Policies Towards Foreign Direct Investment

In his policy statement delivered on February 18, 2019 at the National Assembly, the newly appointed Prime minister focused on the resolution of Burkina Faso’s economic difficulties.  He acknowledged the low productivity of the production sectors. He considered six measures to boost economic activity including improving the business and investment climate. He also stated that the government will strengthen the conduct of reforms, including those contained in the minimum matrix of business climate reform, in order to improve Burkina Faso’s Doing Business ranking and foster the development of the private sector.

The World Bank published the 2019 Doing Business Report (DB/2019), on November 1, 2018. This report announced a slight drop for Burkina Faso in its ranking for “ease of doing business for small and medium-sized businesses” as it slipped in ranking from 148th place out of 190 in 2018 to 151st in 2019.

The government of Burkina Faso adopted the National Program for Economic and Social Development (PNDES) with the aim to structurally transform the Burkinabè economy in order to generate strong, sustainable, resilient, and inclusive growth and thus create decent jobs for all and improve social well-being.  The total amount of funding required for the implementation of the PNDES is CFAF 15,395.4 billion, or about USD 27 billion. Of this sum, it is expected that 63.8 percent (CFAF 9,825.2 billion or USD 17 billion) of the amount be mobilized by own resources, namely the mobilization of taxes. The other 36.2 percent (CFAF 5,570.2 billion or USD 10 billion) represents the need for funding from Public Private Partnership (PPP) projects, the mobilization of funds from the Burkinabe diaspora and technical and financial partners, and the voluntary contributions.

As of December 2018, According to PNDES Permanent Secretariat technicians, CFAF 3,884.5 billion of CFAF 9,825.2 billion (39.5 percent) was mobilized from internal resources.  Out of external resources, the amount of agreements signed amounts to CFAF 2,573.35 billion of CFAF 5,570.2 billion, or 46.2 percent. The main difficulties to internal revenue collection are related to security issues and strikes initiated by government workers.

Article 8 of the investment code stipulates there is to be no discrimination against US foreign investors.  However, in order for any foreign investor to benefit from the exemptions provided for by the investment code, they are required to submit a request to the General Directorate for the Promotion of the Private Sector.

Limits on Foreign Control and Right to Private Ownership and Establishment

Burkina Faso is a member of the Organization for the Harmonization of Corporate Law in Africa (OHCLA).  All the Uniform Acts enacted by this organization are applicable in the country. Regarding business structures, OHCLA allows most forms of companies admissible under French business law, including: public corporations, limited liability companies, limited share partnerships, sole proprietorships, subsidiaries, and affiliates of foreign enterprises.  With each scheme, there is a corresponding set of related preferences, duty exceptions, corporate tax exemptions, and operation-related taxes.

From 1995 to 2018, Law 062-95, which was amended several times, governed investments in Burkina Faso.  However, in order to adapt this code to the new exigencies of the world economy and to respond to the fierce competition between states for attracting foreign investment, the National Assembly adopted a new Investment Code by Law 038 on October 30, 2018.  It replaces Law 062-95 of December 14, 1995, which presented several shortcomings, including the non-coverage of investments in renewable energies and hydraulics.

According to Article 5 of the Investment Code, certain sectors of activity may be subject to restrictions on foreign direct investment. Foreign companies wishing to invest in these sectors must follow a specific procedure specified by decree.  Burkina Faso has not established a procedure to scrutinize foreign direct investment. Under the investment code, all personal and legal entities lawfully established in Burkina Faso, both local and foreign, are entitled to the following rights: fixed property; forest and industrial rights; concessions; administrative authorizations; access to permits; and participation in government procurement process.

The investment code establishes a special tax and customs regime for investment agreements signed by the state with large investors.  This scheme provides significant tax benefits.

U.S. investors are not specifically targeted regarding ownership or control mechanisms.

Other Investment Policy Reviews

There have been no recent investment policy reviews by the WTO or UNCTAD.  In July 2014, the organizations Réseau Africain de Journalistes pour l’Intégrité et la Transparence and the Natural Resource Governance Institute published a report entitled “Impact of Tax and Customs Regimes on the Mining Sector and on the EITI Reports in Burkina Faso.”

Business Facilitation

In March 2013, the GoBF created the Burkina Faso Investment Promotion Agency (API-BF).  The establishment of the Presidential Council fulfilled recommendations of a 2009 UNCTAD Investment Policy Review.  The website is www.investburkina.com  .

To simplify the registration process for companies wishing to establish a presence in Burkina Faso, the government has created eight enterprise registration centers called Centres de Formalités des Entreprises, known by their French acronym as CEFOREs.  The CEFOREs are one-stop shops for company registration. On average, a company can register its business in 9 days according to the Doing Business report 2019. The CEFOREs are located in Ouagadougou, Bobo-Dioulasso, Ouahigouya, Tenkodogo, Koudougou, Fada N’Gourma, Kaya, Dedougou and Gaoua.

In 2018, Burkina Faso strengthened protections for minority investors by enhancing access to shareholder actions and by increasing disclosure requirements on related-party transactions.  The 2019 Doing Business report ranked Burkina Faso 149th of 190 in minority investor protection.

Other sites of interest:

Chamber of Commerce business registration: http://cci.bf/?q=fr/creation-dentreprise  

Mining Chamber of Commerce: http://chambredesmines.bf/  

Investment Promotion Agency of Burkina Faso or l’Agence de Promotion des Investissements du Burkina Faso (API-BF): http://www.investburkina.com  

Tax and administrative procedures: https://burkinafaso.eregulations.org/  

World Bank Investing Across Borders: http://iab.worldbank.org/data/exploreeconomies/burkina-faso  

Among the 21 countries covered by the World Bank’s Investing across Sectors indicators in the Sub-Saharan Africa region, Burkina Faso is one of the more open economies to foreign equity ownership.  Most of its sectors are fully open to foreign capital participation, although the law requires companies providing mobile or wireless communication services to have at least one domestic shareholder.  Furthermore, the state automatically owns 10 percent of the shares of all companies active in the mining sector. The government is entitled to nominate one member of the board of directors for such companies.  Select additional strategic sectors are characterized by monopolistic market structures. In particular, the oil and gas sector, and the electricity transmission and distribution sectors.

Outward Investment

The Burkinabe Government tries to promote outward investment via the Investment Promotion Agency of Burkina Faso or L’Agence de Promotion des Investissements du Burkina Faso (API-BF), which sits under the Presidential Council for Investment (Conseil Presidentiel pour l’Investissement).  The API-BF’s mission is to promote the economic potential of Burkina Faso to attract investment and spur economic development.

Burkina Faso currently imposes no restrictions for investors interested in investing abroad, within the framework of the Economic Community of West African States (ECOWAS) and West African Economic and Monetary Union (WAEMU) regional markets.

Investment Incentives

The 2018 investment code demonstrates the government’s interest in attracting FDI to create industries that produce export goods and provide training and jobs for its domestic workforce.  The code provides standardized guarantees to all legally established firms operating in Burkina Faso, whether foreign or domestic. It contains five investment and operations preference schemes, which are equally applicable to all investments, mergers, and acquisitions.

Burkina Faso’s regulations governing the establishment of businesses include most forms of companies admissible under French business law, including: public corporations, limited liability companies, limited share partnerships, sole proprietorships, subsidiaries, and affiliates of foreign enterprises.  With each scheme, there is a corresponding set of related preferences, duty exceptions, corporate tax exemptions, and operation-related taxes.

Under the investment code, all personal and legal entities lawfully established in Burkina Faso, both local and foreign, are entitled to the following rights: fixed property, forest and industrial rights, concessions, administrative authorizations, access to permits, and participation in state contracts.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are no foreign trade zones or free ports in Burkina Faso.  The Burkinabe investment code prohibits discrimination against foreigners.  American firms not registered in Burkina Faso can compete for contracts on projects financed by international sources such as the World Bank, U.N. organizations, or the African Development Bank.

Performance and Data Localization Requirements

The GoBF does not mandate local employment, but in recent years has encouraged investors to promote local employment and support local economies.  The GoBF does not require investors to purchase materials from local sources or to export a certain percentage of output. However, regarding the mining sector, according to the article 101 of the mining code, “Holders of mining title or authorization and their subcontractors give preference to Burkinabe enterprises for any contract of provision of services or supplies of goods in equivalence of price, quality and time.” The GoBF does not impose “offset” requirements, which dictate that major procurements be approved only if the foreign supplier invests in Burkinabe manufacturing, research and development, or service facilities in areas related to the items being procured.  Burkina Faso does not have “forced localization” policies.

