Mauritania - Guidelines for a four year development program

November 1968 FILE COPY 97-= ___ ~~Report No. 10953-MAU Type: (PUB) __ ~WESTEBBE, / x 0 //_ ___ ~~~DATE: F= 19681101 __ TniMr'Anatlolnal BanLk fass Reconstrueciton auad U3ovalopmoni   MAU1RITANIA: Guidelinies for a Fouir-year Developmerit Program Report of a mission organized by thle Internatiornal Baxxk for Rteconstructionr and Developrment at the request of th[e Islamic Republic of Mauritanxia H. M. WEST3EBBE3, Chief of Missioxn International Banklk for lReconstruction and Developmexnt NOVEMBER 1968   - iii - FOREWORD The present volume is a revised version of a report submitted to the Government of Mauritania in August 1967, based on the findings of the World Bank Mission which visited Mauritania in the spring of 1967 at the request of the Government. The report evaluates the first Four-Year Plan and recommends another four-year program of action, as guidelines for the next Four-Year Plan, which will be prepared by the Mauritanian Government. It presents a short-run program of action and longer term perspectives for each sector. The sectoral programs are coordinated in terms of an overall strategy of development, with a series of general institutional reforms and Government policy measures, designed to make their implementation possible. Finally, an estimate is made of domestic and external financial requirements and availabilities. It is intended that the precise timing of each program or project, as well as its detailed financial requirements and any specific policy measures or related organizational changes which may be needed, should be specified in a series of successive Annual Development Plans through which the next Four-Year Plan would be implemented. Following the receipt of the technical assistance report the Government of the Islamic Republic of Mauritania announced its acceptance of the broad outlines of the strategy as well as most of the specific pro- posals recommended by the mission. No attempt has been made in this revised text to enumerate the many policy changes, institutional reforms and basic studies which have occurred or which are under way. Where it was deemed important to assist the reader, revised figures, and in some cases, explan- atory notes on selected recent developments have been introduced. The principal author of this report is Mr. Richard M. Westebbe who was chief of the mission. Important contributions were made by the other members of the mission who also produced the bulk of the technical material which formed the basis for the analysis of the various sectors. In particular, Mustapha Zaanouni, agricultural economist, made a major contribution to the production and organization of the sections on the rural and fisheries sectors. Henri Boumendil was responsible for hydrology, R. Aubray for the basic work on fisheries, J. P. Marty for livestock, Livio Costa for education, Albert Waterston for plan organization, Wilfred Thalwitz and Bernard Siret for transportation and Pierre Chardon for mining. The bulk of the technical material prepared by the mission has been reproduced by the World Bank in Volume II. Finally, acknowledgment must be made of the full support and cooperation given to the mission by the President of Mauritania, His Excel- lency Moktar Ould Daddah, members of his cabinet, numerous public servants, and various members of the private sector. Without their help and encourage- ment this report would have been far more difficult, if not impossible, to produce, and certainly would be much less useful as a contribution to the country's effort to develop itself. Andrew M. Kamarck Director Economics Department   TABLE OF CONTENTS Page No. BASIC DATA............................................ viii LIST OF ABBREVIATIONS .. xi SUMMARY OF DEVELOPMENT STRATEGY AND PRINCIPAL RECOMMENDATIONS- xii I. The Strategy ................ xii II. Principal Recommendations ............................. xiv CHAPTER ONE: INTRODUCTION ..................................... 1 A. The Political and Social Structure .................... 1 B. The People and Their Environment ...................... 3 C. The Structure of the Economy .......................... 6 CHAPTER TWO: EVALUATION OF THE FIRST FOUR-YEAR PLAN 1963-1967. 13 I. Objectives ......................................... 13 II. Evaluation of Results .............................. 14 III. The Conceptual Problem .. 18 IV. Administration and Execution .......................... 25 CHAPTER THREE: A STRATEGY FOR DEVELOPMENT ..................... 26 I. General Perspectives .................................. 26 II. The Sectoral Perspectives ............................. 27 CHAPTER FOUR: PROGRAM OF ACTION ............................... 33 I. The Rural Sector ...................................... 33 A. Recent Developments ............................... 33 B. General Objectives ................................ 36 C. Livestock Development - Objectives and Recommendations ................................... 39 D. The Development of Crop Production - Objectives and Recommendations ............................... 45 E. Forestry - Objectives and Recommendations ......... 52 II. Fisheries ............................. 57 A. Recent Developments .............................. 57 B. Objectives ........................................ 61 C. Recommendations ................. 62  - vi - Page No. III. Mining ................................................. 66 A. NIFMERM .66 B. Akjoujt ...................... 72 C. Objectives ............ 81 D. Recommendations .81 IV. Transportation. 85 A. Recent Developments. 85 B. Objectives .86 C. Recommendations .87 V. Education and Training ................................. 90 A. Recent Developments .90 B. General Objectives. 94 C. Primary Education - Objectives and Recommendations. 96 D. Secondary Education - Objectives and Recommendations .................................... 99 E. Administrative and Miscellaneous Expenditures 102 F. Technical Education - Objectives and Recommendations .103 G. High Level Manpower Training. 104 H. The Investment Program - Objectives and Recommendations .................................... 105 CHAPTER FIVE: THE MEANS .108 I. Introduction: The Instruments of Economic Policy 108 II. Institutions ..110 A. The Credit System .110 B. Agricultural Credit .111 III. Plan Administration ..113 A. The Planning Process .113 B. Organization for Planning .116 C. Major Conclusions and Recommendations .120 IV. Government Finances .................... 121 A. Fiscal Policy ............................ 121 B. Recent Developments .123 C. Domestic Financing of the Plan.. 124 D. External Finance ................................... 129 APPENDIX I: THE BUDGETARY SYSTEM ............................... 132 APPENDIX II: GROSS DOMESTIC PRODUCT.................... 144  - vii - Page No. LIST OF PRINCIPAL TABLES, CHARTS AND MAPS MAP - Mauritania: Climate and Economic Zones MAP - Mauritania: Population Density by Administra- tive Unit Table 1: Allocation of Investments of the Four-Year Plan 1963-67 20 Table 2: Plan Objectives ................................... 24 Table 3: Livestock Objectives ................................... 40 Table 4: Livestock Investments ................. 41 Table 5: Forecast of Annual Crop Production for 1971........ . 54 Table 6: Summary Investments and Production . . 56 Table 7: Capacity of Fresh Fish Processing Industries at Port Etienne ........ ............. ..................... 67 Table 8: Estimate of Possible Further Investments in Fisheries.. 68 MAP - Former Limit of the Territorial Waters MAP - New Limit of the Territorial Waters Table 9: Projected MIFERMA Taxes, Profits and Sales 1966-75 ... 73 Table 10: Estimated Contribution of MIFERMA to the Gross Domestic Product and Employment 1966-75. .. . . 74 Table 11: Iron Ore Prices: Swedish 1950-1967............... 75 Table 12: Projected Akjoujt - Taxes, Profits and Sales 1967-88 .. 82 Table 13: Estimated Contribution of Akjoujt to the Gross Domestic Product 1967-80............................... 83 CHART - Proposed Organization of Planning and Economic Policy-Making 122 Table 14: Consolidated Government Accounts: Expenditures and Source of Financing . . . 