequalities in access to health depending on region (target exceeded) (FY06): ICR rated design should be simple with services • practice of exclusive breastfeeding during the first six months: 40% to 60% outcome as MU. limited number of components Outcome 18 : Improved maternal depending on region (below target) Rate of coverage in Vitamin A of & clear project objectives; health and access to HIV/AIDS mothers and children under 5 years at 68% No new Health Project proper planning for treatment as measured by • Vitamin supplementation for children 6 to 59 months: 103% (target was funded in FY09 strengthening human resource • Increase in the rate of pre-natal exceeded) (as proposed if IDA is important; the Bank should consultations in four (4) wilayas • Number of operational health mutuelles indicating adequate financing funds were available) be particularly proactive in that charge “fixed obstetrical fee” measured: 29 versus target of 25 providing the needed TA to the • Increase in the rate of mass • Annual revision of health Sector MTEF counterparts; (c) more treatment of schistosomiasis. attention should be paid in • Increased practice of exclusive • People among priority groups reached through communications for properly designing M&E breastfeeding during the first six behavioral change: 1,659,000 versus target of 1,200,000 system. months • Persons aged 15 and older have received counseling and testing for HIV/ Health project’s objectives still • Increase in rate of administration AIDS and having their test results reached 55,938 (versus target of 15,000) relevant and important. A of Vitamin A to new mothers and • Adults and children with advanced HIV infection have received follow-on project on medical children under 5* antiretroviral combination therapy: 1,746 versus target of 1,000 insurance/ social health financing/health system • A consolidated Action Plan not available annually but prepared for 2012 • strengthening should have 2- Increase to 1,200,000 the number • Annual distribution of 5,807,000 condoms versus 1,500,000 target of people in high-risk pronged approach: (a) • 25% of ministries involved have a budget line for HIV/AIDS activities continuing ongoing actions ; communities having participated • Subprojects targeting priority groups and sub-projects targeting high-risk in BCC activities (b) preparing for a changing groups increased respectively by 84% and 16%. epidemiological profile to • Increasing to 1,000 the number of patients on antiretroviral reflect country’s new economic Obstetrical package, mutual health insurance are available at least in 70% of situation. More work on • Increasing to 25% ministries that health centers: not measured financial sustainability of the have a budget line for HIV/AIDS sector needed to ensure that control activities public health priorities are • increasing to 75% sub-projects underpinned by fiscally targeting priority groups ; and sustainable domestic financing Increasing to 15% sub-projects and accompanying institutional targeting high-risk groups reforms. C. Water and Sanitation. Outcome 19. Improved sustainable access to potable water and sanitation : Lending Improve sustainable access to potable Achieved water and sanitation in urban and PDU rural areas • Daily potable water consumption (liters/person/day) increased from 15 to Outcome 19 : Facilitated access to 41 l. sustainable urban water and • .Reduction of the price of m3 of water in poor districts to US$1 (50%) sanitation services in PDU targeted • 26,000 persons with access to improved sanitation in Nouakchott areas • 2,946 improved latrines (against target of 2,000) • Increase of the population %age that have access to potable water 65 source to 65% Implementation of the PNAR and urban and rural sanitation strategies. Started • Increase in the daily consumption in urban areas but not support by CAS in rural areas of potable water to 35 liters per person • Percentage of households having access to improved sanitation system at 50% Percentage of households having access to a trash management system at > 50%?* D. Gender Equity and Social Outcome 20. Increased right awareness among women and knowledge on AAA Bank actions on gender limited Protection social protection: Not Achieved ESW Gender (FY07) during CAS period: essentially Outcome 20 : Increased right ESW Social some specific actions targeting awareness among women and System of gender monitoring indicators is operational in 4 Ministries (SECF, Protection not Female beneficiaries in several disseminate knowledge on social MDRE, Education, Health); Formulation and implementation short-term and delivered projects: PDU, EDSP protection long-term strategies to implement and sustain new solutions or laws: Training /EFA(girls to boys ration in • Women of the targeted zones are of judiciary and court personnel. Not achieved education), PRISM2, better informed of their rights and obligations • Monitoring gender indicators are identified Strategy on social protection developed, E. Universal Access to Basic Services Outcome 21. Increased access to electricity: Partially Achieved in urban Lending Bank group has not been : areas but not yet in rural areas directly involved in rural Increase the rate of access to • PDU electrification as other donors electricity • 261 km of distribution lines rehabilitated so far in urban areas (with final • WAPP are active (distribution). Outcome 21: Increased access to target of 281 km likely to be achieved soon). Restructuring PEs like electricity in WAPP targeted rural • Through additional electricity generated soon by new Felou Units under AAA SOMELEC is essential to areas: Increase of the rate of access to WAPP when they are commissioned (2013) and with enhanced pooling SOMELEC studies improve public services urban electricity in rural and semi- arrangements under the Power Pool (Mali, Senegal, Mauritania) will (Audit, Restructuring delivery in addition to reducing urban areas significantly increase electricity supply in urban areas as well as rural areas study and tariffs subsidies. New TA initiative close to transmission lines. study) needed with capacity building first to monitor better Electrification master plan is adopted for the entire country: not achieved financial/economic performance and 2nd improve overall their governance. 66 Pillar 4: Improving Governance and Strengthening Institutional Capacities A. Modernization of Public Outcome 22. Enhanced HR management policy and tools in the public Lending Support to HR management in Administration Put in place modern Administration : Partially Achieved with further progress under way public administration should be human resource management tools • PRECASP pursued, even at a low scale, Outcome 22 : Enhanced HR • Legislation related to civil service special status and salary grid partially restructured. Last under new CAS. Follow-up management policy and tools are adopted. PDO & IP ratings S operations to PRECASP available and used in the public • Contract for setting new computerized HRM system awarded and work & S should be contemplated as Administration about to start Public Administration • New regulation on human resource • Civil servant census and harmonization of results with two existing Reform/PFM is a long haul management approved and in database completed. agenda for which Bank support force has demonstrated tangible • 90% of public servants managed results and for which by the responsible ministry on the leveraging support from other basis of the computerized system donors is possible. B. Efficient Management of Public Outcome 23. Improving Public Finance Management: Lending 1. PRECASP with ambitious Property : Partially achieved with further progress under way and wide agenda made already Improve revenue mobilization; • PRECASP great strides in advancing PFM institute optimal and transparent • Reform of the Tax Code under way • PRSM2 Additional reform and will deepen this management oil revenue ; improve • Oil revenue feature in the Finance Act and are submitted for parliamentary Financing 2. continue after having been budget programming, execution and control as well as the Audit Office restructured. PFM reform control; ensure transparency and • MTEF is currently prepared in 8 