Capital Markets and Portfolio Investment

The government of Burkina Faso is more focused on attracting FDI and concessionary lending for development than it is on developing its capital markets.  Net portfolio inflows were estimated at around 0.1 percent of GDP in 2017, while FDI was about 2.9 percent, according to Standard & Poor’s. While the government does issue some sovereign bonds to raise capital in the WAEMU regional bond market, in general the availability of different kinds of investment instruments is extremely limited.

Money and Banking System

The banking system is sound, relatively profitable and well capitalized, but credit is highly concentrated to a small number of clients and a few sectors of the economy, according to the IMF’s March 2018 Country Report.  Only 15 percent of the population has a checking account. Like all member states of WAEMU, Burkina Faso is a member of the Central Bank of West African States. Many foreign banks have branches in the country. The traditional banking sector is composed of twelve commercial banks and five specialized credit institutions called “établissements financiers.”  The use of mobile money is becoming more prevalent.

Foreign Exchange and Remittances

Foreign Exchange

Burkina Faso is a member of the West African Economic and Monetary Union (WAEMU, or UEMOA when referred to by its French acronym), whose currency is the CFA franc (XOF), or FCFA.  The FCFA is freely convertible into euros at a fixed rate of 655.957 FCFA to 1 euro. Investors should consider the advantages offered by the WAEMU, which allows the FCFA to be used in all eight member countries: Senegal, Togo, Cote d’Ivoire, Mali, Benin, Guinea Bissau, Niger, and Burkina Faso.

Burkina Faso’s investment code guarantees foreign investors the right to the overseas transfer of any funds associated with an investment, including dividends, receipts from liquidation, assets, and salaries.  Such transfers are authorized in the original currency of the investment. Once the interested party presents the request for transfer, accompanied by all relevant bank documents, Burkinabe banks transfer the funds directly to the recipient banking institution.  Foreign exchange is readily available at all banks and most hotels in Ouagadougou and Bobo-Dioulasso.

Remittance Policies

The GoBF is not expected in the near future to change its current remittance policy concerning purchasing foreign currency in order to repatriate profits or other earnings.

As a member of a regional currency union (WAEMU), Burkina Faso does not engage in currency manipulation.

Burkina Faso is a member of the Intergovernmental Action Group against Money Laundering in West Africa (GIABA), a FATF-style regional body.

Sovereign Wealth Funds

Burkina Faso does not have a sovereign wealth fund.

There is a general awareness of corporate social responsibility among both producers and consumers.  The GoBF requires mining companies to invest in social infrastructure, such as health centers and schools, and other projects to benefit the local populations in the areas of their mining operations.  A common practice for many companies is to provide food supplies, typically rice or millet, to their workers often at the end of the year. Larger private businesses, such as civil engineering firms, sponsor sport events like the Tour du Faso and donate sporting equipment to disadvantaged communities.  SOEs such as SONABHY and LONAB frequently undertake social projects.

Burkina Faso is a member of the Extractive Industries Transparency Initiative (EITI) since 2008.  In 2013, it was declared an EITI compliant country, and has continued to show progress in each evaluation.

Policies Towards Foreign Direct Investment

The GOC’s policies towards foreign direct investment (FDI) are generally positive.  There are few formal restrictions on foreign trade and investment. 

Chad’s laws and regulations encourage FDI.  The National Investment Charter of 2008, a set of guidelines promulgated by the National Agency for Investment and Exports (ANIE, Agence Nationale des Investissements et des Exports), an agency of the Ministry of Industrial and Commercial Development & Private Sector Promotion, offers incentives to foreign companies establishing operations in Chad, including up to five years of tax-exempt status.  Under Chadian law, foreign and domestic entities may establish and own business enterprises. The National Investment Charter permits full foreign ownership of companies in Chad. The only limit on foreign control is on ownership of companies deemed related to national security.  The National Investment Charter guarantees both foreign companies and individuals equal standing with Chadian companies and individuals in the privatization process. In principle, tenders for foreign investment in state-owned enterprises (SOEs) and for government contracts are conducted through open international bid procedures.

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limits on foreign ownership or control.  There are no sector-specific restrictions that discriminate against market access for U.S. or other foreign investors, and no de facto anti-foreign discriminatory practices.

Other Investment Policy Reviews

The World Trade Organization (WTO) last published a trade policy review for Chad, Cameroon, Republic of Congo, Gabon, and Central African Republic in July 2013. 

Neither the Organization for Economic Cooperation and Development (OECD) nor the United Nations Committee on Trade and Development (UNCTAD) has published any investment policy reviews (IPR) of Chad.

Business Facilitation

Foreign businesses interested in investing in or establishing an office in Chad should contact ANIE, which offers a one-stop shop for filing the legal forms needed to start a business.  The process officially takes 72 hours and is the only legal requirement for investment. ANIE’s website (www.anie-tchad.com  ) provides additional information.  Online business registration is not yet available via the Global Enterprise Registration web site (www.GER.co  ) or the Business Facilitation Program (www.businessfacilitation.org  ). 

In 2018, the World Bank ranked Chad 180 out of 190 countries for ease of starting a business, which included factors beyond the registration, to include permitting, access to resources like space and energy, and access to capital.

Contracts are tailored to each investment and often include additional incentives and concessions, such as permissions to import labor or agreements to work with specific local suppliers.  Some contracts are confidential. Occasionally, government ministries attempt to change the terms of contracts or apply new laws broadly, even to companies that have pre-existing agreements that exempt them.  Chad’s judicial system is weak, and rulings, including those relating to contract disputes, are susceptible to government interference. There is limited capacity within the judiciary to address commercial issues, including contract disputes.  Parties usually settle disputes directly or through arbitration provided by the Chamber of Commerce, Industry, Agriculture, Mining, and Crafts (CCIAMA) or through an outside entity, such as the International Chamber of Commerce (ICC) in Paris. 

Outward Investment

The GOC does not offer any programs or incentives encouraging outward investment, although there are no restrictions on domestic investors who might have the means and the interest in investing abroad.

The GOC does not restrict domestic investors from investing abroad.

Investment Incentives

The Chadian tax code (CGI, Code General des Impôts) offers incentives to new business start-ups, new activities, or substantial extensions of existing activities.  Eligible economic activities are limited to the industrial, mining, agricultural, forestry, and real estate sectors, and may not compete with existing enterprises already operating in a satisfactory manner (Articles 16 and 118 of the National Investment Charter). 

Foreign investors may ask the GOC for other incentives through investment-specific negotiations.  Large companies usually sign separate agreements with the government, which contain negotiated incentives and obligations.  The possibility of special tax exemptions exists for some public procurement contracts, and a preferential tax regime applies to contractors and sub-contractors for major oil projects.  The government occasionally offers lower license fees in addition to ad hoc tax exemptions. Incentives tend to increase with the size of a given investment, its potential for job creation, and the location of the investment, with rural development being a GOC priority.  Investors may address inquiries about possible incentives directly to the Ministry of Industrial and Commercial Development & Private Sector Promotion, or the Ministry of Petroleum and Energy.

The GOC does not issue guarantees but jointly finances some foreign direct investments.

Foreign Trade Zones/Free Ports/Trade Facilitation

There are currently no foreign trade zones in Chad.  The Chadian Agency for Investment and Exportation (ANIE) is examining the possibility of creating a duty-free zone.

Performance and Data Localization Requirements

Chad does not follow forced localization, the policy in which foreign investors must use domestic content in goods or technology. 

Foreign companies are legally required to employ Chadian nationals for 98 percent of their staff.  Firms can formally apply for permission from the Labor Promotion Office (ONAPE) to employ more than two percent expatriates if they can demonstrate that skilled local workers are not available.  Most foreign firms operating in Chad have obtained these permissions. Foreign workers require work permits in Chad, renewable annually. Companies must present personnel files of local candidates not hired to the GOC for comparison against the profiles of foreign workers.  Multinational companies and international non-governmental organizations routinely protest these measures. 

There are no requirements for foreign IT providers to turn over source code and/or provide access to surveillance (backdoors into hardware and software or turn over keys for encryption).  There are no rules on maintaining a certain amount of data storage within Chad. The GOC has enacted four laws covering cybersecurity and cyber-criminality.

Capital Markets and Portfolio Investment

Chad’s financial system is underdeveloped.  There are no capital markets or money markets in Chad.  A limited number of financial instruments are available to the private sector, including letters of credit, short- and medium-term loans, foreign exchange services, and long-term savings instruments.

Commercial banks offer credit on market terms, often at rates of 12 to 25 percent for short-term loans.  Medium-term loans are difficult to obtain, as lending criteria are rigid. Most large businesses maintain accounts with foreign banks and borrow money outside of Chad.  There are ATMs in some major hotels, N’Djamena airport, and in some neighborhoods of N’Djamena.

Chad does not have a stock market and has no effective regulatory system to encourage or facilitate portfolio investments.  A small regional stock exchange, known as the Central African Stock Exchange, in Libreville, Gabon, was established by CEMAC countries in 2006.  Cameroon, a CEMAC member, launched its own market in 2005. Both exchanges are poorly capitalized.