136 Table 15: Expenditures: Current Budget ............... 137 Table 16: Current Budget Expenditures by Administrative Categories 138 Table 17: Current Receipts ...................... 139 Table 18: Current Budget Financing .. 140 Table 19: Equipment Budget - Expenditure . .............. 141 Table 20: Equipment Budget - Financing . .142 Table 21: Government Reserve Fund ................................O 143 Table 22: Gross Domestic Product ................... 145 Table 23: Rural Sector GDP ............................ 146  ISLAMIC REPUBLIC OF MAURITANIA 0 50 00o 50 200 250 500 - 0 50 00o 50 200 250 SOOMI Unpaved national roads Copper AGRICULTURAL ZONES - Local roads &'; Iron 7~[1111 Saharan desert . .... Fture roads %irn 0 A-rf-elds Date pals E |Saharan sb-desert Ralay T F-h-g S~~~~~~~~~~.-. A ... I.,.. F ,_o~~~~~~~~~~~~~ t rs / i t\.s ~~~~~~~A L G E R I A X Vila Csnerosf { K * . I.., -K. -re -r - - - -- -- -- -- - -t--- - - -- - -w - r- - - --- Q. / Oo S N GA L Iws v PORT ETIENNEg - 20- ,Sl J C ; , '\s ;''' '' ','' 20- NOUACHO AUGUST 1967  MAURITANIA POPULATION DENSITY BY ADMINISTRATIVE UNIT T erritoril boundary Ad.i..ni-trato boundary Appron-ate density > INHABITANTS PER 1' 1 Po 0.5 to I Fro I to 2 Fr- 2 to 3 Pr nqo Prom 3 to N.-r than Eti ENNE ' NOUAKCHO e .s M A L I f N Louis~i A8 N. OCTOBER 1968  - viii - BASIC DATA Area: 1,085,000 square kilometers Population:-/ 1,o4o,000 1965 of which: Nomadic 800,000 Rural Sedentary 160,000 Urban 80,000 Ethnic Groups: 80% Moors (30-40% black) 20% Negro (diverse tribes) Rate of Growth: 1.7% (1964-65) Population Density (per square mile): 2 Political Status: Independent since November 1960 Gross National Product: (billion CFAF at current market prices) Annual rate 1959 1964 of change 13.1 26.9 15.5% Gross Domestic Product: (billion CFAF at current market prices) 1959 1964 1966 14.5 35.7 41.2 of which: traditional sectors (agriculture, livestock) 10.3 13.7 15.0 71% 38% 35% mining 7.6 11.0 21% 27% 1/ provisional figures  - ix - Gross Domestic Production at Factor Cost in 1964: (billion CFAF) Agriculture, Handicraft 14.9 Mining 6.9 Diverse Industry .4 Building .6 Transportation .7 Services .5 Commerce 3.3 Public Enterprises 1.5 Total 77 Percentages of GDP at Market Prices: (million CFAF) Gross Investment ....... 4593 13% Gross Domestic Savings.::::: 78421/ 22% Balance of Payments 2/ current account surplus... 9% Government Current Account Revenues .................. 4555 13% Money & Credit Conversion 1 CFA franc = US$0.004 US$1 = 246.85 CFA francs Relationship to larger monetary or customs area: a) Member of the West African Monetary Union b) Member of the West African Customs Union c) Associate Member of the European Economic Community Rate of Change Dec. 1966 Dec. 1967 Dec. 1963- Dec. 1966- (millionTCFAFT Dec. 1966 Dec. 1967 Total Money Supply 2910 3467 3% p.a. 20% Time & Demand Deposits 1704 2141 80% 26% Commercial Bank Credit to the Private Sector 1388 2592 47% 90% Rate of Change of Prices European family con- sumption - - 4%(1965-66) 4% Mauritania family con- sumpti6n - - 6%(1964-65) 1% 2 Distorted by MIFERMA.  Public Sector Operations:2/ Budget 1966 Percentage Change 1967 (mil. CFAF) 1961-1966 (mil.CFAF) Government Current Receipts 4735 220% 5113 Government Current Expenditure 4409 119% 5113 Balance +326 0 Government Equipment Budget Expenditures 771 530% 771 Public Investment Expenditures 13804/ External Public Debt: Dec. 31, 1967 ($1,000) Total debt including undisbursed 33,733 5/ Total annual debt service 3,750 Debt Service Ratio (over total exports)6/ 4.9% Balance of Payments:i/ 1964 (billion CFAF) Total exports (CIF) 16.4 Total imports (CIF) 12.7 Trade balance +3.7 Non-factor services - .3 Factor payments -4.0 Expatriate remittances -4.8 Net External Financial Assistance: Commitments (CFAF millions) 1960-62 3,444 1963 4, 444 1964 3,738 1965 2,292 1966 1 684 T o t a 1 15,602 Total payments (as of Dec. 31, 1966) 8,591 Net Foreign Assets of the Central Bank, end of December 1967: CFAF 2.1 bil. 3/ Budget figures represent the final balances or forecasts of budget years and do not reflect cash receipts or expenditures in any given year. 4/ Payments by FAC & FED during 1965. '/ Excluding $66 million IBRD loan to MIFERMA, guaranteed by the Government of Mauritania. 6/ If MIFERMA service payments are included, total debt service would amount to about 20% of total exports. 7/ Estimate based on 1964 provisional national accounts. Both the export and transfer figures are heavily influenced by MIFERMA.  - xi - List of Abbreviations SEDES - Soci6t6 d'Etudes pour le D6veloppement Economique et Social FAC - Fonds d'Aide et de Coop6ration RIM - R6publique Islamique de Mauritanie SONIMEX - Soci6t6 Nationale Import-Export ONTP - Office National de Transport Public FED - Fonds Europeen de Developpement BIAO - Banque Internationale pour l'Afrique Occidentale BMD - Banque Mauritanienne de Developpement SOMAUPECO - Societ6 Mauritanienne de Pgche et de Conserverie SOMAP - Societe Mauritanienne d'Armement a la Pgche SOMIP - Soci6te Mauritanienne des Industries de la Peche SCAM - Soci6t6 des Chantiers et Ateliers de Maiuritanie SIGP - Societ6 Industrielle de Grande Peche IMAPEC - Industrie Mauritanienne de Pgche EGA - Entreprise Generale de l'Atlantique SOMIMA - Societe Miniere de Mauritanie EIB - European Investment Bank IBRD - International Bank for Reconstruction and Development IFC - International Finance Corporation IDA - International Development Association MIFERMA - Mines de Fer de Mauritanie MICUMA - Soci6t6 des Mines de Cuivre de Mauritanie BRGM - Bureau de Recherches G6ologiques et Minieres ha. - hectares T. - tons p.m. - pour memoire  - xii - SUMMARY OF DEVELOPMENT STRATEGY AND PRINCIPAL RECOMMENDATIONS I. The Strategy 1. The strategy of development proposed for the next four years by the Mission is based on our analysis of the structure of the economy, the technical possibilities for change and the resources likely to be available for investment. 2. Our strategy assumes that the basic objective of development is to increase the economic well-being of the bulk of the population. This approach does not deny the desirability or even the necessity of expendi- tures for welfare, culture or national sovereignty. Rather it is based on the proposition that in a poor country like Mauritania such expenditures will inevitably be limited, and that the best way of providing for non- economic needs is to increase economic resources so that in the future adequate amounts will be available for such purposes. 3. The econony of Mauritania is strongly dual in character. The traditional livestock and agricultural sectors yield little more than sub- sistence standards of living for 90% of the population. Some four-fifths of the entire population consists of Moors who are largely nomadic livestock herders. The balance of the subsistence type of population consists of various negro tribal groups who live close to the Senegal River and who produce mainly millet,using primitive methods. 4. The modern sector at present consists primarily of the MIFERMA iron ore mines in the Northwest and the developing fishing industry of Port- Etienne. By their very nature these enclave industries can have only a limited direct influence on the development process in the rest of the country. They employ few people, provide limited markets for internal products and use a technology not readily transferable to the traditional sectors. The enclaves produce a large volume of exports, but only a small amount of foreign exchange receipts. The iron mines do contribute over a fourth of current budget receipts in the form of export levies and taxes, but even this addition to public savings is not enough to influence the development of the rest of the country. Even the prospective development of the copper mines at Akjoujt will produce no appreciable benefit to the State budget for some time. 5. The basic development strategy evolved by the Mission is to raise output in the livestock and crop agricultural sectors. Our technical findings in livestock and agriculture show that large short-run gains in the output of both meat and millet appear to be eminently possible as a result of both productivity gains and the use of presently unused pasture and crop land. The program requires relatively modest investments in training and equipment, such as animal drawn plows, as well as the creation of farmers' associations, the availability of credit, sanitation and the more rational use of pastures. A substantial effort will be required in setting up an agricultural extension system to introduce and foster the changes proposed.  - xiii - 6. With limited population growth the gains in output should be reflected in significant rises in per capita incomes, import substitution of millet and increased exports of meat and animal products. The program proposed does not involve a sharp break with traditional practices and should accordingly be more acceptable to producers than a program based on the sudden introduction of modern techniques. One important result of in- creasing output will be a rise in commercial exchanges thereby furthering the progressive transformation of the traditional barter economy to a more sophisticated market economy which will respond better to economic incentives and which will provide greater scope for direct and indirect taxation. Little new investment is proposed in transport where traffic volumes are at present insufficient to justify such investment, nor in education where the recommended changes in the present pattern of education should provide enough trained personnel to meet the future manpower needs of the economy. In fishing, where excessive and badly planned investment has taken place, basic studies are recommended before new investment decisions are made. A number of recommendations cover state institutions and the credit structure. In particular, a detailed reorganization scheme is proposed, as a matter of the highest priority, for the planning and economic policy making apparatus within the Government in order to concentrate and coordinate the Government's efforts and resources with the sectoral programs of action. The fiscal side of Government is identified as a particular constraint since inadequate local resources will affect the ability of the country to support a large foreign financed capital investment program. 7. Finally a number of projects and studies are proposed which are designed to widen the scope of development activities in the future by in- creasing the number of productive investment alternatives. The major parts of the proposed investment program are ranked by priorities in accordance with the lowest ratio of capital invested to output. Accordingly, it will be possible to adjust the size of the investment program to the amount of capital available. 8. The investment guidelines suggested by the Mission for the four years of the next plan total some CFAF 8.6 billion with the following sec- toral breakdown: Agriculture 2.8 Livestock 1.4 Fishing 2.5 Education .4 Mining .3 Other 1.2 Total 7 9. Within this total the Mission has suggested a smaller first priority program amounting to some CFAF 6 billion, although not all of this, particularly with respect to the fishing industry, may require public fi- nancing. Whether the larger program of CFAF 8.6 billion can be implemented will depend on the readiness of projects and the availability of finance. The above programs are in addition to investments authorized under earlier programs. The recurrent charges to the budget are estimated to increase by some CFAF 1.4 billion annually by 1971, partly as a result of the new invest- ments proposed by the Mission,partly a result of an allowance for the normal upgrading of personnel remuneration and for bringing maintenance expenditures to adequate levels.  - xiv - 10. The overall rate of growth in the Gross Domestic Product is projected as 3.8% annually from 1966 through 1971, far lower than rates recorded in the early 1960's when mining investment and output were ex- panding more rapidly. The impact of the recommended program of action will fall mainly on the rural and fishing sectors with an annual average rate of increase of 3 and 11 percent respectively (see Appendix II). It should be noted that the base used is 1966 while the program will not even get underway until 1968. With the same overall growth, this implies higher rates of growth for the period 1967-1971. In the rural sector an overall rise of 20% in this period is estimated for millet and livestock output - the two products which will benefit most in the short run from the invest- ments and policies recommended in the program. These increases in tradi- tional products would substantially surpass output gains in recent years. In fishing an annual rate of growth of 11% is projected because of the expected fuller utilization of excess capacity. A good deal of what is recommended in the program for the next four years should also yield sub- stantial gains in output after 1971. The projections take account of ongoing programs and investments. II. Principal Recommendations 11. The following is a summary of the Mission's principal recommen- dations. Where appropriate the indicative costs of proposed investments are included in parentheses. The relevant paragraph number of the main report is also indicated at the end of each recommendation. 12. Livestock (1) Sanitary protection (CFAF 216 million): for the establishment of an immunization center, twenty vaccination parks, continuation of the antirinderpest campaign, laboratory equipment and the provision of vehicles. (162) (2) Provision of Water Stations (CFAF 741 million): for studies, the location of wells and water resources, maintenance of existing wells, installation of new wells and the purchase of exploratory drilling equipment. (163) (3) Improvement of pastures (CFAF 136 million): for the creation of pilot zones at Kaedi and Aftout-es-Sahel. (164) (4) Marketing of cattle (CFAF 207 million): for the study and estab- lishment of cattle ranches at Kaedi and Aftout-es-Sahel. (165) (5) Animal product industries (CFAF 88 million): for the establish- ment of a dairy complex at Rosso and a study of a new slaughter- house. (166)  13. Crop Production (1) Studies (CFAF 70 million): including crop production, family budgets, and research on date palm trees. (167) (2) Program for improving and carrying out millet cultivation (animal traction) (CFAF 278 million): in the Gorgol Brakna area and the Nema district as well as Aioun, Kiffa and Rosso. (168) (3) Hydro-agricultural development schemes (CFAF 2,319 million): (169) (a) Hydro-agricultural studies (CFAF 399 million) for hydro- geological surveys in the Assaba, hydrological studies of the Kara Koro and the Hodh, the Mauritanian contribution to the United Nations Special Fund projects for the study of the development of the Senegal River and the establish- ment of a subterranean water authority. (169-1) (b) Further development of the Dar El Barka project (CFAF 10 million). (169-2) (c) Improvement of the Lower Boghe plan (CFAF 600 million). (169-3) (d) Gorgol development schemes (CFAF 755 million) including dams on the Lower Gorgol, Foum El Gleita, development of terrain and experimental plots. (169-4) (e) Further development of the R'Kiz Lake (CFAF 80 million). (169-5) (f) Development of the Delta (CFAF 275 million). (169-6) (g) Small scale irrigated agricultural developments on the Senegal River upstream from Kaedi (CFAF 30 million). (169-7) (h) Construction of two flood retention irrigation dams in the Hodh (CFAF 60 million). (169-8) (i) Creation of an hydro-agricultural work unit (CFAF 110 million). (169-9) 14. Forestry (1) Protection of gum tree plantations (CFAF 138 million). (171) (2) Forestry production measures (CFAF 40 million). (172) 15. Fisheries (1) Study of the stock of exploitable marine resources (CFAF 43 million). (197) (2) Preparation of a market study. (198)  - xvi - (3) Creation of a Mauritanian fishing fleet (CFAF 1.4 billion in four years). (199) (4) Training of seamen (CFAF 35 million). (201) (5) Charter-parties for foreign vessels. (203) (6) Expansion of port installations (CFAF 845 million). (204) (7) Protection of territorial waters (CFAF 150 million). (205) 16. Mining (1) Establishment of a geological research service (CFAF 28 million in four years). (251-1) (2) Charge the Service of Mines with a study of power needs. (251-2) (3) Creation of a mining and prospecting section in the National School of Public Administration (CFAF 12 million). (251-3) (4) Revision of mining legislation. (251-4) 17. Transportation (1) Complete the Rosso-Nouakchott road according to present design standards. (265-1) (2) Avoid investments in improving the long distance road system. (265-2, 10, 11) (3) Reintroduce competition in the road transport industry and revise the role of the ONTP. (265-3) (4) Raise road maintenance expenditures to an annual minimum of CFAF 300 million. (265-4) (5) Start a long-term program to train Mauritanian road engineers. (265-5) (6) Study the desirability of replacing overage aircraft. Evaluate the financial aspects of exporting meat by air from Kaedi. (265-6) (7) Meet short-term transport requirements in the region Rosso-Kaedi through marginal investments in improving navigability. (265-7, 8) (8) Assess and attempt to recover damages on the badly constructed Kaedi-Kiffa road. (265-9)  - xvi i - Education and Training 18. Primary Education (1) Reduce the weekly class periods. (295-1) (2) Offer education in only one language in the first three grades and introduce the second language in the fourth or fifth grade. (295-2, 3) (3) Improve the training of teachers who will teach in only one language. (295-4) (4) Depending on Government policy with respect to the use of a single language in the lower grades of the primary school the training of bilingual teachers would be discontinued. (295-5) (5) If bilingual teacher training is continued, the Government should reconsider the level at which students would be admitted to the training college, as well as the duration, curriculum, and methods of education. (295-6) 19. Secondary Education (1) Severe selection standards should be imposed for admission to the sixth grade. (302-1) (2) Permit only one repetition per cycle and only 15% repeaters in each grade. (302-2) (3) Upper cycle admittance should be based on the best performance. (302-3) (4) Total enrollment in the fifth grade of the school year 1967-68 should be limited to 480 to prevent a costly rise in total future enrollment. (302-4, 5) (5) Although the above recommendations will achieve the most impor- tant BEPC and BAC level targets at a reasonable annual cost the Government may find it difficult to fully adopt the measures suggested with respect to selection and repeaters. Accordingly the following suggestions are offered for further consideration: (302-8) (a) Reshape the secondary school curriculum to produce a type of education more suitable to Mauritanian needs. (302-8a) (b) Maintain the parallel between the Mauritanian and French secondary school diploma and perhaps with other countries. (302-8b)  - xviii - (c) Maintain one complete lycee with a French curriculum and consider the creation of a complete secondary school providing education in Arabic for teachers and others going on to higher education abroad. The proposed school could be established at the site of the present Institute of Higher Islamic Studies at Boutilimit. (302-8c, 9, 10) (6) A special national commission should be formed to study these recommendations and alternatives with a view to recommending the most appropriate policy. (302-11) 20. Technical Education and High Level Manpower Training (1) The girls' lyc6e at Nouakchott should be expanded to include training in home economics and health. (306-1) (2) Investments in vocational training should be held in abeyance until the results of present methods have been obtained and expenditure levels determined. The control of the Technical College should be returned to the Ministry of Education and admission requirements of this college should be raised. (306-2) (3) The Mamadou Toure Center should gradually increase its enroll- ment. (306-3) (4) The other centers should expand and alter their programs in accordance with demonstrated requirements. (306-4) (5) A long-term plan for using scholarships should be drawn up in order to train Mauritanians to replace expatriates in accordance with manpower needs established by the Plan Organization. (308) (6) The budgets for all technical training organizations, except the nursing school, should be included under the High Commissioners for Technical Education and High Level Manpower Training. (311) 21. Investments (1) Primary education (CFAF 100 million): for 30 new classrooms, offices,vehicles and equipment. (315-1) (2) Pedagogical Institute (CFAF 20 million): audio-visual aids. (315-2) (3) Secondary schools (CFAF 270 million): for buildings, staff houses, teaching aids, classrooms and other facilities. (315-3) (4) Vocational training facilities (CFAF 10 million). (315-4)  - xiv - 10. The overall rate of growth in the Gross Domestic Product is projected as 3.8% annually from 1966 through 1971, far lower than rates recorded in the early 1960's when mining investment and output were ex- panding more rapidly. The impact of the recommended program of action will fall mainly on the rural and fishing sectors with an annual average rate of increase of 3 and 11 percent respectively (see Appendix II). It should be noted that the base used is 1966 while the program will not even get underway until 1968. With the same overall growth, this implies higher rates of growth for the period 1967-1971. In the rural sector an overall rise of 20% in this period is estimated for millet and livestock output - the two products which will benefit most in the short run from the invest- ments and policies reconmended in the program. These increases in tradi- tional products would substantially surpass output gains in recent years. In fishing an annual rate of growth of 11% is projected because of the expected fuller utilization of excess capacity. A good deal of what is recommended in the program for the next four years should also yield sub- stantial gains in output after 1971. The projections take account of ongoing programs and investments. II. Principal Recommendations 11. The following is a summary of the Mission's principal recommen- dations. Where appropriate the indicative costs of proposed investments are included in parentheses. The relevant paragraph number of the main report is also indicated at the end of each recommendation. 12. Livestock (1) Sanitary protection (CFAF 216 million): for the establishment of an immunization center, twenty vaccination parks, continuation of the antirinderpest campaign, laboratory equipment and the provision of vehicles. (162) (2) Provision of Water Stations (CFAF 741 million): for studies, the location of wells and water resources, maintenance of existing wells, installation of new wells and the purchase of exploratory drilling equipment. (163) (3) Improvement of pastures (CFAF 136 million): for the creation of pilot zones at Kaedi and Aftout-es-Sahel. (164) (4) Marketing of cattle (CFAF 207 million): for the study and estab- lishment of cattle ranches at Kaedi and Aftout-es-Sahel. (165) (5) Animal product industries (CFAF 88 million): for the establish- ment of a dairy complex at Rosso and a study of a new slaughter- house. (166)  - xv - 13. Crop Production (1) Studies (CFAF 70 million): including crop production, family budgets, and research on date palm trees. (167) (2) Program for improving and carrying out millet cultivation (animal traction) (CFAF 278 million): in the Gorgol Brakna area and the Nema district as well as Aioun, Kiffa and Rosso. (168) (3) Hydro-agricultural development schemes (CFAF 2,319 million): (169) (a) Hydro-agricultural studies (CFAF 399 million) for hydro- geological surveys in the Assaba, hydrological studies of the Kara Koro and the Hodh, the Mauritanian contribution to the United Nations Special FUnd projects for the study of the development of the Senegal River and the establish- ment of a subterranean water authority. (169-1) (b) Further development of the Dar El