out of 11 pilot Ministries and in 2007 an AAA: should be pursued in next CAS equal access to public markets; fight overall MTBF together with sector MTEF for all Ministries was prepared. EITI (FY06) after PRECASP is closed. against corruption • Government Financial Statistics (GFS) table is updated and available on TA Treasury 2. Building on achievements Outcome 23 : Improved the Treasury site. Treasury balance table is also up-to-date. However, the PER (FY010) with Procurement IDF, performance, efficiency, and Loi de Reglement (with validated execution table) is still produced with PEFA (FY09)? PRECASP will deepen transparency of public resources long delays IDF procurement procurement reform (standard management • issuance of payment order now delegated to all twenty five sector (FY0 bidding documents; • Doubling the rate of tax recovery Ministries, all using RACHAD (computerized Network for budget ESW Anti-Corruption completion of procurement • Transparent management of the execution) for all expenditure lines (FY08) regulations and oil revenue through the budget • this network has been extended to Treasury, to the Central Bank and to implementation of new channel primary banks, speeding up budget execution and increasing transparency system/framework; and • Elaboration of the Finance Act • consultants working with Tax Office to computerize tax management intensive training. This should (FA) based on the overall MTEF be pursued during next CAS • new Public Finance Reform agenda prepared and adopted by Government and sector MTEFs of all the also after PRECASP is closed. (with EU funding and Bank imput) ministerial departments 3. PRECASP contributed • anti-corruption strategy adopted; but implementation yet to be started • Budget & accounting reports in • New Public Procurement Code adopted and corresponding agencies significantly in creation of new accordance with international environment ministry. Support established and staffed in transparent & participatory way to new ministry should be standards • State control bodies (IGE, IGF, Inspection Units in ministries) reinforced 67 • population is aware of the • New ministry of environment established with PRECASP; strong pursued under new CAS. consequences of corruption for the partnership with German cooperation in environment. Specific new approach to be economy and the impact on each applied to effectively address citizen But putting in place system for monitoring-evaluation of the performance of risk of flooding of Nouakchott • The services of the Treasury and external funding instruments not yet initiated. areas if coastal barriers are Finance Inspection are breached (reputational risk for consolidated?* the Bank) C. Decentralization: Outcome 24. Increased decentralization and de-concentration reform: Lending Future Local Government Strengthen institutional framework; Partially achieved with further progress under way strengthen communal Management • PRECASP tools and capacities; mobilize • With pilot operations for Nouadhibou and Rosso completed. • PDU Dvt. Project to consolidate & resources Deconcentration and decentralization well under way in both cities. scale up achievements in Outcome 24 : Increased • Training of actors of decentralization under way: 745 people working in the decentralization and local decentralization and de- land, municipal and urban administration trained under PDU (versus target development (following CBRD concentration by supporting the of 629) approach) with concrete steps implementation of reforms • Municipal income in PDU cities increased by 33% from 2002 to 2010 to transfer public funds to local • Financial viability of the districts,; (versus EoP target of 50%). communities (Regional investments under contract & • Local development plan of Rosso prepared and validated. Development Fund) – together supply of basic services with stronger focus on • The tools for planning local employment creation. development that facilitate the But full implementation of national development and local governance strategy participation of citizens and (recently adopted) still not started in earnest. ensure good governance are put in place • Decentralization bodies operational The mechanisms for funding the development districts under contract are strengthened and harmonized 68 Table 4: Planned Lending Program and Actual Deliveries (Base Case of CAS Plan) CAS PLANS STATUS FY US$ M US$ M 2007 Public Sector Capacity Building 13.0 Delivered 13 Petroleum Capacity Building 5.0 Delivered as added financing to PRISM2 5.0 Subtotal 18.0 Subtotal 18.0 2008 IBRD Enclave Ports TBD Not delivered O IBRD Enclave Energy TBD Not delivered 2009 Finance -PSD 7.0 Delivered 5.0 Transport TA 4.0 Delivered 4.5 Additional actual projects Education Sect. EFA/FTI 14.0 Urban Development PDU additional 25.5 Subtotal 11.0 49.0 2010 Education Sector development (b) 7.0 Not delivered 0 Additional actual projects Nouakchott-Rosso Road Corridor ACGF 20 Subtotal 7.0 Subtotal 20.0 2011 Urban Development II Not delivered 0 Additional actual projects 0 Skills Development Support 16 PRISM2 additional financing 7.1 Subtotal 7.0 Subtotal 23.1 Subtotal FY2008-2011 25.0 Subtotal FY2009-2011 92.1 Total FY2007-2010 43.0 110.1 69 Table 5: Planned Non-Lending Services and Actual Deliveries CAS PLANS STATUS 2008 Consultative Group Delivered (December 2007) PRSP Progress Report Delivered Fisheries ESW Delivered Anti-Corruption ESW Delivered CPPR Delivered Additional ICA Strategic Country Gender Assessment EITI Implementation 2009 Sources of Growth Delivered Land Tenure Delivered Poverty Survey and Assessment /Poverty Map Delivered Social Protection Study Not done PRSP Progress Report Delivered in FY10 CPPR Delivered Additional Support to accounting profession (IDF) Study on PE Governance (Mauritania + Multi-country Study) Support to Public Procurement Function (IDF) Support to Transparency (IDF) Support to Statistical system (IDF) Support to Brussels Roundtable to reengage donors 2010 PEFA Not done Ctry. Procurement Asmt. (CPAR) Done CAS Progress Report Not done CPPR Delivered PRSP Progress Report (instead of FY09) Additional Multi-sector stock taking 70 CAS PLANS STATUS SOMELEC restructuring and Power Sector Study (PPIAF) PER update 2011 EITI implementation (US$0.28 million) Joint IMF-WB Debt Sustainability Assessment Joint Health PER ICT sector note and dialogue Strategic Environmental Assessment * Plus a multi-year TA: AML-CFT (IDF) 2007-2011 71 Table 6: Lending operations and implementations Operation Approval Closing Amounts Extensions (E) Outcome rating1 (Bank Date Date Actual. or US$ mil. Major Restructuring (R) Performance) planned Credit/Grant Education Sector 10/25/2001 3/21/2010 38.7 + 9 R S(S)(ICR) Development Program Urban Development Program 10/25/2001 (06/30/2008) 63.6 + 6.6 E S(S)(ISR) 6/25/2010 06/30/2012 10 + 15.5 (CRW) Global Distance Learning 11/21/2001 3/31/2010 3.2 E MU(MU)(ICR) Center HIV/AIDs control 7/07/2003 3/31/2012 21 R MS(MS)(ISR) 2nd Mining Capacity 7/08/2003 (3/15/2009) 17.5+ 0.48 E S (S) (ISR) 7/06/2006 (10/01/2012) 5 5/19/2011 11/15/2013 7.1 Community-Based Rural 4/20/2004 12/31/2011 45 E, R S(S)(ISR) Development MS (MS) ISR Higher Education 8/03/2004 03/31/2012 15 E Integrated Development Program for Irrigated 3/17/2005 6/30/2013 39 E MS(MS)ISR Agriculture (APL 2) Additional financing to the Integrated Development Program for Irrigated 8/2/2012 2/28/2014 5+5 R MS ISR Agriculture (response to 2011 drought) Health and Nutrition Project. - 6/01/2006 06/30/2011 10 MU(MU) ICR Public Sector Capacity 7/06/2006 3/29/2014 13 E ,R S(S)ISR 72 Building Project Community Based Watershed 8/28/2006 9/30/2012 6.0 E S(S) (ISR) Management Project (GEF) BEEP – business environment 5/22/2008 11/30/2013 5.0 E MS(MS)(ISR) enhancement development project EFA/FTI 4/08/2008 3/31/2012 14.0 E S(S)(ISR) Education Sect. Dvt. (CF-EFA) Transport Sector Institutional 7/31/2008 9/30/2012 4.5 S (S) (ISR) Development and TA (PATRIST) Port of Nouakchott 8/05/2008 12/30/2012 1.5 (IBRD) Development Nouakchott Rosso road 6/15/2010 S (MS) ISR 10/31/2013 20 (ACGF) corridor ACGF Skills Development Support 4/26/2011 6/30/2016 16 S(S)(ISR) Regional Operations Africa Emergency Locust 12/16/2004 5/31/2011 10.1 (60 for 7 