The GOC does not restrict payments and transfers for current international transactions. Access to credit is available, but is prohibitively expensive for most Chadians in the private sector.

Money and Banking System

Chad’s banking sector is small and continues to streamline lending practices and reduce the volume of bad debt. The Chadian banking rate is even lower than the average rate in the CEMAC, sub-region estimated at 12%, due to the lack of means to afford a bank account and the lack of culture aimed at popularizing the banking system. Chad’s four largest banks have been privatized. The former Banque Internationale pour l’Afrique au Tchad (BIAT) became a part of Togo-based Ecobank; the former Banque Tchadienne de Credit et de Depôt was re-organized as the Societe Generale Tchad; the former Financial Bank became part of Togo-based Orabank; and the former Banque de Developpement du Tchad (BDT) was reorganized as Commercial Bank Tchad (CBT), in partnership with Cameroon-based Commercial Bank of Cameroon.  There are two Libyan banks in Chad, BCC (formerly Banque Libyenne) and Banque Sahelo-Saharienne pour l’Investissement et le Commerce (BSCIC), along with one Nigerian bank (UBA, United Bank for Africa). In 2018, the GoC funded a new bank Banque de l’Habitat du Tchad (BHT) with the GoC as majority shareholder with 50 percent of the shares and two public companies, the National Social Insurance Fund (CNPS) and the Chadian Petroleum Company (SHT), each holding 25 percent.

 Chad, as a CEMAC member, shares a central bank with Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, and Gabon – the Central African Economic Bank (BEAC, Banque des Etats de l’Afrique Centrale), headquartered in Yaounde, Cameroon.   

Foreigners must establish legal residency in order to establish a bank account.

Foreign Exchange and Remittances

Foreign Exchange

The government does not restrict converting funds associated with an investment (including remittances of investment capital, earnings, loan repayments, lease payments, royalties) into a freely usable currency at legal market-clearing rates.  There are no restrictions on repatriating these funds, although there are some limits associated with transferring funds. Individuals transferring funds exceeding USD 1,000 must document the source and purpose of the transfer with the local sending bank.  Companies and individuals transferring more than USD 800,000 out of Chad need BEAC authorization to do so. Authorization may take up to three working days. To request authorization for a transfer, companies and individuals must submit contact information for the sender and recipient, a delivery timetable, and proof of the sender’s identity.  There were no reports of other capital outflow restrictions in 2017. Businesses can obtain advance approval for regular money transfers.

Chad is a member of the African Financial Community (CFA) and uses the Central African CFA Franc (FCFA) as its currency.  The FCFA is pegged to the Euro at a fixed rate of one Euro to 655.957 FCFA exactly (100 FCFA = 0.152449 Euro). In 2018, the CFA/USD exchange rate fluctuated between 565 and 625 FCFA as a function of the performance of the USD against the Euro.  There are no restrictions on obtaining foreign exchange.

Remittance Policies

There are no recent changes to or plans to change investment remittance policies.  There are no time limitations on remittances, dividends, returns on investment, interest, and principal on private foreign debt, lease payments, royalties, or management fees. 

Chad does not engage in currency manipulation.

Chad is a member state of the Action Group against Money Laundering in Central Africa (GABAC), which is in the process of becoming a Financial Action Task Force (FATF)-style regional body.  On the national level, the National Financial Investigation Agency (ANIF) has implemented GABAC recommendations to prevent money laundering and terrorist financing.

Sovereign Wealth Funds

The GOC does not currently maintain a Sovereign Wealth Fund. 

There is a general awareness of Responsible Business Conduct (RBC) among firms in Chad.  Most Western firms operating in Chad engage in RBC, particularly those in the petroleum and telecommunications sectors.  For example, Esso Exploration and Production Chad, Inc. (EEPCI), the main oil producer, has implemented Environmental Management Plans (EMP), a rigorous program that espouses, inter alia, prioritizing hiring local residents and local purchase of goods and services, establishing international safety standards, and protecting biodiversity.  A critical part of EMP has been the Land Use Management Action Plan (LUMAP) that compensates individuals and communities for land used by the project. To date, LUMAP has distributed approximately $1.7 million in cash, in-kind goods, and training. EMP’s efforts are complemented by the ExxonMobil Foundation, which supports projects to improve girls’ education and fight malaria.

Many foreign firms commit to extensive local staff training efforts, purchase local goods, and donate excess equipment to charities or local governments. Internet companies Airtel and Tigo, as well as some banks, continue to engage in RBC focused on public awareness campaigns countering violent extremism and promoting social cohesion.

While work safety and environmental protection regulations exist, the government does not always enforce them and companies do not always adhere to them.  There are a number of local NGOs, particularly in the southern oil-producing regions, which monitor safety and environmental protection in the oil sector, and which have held government and private companies publically accountable. EEPCI adheres to U.S. Occupational Safety and Health Administration (OSHA) guidelines for recording accidents and injuries, and implements a rigorous program of safety procedures and protocols.

Policies Towards Foreign Direct Investment

Mali generally encourages foreign investment.  Foreign and domestic investments receive equal treatment.  The structural adjustment facility agreements signed between the International Monetary Fund (IMF)/World Bank and Mali since 1992 support foreign investment.  The government’s national strategy to fight poverty as presented to the IMF, World Bank, and other donors emphasizes the role of the private sector in developing the economy.  Mali adopted a new Strategic Framework for Economic Recovery and Sustainable Development for 2019-2023, “le Cadre Stratégique pour la Relance Economique et le Développement Durable” (CREDD).  Emphasizing peace, security, and macroeconomic stability, the new CREDD hopes to strengthen economic growth, institutional development, governance, and the provision of basic social services. Mali maintains an office in charge of Business Climate Reforms, the Cellule Technique de la Réforme du Climat des Affaires (CTRCA), tasked with developing an action plan for improving the business environment.  In 2015, Mali also created a committee comprising both government and private business for Monitoring Business Environment Reforms. Mali is a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU), which aim to reduce trade barriers, harmonize monetary policy, and create a common market.

The Malian government has instituted policies promoting direct investment and export-oriented businesses.  Foreign investors go through the same screening process as domestic investors. Criteria for granting authorization under the 2012 investment code include the size of the proposed capital investment, the use of locally produced raw materials, and the level of job creation.

Mali maintains a one-stop shop for prospective investors, the Agency for Investment Promotion (Agence pour la Promotion de l’Investissement or API).  A law on public-private partnerships approved by the National Assembly in 2016 aims to reinforce the framework to attract foreign and domestic investment in a multitude of sectors.

In 2011, the government created an export promotion agency (APEX-Mali) to promote and encourage export-oriented activities.  APEX-Mali is fully functional. The Government of Mali has also revitalized an African Growth and Opportunity Act (AGOA) committee to encourage exports to the United States.  The AGOA committee developed a National AGOA Strategy to help Malian exporters better utilize the market preferences provided under AGOA.

U.S. investors report to face the same challenges as other foreign investors do, including allegedly unfair application of tax collection laws, difficulties clearing goods through customs, and requests for bribes.  Third parties report that corruption in the judiciary is common and foreign companies often find themselves at a disadvantage vis-à-vis Malian investors in enforcing contracts and competing for public procurement tenders.

Additional information can be found in the 2019 Doing Business Report on Mali: http://www.doingbusiness.org/en/data/exploreeconomies/mali#  .

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises with no restriction to forms of remunerative activities.  There are some specific limits on ownership in the mining and media sector. For example, foreign investors in the mining sector can own up to 90 percent of a mining company.  Foreign investors in media companies must have a 50 percent or lower ownership stake. WAEMU requires Malian and foreign companies to report if they will hold foreign currency reserves in their Malian business accounts and receive approval from the Ministry of Economy and Finances and the Central Bank for West African States (BCEAO). 

Other Investment Policy Reviews

No information is available on other investment policy reviews.

Business Facilitation

The Agency for Investment Promotion (API) is Mali’s one-stop shop to facilitate business and to promote foreign and local investments.  Serving both Malian and foreign enterprises of all sizes, API has become a strong source of potential support for U.S. investors.

API’s website (http://www.apimali.gov.ml/  ) provides copious information ranging from business registration, tax payment, access to social security, trade regulations, land ownership procedures, visa and residence permit regulations, and information on tax exemptions, special economic zones, recruitment of personnel, and connecting to water and electricity utilities.

Foreign companies, regardless of size, wishing to register in Mali can receive tax and customs benefits depending on the size of investment.  Small and medium sized enterprises, for which the size definition varies across ministries, are also eligible for fiscal advantages. The Government of Mali is in the process of harmonizing its registration advantages.  There is no discrimination based on gender, age, or ethnicity in the process of business registration.