Barka project (CFAF 10 million). (169-2) (c) Improvement of the Lower Boghe plan (GFAF 6oo million). (169-3) (d) Gorgol development schemes (CFAF 755 million) including dams on the Lower Gorgol, Foum El Gleita, development of terrain and experimental plots. (169-4) (e) Further development of the R'Kiz Lake (CFAF 80 million). (169-5) (f) Development of the Delta (CFAF 275 million). (169-6) (g) Small scale irrigated agricultural developments on the Senegal River upstream from Kaedi (CFAF 30 million). (169-7) (h) Construction of two flood retention irrigation dams in the Hodh (CFAF 60 million). (169-8) (i) Creation of an hydro-agricultural work unit (CFAF 110 million). (169-9) 14. Forestry (1) Protection of gum tree plantations (CFAF 138 million). (171) (2) Forestry production measures (CFAF 40 million). (172) 15. Fisheries (1) Study of the stock of exploitable marine resources (CFAF 43 million). (197) (2) Preparation of a market study. (196)  - xvi - (3) Creation of a Mauritanian fishing fleet (CFAF 1.4 billion in four years). (199) (4) Training of seamen (CFAF 35 million). (201) (5) Charter-parties for foreign vessels. (203) (6) Expansion of port installations (CFAF 845 million). (204) (7) Protection of territorial waters (CFAF 150 million). (205) 16. Mining (1) Establishment of a geological research service (CFAF 28 million in four years). (251-1) (2) Charge the Service of Mines with a study of power needs. (251-2) (3) Creation of a mining and prospecting section in the National School of Public Administration (CFAF 12 million). (251-3) (4) Revision of mining legislation. (251-4) 17. Transportation (1) Complete the Rosso-Nouakchott road according to present design standards. (265-1) (2) Avoid investments in improving the long distance road system. (265-2, 10, 11) (3) Reintroduce competition in the road transport industry and revise the role of the ONTP. (265-3) (4) Raise road maintenance expenditures to an annual minimum of CFAF 300 million. (265-h) (5) Start a long-term program to train Mauritanian road engineers. (265-5) (6) Study the desirability of replacing overage aircraft. Evaluate the financial aspects of exporting meat by air from Kaedi. (265-6) (7) Meet short-term transport requirements in the region Rosso-Kaedi through marginal investments in improving navigability. (265-7, 8) (8) Assess and attempt to recover damages on the badly constructed Kaedi-Kiffa road. (265-9)  - xvi i - Education and Training 18. Primary Education (1) Reduce the weekly class periods. (295-1) (2) Offer education in only one language in the first three grades and introduce the second language in the fourth or fifth grade. (295-2, 3) (3) Improve the training of teachers who will teach in only one language. (295-4) (4) Depending on Government policy with respect to the use of a single language in the lower grades of the primary school the training of bilingual teachers would be discontinued. (295-5) (5) If bilingual teacher training is continued, the Government should reconsider the level at which students would be admitted to the training college, as well as the duration, curriculum, and methods of education. (295-6) 19. Secondary Education (1) Severe selection standards should be imposed for admission to the sixth grade. (302-1) (2) Pernit only one repetition per cycle and only 15% repeaters in each grade. (302-2) (3) Upper cycle admittance should be based on the best performance. (302-3) (4) Total enrollment in the fifth grade of the school year 1967-68 should be limited to 480 to prevent a costly rise in total future enrollment. (302-4, 5) (5) Although the above recommendations will achieve the most impor- tant BEPC and BAC level targets at a reasonable annual cost the Government may find it difficult to fully adopt the measures suggested with respect to selection and repeaters. Accordingly the following suggestions are offered for further consideration: (302-8) (a) Reshape the secondary school curriculum to produce a type of education more suitable to Mauritanian needs. (302-8a) (b) Maintain the parallel between the Mauritanian and French secondary school diploma and perhaps with other countries. (302-8b)  - xviii - (c) Maintain one complete lycee with a French curriculum and consider the creation of a complete secondary school providing education in Arabic for teachers and others going on to higher education abroad. The proposed school could be established at the site of the present Institute of Higher Islamic Studies at Boutilimit. (302-8c, 9, 10) (6) A special national commission should be formed to study these recommendations and alternatives with a view to recommending the most appropriate policy. (302-11) 20. Technical Education and High Level Manpower Training (1) The girls' lyc6e at Nouakchott should be expanded to include training in home economics and health. (306-1) (2) Investments in vocational training should be held in abeyance until the results of present methods have been obtained and expenditure levels determined. The control of the Technical College should be returned to the Ministry of Education and admission requirements of this college should be raised. (306-2) (3) The Mamadou Toure Center should gradually increase its enroll- ment. (306-3) (4) The other centers should expand and alter their programs in accordance with demonstrated requirements. (306-4) (5) A long-term plan for using scholarships should be drawn up in order to train Mauritanians to replace expatriates in accordance with manpower needs established by the Plan Organization. (308) (6) The budgets for all technical training organizations, except the nursing school, should be included under the High Commissioners for Technical Education and High Level Manpower Training. (311) 21. Investments (1) Primary education (CFAF 100 million): for 30 new classrooms, offices,vehicles and equipment. (315-1) (2) Pedagogical Institute (CFAF 20 million): audio-visual aids. (315-2) (3) Secondary schools (CFAF 270 million): for buildings, staff houses, teaching aids, classrooms and other facilities. (315-3) (4) Vocational training facilities (CFAF 10 million). (315-4)  - xix - 22. Economic Policy (1) A thorough inquiry should be undertaken of interior and exterior commerce with a view to establishing whether a justification exists for reallocating the common customs receipts from the Customs Union with Senegal. (321) (2) The present arrangements providing for an open economy, a con- vertible currency and important economic ties to other West African states, France and the Common Market should be retained. (322) 23. The Credit System (1) The BMD should pursue an active credit policy concentrated in the rural sector in accordance with the requirements of the development program. (329-1) (2) The problem of control and development policy of the BMD needs to be reexamined with serious consideration given to changing the Bank's statutes. (329-2) (3) Credit to farmers should be extended through farmers' associa- tions and should include production equipment, storage facilities, and a minimum price policy. (330,331) (4) The program of rural credit should be based on current studies and pilot projects. (332) 24. Plan Administration (1) The Office of the Economic and Financial Advisor to the President and the Office of the National Planning Agency should be combined. (367-1, 2) (2) The National Planning Agency should contain one directorate for planning and one for statistics; the latter should serve as the Government's central statistical agency and should be given adequate funds, personnel and equipment to perform this function. (367-3) (3) A sectoral programming apparatus should be set up within each ministry. (367-4) (4) An inter-ministerial planning and policy committee should be established under the National Planning Agency to coordinate sectoral, national planning, and the budget as well as to advise the Cabinet on current economic policy issues. (367-5) (5) An Economic Committee of the Council of Ministers should be established to examine development and economic policy issues. (367-6)  (6) The system of budgetary accounting should be revised so as to enable