MS(S) ICR countries) Senegal River Basin Multi- purpose Water Resources 6/08/2006 9/08/2011 22.2 S (S) (ISR) Development West Africa Power Pool (APL 2) - OMVS Felou 6/29/2006 6/30/2013 25 S (S) (ISR) Hydroelectric 73 Annex 3: Ongoing and Proposed New Operations Operation 2012 2013 2014 2015 2016 Ongoing Public Sector CB xxxxxx xxxxxx xxxxxx xxxxxx xxx Agriculture Dev. & xxxxxx xxxxxx xxxxxx xxxxxx xx Food Price Resp. 52 Higher Education xxxxxx xxxxxx xxxxxx xxxx Road Corridor (AGCF) xxxxxx xxxxxx xxxxxx xxxx Community-based xxxxxx xxxxxx xxx Watershed Management (GEF) 2nd Mining Sector CB xxxxxx xxxxxx xxxxxx xxxxx EITI Implementation xxxxxx xxxxxx xxxxxx xxxxxx Business Environment xxxxxx xxxxxx xxxxxx xxxxx xxxxxxx Enhancement Skills Development xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx WA Regional Power xxxxxx xxxxxx xxxxxx Pool Regional Senegal River xxxxxx xxxxxx xxx Basin/OMVS-1 New IDA or TF Operations Basic Education Sup. xxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx US$12 million Agriculture xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx US$10 million Decentralization& xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx Local Dev. Youth US$25 million WARCIP xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx US$30 million Statistical CD xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx (US$5 million) Regional OMVS-2 xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx Health/Social Safety xxxxxx xxxxxx xxxxxx xxxxxx Nets US$10 million SD (t.b.d.) xxxxxx xxxxxx xxxxxx US$10 million Governance/budget xxxxxx xxxxxx xxxxxx support (t.b.d.) US$10 million Competitiveness and xxxxxx xxxxxx Ent. Dev. Project: An SEZ Approach Possible IBRD Enclaves Gas to Power xx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx PPP $70 million WA Fisheries Sector xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx xxxxxx US$32 million 52 Additional Financing to Integrated Development Program for Irrigated Agriculture II 74 Annex 4 : Country Partnership Strategy Donor Positioning Cooperation with development partners has been close in recent years and will continue during the CPS period. An Annex Positioning of Donors will be included in the document. There are many synergies between donors’ interventions and World Bank Group assistance. So, the Bank teams will continue to work with bilateral donors, UN system, Arab Funds, the Islamic Development Bank, GIZ, African Development Bank, AfD, the EU and others. The focus will be on increased upstream collaboration on strategies, shared analytic work, and effective co- financing. The Bank will also continue to collaborate closely with the International Monetary Fund (IMF), which conducts regular monitoring missions, and increasingly with the International Finance Corporation (IFC). Moreover the Paris declaration recommended regular meetings between Government and development partners, sector-wide programs, and joint analytical work. Looking ahead, the focus will be placed on more upstream collaboration on assistance strategies with bilateral donors, the African Development Bank (AfDB), the EU, and the United Nations (UN) system, greater harmonization of procedures, carrying out joint analytic work in key areas of poverty, decentralization, building public sector and governance, and the use of sector-wide programs in education and health. Finally, Bank Group upstream support to remove selected constraints to private sector development will complement others donors’ direct support to investments and to private companies. The CPS, prepared in close collaboration with the donor community, will be complemented by a renewed effort on donor coordination through: (i) sharing information on sector strategies, with joint funding of programs and projects; (ii) providing feedback on implementation and generic portfolio issues for ongoing operations; and (iii) undertaking joint coordinated efforts in communicating with the Government and other stakeholders. These was a strong consensus on development challenges and priorities among various stakeholder groups, while it was commonly agreed that actual implementation of policies, programs, and projects will determine how successfully they will be met. 75 Octr (millions USD) UE A) e I+ A L BE n + RF n EA ES EF E nc DB B + ai O IZ AD pa D D D B W S M DP AC FP IC IN TA Axe Sous Axe ra M F Af W EC Sp FA (G IF Ja FS FK FA ID KF O PA UN SC UN UN CH TO 1 - Accélérer 62.67 0.00 60.30 365.62 47.08 0.00 16.32 0.00 0.00 20.08 23.93 288.78 236.29 0.00 0.00 0.00 2.41 0.00 0.00 0.00 381.52 1505.00 1.1 - Cadre macroeconomique 2.41 2.41 1.2 - Réformes structurelles 62.67 0.00 4.44 6.62 0.00 0.00 0.00 0.00 0.00 0.00 3.17 0.00 0.17 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 77.08 Renforcement de système d'Incitation 62.67 0.17 62.85 Développement du secteur privé 4.44 6.62 Réformes de systèmes d'incitation 3.17 1.3 - Potentiels de croissance 0.00 0.00 29.62 0.00 7.05 0.00 16.32 0.00 0.00 0.00 0.00 0.00 21.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 74.88 Pétrole 0.00 Pêche 7.05 16.32 23.37 Mines 29.62 29.62 Agriculture 21.90 Tourisme 0.00 1.4 - Infrastructures de soutien à la croissance 0.00 0.00 26.24 359.00 40.03 0.00 0.00 0.00 0.00 20.08 20.76 288.78 214.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 381.52 1350.63 Transport 26.24 329.29 26.78 20.00 20.76 101.77 74.23 381.52 980.59 Energie 13.24 0.08 187.01 139.99 340.32 TIC 29.71 2 - Ancrer 0.00 0.00 214.86 0.00 4.95 1.98 0.00 32.47 5.58 119.58 108.21 466.73 51.35 0.00 0.46 0.00 0.00 0.00 0.99 2.35 0.00 1009.51 2.1 - Développement rural 125.78 0.26 32.47 46.41 0.56 0.99 206.47 2.2 - Développement urbain 89.07 1.43 98.64 108.21 417.71 39.72 754.78 2.3 - Micro finance 0.00 2.4 - Micro & petite enterprise 0.00 2.5 - Securité alimentaire 3.26 1.98 5.58 20.94 2.62 11.07 0.46 2.35 48.26 2.6 - Programmes ciblés de lutte contre la pauvreté 0.00 2.7 - Lutte contre l'exclusion 0.00 3 - Développer 58.95 0.00 42.00 4.90 12.91 0.00 0.00 0.00 0.11 5.60 38.38 0.35 93.13 0.00 0.00 17.77 7.87 0.00 1.25 1.05 14.77 299.03 3.01 - Education 23.18 15.00 7.04 38.38 25.52 14.77 123.88 3.02 - Alphabétisation 11.83 11.83 3.03 - Formation technique et professionnelle 17.10 17.10 3.04 - Santé 34.51 9.90 3.33 0.03 20.26 68.03 3.05 - Hydraulique 1.26 4.90 1.99 5.60 35.52 17.77 67.03 3.06 - Culture 7.50 7.50 3.07 - Emploi 0.35 0.35 3.08 - Politique de la population 0.44 0.44 3.09 - Promotion feminine et equité de genre 0.56 0.81 1.37 3.10 - Enfance 0.08 0.08 3.11 - Protection sociale 1.05 1.05 3.12 - Access universel aux services de base 0.37 0.37 4 - Améliorer 26.89 0.00 33.77 25.11 1.24 1.01 18.14 4.27 8.74 0.00 0.00 2.44 0.00 0.00 0.00 0.00 25.88 0.00 0.00 0.79 58.64 206.93 4.1 - Etat de droit 2.14 0.36 9.74 7.28 6.23 0.79 26.55 4.2 - Modernisation de l'administration publique 1.93 33.41 13.26 1.25 58.64 108.49 4.3 - Gestion efficace des biens publics 1.32 0.98 2.31 4.4 - Décentralisation 19.36 3.97 3.05 6.00 32.38 4.5 -Gouvernance Environnementale 2.14 1.24 1.01 6.88 4.27 5.70 2.44 11.42 35.09 4.6 - Promotion de l'approche participative 4.7 - Communication 2.11 2.11 5 - Renforcer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.79 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.79 5.1 - Le systeme de suivi-evaluation 2.79 2.79 5.3 - La coordination 0.00 Autres 0.00 Grand Total 148.51 0.00 350.93 395.63 66.18 2.98 34.46 36.74 14.44 145.26 170.52 761.09 380.77 0.00 0.46 17.77 36.16 0.00 2.24 4.20 454.93 3023.26 76 Annex 5: Millennium Development Goals and Trends Millennium Development Goals Mauritania With selected targets to achieve b etween 1990 and 2015 (estimate closest to date shown, +/- 2 years) Mauritania Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2010 Poverty headcount ratio at $1.25 a day (PPP, % of population) .. 23.4 21.2 23.4 Poverty headcount ratio at national poverty line (% of population) 56.5 50.5 .. 42.0 Share of income or consumption to the poorest qunitile (%) .. 6.4 .. 6.0 Prevalence of malnutrition (% of children under 5) 43.3 20.3 30.4 15.9 Goal 2: ensure that children are able to complete primary schooling Primary school enrollment (net, %) .. 55 65 74 Primary completion rate (% of relevant age group) 29 34 46 57 Secondary school enrollment (gross, %) 14 16 18 22 Youth literacy rate (% of people ages 15-24) .. .. .. .. Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 69 82 93 102 Women employed in the nonagricultural sector (% of nonagricultural employment) .. .. .. .. Proportion of seats held by women in national parliament (%) .. 1 4 22 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 124 119 115 112 Infant mortality rate (per 1,000 live births) 80 78 77 76 Measles immunization (proportion of one-year olds immunized, %) 38 67 58 65 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 760 690 .. 560 Births attended by skilled health staff (% of total) 40 .. 57 61 Contraceptive prevalence (% of women ages 15-49) 4 .. 8 9 Goal 6: halt and begin to reverse the spread of HIV/AIDS and other major diseases Prevalence of HIV (% of population ages 15-49) 0.2 0.4 0.6 0.7 Incidence of tuberculosis (per 100,000 people) 228 251 282 324 Tuberculosis case detection rate (%, all forms) #N/A #N/A #N/A #N/A Goal 7: halve the proportion of people without sustainable access to basic needs Access to an improved water source (% of population) 30 36 42 49 Access to improved sanitation facilities (% of population) 16 18 21 26 Forest area (% of land area) 0.4 .. .. 0.3 Terrestrial protected areas (% of land area) 0.5 0.5 0.5 0.5 CO2 emissions (metric tons per capita) 1.3 1.3 0.5 0.6 GDP per unit of energy use (constant 2005 PPP $ per kg of oil equivalent) .. .. .. .. Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.3 0.4 0.7 2.3 Mobile phone subscribers (per 100 people) 0.0 0.0 0.6 63.5 Internet users (per 100 people) 0.0 0.0 0.2 1.9 Computer users (per 100 people) #N/A #N/A #N/A #N/A Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 70 100 60 75 50 75 40 50 50 30 25 20 25 0 10 2000 2002 2005 0 0 1990 1995 2000 2010 2000 2005 Primary net enrollm ent ratio Fixed + mob ile subscribers Ratio of girls to boys in prima ry & secondary Mauritan ia #N/A education Internet users Note: Figures in italics are for years other than those specified. .. indicates data are not available. 2/14/13 Development Economics, Development Data Group (DECDG). 77 Table 7: Inventory of Mauritania Surveys Surveys Year Remarks Household Surveys (EPCV 2008) 2008 Poverty profile 2008 Ongoing and Results expected Household Surveys (EPCV 2013) September,2013 for 2014 MICS Mauritania survey 2007 (Multiple Multiple indicators essentially Indicator Cluster Survey) September 2007 for health Population Census June 2013 Results expected by end of 2013 Employment Survey (Enquête Nationale de Diffusion of results expected by Référence sur l’Emploi et le Secteur Informel) 2010-2012 September 2013 ESAM 2007 (Enquête sur la Sécurité Alimentaire des ménages en Mauritanie) 2007 Social Protection Source: ONS 78 Annex 6: Country Partnership Strategy Consultations - Feedback Summary Date: 25–27 September, 2012 Venue: Nouakchott, Mauritania Session: Country Partnership Consultations (CPS) Participants: Civil Society & Religious Leaders, Private Sector, Parliamentarians, Donors and the Government Number of Participants: 60 Specific Feedback from Stakeholders Civil Society & Religious Leaders (25 September, 2012) • Participants repeatedly point towards the importance of taking the country context into account, i.e. 100percent Muslim country. There is a need to sensitive donor community intervening in Mauritania. Bank needs to redefine its strategy to see what the priorities of the people are. Need to know where to start and this should be at the needs of the people: access to education, health, reinforces capacities of citizens to give them a voice. • HIV/Aids: Bank should integrate Aids into their development strategy • Education: key sector for development, there have not been fundamental changes or progress, quality has not improved. There is a need to be more consultative and ask what the population wants from the education system. • Reform of the banking system: this is essential because there is not distribution of resources and credits. • Need to reinforce capacities of NGOs and civil society (CS). CS remains vulnerable. • With reference to Pillars 1 and 2 the question is posed why irrigation and food safety are divided – they should be treated together. Lots of people do not benefit from the Bank projects (refers to the client survey) thus there is a need to reinforce capacity of CS and do diligent M&E of Bank funds. • Social protection: is seen as extremely important but no clear strategy of Bank intervention can be seen from proposed CPS. It would be important for the Bank to coordinate public services since not even 7percent of the population is covered by these services. Also important that the Bank intervenes at the policy level of service provision. • Governance and corruption: the main problem is that there are no mechanisms of justice to deal with corruption although these are badly needed. Decisions taken by the government at not implemented. What role can the Bank play here? Which actions could Bank do to ensure that these are implemented and actually realized? Need to turn words into action. Put in place systems to see that those who do not 79 manage finances well will be prosecuted. Huge problem due to lack of transparency and marginalization enforced by the government. • Dividing state resources: a lot could be done with state resources if they were distributed correctly and the Bank should help doing this. • Community Driven Development (CDD): all interventions of the Bank should be based on this approach. Need to take local actors into consideration and to give more capacity to the population. • Land: main problem is food security – during drought everyone thinks about saving the starving but there is a need to make better use of land resources. There is land which is not being exploited but then international actors come in and exploit it. A huge part of the Mauritanian population does not have access to land. Bank needs to intervene for better distribution of land. Need to help against expropriation and land grab which comes from big industries in order to avoid that people lose their livelihoods and starve. The Bank has the responsibility to take land into consideration. • Stability and security: this needs to be the basis of all development activities. Imams have an important role in working against violence and supporting stability and security. Great cooperation between Imams and the government but this is not enough to ensure stability and security. • Monitoring & Evaluation: there seems to be general concern that M&E of Bank projects is not diligent enough. Recommendation is to be better aware of effects and outcomes of Bank projects, e.g. food security: has the Bank through its projects tried to evaluate the effect of their actions? Over 700,000 people are suffering from the drought today. In the system of control of the Bank there is a need to insist that monitoring happens, even with the government. • Social justice and human rights: add a pillar on social justice and rights – to touch upon discrimination which is very apparent in the country. High levels of discrimination and here we could also add gender which is an essential question. 52percent of the population is female and this is not being taken into account. Coming close to presidential elections it is essential to include female candidates. • Youth: 70percent of the population is considered youth. Need to include youth employment in the fight against poverty – this is a fundamental issue. We always remain in old structures. Training is important – very important to know what youth want and does not want. Important question to ask is why are things not improving? Very important to include youth in different sectors of development. • Project execution: needs to be more efficient – lack of efficiency is one of the main problems. Projects enhance corruption and favoritism and it would be important to include citizens. Security, stability, youth employment and education – these should be the 4 main areas of intervention of the Bank. Without these nothing can be done. You have to change the paradigm. Look at justice and governance. Education, land and better engagement with CS. We cannot do development without security and CDD is necessary for better impact. 