The World Bank’s 2019 Doing Business Report notes that it takes an average of five procedures and 11 days to establish a business in Mali.  The Government of Mali publishes the incorporation notices of new companies on the official API website. The mining code encourages investments in small and medium mining enterprises, awards two-year exploration permits free of charge, and does not require a commitment from the exploring firm to lease the area explored thereafter.

Additional information on Mali’s online business registration processes is available at https://ger.co/  .

Outward Investment

The Government of Mali has no policy to promote outgoing investment.  A few Malian companies invest in neighboring countries and in France.

Investment Incentives

The investment, mining, commerce, and labor codes have the stated intention of encouraging investment and attracting foreign investors.  Mali has privatized a number of state-owned enterprises, and foreign companies have responded successfully to calls for bids in several cases.  The investment code offers incentives to companies that reinvest profits to expand existing businesses or diversify into another relevant sector.  The code also encourages the use of locally sourced inputs, which can offer tax exemptions. Companies that use at least 60 percent locally produced raw materials in their products are eligible for certain tax exemptions.  Companies that invest at least five percent of their turnover in supporting local research and development are eligible for a reduction of payroll taxes for Malian employees.

Most businesses are located in the capital city of Bamako.  The investment code encourages the establishment of new businesses in other areas.  Incentives include income tax exemptions for five- to eight-year periods, reduced energy prices, and the installation of water, electric power, and telecommunication lines in areas lacking public utilities.

The National Assembly approved a revised petroleum code in June 2004.  The law allows an initial period of four years for prospecting, renewable for two successive periods of three years each.   A 2008 amendment allows the government to expand the prospecting period for two additional years during the initial or successive phases.  Prospecting and exploitation permits, as well as their renewal, are subject to the payment of fixed taxes ranging from one million to ten million FCFA (USD 1,650 to USD 16,500).  In addition, prospecting permit holders remain liable for the payment of taxes ranging from FCFA 500-2,500 (USD 0.85-5.00) per square kilometer, and taxes of FCFA 1,000,000 (USD 1,650) per square kilometer during exploitation.  Permit holders and the companies associated with those permit holders are subject to a 35 percent tax on net profits. In 2004, the Government of Mali created a marketing office for petroleum exploration, l’Autorité pour la Promotion de la Recherche Pétrolière, or AUREP.  This agency drafts, plans, and implements oil research programs, and collects data on oil reserves. Private sector petroleum investors should meet with AUREP when beginning work.

The government has identified priority sectors for furthering economic development.  Special incentives are offered for investment in the following areas:

• Agribusiness
• Fishing and fish processing
• Livestock and forestry
• Mining and metallurgical industries
• Water and energy production industries
• Tourism and hotel industries
• Communication
• Housing development
• Transportation
• Human and animal health promotion enterprises
• Vocational and technical training enterprises
• Cultural promotion enterprises

In general, the government does not have a practice of issuing guarantees or jointly financing FDI projects.  Foreign investors in the mining sector can own up to 90 percent of a mining project. Foreign investors in media companies must have a 50 percent or lower ownership stake.

Foreign Trade Zones/Free Ports/Trade Facilitation

By law, there is no discrimination between foreign-owned firms and Malian entities with regard to investment opportunities.  Companies (domestic or foreign) that export at least 80 percent of their production are entitled to tax-free status. As such, they benefit from duty free-status on all equipment and other inputs they need for their operations.  The Government of Mali encourages the cultural sector by reducing taxes on cultural goods imports. Imports of solar energy materials also benefit from special tax treatment. Short-term tax exemptions are provided by the Government of Mali during periods of high prices of essential products.  Customs agents have accepted letters from Ministers exempting favored parties from exemptions; the IMF is working with the Government of Mali to stop this arbitrary exemption practice, including by explicitly making it illegal and instructing Customs to disregard any future letters. To date, there are no dedicated free trade zones in Mali.  Mali, Cote d’Ivoire, and Burkina Faso have planned to establish a special economic zone involving the Sikasso region of Mali, Korogho in Cote d’Ivoire, and Bobo-Dioulasso in Burkina Faso, but the zone is not yet operational. The government is currently drafting a law to create special economic zones in the regions of Sikasso, Segou, and Mopti, as well as a dry port in Kayes.

Performance and Data Localization Requirements

There is no requirement that Malian nationals own shares in a foreign investment or that foreign equity be reduced over time.  OHADA regulations specify that a company with less than 35 percent government equity is legally considered a private company.

Capital Markets and Portfolio Investment

WAEMU statutes and the BCEAO (the West African Central Bank) determine the banking system and monetary policy in Mali.  BCEAO headquarters are located in Dakar, Senegal. Commercial banks enjoy considerable liquidity. The majority of banks’ loanable funds, however, do not come from deposits, but rather from other liabilities, such as lines of credit from the BCEAO and North African and European banks.  In spite of having sufficient loanable funds, commercial banks in Mali tend to have highly conservative lending practices. Bank loans generally support short-term activities, such as letters of credit to support export-import activities and short-term lines of credit and bridge loans for established businesses.  Small- and medium-sized businesses have reported to have difficulty obtaining access to credit.

In order to strengthen the banking sector, WAEMU raised the minimum stockholders equity capital required of banks and financial institutions to FCFA 10 billion (USD 16.5 million) and FCFA 3 billion (USD 5 million) by a date still to be determined by the regional WAEMU Council of Ministers.  The first step of this measure is to increase the minimum stockholders equity capital requirement to FCFA 5 billion (USD 8.2 million) for banks and FCFA 1 billion (USD 2.5 million) for financial institutions by the end of 2010. WAEMU has made it a requirement for any new banks and financial institutions in the region to abide by the increased minimum stockholders equity requirement.  This measure has had mixed results in Mali. Of the 96 banks surveyed by the WAEMU Banking Commission in WAEMU countries, 82 met the new measures (85 percent). In Mali, however, eight out of 14 banks met the criterion (57 percent).

Portfolio investment is not a current practice, although the legal and accounting systems are transparent enough and are similar to the French system.  In 1994, the government instituted a system of treasury bonds available for purchase by individuals or companies. The payment of dividends or the repurchase of bonds might be done through a compensation procedure offsetting corporate income taxes or other sums due to the government.

The WAEMU stock exchange program based in Abidjan has a branch in each WAEMU country, including Mali.  One Malian company is quoted in the stock exchange. The planned privatization programs of the electricity company EDM (Energie du Mali), the telecommunications entity SOTELMA (Societé des Telecommunications du Mali), the cotton ginning company CMDT (Compagnie malienne pour le développement du textile), and the Bamako-Senou Airport offer prospects for some companies to be listed on the WAEMU stock exchange.

The Government of Mali first participated in the Sovereign Credit Rating Program in 2002, sponsored by the U.S. government.  As part of this program, Fitch Ratings won a competitive contract to conduct the ratings. The U.S. Treasury Department provided technical assistance to the Malian Ministry of Economy and Finance with the support of the U.S. Department of State.  Fitch completed its evaluation in 2004 and awarded a B- to Mali. Parallel to this effort, Standard and Poor’s awarded Mali a BBB- rating in 2005 through a UNDP-funded program. Standard and Poor’s has not rated Mali since 2005. In December 2009, Fitch Ratings affirmed Mali’s long-term foreign and local currency Issuer Default Ratings (IDRs) at B- with Stable Outlooks, Country Ceiling at BBB-, and short-term foreign currency IDR at B.  After completion of the State Department-sponsored rating program, Fitch announced in December 2009 it would no longer provide rating or analytical coverage of Mali, and all ratings have been withdrawn. As of 2018, there has been no new rating for Mali.

Mali’s IDR of B- reflects the investors’ assessments of the country’s high level of poverty, vulnerability to external shocks and slow economic growth.  Mali consistently runs a current account deficit, due to its high dependence on energy imports and low export base. Fitch does not expect any improvement in Mali’s creditworthiness in the medium to long term.  However, the country’s external situation is not a constraint, as Mali is part of the West African Economic and Monetary Union: the FCFA is pegged to the Euro and the French Treasury guarantees its convertibility.

Money and Banking System

Since the devaluation of the FCFA in 1994, eight new banks have opened in Mali:  Ecobank (1998), BICI-M (1998), BMS (2002), BSIC (2003), Banque Atlantique (2005), Banque pour le Commerce et l’Industrie (2007), Orabank of Cote d’Ivoire (2013), and Coris Bank International (December 2013). The return on equity for the banking sector was 14.7 percent in 2015, 11.5 percent in 2016, and 12.2 percent in 2017.  The total assets of the 14 banks and the three financial institutions in Mali were FCFA 4, 501 billion (USD 7.7 billion) as of December 2017.