policy makers to identify cash receipts and expenditures, current and capital costs and economic categories in the budget. (367-7) 25. Fiscal Policy (1) An external debt management policy should be followed to ensure that new debt is incurred only for productive purposes on suitable terms. In particular care should be taken not to permit an excessive expansion of external suppliers' credits. (382,383) (2) The Government should revise its purchasing policies so as to avoid paying customs duties on its own imports. (384-2) (3) The system of local taxation should be revised in order to place a larger share of the burden of social services and education on the urban and rural communities. (384-3) (4) A full enquiry should be undertaken of the entire tax system including the potential tax base and the management of the fiscal structure with a view to instituting specific reforms and increasing tax yields from present taxes and new taxes. Reforms should change import duties and turnover taxes and introduce tabulating machinery as part of the statistical re- organization. (384-4)  CHAPTER ONE: INTRODUCTION A. The Political and Social Structure 1. Before Mauritania achieved independence in November 1960, it was ruled by the French for 60 years. The French did not fundamentally change the tribal and feudal structure they found, rather they modified it and gradually brought it under the control of a governmental structure which included a good part of West Africa. Nevertheless changes were occurring in the social structure, changes which were hastened by the spreading European influence. These changes tended to reduce the rigid class dis- tinctions of the Moorish tribal structure and the system of feudal tribute. The tribal structure of the Senegal River area had been subjected to Euro- pean influence far earlier. The variety of Negro ethnic groups, which inhabited the Senegal River basin, were consequently exposed to more French cultural and commercial influences. 2. The present Islamic Republic of Mauritania contains a population of whom about 80% are of Moorish background and about 20% of Negro origin. Although virtually all are Moslems, the former group has an Arab-Berber ethnic and cultural background, while the latter consists of such distinct Negro ethnic groups as Toucouleurs, Sarakoles and Peuls. The Moors trace their ancestry back to the Almoravides and their Hassaniya Arab successors who conquered Morocco and Spain, absorbed the Berber Tribes, and spread Islam to the Negro tribes in Mauritania. The Negro tribes can also recall proud kingdoms. They successively fought and made treaties with the Moors and the French, a process which took place over centuries and which had as its focal point the Senegal River basin. 3. The present Islamic Republic of Mauritania has aptly been des- cribed as the bridge (trait d'union) between Arab Africa and Black Africa. Culturally and ethnically the majority belongs to the North while the minority looks to the South. Materially, however, the main ties are with the South, particularly Dakar, with which the bulk of commerce takes place. Between Mauritania and the Northern Arab states lies the Western Sahara desert which effectively inhibits communication and large scale trade. 4. The present political structure evolved after independence from a number of political parties that combined to create a single national party, The People's Party, and that in effect agreed to express their differences within this framework. Dissident elements in Morocco and at home are not considered a serious threat in view of the general support the Party has with the people. From the outset the stress was on national unity. Governmental portfolios were distributed in order to effect a balance between the various interests. In 1961 a new constitution was voted creating a Presidential system and vesting legislative power in a 40-member National Assembly. Moktar Ould Daddah was recognized as the dominant polit- ical leader and has from the beginning been head of the Party as well as President of the Republic.  5. The system of electing deputies is democratic in nature. The various constituencies vote on proposed candidates, who are approved by the central party organization. Of the three Amirates surviving the French period, only one is alleged to retain real power over his domain. Yet the vast distances and isolated condition of the largely nomadic peoples tend to preserve tribal control in the rural areas, a control which is only gradually being reduced. Evidence of this is the emergence of new political figures who are not always members of the ruling families. An important and controversial step to advance the cause of modernization was the strengthening of the power of the Party in 1964. The Party became the principal instrument for formulating national policy, while the power of the more traditionalist Assembly was reduced. 6. By far the most serious divisive factor is that which exists between the dominant Moors and the minority Negro ethnic groups along the river. It is not primarily a matter of color, since some 40% of the Moors are the black descendants of subject peoples who intermarried with the Moors and who regard themselves as fully part of this group. The problem is cultural. The more militant Moorish groups want Arabic as the official language and the Negroes demand more influence and autonomy. The mother tongue of the Negro groups is any of a number of tribal dialects. These people, who usually speak Arabic also, were particularly successful in adapting themselves in the past to the French language and administration. As a result they now hold a disproportionate number of places in the civil service where French is the official language, a position they are reluctant to lose. The issue erupted into serious disturbances in February 1966 in the capital, mainly between students representing the two groups, over the proposal of the Minister of Education to enforce Arabic as the language of instruction in the secondary schools. This led to the closing of the sec- ondary schools in Nouakchott and Rosso for the rest of the year. 7. A subsequent Party Congress was followed by a thorough reorgani- zation of the Government and the decision not to change the status quo. The reorganization placed special emphasis on the youth and a new High Commis- sion was established for this purpose. The President has managed to re- establish the former consensus between the two groups and the near term prospects for continued stability are good in the opinion of experienced observers. 8. Mauritania has succeeded in establishing cordial relationships with virtually all nations and blocs. It is a member of a number of African blocs, including that of the Arab nations, and has had good political and economic relations with Russia, Communist China and the United States. It joined other African States in breaking diplomatic relations with the United Kingdom over the issue of Rhodesia, and more recently broke relations with the United States following the Middle East conflict. 9. Mauritania has close ties with France which were formalized in 1961 in a series of economic, financial and technical agreements. France is by far the largest single contributor of concessional aid and technical assistance to Mauritania. France also exercises strong cultural influences particularly through the educational system. A number of Frenchmen still occupy important administrative and judicial posts in the Government although  they are gradually being replaced, as trained Mauritanians become available. Mauritania is a member of the Customs and Monetary Union of West African States, and is one of the 18 African States associated with the Common Market, from which it receives considerable economic assistance. 10. The principal external problem is the still unsettled issue of Morocco's non-recognition of Mauritania's independence. In particular, the conflicting claims of the two nations to the Spanish Sahara (Rio de Oro) are a potential source of trouble. Little pressure is being exerted on the Spanish by the Mauritanians, no doubt in recognition of the dangers that a change in the status quo of the Spanish Sahara would involve. Indeed, Mauritania has important economic agreements with Spain in relation to the Port Etienne fishing industries, in which considerable Spanish investment is anticipated. 