80 Parliamentarians (25 September, 2012) • We know better the partners of the UN than the Bank – the organizations that intervene directly. The bank intervenes at higher level, at the macro level hence it is not known so well. Here Bank can take the lesson how to intervene in more sensitive domains in order for the Bank to be known better. • Natural resources: there is a need to look at the given conditions of budget troubles of the country. • Basic Services: huge concentration of population in urban areas but still many don’t have access to water, sanitation, etc lots of people who are neither francophone, nor speak Arabic – we need to reflect on this level of education. Need to balance the level of wealth within the country and here the Bank could support. • Stability: Potential of a political crisis also needs to be taken into account. Necessary to create a stabile context, also in political terms. • Bank interventions: Reports do not have a vision - direct impact on the population is best achieved via projects. • Finances: Need to facilitate access to finances for investors and enterprises. This problem of finances should be addressed. • Bank should accompany decentralization efforts. Resume: Bank is very relevant in Mauritania, especially in the education sector. Health: it had been mentioned many times that the Bank should continue its effort in projects on Aids. Social services are very important. Need for better communication with stakeholders on the ground. Take the context of the country into account. Strategy of the Bank is in line with its mission. Private Sector (26 September, 2012) • Activation of the Committee National de concertation de secteur privé – this is their main objective. To put this in place will allow them to deal with numerous problems – transversal and sectorial, for example when creating businesses • Problem of energy costs, liquidity, infrastructure, lack of educated professionals. Here we need to address the education system. • Need for protection of infant industries from competition. National industry has a socio-economic impact. Necessary to create commercial activities. • Mining industry: exportation of mining products is important but there is a need for donor coordination. • Training: both administrative and professional. It is important for the administration to understand the consequences of their decisions – if the decision makers at the level of the administration do not take good decisions this is a big problem. Need for them to understand economic principles, modern business law, etc. • Great need for human resources to be good in order for the public and private sector can function. CPS should focus on HR as this is one of the biggest problems of Mauritania. Capacity building on HR can be done by a program of training of 81 procedures of eg marketing, new IT technologies, etc. This willingness to promote HR is essential • Federation of Fisheries: around 40,000 employees – more than in the mining sector. Problems of commercialization – it is the state that commercializes which is a handicap for the sector because the sector could create much higher employment if it were better managed like in Senegal for example. It is important that this sector develops and need to avoid that it will be taken over by foreign companies. • Agriculture: Need to see this sector as strategic since it will address all the socio- political problems of this country hence there is a need for particular attention. Need for “credit agricole” – this exists already and Bank has played a vital role but the sector is still mainly traditional hence there is a need to revise this. Problem of debt: system credits has been put in place but real problem of natural disasters (drought, flood, locust) and every time this happens then there is not enough agricultural products and hence loans can never be paid back which creates a spiral of higher and higher debt levels. • Capacity building is a transversal problem that needs to be addressed in all sectors. • Transport: problem of good roads – some are good but a lot are not. Cost of constructing roads does not compare to cost of transport. Put in place credits to improve situation. • Problem of good governance: social responsibility needs to be enforced. Need for business to respect fiscal, administrative and social responsibility. And fiscal transparency and ensure that enterprises pay taxes. • Phenomenon of informal sector – this has a huge social impact but it is important that we understand this phenomenon – what is at the origin of it? It is the cost of money and other difficulties. To solve this find measures that will encourage the move from informal to formal sector. • Energy and transformation of agriculture: Don’t put too much resources on soft (TA and ESW) but more on hard – real projects. Donors (26 September, 2012) • More emphasis on partnership. • Health: WB did good interventions in the health sector which were important and we should go back to supporting this sector. Add WASH along with nutrition. • Add social protection to Pillar 2. We should put accent here – we should put in place a framework for protection because MR is structurally vulnerable to different external shock (climate, security, etc). Important that the most vulnerable part of the population is being protected. This is important for economic growth. Also add environmental protection. • Importance of youth employment – but unclear to some what we mean when talking about youth employment. AfDB is doing a study on youth employment which will be available in 2013 and would be a good point of cooperation. • Professional training: • Security and stability of the sub-region: • Besides following PRSP we also have the responsibility to choose pillars that are more realistic and achievable. Now we are following very generally the PRSP but to 82 be effective we really need to be more specific. Pillars looks good but we should be a little more selective regarding the project and activities. We should be a little more selective. • M&E and providing country with statistics is very important – need a more strategic framework for M&E. Lack of statistics if a huge problem for all sectors in MR. • Put emphasis on the axis of resilience and vulnerability. Disaster risk management is also a great problem in MR and we should take this upon us and appreciate when we do our work. • Coordination: Community of partners is not big in MR and we all intervene more or less in the same domain. At the UN they are discussing a strategy of resilience for the Sahel – need to make sure to coordinate. • IMF: Put one pillar on inclusive growth and employment: promote investment (by developing the private sector) and social protection. We need to focus on agricultural and fisheries growth. It would be good to include the CPIA – what has been done for stabilization, etc. Add a few analytical studies on employment etc. How to deal with liberalization of products? • Reform the government and the public sector would be the most important. Government (27 September, 2012) • Highlights importance of statistics – real need for data • Importance of the transport sector – here it would be good to know what Bank envisions • Very interested in youth employment • Importance of capacity building of administration • Would be good to have something on infrastructure • Civil protection would be extremely important but this cannot be found in Bank strategy • One suggestion: interventions should be divided in three specific activities: fisheries, agriculture and capacity building. What we propose is too disbursed. • Health sector – disappointed not to see anything here – Bank has signed the compact until 2015 to support health. Is also disappointed about MAP (Aids project). Bank should again take this up. • Min of Economic Affairs argues that there already is a quite a lot allocated to agriculture and does not want it to be divided just by three sectors. He thinks the distribution is already quite good, because a lot of activities are already related to the other sectors. • Min of Finance lobbies for budget support. 