In order to improve the business environment and soundness of the financial system, BCEAO decided to adopt a Uniform Law on Credit Reference Bureau.   The Government of Mali decided to align its legislation on the regional requirement by authorizing the Credit Reference Bureau, whose activities include collecting and processing information from financial institutions, public sources, water and electricity companies, etc. to create the credit record of citizens.  The collected information is supposed to be treated and commercialized by these companies upon the agreement of clients. The system is also supposed to increase the solvency of borrowers and to improve access to credit. Nonperforming loans represented 17.5 percent of total loans in December 2017.

The microfinance sector has grown rapidly.  From 2000 to 2013, the number of new branches operated by microfinance institutions increased from 342 to 700 and the number of beneficiaries from 253,705 to over 1 million.  The stock of deposits of microfinance institutions grew from FCFA 14 billion (USD 23 million) to FCFA 53 billion (USD 87 million), and the stock of credit grew from FCFA 16 billion (USD 26 million) to FCFA 60 billion (nearly USD 100 million) over the 2000 to 2013 period.  Despite this growth, microfinance institutions suffer from poor governance and management of resources, and have not put in place all government regulations or regional best practices to ensure sufficient financial controls and transparency.

Foreign Exchange and Remittances

Foreign Exchange

The Malian investment code allows the foreign transfer and conversion of funds associated with investments, including profits.  As a WAEMU member, Mali uses the Franc of the Financial Community of Africa (FCFA) as its currency. Linked to the Euro, the FCFA is fully convertible at a rate of Euro 1 = FCFA 655.957 as of April 2019.  No parallel conversion market exists as the FCFA is a fully convertible currency supported by the French treasury, which ensures a fixed rate of exchange. The FCFA has not been devalued since January 1994.  As of April 11, 2019, the U.S. dollar exchange rate was 581.66 FCFA for one U.S. dollar. Local currency exchanges are available at Malian banks.

There are no limits on the inflow or outflow of funds for repatriation of profits, debt service, capital, or capital gains.  In the FCFA zone, there is no limit on the export of capital provided that an exporter has adequate documentation to support a transaction and the exporter meets the domiciliation requirement.  Most commercial banks have direct investments in western capital markets.

To physically carry foreign currency into the WAEMU zone, non-WAEMU residents need to declare currency valued in excess of 1 million FCFA (approximately USD 1,650).  For export, non-WAEMU residents must declare values upwards of 500,000 FCFA (USD 825) in foreign reserves.

Article 12 of the Malian Investment Code of 2012 states that foreign investors are authorized to transfer abroad, without any authorization, all payments relating to business operations in Mali (this includes net profits, interest, dividends, income, allowances, savings of expatriated salaried employees).  The capital and financial transactions (such as buying and selling stocks, assets, and compensation from expropriation) are free to transfer abroad but are subject to declaration requirements to the Ministry of Economy and Finance. These transfers must be done through authorized intermediaries such as banks or financial institutions.

Remittance Policies

Mali is a member of the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA), a Financial Action Task Force (FATF)-style regional body.  Mali’s most recent mutual evaluation can be found at http://www.giaba.org/reports/mutual-evaluation/Mali.html  .

Although Mali’s Anti-Money Laundering Law designates a number of reporting entities, companies have noted that very few comply with their legal obligations.  While businesses are technically required to report cash transactions over approximately USD 10,000, most, allegedly, do not. Despite the operation of a number of al-Qaeda-linked terrorist and armed groups in northern Mali, the country’s Financial Intelligence Unit, the National Information Processing Unit (CENTIF), receives relatively few suspicious transaction reports (STRs) concerning possible cases of terrorist financing.  With the exception of casinos, designated non-financial businesses and professions are not subject to customer due diligence requirements. The U.S. Department of State’s Financial Action Task Force (FATF) considers Mali a “monitored” country. Additional information is available at http://www.state.gov/j/inl/rls/nrcrpt/2015/vol2/index.htm.

Sovereign Wealth Funds

Mali does not have a sovereign wealth fund.

There is no general awareness or defined standard of responsible business conduct in Mali among producers or consumers.  Despite the creation of the Malian Agency for Normalization and Quality Promotion (AMANORM) and the National Agency for the Sanitary Security of Foods (ANSSA), some report that Mali continues to produce, import, and export dangerous products and products of poor quality.  Allegations of violations of hygiene and quality standards are common in the food-processing industry and investors have reported there is no general awareness about the dangers of unsafe and toxic chemical products in food production. Labor rights are not generally observed given the large unregulated informal sector.  Even the formal sector often hires workers informally, which reduces employee fees such as social security, retirements and other related benefits.

The Government of Mali has various laws intended to protect against child and forced labor and business practices which can harm the environment and local communities.  Despite these laws, several companies have reported there are frequent cases of child labor and forced labor in the mining, agricultural, services, and industrial sectors.  The mining code requires owners of mining and exploitation permits to present local development plans to mitigate the health, security, hygiene, environment, and cultural heritage impacts of their mining activities.  Conflicts between local artisanal mining communities and foreign mining companies over land ownership rights are frequent. Local communities have also voiced concern with the significant environmental impacts of mine closures because of the lack of government-enforced measures to restore and rehabilitate the environment.  Foreign mining and oil exploration companies sometimes provide schools and health clinics to communities in proximity of their activities as a form of corporate social responsibility. These activities are not done in accordance with the OECD Guidelines for Multinational Enterprises, but are rather the result of individual negotiations between the company and the leaders of neighboring communities.

Mali is an active member of the Extractive Industries Transparency Initiative (EITI) and since 2011 has been declared as a “compliant country.”  The latest EITI report available at https://eiti.org/mali#overview   notes that Mali made “meaningful progress” in transparency despite significant challenges.

Policies Towards Foreign Direct Investment

Mauritania is increasingly open to foreign direct investment (FDI).  In 2019, the government created a ministerial-level committee charged with overseeing improvements in the business climate.  Government officials regularly highlight the need to improve the business climate in order to attract more FDI, particularly from the United States.  Local, reputable businesses in the private sector frequently express interest in representing U.S. companies, and the number doing so is growing. There is no law prohibiting or limiting foreign investment, which can target any sector of the economy.  There are no laws or regulations specifically authorizing private firms to adopt articles of incorporation or association, which limit or prohibit foreign investment, participation, or control. There are no other practices by private firms to restrict foreign investment.  The government continues to prioritize foreign investment in all sectors of the economy. It is working closely with the International Monetary Fund (IMF), the World Bank, and the international donor community to improve basic infrastructure and to update laws and regulations.

The IMF 2018 review on the Extended Credit Facility (ECF) in Mauritania shows improvement in balance of payments and reserves recovery following the 2014 shock to the Mauritanian economy caused by the drop in price of iron ore.

In 2012, the government adopted a revised Investment Code and created the Office of Promotion of the Private Sector (OPPS) to promote and monitor investment.  Currently, prospective investors are required to obtain an Investment Certificate by presenting their proposal and all required documents to the OPPS. The government tends to maintain on ongoing dialogue with investors through formal business conferences and meetings.

Limits on Foreign Control and Right to Private Ownership and Establishment

All domestic or foreign entities are allowed to engage in all forms of remunerative activities, except activities involving selling pork or alcohol.  There are no limits of transfer of profit or repatriation of capital, royalties, or service fees, provided the investments were authorized and made through approved banks.  The Government of Mauritania practices mandatory screening of foreign investments. These screening mechanisms are routine and non-discriminatory. The OPPS “Guichet Unique” (a single location to take care of all administrative needs related to registering a company) provides the review for all sectors, except the petroleum and mining sectors, which require approval from a cabinet meeting led by the president.

Other Investment Policy Reviews

The latest investment policy review occurred in February 2008.  The United Nations Conference on Trade and Development (UNCTAD) review is available online, in French, at: http://unctad.org/en/Docs/iteipc20085_fr.pdf.  The report recommended that the Government of Mauritania diversify the economy, improve its investment potential through increasing revenue generated by the exploitation of natural resources, accelerate required reforms, and enhance the business and investment climate.

In 2011, Mauritania underwent a World Trade Organization (WTO) trade policy review.  The report is available online at http://www.wto.org/english/tratop_e/tpr_e/tp350_e.htm.  The report states that, since 2002, the government had undertaken few reforms in the areas of customs, trade, or investment regulations.  The report also highlighted a lack of transparency as a deficiency. These policy reviews led to the release of the revised Investment Code in June 2012 to improve transparency in the government procurement process.

Business Facilitation

The government continues to amend its laws and regulations to facilitate business registration.  The “Guichet Unique” facilitates business registration and encourages FDI. In 2016, Mauritania made starting a business easier by eliminating the minimum capital requirement.  In 2017, trading across borders was made easier by upgrading the SYDONIA World electronic system, which reduced the time for preparation and submission of customs declarations for both exports and imports.  It can take up to seven days to register a business in Mauritania.