11. The nation's foreign relations reflect the high degree of modera- tion and pragmatism characteristic of internal relations among the Moors. The pressures for development and the stresses of social changes are less likely to take on an explosive character under these circumstances. Rather it appears that the authorities in Mauritania will have the time, if they choose to use it, to marshall their limited resources in a systematic manner so growth can proceed in an orderly fashion. B. The People and Their Environment 12. According to the most recent samp4e census, Mauritania had a population in 1965 estimated at 1,040,000. A forthcoming complete census may well produce important differences in the size and characteristics of the population from the estimates used here. According to the available figures, the population is about 80% Moorish and 20% Negro. The urban population is not known with any precision but is reported to slightly exceed 10% of the total and is spread over a number of relatively small towns. Nouakchott, the capital, has an estimated population of some 15,000, Port Etienne, Fort-Gouraud and Kaedi about 10,000 each, and Rosso some 5,000. Growth has been most rapid in the towns which are part of the modern sector particularly Nouakchott, Port Etienne and Fort-Gouraud. 13. The estimated rate of population growth is 1.7% annually; the growth rate amongst the Moors is 1.5%, and amongst the Negroes, 1.9%. This implies a doubling of population in fifty years and a net increase of some 300,000 by 1980. Life expectancy at birth is 40 years. Because of the primitive and harsh conditions of life the infant mortality rate is extremely high. Both the survival and death rates can be expected to change signifi- cantly in the event of a great improvement in public health services. In 1964 the country had 23 doctors of whom three were nationals, 3 hospitals, 25 medical centers and 50 dispensaries. Some 180 trained nurses staffed most of these facilities. Despite the progress made in recent years, the bulk of the population has no access to modern medical care. l/ Enquete D6mographique 1964-1965, SEDES, October 1966. In 1962 the population was estimated at 880,000.  14. The distribution of population reflects primarily climatic and ecological conditions. The main factor in determining the location and concentration of the population is the availability of water. Close to 80% of the population lives south of the 170 parallel in 1/7th of the country's land area. The concentration of population ranges from less than 0.1 per km2 in the North to 8 per km2 in Guidimaka in the far South. 15. The outer limit of regular pasturable terrain is marked by the 100 mm annual rainfall line which passes through the oasis of Atar in the North (210 parallel) and is close to the 170 parallel in the South West. South of this 100 mm line annual rainfall increases to 600 mm along the river in the South. In areas where rainfall exceeds the 200 mm level dry farming is found in addition to cattle, and the pure nomad is replaced by the semi-nomad and sedentary population. In general, the Moors are nomadic while the Negroes tend to be sedentary, although the distinction is not sharp. 16. The main movement of population is towards the South from the Saharan and Sub-Saharan zones to the more plentifully watered Sahelan areas. In the process increased sedentarization is observable in the form of new villages and increases in the sizes of regional towns. This process is encouraged by official policy. 17. Some two-thirds of the entire population is engaged in livestock herding. The bovine herds are most heavily concentrated in the regions of greatest rainfall along the Senegal River from South of Brakna, Guidimaka, the Hodh Occidental and the South of the Hodh Oriental. The concentration diminishes as the 200 mm zone is approached in the Northeast Trarza to the center of the Hodh Oriental in the far eastern part of the country (see map). The goat and sheep population overlaps the bovine regions in the more north- erly reaches and is particularly concentrated in the triangle bounded by M'Bout and Konkossa in the South and Tidjika in the center of the country. Goats and sheep are also numerous in the Western Trarza and the Hodh. Camels are mainly found in regions of less than 200 mm rainfall and East of the line starting 200 km North of Nema to Fort Trinquet in far North. 18. There are three types of livestock herding which affect the degree of nomadism. First, there is the nomadism, called transhumance, of lower Mauritania (Sahelian region). Here the tribal camps are relatively stable with rich pastures and predominantly bovine herds. The herds and people move to different zones and even cross national boundaries (Mauritania and Mali) along fixed routes and according to established patterns in order to take advantage of seasonal vegetation growth. Since the animals leave the inundated and unhealthy zones during the winter rainy period they are gen- erally healthier than livestock belonging to the sedentary people. The dispersion of the animals also inhibits the spread of contagious diseases. It is not unusual to find schools and wells in the more important camps as well as some cultivation of the soil. 19. A second form of nomadism occurs in central Mauritania (Adrar- Tagant) where movements are more erratic and dependent on rainfall. Sheep and camels go South with the beginning of the humid season and return North with the autumn rains. People and herds move over greater distances but less regularly than in the South.  20. Finally, there are the great Nomads of the North who can depend on no regular seasonal rainfall and who travel with their camels, often over a thousand kilometers, in search of pasture. The numbers of people involved are small and they are widely dispersed. 21. The sedentary zones are in the far South; their population raises cattle and produces crops, principally millet and sorghum. In addition to the various Negro ethnic groups:;identified earlier in this area, the seden- tary zones include a number of villages inhabited mainly by black Moors. The sedentary population also includes the inhabitants of the oases in various parts of the arid regions. The greatest part of the sedentary population is situated along the Senegal River. This area has the highest population density in the country. 22. The social structure of the sedentary tribes is like that of the Moorish tribes. In the Moorish tribes the principal unit is the tribe, an ancient social organism, which is composed of a number of family groups or tents with common traditions and habits under a single chief. In its classic form the tribe consists of noble families at the top of the structure, either warriors or Marabouts (learned and religious castes), tributary groups of shepherds and farmers usually of Berber origin, artisans, and haratines who were subject peoples. Many of these are black Moors who engage in sedentary agriculture and often still pay tribute. With the increasing modernization of Mauritania the warrior castes have lost their importance. Members of this class have tended to be absorbed in the police corps and army. The Marabouts tend to become teachers and administrators. It is important to note that the Moorish caste system does not imply marked differences in material wealth but rather defines mutual obligations and privileges. The noble families own little land and the democratic nomadic tradition requires wealth to be widely distributed. Among the Negro tribes the Toucouleurs are most numerous. They inhabit both the Mauritanian and Senegalese sides of the River and frequently have family and property interests in both countries. They too have noble families, free productive classes, artisans and servant classes. The Peuls are spread all over the valley and are partly sedentary. Large numbers leave the villages during the seasons of transhumance to follow the cattle. 