83 Annex 7: Political & Social Analysis Mauritania’s development trajectory is closely linked to its historical and political alliances. Five overarching themes characterize the landscape and constitute the main sources of fragility and conflict: (i) Polarization around cultural identity and social relations built around clans and families have impeded social inclusion and cohesion; (ii) History of coups, lack of transparent decision-making and influence of traditional elite weakens institutions and local governance; (iii) absence of property rights, Land distribution and management is a source of conflict and tension; (iv) Rapid urbanization has increased perception of inequalities, affecting urban youth in particular; and (v) Regional dimensions. 1.) Polarization around cultural identity and social relations built around clans and families have impeded social inclusion and cohesion • Strong divide between ethnic groups, clans and casts  Traditionally very divided society around rigid group boundaries defined by ethnicity, clans and casts  In large part, inter- and intra-ethnic/tribal cast system still determines social order • Access to power builds around ethnic structure, clans and families  Reproduction of social structures through control of politics, economics and the military by leaders from traditional ruling clans and families within ethnic groups  Tendency is reinforced by a rent economy, concentrated on very few sectors that is easily captured by a very small political and economic elite  Societal dynamics reinforces exclusion and exclusionary policies  Political and economic patronage, forced displacement, quasi slavery situation, language of education, conflicts over land etc. 2.) History of coups, lack of transparent decision-making and influence of traditional elite weakens institutions and local governance • Traditional social structures permeate State and local institutions  Strong traditional system determines how many formal institutions operate  Regular interference of army and heads of powerful clans and families in politics weakens function of State  Informal norms permeates formal justice system which weakens judiciary independence • Problem of governance, especially at local level  Tight control by a few central organizations and the military on state and local level institutions undermines decentralization  Large parts of the territory with very low population density experience loose state control which increasing penetration by illegal groups  Attempts to control rents from extractive industries and a few other sectors undermines governance 3.) Land distribution and management is a source of conflict and tension • Issues around land in the Senegal River Basin reflect social injustice and inequalities of society 84  Characterized by scarcity, ethnic rivalries, corruption and non-transparent decision- making by government  Conflicts over land categorized as: (i) intra-tribal (often between Haratin and Bidhan); (ii) inter-ethnic (often between Halpulaar and Haratin); (iii) between traditional chieftaincies (e.g. Halpulaar and Wolof); economically motivated (farmers vs agribusiness); and (v) between pastoralists and agriculturalists • Serious problem with reintegration of returnees  Land allocated to returnees is not sufficient and of low quality  Lack of access to formal justice mechanisms and redress mechanisms  Very strong sense of social injustice • Conflicts are latent with serious threat to social cohesion and peace  Many conflicts created as a result of decisions taken by government, that is top down and does not consult enough 4.) Rapid urbanization has increased perception of inequalities, affecting urban youth in particular • Creation of spatial, ethnic and social divide:  Ethnic division of urban districts which determines social identity  Creation of spatial inequality, trend towards ghettoization • Lack of attention to needs of urban youth  Lack of purpose, sense of marginalization  Very little urban planning and social policy to address problems of youth 5.) Regional Dimensions • Rapid development of trafficking and illegal activities through the Sahara  Trafficking in drug, humans and weapon  Reinforced by a number of conflicts in the border regions of the Sahara (Algeria, Libya, Touareg rebellion, Boko Haram in Nigeria) • Situation in Mali  Pressure on local population due to inflow of refugees coupled with drought  Pressure on livelihoods  Strengthening of terrorist groups such as AQMI who are gaining territorial control 85 Annex 8: Gender in Mauritania The Government of Mauritania is committed to promoting gender equality and empowering women by eliminating gender disparities in several areas. The Diagnostic made with Bank support during the last CAS and currently with UN agencies, shows that some obstacles persist in term of equity. Gender issues are still confronted by cultural, social and economic barriers and with weak use of human rights’ approach to respond to the strategic and practical needs of women and men. The GOM has ratified most international juridical instruments relating to women and has set up an institutional framework to maintain the fundamental humans’ rights of women (Personal status code). The political commitment has led to some improvements in term of human development and fight against Female Genital Mutilation. Even though progress has been made, inequity exists in term of human development, access to productive resources, labor market, etc. However, most of the existing sectoral policies have a focus on gender issues, in order to contribute to the reduction of gender disparities and poverty among women. Promote equal access for men/women to human capital development: Regarding girls' education, Mauritania has registered significant improvement in the gross enrollment rate in basic education. The gross enrollment rate (GER) of girls (105 percent) in primary education, now exceeds boys (95.4 percent). However, significant gender gaps still remain at the secondary level. According to recent studies done by the Ministry of Women’s Affairs, women are lagging behind with a 72.2 percent illiteracy rate compared to 44 percent for men. The government continues to prioritize the issue of illiteracy and has adopted an illiteracy elimination strategy which places particular emphasis on women and the reduction of gender inequalities in education. In the health sector, the most serious health issue for women in Mauritania is the high Maternal Mortality Rate (MMR) (560 per 100,000 live births in 2010). The lack of access to health facilities and frequent and insufficiently spaced births are among the main contributors to the high MMR in the country. While 75 percent of women receive antenatal care from a skilled health professional, the percentage of births attended by a skilled health attendant is much lower. The GOM is putting a lot of emphasis on reaching the health MDGs; A National Entity for reaching health MDG has been set up to allow a follow up of health indicators. This is a critical area of concern for Mauritania and represents one of the MDGs for which the government is particularly off-target. In terms of employment and economic participation of women, the National Strategy for Institutionalizing Gender (SNIG) notes that female employment is low since it concerns only 12.4percent of the economically active women against (27.3 percent of men in the same category). Women are concentrated in agriculture (48.6 percent of women in this category) and, to a lesser extent, in administration (23.6percent against 76.4percent for men) and trade (31.6percent against 63.9 for men). On the labor market, the SNIG highlights that women continue to suffer marginalization. 