In 2018, Mauritania ranked 148 among 190 economies in the ease of doing business, according to the World Bank annual ratings.  Mauritania had been ranked 150 in 2017. The 2018 ranking is the highest ever for Mauritania, and marks a significant improvement from Mauritania’s worst ranking at 176 in 2014.

Outward Investment

Government incentives toward promoting outward investment remain limited.  Mauritania’s major exports are iron ore (46 percent), non-fillet frozen fish (16 percent), and gold (11 percent). China, France, Spain, Japan, and the United Arab Emirates are the main trade partners.  There are no investment restrictions on domestic investors from investing abroad.

Investment Incentives

Investment incentives such as free land, deferred and reduced taxes, and tax-free importation of materials and equipment are available to encourage foreign investors.  The Ministry of

Economy and Finance offers tax benefits, including exemptions in some instances, to enterprises in Special Economic Zones and some companies in priority sectors throughout the country.  The Investment Code outlines standard investment incentives, but foreign investors may negotiate other incentives directly with the government.

Foreign Trade Zones/Free Ports/Trade Facilitation

The Investment Code creates Special Economic Zones (Free Export Zone or Cluster of Development in the Interior) by decree.  SEZ are subject to continuous monitoring by the Customs Service in a manner specified in the decree. Nouadhibou, the commercial capital of Mauritania, is designated as a Free Trade Zone by the government.  The Nouadhibou Free Trade Zone has its own regulatory structure. As of January 2018, the Nouadhibou Free Trade Zone has granted 450 authorizations for companies, primarily in the tourism, services, and fisheries sectors.

The Investment Code provides three main preferential tax regimes: Small and Medium Enterprises Regimes, which apply to any investment between USD 167,000 and USD 667,000; Free Export Zones/Clusters of Development; and Targeted Industries, which includes agriculture, artisanal fishing, tourism, renewable energy, and raw material processing.  Land concessions allocated to companies located in Free Economic Zones will follow a rental rate determined by joint decision of the relevant Minister and the Minister of Economy, which sets land allocation prices. As for tax advantages, companies will be exempt from taxes, excluding personnel taxes such as for retirement and social security, if they have invested at least USD 1.6 million and generated at least 50 permanent jobs, and show a potential to export at least 80 percent of their goods or services.

Additionally, under the provisions in the revised Investment Code, companies will not be taxed on patents, licenses, property, or land, but rather assessed a single municipal tax that cannot exceed an annual amount of USD 16,000.  Companies established in free zones are exempt from taxes on profits for the first five years. Additionally, companies established in free zones benefit from a total exemption of customs duties and taxes on the importation and export.

Performance and Data Localization Requirements

The government mandates that companies may employ expatriate staff in no more than 10 percent of key managerial staff positions, in accordance with the Labor Code and are required to have a plan in place to “Mauritanize” expatriate staff positions.  Expatriate staff may be hired in excess of 10 percent with authorization from the appropriate industry authority by establishing that no competent Mauritanian national is available for the vacancy. Foreign companies are required to transfer skills to local employees by providing training for lower-skilled jobs.  However, this does not apply to companies operating within the Nouadhibou Free Trade Zone Authority.

Current immigration laws do not discriminate nor are they considered to apply excessively onerous visa, residence, or work permit requirements inhibiting foreign investors’ mobility.  However, some U.S. companies have expressed frustration with the difficulty in obtaining or renewing work and residency permits for their employees that are not Mauritanians.

The government imposes performance requirements as a condition for establishing, maintaining, or expanding an investment, or for access to tax and investment incentives.  Foreign investors consistently report that government-sponsored requests for tenders lack coherence and transparency. The revised Investment Code requires investors to purchase from local sources if the good or service is available locally and is of the same quality and price as could be purchased abroad.  There is no requirement for investors to export a certain percentage of output or have access to foreign exchange only in relation to their exports. If imported “dumped” goods are deemed to be competing unfairly with a priority enterprise, the government will respond to industry requests for tariff surcharges, thus providing some potential protection from competition.

Expatriate staff members working for companies in accordance with the Labor Code are eligible to import, free of customs duties and taxes, their personal belongings and one passenger vehicle per household, under the regime of exceptional temporary admission (Admission Temporaire Exceptionelle, or ATE).  All sales, transfers, or withdrawals are subject to permission of customs officials.

The Mauritanian government does not have any requirements or a mechanism that impedes companies from transmitting data freely outside the country.  There are no laws in place enforced on local data storage.

Capital Markets and Portfolio Investment

In accordance with Article 3.1 of the Investment Code, the Government of Mauritania guarantees any individual or legal entity wishing to undertake business activities in the country the freedom of establishment in accordance with laws and regulations.  Private entities, whether foreign or national, have the right to freely establish, acquire, own, and/or dispose of interests in business enterprises and receive legal remuneration. Privatization and liberalization programs have also helped put private enterprises on an equal footing with respect to access to markets and credit.  In principle, government policies encourage the free flow of financial resources and do not place restrictions on access by foreign investors. Most foreign investors, however, prefer external financing due to the high interest rates and procedural complexities that prevail locally. Credit is often difficult to obtain due to a lax legal system to enforce regulations that build trust and guarantee credit return.  There are no legal or policy restrictions on converting or transferring funds associated with investments. Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.

Commercial bank loans are virtually the only type of credit instrument.  There is no stock market or other public trading of shares in Mauritanian companies.  Currently, individual proprietors, family groups, and partnerships generally hold companies, and portfolio investments.

Money and Banking System

The IMF has in the past assisted Mauritania with the stabilization of the banking sector and access to domestic credit has become easier and cheaper.  A proliferation of banks has fostered competition that has contributed to the decline in interest rates from 30 percent in 2000 to 10 percent in 2009, not including origination costs and other fees.  Interest rates have remained stable since 2009, ranging between 10 to 17 percent as of April 2019.

The banking system is stable but fragile.  In 2018, GDP growth is estimated at 3.5 percent, up from 3.0 percent in 2017 and 1.4 percent in 2015.  Nevertheless, this rebound remains fragile as liquidity constraints in the financial market, arising from fiscal consolidation and an ineffective monetary policy, continue to dampen liquidity in the banking sector.  The country’s five largest banks are estimated to have USD 100 million in combined reserves; however, these figures cannot be independently verified, making an evaluation of the banking system’s strength impossible. As of April 2019, 25 banks, national and foreign, currently operate in Mauritania, despite the fact that only some 15 percent of the population holds bank accounts.  The Central Bank of Mauritania is in charge of regulating the Mauritanian banking industry, and the Central Bank has made reforms to streamline the financial sector’s compliance with international standards. The Ministry of Economy and Finance mandates that the Central Bank perform yearly audits of Mauritanian banks. There are no restrictions enforced on foreigners who wish to obtain an individual or business banking account.

In 2017, the Central Bank significantly reduced direct foreign currency sales to the private sector to better enforce foreign exchange regulations as part of its drive to allow for a more flexible determination of the exchange rate.  In 2018, the Central Bank of Mauritania lost all correspondence banking relationships with banks in the United States. This occurred because of de-risking policies enforced by U.S. banks.

Foreign Exchange and Remittances

Foreign exchange

There are no legal or policy restrictions on converting or transferring funds associated with investments.  Due to the global de-risking phenomenon, there are currently no correspondent banking relationships between U.S. and Mauritanian banks.  Local branches of international banks (such as Societe Generale or Attijari) do maintain correspondent banking relationships with U.S. banks and are able to clear transactions in USD.

Investors are guaranteed the free transfer of convertible currencies at the legal market rate, subject to the availability of such currencies. Similarly, foreigners working in Mauritania are guaranteed the prompt transfer of their professional salaries.  To transfer funds, investors are required to open a foreign exchange bank account in Mauritania. There are no maximum legal transaction limits for investors transferring money into or out of Mauritania, although regulations to withdraw money may be complicated in practice.

The local currency, the ouguiya, is freely convertible within Mauritania, but its exportation is not legally authorized.  Hard currencies can be obtained from the central bank and local commercial banks. The Central Bank holds regular foreign exchange auctions, allowing market forces to fix the value of the ouguiya.  Individuals and companies may obtain hard currency through the informal market and commercial banks for the payment of purchases or the repatriation of dividends. If the bank has hard currency available, there is no delay in effect for remitting investment returns.  However, if the bank does not have sufficient reserves, the hard currency must be obtained from the Central Bank in order to conduct the transfer. The Central Bank is required to prioritize government transfers, which could present further delays. Delays of one to three weeks, although relatively uncommon, can occur.

In January 2018, the government of Mauritania introduced a new currency.  The new currency drops a zero from the country’s previous currency; however, the value and the name of the currency remain unaffected by the change.  Local banks had to adapt their software, change their checkbooks, and reconfigured their ATMs to bring them into compliance with the new currency.

