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A Look at Credit Access in Mauritania

Credit Access in Mauritania
Located in the Sahel region of West Africa, Mauritania is a predominantly desert-country that bridges western sub-Saharan Africa and the Arab Maghreb. As Mauritania experiences robust growth from a thriving natural resource industry, poverty rates significantly declined.

The poverty headcount fell from 44.5 percent of the country’s population in 2008 to 33 percent in 2014, yet Mauritania remains ranked 159 out of 188 countries on the United Nations Human Development Index.

Diagnosing the Problem

Credit access in Mauritania is one of the leading impediments to economic growth. A World Bank report on Financial Access and Household Welfare in Mauritania notes that the credit market is shallow, divided and informal. There are few formal credit providers that operate in the country. Most banks, ATMs and the financial infrastructure is exclusive to the capital, Nouakchott.

Beyond these barriers to a more inclusive credit market, there are potent cultural barriers that continue to restrict credit access in Mauritania. From extensive information asymmetry between lenders and borrowers to weak legal and government institutions to gender hierarchies, these factors remain as obstacles to accessing credit. Because of these barriers, with regard to ease of credit access, Mauritania ranked 162 out of 189 countries in the 2016 Doing Business report.

The role credit serves in the growth of developing countries’ economies cannot be overstated. Increased credit access is essential for allowing farmers, businesses and consumers across Mauritania to utilize investment capital and help expand economic activity.

Improving Credit Access in Mauritania

Research conducted in India and Pakistan demonstrates that the growth of rural financial services and infrastructure is correlated with improved household welfare and increased development of bank branches. The impact of bank branches is two-fold: non-agricultural economic output increases and rural poverty decreases.

As of 2016, the rural population of Mauritania stood at 39.55 percent, according to the World Bank. Mauritania and its rural population have much to gain as efforts to improve credit access continue. Access to credit significantly influences economic incentives at the household level, which can increase consumption and improve investment decisions and rates of wage growth. Furthermore, as households are able to get credit more readily, they become less reliant on the consumption of household production, which can lead to improved living standards, food security, a better education and an acclimation to the nonagricultural sectors of the economy.

Going Forward

In order to ensure credit access in Mauritania continues to expand, policymakers should pursue strategies for expanding financial services in underrepresented rural areas. Greater access to financial services and microcredit programs beyond the country’s urban centers can facilitate rural households’ access to credit.

Recent positive trends in mobile banking are already allowing rural populations to have increased access to financial services across Sub-Saharan Africa. Improved credit access in Mauritania could spark productivity growth and improve welfare among the poorest households in the country.

– McAfee Sheehan
Photo: Flickr

Examining the Causes of Poverty in Mauritania

Causes of Poverty in MauritaniaMauritania is a sparsely populated and enormous nation stretching across a vast area of Northwest Africa. It is also cripplingly poor; about 21 percent of children under five are chronically malnourished and recent climatic changes have worsened the situation.

The causes of poverty in Mauritania are linked to both geographical inevitabilities and the immense corruption taking place at the government level. The country has experienced a dramatic 20-year drought, which has caused widespread desertification. Approximately 90 percent of the nation is now considered desert land, which has inevitably caused major problems for the small rural population that is scattered across it.

Nomadic communities have declined in population as they struggle to adjust to the new environment they find themselves in. New shantytowns have arisen as a result, which offer poor sanitation and a lack of basic water needs. Donkeys carrying containers are the main method of water transportation and failed sewage systems frequently contaminate the ground supply.

Corruption is another one of the major causes of poverty in Mauritania, which has prevented the country from exploiting its resources – these include fish, minerals and livestock. Economic policy is unstable and inconsistent, preventing any major investment from Europe or the Arab world. Educated Mauritanians mostly leave the country to work in the Gulf States, where opportunities abound by comparison.

Despite 170,000 hectares of agricultural land, Mauritania is food insecure as a result of this corruption. Public officials almost never face recrimination for usurping public money; as a result, the country starves. About 26 percent of Mauritanians in the lean season – where rainfall is scattered – do not get the basic foodstuffs they need to survive.

Nongovernmental organizations (NGOs) are working to improve the situation. The World Food Programme has implemented a distribution system where they provide two meals a day in rural areas, focusing on areas where malnutrition is high and children are unable to attend school. The changing climate is also being addressed. Supplementary feeding is being provided for pregnant women and young mothers in areas enduring the shock of a climate shift.

The causes of poverty in Mauritania are both manmade and natural. The nation’s shifting geography and desertification have devastated rural communities and worsened hunger and child mortality. Corruption acts in tandem with this to worsen the situation and has left Mauritania unable to fully exploit is significant natural resources to dig itself out of its poverty trap. The work of NGOs like the World Food Programme offer a glimmer of hope for the nation to begin to raise itself out of poverty.

– Jonathan Riddick

Photo: Flickr