86 Women (29 percent) often have less access than men (71 percent) to decent employment and labor standards. In the private sector, the situation is much worse, and Mauritania only has 7.9percent women in the private sector against 92.1 percent of men. In the private sector most requested profiles are specialists in building, electrical, welding, masonry, auto mechanics, etc. Women with these specialties are almost nonexistent in Mauritania. Promote equal access for men/women to productive and economic Resources: The place of women in the national economy does not reflect the demographic weight of this social group, or its potential contribution or induced effects. Mauritanian women’s opportunities to contribute to and benefit from productive participation in the workforce appear to be limited compared with those of men. Even if the Economic contribution of women is increasing and becoming visible, some constraints are limiting their access to productive resources: access to land tenure for rural women, financial and technical resources and market. Informal sector is the largest source of employment for women. The female situation in the labor market is characterized by the fact that certain activities are significantly less open to women. This is particularly the case of employees who work in industry, justice, administration, etc. The National gender Strategy prepared by the GOM in 2010 and updated in 2012, put emphasis on Agriculture as representing the most important sector for women’s economic participation. Over 48.6 percent of women are estimated to work in agriculture, with almost 75 percent of self-employed rural women working in agriculture-related activities (Gender Strategy, 2010). Moreover, women’s representation compared to men is much higher in the agricultural sector than in the economy as a whole. Women are estimated to represent around 54 percent of those economically active in the sector (FAO, 2011). The potential of the agriculture sector to help rural women out of poverty is hampered by poor productivity (partly resulting from women’s poor access to productive inputs), sex-specialization that results in men dominating the more profitable activities, and lower access to credit and land(property) which is very unequal between men and women in Mauritania. Various strategies and policies developed by the Mauritanian Government clearly state the need to increase and strengthen the economic activities of women. The operationalization of the concept “promotion of women's economic activities", constitute an institutional response to the needs of women. During the preparation of the PRSP 2013-2015, some objectives have been identified for the promotion of women’s access to: i) the productive factors (land, financial resources, human resources, etc.), ii) access to the labor market, and iii) enhancing the productivity of women. The strategic options for the development of micro-finance institutions offering to women cooperatives financial services is an opportunity to develop economic activities and to meet a real need in particular for women who do not have access to the banking system. The establishment of IMF savings and credit institutions, managed and operated by women themselves, has had an impact beyond considerations of access to credit, they have also contributed to strengthening the social capital of women and their ability to participate and support their access to economic development. Some concrete actions are under consideration by the GOM: i) allocating more resources to the MASEF to help the Department to set up the keys priorities for women’s economic promotion (improvement of illiteracy, access to land, developing more financial intermediation, etc.), ii) 87 putting in place and promoting the private sector development which may include a sub- component on female entrepreneurship. c) Give men and women equal status and protection under the law. Mauritania has made progress in achieving greater legal equality for women, but implementation is often poor and some legal discrimination still exists. A new constitution, which guarantees equal rights for men and women, was passed in 2006 (World Bank, 2007). Mauritania has also ratified numerous international and regional legal texts such as the Convention on the Elimination of All Forms of Discrimination against Women (World Bank, 2007). Mauritanian law calls for equal pay for equal work. This law is observed by the two largest employers in the country – the civil service and the state mining company (USDS, 2011). However, in practice, women still suffer discrimination due to poor implementation and persistent negative social attitudes and practices (USDS, 2011). Some progress has also been made with respect to law enforcement, prevention and response to gender-based violence. The Personal Status Code (CSP), which was enacted in 2001, raises the marital age for men and women to 18 years and makes the consent of the woman mandatory. Female Genital Mutilation (FGM) is still very common in Mauritania but is decreasing and there is growing social momentum in attitudes against the practice. Between 2001 and 2007, FGM incidence fell from 71 percent to 65 percent, mainly due to a reduced incidence in urban areas (USDS, 2011). Support for the practice among the population is also decreasing, with 64 percent of women and 70 percent of men now favoring the abolition of FGM (World Bank, 2007). A law criminalizing the FGM is under preparation. Women’s equality is also hampered by some continuing areas of explicit legal inequality in modern civil law. Discrimination against women was seen with respect to the right to present witnesses and evidence and the right of access to government-held evidence (USDS, 2011). Women are considered minors before the law, cannot confer citizenship on their children if the father is a non-national (which is not the case for men), and do not have equal inheritance rights, with daughters entitled to only half the inheritance of sons and widows entitled to less than widowers (OECD, n.d.). The CSP also gives the husband exclusive authority over the family and allows the husband unilateral discretion to divorce, while it refers women’s requests for divorce to a judge (GoM, 2008). The government has been leading the way on women’s representation in public life, introducing a quota system in July 2006 that requires women to make up at least 20 percent of legislative candidates (USDS, 2011). This has resulted in women having a slightly higher level of representation in parliament. According to 2011 WDI data, the proportion of seats held by women in parliament was 22 percent. In addition, women hold around 35 percent of municipal council seats and have recently been appointed to symbolically important positions, such as ‘Wali’ (GoM, 2008; 2011). However, women’s representation is lower in other political institutions. In 2010, women made up only around 16 percent of the seats in the Senate and 18 percent of cabinet members. Women are also largely absent from senior positions in the public sector. 88 Annex 9: Mauritanian Statistics and World Bank support The Mauritanian Office for National Statistics (ONS) was established in 1990 and is a financially autonomous agency, supervised by the Ministry of Economic Affairs and Development (MAED). The ONS’s main mission is to collect, process, analyze, and disseminate statistical information, as well as to coordinate the National Statistical System (NSS). Its mission also includes: monitoring the economic framework, conducting research, developing cooperation (domestic and international) and facilitating training activities in the field of statistics. This agency, together with specialized statistical services located in various Ministries (established in the areas of education, health, agriculture, livestock, and fisheries) shape the NSS. Assessing the impact of these services may be complex since their production of statistical data is not always widely disseminated. Mauritania adopted a National Strategy for the Development of Statistics (NSDS) in 2000, covering the period 2001-2012. This strategy has recently been updated and extended, thus covering the period 2011-2015. The main four pillars are: (1) Improving the organizational system of national statistics, and strengthening data collection and coordination, (2) Developing statistical production by improving data quality and its dissemination, (3) Stimulating data analysis, and (4) Developing human capacity, as well as advocating/promoting the availability of technological and financial resources. The binding constraint for statistical development in Mauritania is the implementation of the existing Strategy through annual action plans. The principal bottlenecks hindering statistical development in the country are common to many statistical systems throughout Africa, namely: a. The need for statistical