Remittance Policies

There are no legal parallel markets in Mauritania that would allow investors to remit investments through other means.  There is no limit on the inflow or outflow of funds for remittances of profits, debt service, capital or capital gains.

Businesses transfer money through the traditional Hawala system—they deposit their money in a Hawala store and designate a beneficiary for pick up.  The Hawala system has become a reliable substitute to the high interest rate, long wait period and transaction fees imposed by local banks. However, in March 2019, the Central Bank closed 700 illegal money transfer points to restructure the financial sector.  Currently, only nine agencies have a provisional authorization for transfer of funds.

Sovereign Wealth Funds

The Central Bank administers the National Fund for Hydrocarbon Reserves, a sovereign wealth fund (SWF), which was established in 2006.  The SWF is funded from the revenues received from the extraction of oil, any royalties and corporate taxes from oil companies, and from the profits made through the fund’s investment activities.  The fund’s mandate is to create macroeconomic stability by setting aside oil revenues for developmental projects. However, the fund’s management is considered to lack transparency and the projected revenue streams remain unrealized.

Historically, there has been little local awareness of corporate social responsibility in Mauritania, either on the part of producers or consumers.  However, awareness is growing, particularly as more foreign-owned companies enter the Mauritanian market. Certain state-run industries have been active in providing basic educational and training opportunities for the children of their employees and scholarships for their employees to study abroad, but this is usually the extent of social responsibility initiatives.  Companies in the mining and hydrocarbon industries send young Mauritanians overseas to complete their studies on scholarship programs; many of the scholarship recipients have family ties to powerful individuals in the companies. The larger fishing companies have recently started to provide more opportunities for qualified youth to study at the fishing and naval training school in Nouadhibou to prepare them for careers in the fishing industry.  Current projects by foreign-owned companies include providing free water to local communities; building vocational training centers, health clinics, and roadways; and providing healthcare equipment and medicines to towns near company operations.

Since 2011, three of Mauritania’s largest mining companies—Kinross, Mauritanian Copper Mines (MCM), and SNIM—funded a School of Mining with the goal of increasing the number of qualified Mauritanians to serve in the mining industry.  The school has a partnership with the Ecole Polytechnique in Montreal and with the mining companies. The school is considered a public entity under the Ministry of Oil, Energy, and Mines. In 2017, Kosmos Energy provided financial support to the national Diawling Park in the southern part of country, and in 2018 Kosmos launched the Kosmos Innovation Center in Mauritania.  ExxonMobil, BP and the other international oil companies now operating in Mauritania are likewise increasing corporate social responsibility programs.

Policies Towards Foreign Direct Investment

The government of Niger is committed to attracting FDI and has repeatedly pledged to take whatever steps necessary to encourage privatization and increase trade. The country offers numerous investment opportunities, particularly in agriculture, livestock, energy, industry, infrastructure, hydrocarbons, services and mining. In the past several years, new investor codes have been implemented (the most recent being in 2014), transparency has improved, and customs and taxation procedures have been simplified. There are no laws that specifically discriminate against foreign and/or U.S. investors. The government of Niger has demonstrated a willingness to negotiate with prospective foreign investors on matters of taxation and customs.

The Investment Code adopted in 2014 guarantees the reception and protection of foreign direct investment, as well as tax advantages available for investment projects. The Investment Code allows tax exemptions for a certain period and according to the location and amount of projects to be negotiated on a case-by-case basis with the Ministry of Commerce. The code guarantees fair treatment of investors regardless of their origin. The code also offers tax incentives for sectors that the government deems to be priorities and strategic, including energy production, agriculture, fishing, social housing, health, education, crafts, hotels, transportation and the agro-food industry. The code allows free transfer of profits and free convertibility of currencies.

There are no laws or practices that discriminate against foreign investors including U.S. investors.

The High Council for Investment of Niger (HCIN), created in 2017, reports directly to the President of the Republic. HCIN is the platform of public-private dialogue with a view to increasing Foreign Direct Investments, improving Niger’s business environment, and defining private sector priorities to possible investors.

In 2018, Niger’s government reviewed the HCIN’s mission as related to international best practices on attracting FDI. Accordingly, the GoN added by Presidential Decree a Nigerien Agency for the Promotion of Private Investment and Strategic Projects (ANPIPS). This new agency reports to the HCIN and implements the lead agencies policy initiatives.

The government put in place an Institutional Framework for Improving Business Climate Indicators office (Dispositif Institutionnel d’Amélioration et de Suivi du Climat des Affaires), within the Ministry of Commerce, focused on improving business climate indicators. Its goal is to create a framework that permits the implementation of sustainable reforms.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises. Energy, mineral resources, and national security related sectors restrict foreign ownership and control; otherwise, there are no limitations on ownership or control. In the extractive industries, any company to which the GoN grants a mining permit must give the GoN a minimum 10 percent share of the company. This law applies to both foreign and domestic operations. The GoN also reserves the right to require companies exploiting mineral resources to give the GoN up to a 33 percent stake in their Nigerien operations. Although Ministry of Planning authorization is required, foreign ownership of land is permitted. In 2015, under the auspices of the Ministry of Commerce, the GoN validated a new Competition and Consumer Protection Law, replacing a 1992 law that was never operational. Niger adheres to the Community Competition Law of the West African Economic and Monetary Union (WAEMU) and directives of the Economic Community of West African States (ECOWAS) as well as those offered to investors by the Multilateral Investment Guarantee Agency (MIGA) all of which provide benefits and guarantees to private companies.

Foreign and domestic private entities have the right to establish and own business enterprises. A legal Investment Code governs most activities except accounting, which the Organization for the Harmonization of Business Law in Africa (OHADA) governs. The Mining Code governs the mining sector and the Petroleum Code governs the petroleum sector, with regulations enforced through their respective ministries. The investment code guarantees equal treatment of investors regardless of nationality. Companies are protected against nationalization, expropriation or requisitioning throughout the national territory, except for reasons of public utility.

The state remains the owner of water resources through the Niger Water Infrastructure Corporation (SPEN), created in 2001 and is responsible for the management of the state’s hydraulic infrastructure in urban and semi-urban areas, of its development, and project management. Concessions for the use of water and for the exploitation of works and hydraulic installations may be granted to legal persons governed by private law, generally by presidential decree.

An investment screening mechanism does not exist under the Investment Code.

Other Investment Policy Reviews

In the past three years, the government has not undergone any third-party investment policy reviews through a multi-lateral organization. Neither the United Nations Conference on Trade and Development (UNCTAD), nor the Organization for Economic Cooperation and Development (OECD) has carried out a policy review for Niger.

https://docs.wto.org/dol2fe/Pages/FE_Search/ExportFile.aspx?Id=243443&filename=q/WT/TPR/S362R1-07.pdf 

http://unctad.org/en/Pages/DIAE/Investment percent20Policy percent20Reviews/Investment-Policy-Reviews.aspx  

Business Facilitation

Niger’s one-stop shop, the Maison de l’Entreprise is mandated to enhance business facilitation by mainstreaming and simplifying the procedures required to start a business within a single window registration process.

From 2016 to 2018, the cost and time needed to register businesses dropped from 100,000 CFA (about USD190) to 17,500 CFA (about USD33). Further reforms have included the creation of an e-regulations website (https://niger.eregulations.org/procedure/2/1?l=fr  ), which allows for a clear and complete registration process. Foreign companies may use this website. The website lists government agencies, with which a business must register. The business registration process is about 3 days, down from over 14 days in 2016.

Company registration can be done at the Centre de Formalités des Entreprises (CFE), at the Maison de l’Entreprise, which is designed as a one-stop-shop for registration. Applicants must file the documents with the Commercial Registry (Registre du Commerce et du Crédit Mobilier – RCCM), which has a representative at the one-stop shop.

At the same location, a company can register for taxes, obtain a tax identification number (Numéro d’Identification Fiscale – NIF), register with social security (Caisse nationale de Sécurité Sociale – CNSS), and with the employment agency (Agence Nationale pour la Promotion de l’Emploi – ANPE). Employees can be registered with social security at the same location.

At the moment of company registration, the applicant may also request for the publication of a notice of company incorporation on the Maison de l’Entreprise website: http://mde.ne/spip.php?rubrique10  . The notice of company incorporation can alternatively be published in an official newspaper (journal d’annonces légales).

Outward Investment

The government does not promote outward investment. The government’s policy objectives, as specified in the second Nigerien Renaissance Program (section 1.2), is the development of international markets, especially that of ECOWAS, for Nigerien exports rather than investment.

The GON does not restrict domestic investors from investing abroad.  