improvement is not adequately entrenched in the national culture and among decision makers, and the governance implications are not sufficiently understood; b. The scarcity of qualified human resources and the weakness of the education system, which is unable to fully respond to the needs of the NSS, the private sector and the international institutions; c. The absence of a culture conducive to wide data dissemination and the very difficult access to existing statistical figures; d. The consolidation of statistical administrative record systems within the various ministerial departments remains weak, particularly in the areas of water, sanitation, rural development and environment. Against this background, and with a view to improve the measurability of progress toward the World Bank Group (WBG) twin goals of reducing absolute poverty and enhancing shared prosperity, the WBG aims at supporting the Government of Mauritania strengthening the availability and reliability of its statistical data, by leveraging on the following instruments: a. Technical and financial support to the Population census and to the forthcoming Household Survey, through the PRECASP statistical component. The support has already materialized and will be directed to data collection and data processing, as well as to sample frame design. b. The implementation of a Trust Fund for Statistical Capacity Building (TFSCB), equivalent to USD450’000. The main objective of the TFSCB Grant will be to support the implementation of the NSDS 2011-2015 especially by improving the efficiency of the NSS and the quality and coverage of specific statistics. c. The World Bank will also provide technical comments and support on the questionnaire of the forthcoming Household Survey by proposing methodological approaches. 89 CPS Annex 1: A2 - Mauritania at a Glance 90 91 CPS Annex 2: B2 - Selected Indicators* of Bank Portfolio Performance and Management CAS Annex B2 - Mauritania Selected Indicators* of Bank Portfolio Performance and Management As Of Date 1/31/2013 Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 9 10 7 6 Average Implementation Period (years) b 5.5 6.2 6.5 7.6 Percent of Problem Projects by Number a, c 0.0 10.0 28.6 33.3 Percent of Problem Projects by Amount a, c 0.0 1.7 15.6 15.5 Percent of Projects at Risk by Number a, d 0.0 10.0 28.6 33.3 Percent of Projects at Risk by Amount a, d 0.0 1.7 15.6 15.5 Disbursement Ratio (percent) e 37.4 28.0 28.6 9.4 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) Average Supervision (US$/project) Memorandum Item Since FY 80 Last Five FYs Proj Eval by OED by Number 47 4 Proj Eval by OED by Amt (US$ millions) 781.7 93.5 percent of OED Projects Rated U or HU by Number 34.0 75.0 percent of OED Projects Rated U or HU by Amt 23.8 38.4 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 92 CPS Annex 3: B2 - IFC Program Mauritania: IFC Investment Operations Program 2010 2011 2012 2013* Original Commitments (US$m) IFC and Participants 1.30 10.27 11.59 141.43 IFC's Own Accounts only 1.30 10.27 11.59 141.43 Original Commitments by Sector (%)- IFC Accounts only CHEMICALS 90.15 FINANCE & INSURANCE 100 100 100 9.85 Total 100 100 100 100 Original Commitments by Investment Instrument (%) - IFC Accounts only Guarantee 100 100 100 9.85 Loan 90.15 Total 100 100 100 100 * Data as of January 01,2013 Mauritania: IFC Outstanding Portfolio (as of April 30, 2013) Client Sector Amount (in US$m) BB ENERGY. Chemicals 100.0 Attijari Mauritania Finance & Insurance 2.0 Grand Total 102.0 93 CPS Annex 4: B4 - Summary of Non-Lending Services CAS Annex B4 - Summary of Non-lending Services - Mauritania As Of Date 1/31/2013 Product Completion FY Cost Audiencea Objectiveb (US$000) Recent completions ROSC Accounting FY13 Risk-based audit TA FY13 State-Owned Enterprises Analytical Report FY13 Underway Investment Code TA ICT sector Dialogue FY13 50 Government, public Knowledge dissemination generation, problem-solving. Policy Dialog Health Strategy FY13 30 Financial Sector Strategy (FIRST) FY14 50 MR PER Update 20 Minerals&Petroleum Inst.Cap. Building M&E FY13 78 (IDF) State-Owned Enterprises Analytical Report FY13 50 Government Knowledge generation, problem-solving Land Governance Assessment Framework FY13/14 200* Government, Civil Public debate, Society, Bank, donors knowledge generation, problem-solving Civil Registry Impact on Service Delivery FY14 65 Civil Society, Public debate, Government problem-solving Planned Semi-arid Land & Climate Change Study Policy dialogue health Strategy & PER Dissem. Social Safety Net & Protection Strategy NLTA Skills Training and Employment Statistical Capacity Development Inclusive Green Growth Study 75 a. Government, donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving. * USD 200,000 GPF trust fund allocation that covers multiple countries including Mauritania. 94 CPS Annex 5: B6 - Key Economic Indicators Mauritania - Key Economic Indicators Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) Gross domestic product a 100 100 100 100 100 100 100 100 100 Agriculture 26 19 20 17 13 14 14 14 14 Industry 40 41 35 44 50 48 49 48 48 Services 35 41 34 30 30 33 33 34 35 Total Consumption 82 88 92 87 73 76 83 80 72 Gross domestic fixed investment 28 27 25 24 33 39 31 28 32 Government investment 7 7 7 6 6 8 7 8 8 Private investment 21 21 18 18 27 31 23 20 24 Exports (GNFS)b 43 59 45 56 66 67 59 56 53 Imports (GNFS) 61 82 46 52 59 70 61 54 48 Gross domestic savings 18 13 8 13 27 24 17 20 28 c Gross national savings 23 19 14 15 25 20 14 17 25 Memorandum items Gross domestic product 3357 3585 3027 3685 4213 4672 5130 5565 6110 (US$ million at current prices) GNI per capita (US$, Atlas method) 960 1080 1030 1010 1030 1140 .. .. .. Real annual growth rates (%, calculated from 1995 prices) Gross domestic product at market 1.6 3.5 -1.2 5.1 3.9 6.2 6.3 5.5 9.5 prices (*) Gross Domestic Income -3.4 6.8 18.5 18.2 6.6 -8.4 2.6 4.0 5.3 Real annual per capita growth rates (%, calculated from 1995 prices) Gross domestic product at market -1.0 0.9 -3.6 2.6 1.6 3.3 .. .. .. prices Total consumption 5.0 -7.5 -13.2 11.3 -9.3 0.1 .. .. .. Private consumption 2.8 -7.7 23.6 9.2 -18.6 -10.0 .. .. .. Memorandum items Resource balance (% of GDP) -18.5 -20.9 -16.7 -11.2 -2.5 -3.4 -2.9 -4.4 -3.2 Real annual growth rates ( YR95 prices) Merchandise exports (FOB) -10.2 33.5 -22.6 52.2 35.3 3.2 3.5 -3.8 0.8 Primary -10.2 33.5 -22.6 52.2 35.3 3.2 3.5 -3.8 0.8 Manufactures .. .. .. .. .. .. .. .. .. Merchandise imports (CIF) 159.6 17.8 -40.7 25.2 17.0 22.1 4.7 -0.1 -2.2 (Continued) 95 Mauritania - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Public finance (as % of GDP at market prices)e Current revenues 22.5 23.7 25.0 25.9 25.8 26.7 24.2 23.5 22.5 Current expenditures 18.3 24.2 23.5 20.1 20.8 20.8 18.2 17.0 16.0 Current account surplus (+) or deficit (- 4.2 -0.5 1.5 5.8 5.0 5.9 6.0 6.5 6.5 Capital expenditure 6.7 6.5 7.1 7.7 8.0 10.1 9.4 9.1 7.8 Foreign financing 2.8 1.8 2.7 0.9 3.6 3.9 3.6 3.1 1.9 Monetary indicators M2/GDP 36.5 43.6 53.0 47.2 46.6 48.9 46.6 46.7 43.0 Growth of M2 (%) 18.7 17.5 13.1 14.1 14.9 9.8 6.0 9.4 1.0 Private sector credit growth / 75.1 74.2 20.8 75.8 113.0 100.3 121.5 119.1 73.2 total credit growth (%) Price indices( YR95 =100) Merchandise export price index 156.0 142.8 139.3 139.7 144.7 152.5 140.4 139.8 134.2 Merchandise import price index 137.2 142.0 174.2 193.7 198.8 175.6 177.6 178.1 177.3 Merchandise terms of trade index 113.6 100.6 80.0 72.1 72.8 86.9 79.0 78.5 75.7 Real exchange rate (US$/LCU)f .. .. .. .. .. .. .. .. .. Real interest rates Consumer price index (% change) 7.3 7.3 2.2 6.3 5.7 5.9 6.1 6.1 5.7 GDP deflator (% change) 4.6 -5.0 -5.9 21.8 12.1 -0.9 4.1 3.2 3.9 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. (*) data source: International Monetary Fund Source: National Authorities, IMF and World Bank staff projections and updated as of end 2012 96 CPS Annex 6: B8 - Operations Portfolio (IBRD/IDA and Grants) 97 IBRD 33445R M A U R I TA N I A SELECTED CITIES AND TOWNS MAIN ROADS REGION CAPITALS RAILROADS NATIONAL CAPITAL REGION BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES 15W 10W This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 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