Investment Incentives

Niger offers incentives that are dependent on the size of the investment and number of jobs that will be created. The Investment Code offers VAT-inclusive tax exemptions depending on the size of the business. Potential tax exemptions include start-up costs, property, industrial and commercial profits, services and materials required for production, and energy use. Exemption periods range from ten to fifteen years and include waivers of duties and license fees. There are no restrictions on foreign companies opening a local office in Niger, though they must obtain a business certificate from the Ministry of Trade.

The Investment Code has established three different tiers of incentives for investors, based on minimum investment amounts, listed below:

• Tier 1: Promotional tier, for investments of 25 million CFA francs (about USD40,000) or above.
• Tier 2: Priority tier, for investments of 50 million CFA francs (about USD81,000) or above.
• Tier 3: Conventional tier, for large businesses with investments of at least 2 billion CFA (about USD3.25 million)

During the investment phase, the approved investments are exempt from import duties and taxes on material and equipment needed for the project that are not available locally. The advantages provided during the operational phase include exemption from profit tax (35 percent). Apart from these regimes, two additional incentive schemes are part of the investment code. These apply to companies operating in remote regions, energy, agro-industry, and low-cost housing sectors.

Foreign Trade Zones/Free Ports/Trade Facilitation

In 2016, the GON approved a new Customs Code to replace the current one which had been in place for 55 years. The new code is supposed to reflect the aspirations of actors within the international supply chain and is in conformity with the requirements of Community Customs Codes of the West African Economic and Monetary Union (WAEMU) and the Economic Community of West African States (ECOWAS).

In 2017, the GON modernized the customs procedures with the electronic payment tax which is efficient in Niamey and will be expanded to regions of Niger in 2018. In 2016, internal customs procedures migrated to SYDONIAWORLD, a system designed to improve efficiency and permit centralized oversight and control. In 2015, Niger was the first Least Developed Country (LDC) to ratify the World Trade Organization’s Trade Facilitation Agreement (TFA). The country seeks to implement the trade policy of the West African Economic and Monetary Union (WAEMU) and has joined the Generalized System of Preferences (GSP) of the European Union.

Niger is landlocked, has no free trade zones, and relies on the ports of Cotonou in Benin and Lomé in Togo as its primary seaports. Importers also use the ports of Tema, in Ghana and sometimes Lagos, Nigeria. Delivery can take months due to delays at borders and internal control points along the route. The relatively low number of commercial flights to Niger means that transport costs are high. The country’s main trade partners are Nigeria, the European Union, the United States, China, Cote d’Ivoire, and Algeria.

In 2018, Niger has deposited the instrument of ratification of the African Continental Free Trade Area (ZLECAF) draft flagship of AU Agenda 2063. The treaty is supposed to come into force in 2019 with its ratification by a corium of 22 signatory countries.

Performance and Data Localization Requirements

While Niger does require that companies attempt to hire a Nigerien before applying for a work visa for a foreign national, in practice the rule is not enforced. In addition, it allows for a company to appeal to the Ministry of Labor, if a foreigner is refused a work visa.

There are also no localization requirements for senior management or boards of directors.

There are no excessively onerous visa, residence, work permit, or similar requirements inhibiting mobility of foreign investors and their employees.

In principal, there are no government/authority imposed conditions restricting investments beyond limited sectors for national security as cited in the section on “Limits on Foreign Control.”

There are no forced localization policies requiring investors to use domestic goods in content.

Performance requirements are not imposed as a condition for establishing, maintaining, or expanding foreign direct investments.

Niger has no regulations regarding data storage. Niger does not require foreign IT providers to turn over source code and/or provide access to surveillance.

Capital Markets and Portfolio Investment

Niger’s government welcomes foreign portfolio investment where possible.

Niger’s capital markets are extremely underdeveloped and there is no stock market. Although an effective regulatory system exists, and policies in fact encourage portfolio investment, there is little market liquidity and hence little opportunity for such investment. The agency UMOA-Titres (AUT), a regional agency to support public securities issuance and management in the WAEMU (bonds market), is dedicated to helping member states use capital markets to raise the resources they need to fund their economic development policies at reasonable cost.

There are no limits on the free flow of financial resources.

The government works closely with the IMF to ensure that payments and transfers overseas occur without undue restrictions. Credit is allocated on market terms and foreigners do not face discrimination.

Credit is allocated on market terms through large corporations. Although foreign investors are generally able to get credit on the local market, limited domestic availability tends to drive investors to international markets. To access a variety of credit instruments, the private sector often looks to multinational institutions in Niger or international sources for credit. Private actors in the agriculture, livestock, forestry, and fisheries sectors (which account for more than 40 percent of GDP) receive less than one percent of total bank credit.

Money and Banking System

Less than three percent of Nigeriens have a bank account and the debt rate of the financial sector, measured by the ratio money supply, is at 24.1 percent in 2012 (the average for the sub-region is 32 percent).The banking sector in Niger is generally healthy and well capitalized.

As of December 31, 2017, the resources mobilized by the banking system amounted to 1096.5 billion CFA (1.9 billion USD), an increase of 63.1 billion cfaf (112.5 million USD) or 6.1 percent compared to the same period of 2016. This evolution mainly explained by the increase in net capital of banks by 34.9 billion cfaf (62.3 million USD) or 27.3 percent and the increase of borrowing deposits by 16.3 billion CFA (29 million USD) or 2.0 percent. Demand deposits represent more than half of the total resources of the sector throughout the period under review. Foreign banks control about 80 percent of the sector’s assets, with SONIBANK, BIA Niger, Ecobank and Bank of Africa (BOA) being the largest banks operating in the country.

The Central Bank of West African States governs Niger’s banking institutions and sets minimum reserve requirements through its national Central Bank representation.

There are no restrictions on a foreigner’s ability to establish a bank account, and foreign banks and their subsidiaries operate within the economy without undue restrictions. Niger is a part of the West African Economic and Monetary Union (WAEMU), which utilizes the CFA, pegged to the Euro at 655.61 CFA per euro.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment, including remittances.

Funds are freely convertible into any world currency. However, the government must approve currency conversions above 2 million CFA (approximately 3,413 USD).

The exchange rate is determined via the euro’s fluctuations on the international currency market. The CFA is pegged to the euro.

Remittance Policies

Niger’s Investment Code offers the possibility to transfer income of any kind, including capital investment and the proceeds of investment liquidation, regardless of the destination.

There are no limitations or waiting periods on remittances, though the Ministry of Finance must approve currency conversions above 2 million CFA (approximately 3,250 USD).

Sovereign Wealth Funds

Niger does not maintain a Sovereign Wealth Fund (SWF), and does not subscribe to the Santiago Principles. The government has plans for a build-up of reserves at the Central Bank of West African States (BCEAO) using oil revenues.

There is a general awareness of expectations regarding RBC, as well as business’ obligations to proactively conduct due diligence and do no harm.

For example, in the extractive industries sector, the GoN has focused on ensuring existing obligations are met and that communities benefit from investments. Nigerien law states that 15 percent of revenues derived from extractive industries must be returned to the municipality affected by the project. However, such payments are difficult to track and the GoN is not active or engaged in follow-up.

Ordinance No. 97-001 of 10 January 1997 on the Institutionalization of Environmental Impact Assessments, Article 4 of which states: “Activities, projects or programs of development which, by the importance of their size or their impact on the natural and human environments, may affect the latter are subject to prior authorization from the Minister of the Environment. This authorization is granted on the basis of an assessment of the consequences of the project activities or the program updated by an environmental impact study prepared by the promoter.”

In 2018, Niger began the process to return in the Extractive Industry Transparency Initiative (EITI), which ensures transparency and accountability on how a country’s natural resources are governed. RBCs are also incorporated into Niger’s Mining Code.

There have been no high-profile instances of private sector impact on human rights in the recent past.

The GoN attempts to enforce domestic laws related to human rights, labor rights, consumer protection, and environmental protections. However, a lack of resources makes such enforcement difficult and only somewhat effective.

The government has not put in place corporate governance, accounting, and executive compensation standards.

There is limited NGO focus on responsible business practices. Those looking at transparency in contracts and business practices are generally able to work freely regarding engagement with businesses.

Niger is not a member of the OECD and does not adhere to OECD guidelines, including those related to supply chains of minerals from conflict-affected and high-risk areas. There are no Nigerien-owned companies that deal exclusively with minerals, including those that may originate from conflict-affected areas.

The GoN was a member of EITI since 2007, but the country withdrew following the Board’s decision in October 2017 to suspend Niger on the basis of inadequate progress. In 2018, the government began the process to rejoin EITI and reformulated its EITI offices to meet the organization’s standards. The constitution mandates full disclosure of all payments from foreign government stemming from mining operations, as well as publication of all new exploration and exploitation contracts in the mining sector. However, in practice, payments from foreign countries to GoN officials have at times been controversial due to non-reporting of such payments.