23. A complicated system of land tenure and usage exists in the flood plain of the Senegal. There are numerous examples of collective ownership, individual rights to use land and sharecroppers involving both Moors and Negro tribes. No cadastral survey exists and the system of tenure is only known for certain limited parts of the valley. Efforts to modernize agri- cultural production will have to overcome formidable social barriers with respect to land ownership and rights. 24. Attempts to spread and improve education have been severely hampered by the wide dispersion of the population and the limited resources produced by a primitive livestock and agricultural economy. The primary school age population (ages 6-12) may be estimated at some 20% of the total population. The percentage of primary school age children in school is less than 10%, although primary education absorbs 11% of the total budget. The percentage of children in school also varies widely depending on population concentra- tion. Thus 24% are in school in the North around Port-Etienne but only about  - 6 - 4% in the Eastern Hodh province. The cost of primary education per pupil in Mauritania (CFAF 21,000) is well above the average for the other francophone states of Africa (CFAF 9,700). 25. The generally harsh climatic conditions, the limited amount of arable land, the great dispersion of the bulk of the population and the traditional social structure constitute serious limiting factors for the process of economic development. The dissemination of modem technology, and the extension of central administration is made difficult by the widely scattered population. Land communication is not only primitive, but expen- sive improvements are difficult to justify in economic terms given the structure of production. C. The Structure of the Economy Modem Sector 26. The outstanding feature of the Mauritanian economy is its strong dual character. On the one hand are the traditional livestock and agricul- tural sectors which yield little more than subsistence standards of living and in which about 90% of the population is engaged. On the other hand, there is the modern sector in the Northwestern part of the country consisting of an iron mine, a copper mine under construction, and a developing fishing industry. These enterprises are in reality foreign enclaves developed with foreign capital and staffed at the higher levels almost entirely by Euro- peans. As extensions of the modern industrialized world, these industries are subject to cyclical variations in demand characteristic of their foreign parent industries, as the sharp decline in iron ore prices demonstrated in recent years. In the case of Mauritania, the profitability of ore companies is potentially important, as the Government will receive a large share of their profits, if there are any. The Government also owns a large share in the fish processing facilities, where serious overinvestment makes substantial potential returns questionable. 27. Because of the nature of the enclave industries in the North their direct influence on the introduction of modern technology in the traditional sector can only be limited. In the first place these industries, whether in mineral extraction or in fish processing, are highly capital-intensive in structure. They will therefore employ small, but relatively skilled, local cadres. The specialized training required for these cadres will be largely provided by the industries themselves and will not be readily transferable to the traditional livestock and agricultural sectors. Even in the fishing industry where scope exists to develop a Mauritanian fishing fleet the total requirement for manpower over the next decade is not expected to exceed 1,200. 28. The direct effects of the enclave industries on employment, income and training will be limited. Their primary contribution to the development of the traditional sectors will be indirect in the form of taxes and royalties on output and salaries and possible profit on operations which will accrue to the current Government budget. This source of income already accounts for over a fourth of total Government current revenues, The  possible impact of this source of revenue on the development effort in general should not be exaggerated. Revenues from such sources will not have risen significantly by 1971, the end of the second Plan period, nor will they after that. The copper mines, under the terms now available for review, are not expected to make an important contribution until 1975, when they will amount to some 10% of present Government current revenues. Thus, the Government's financial problem, even with a large contribution from the export of iron ore, remains critically tight. 29. Although revenues have increased by over three and a half times in the last seven years - mainly because of MIFERMA - budgetary balance on the current account has been maintained by keeping current outlays in check and certainly below the level of pressing demands in the fields of rural services, social services and maintenance. Even so, a part of Government outlays has had to be financed by foreign aid through the equipment budget, as have virtually all of investment outlays. 30. Finally the enclaves can have an important, although limited, economic impact in providing markets for domestically produced products. The mining and fishing centers of Port Etienne, Fort-Gouraud, and in the future Akjoujt, with their relatively high salaried European and local staffs,have been only partially exploited by the vegetable growers of Atar and Chinguetti in the North and not at all by the livestock industry of the South and the East. The opportunity exists to replace presently imported foodstuffs with domestically produced vegetables and meat once production, distribution and marketing are properly organized. In this connection the new Government administrative center of Nouakchott should be considered to be part of the modern sector. It offers similar possibilities to domestic producers of agricultural products. 31. With a population of some 1 million persons, the potentially active population (15 to 60 years of age) is estimated to be some 500,000 (less than half male). The proportion of the population under 15 years of age is from 40 to 45% of the total; the proportion over 60 is therefore quite small. A good part of the female population in the active age group should not be considered as part of the labor force, i.e. willing and able to work, since traditional social custom generally relegates the female to a quite passive work role in the nomadic part of the population. These attitudes are carried over to the modern sector where relatively few females participate in the labor force. They constitute about 10% of employment in the modern sector. 32. Employment in the modern sector was estimated at 16,200 in 1965, of which 3,200 were foreigners. In general the modern sector employs some 5% of the potential labor force. The absolute numbers employed have declined in recent years as a result of the completion of major iron mining invest- ments. Some 96% of the private modern labor force is concentrated in the northern part of the country, principally in Nouakchott, Zouerate and Port Etienne. If public employment (excluding the armed forces) is included, the North contains an estimated 61% of total employment in the modern sector. Thus modern sector employment affects a very small part of the population. It is fairly stable in numbers and is subject, as will be shown, to great shifts in types of occupation. Finally, the productive part of the modern sector is heavily concentrated in the most sparsely populated part of the  - 8 - country, where its higher incomes and modern skills can have but a minimal influence on the bulk of the traditional sector. The difference between the modern and traditional sectors is seen even more clearly from the figures on income distribution. The latest available national accounts estimates are for 1964.2/ These are most imprecise in imputing value added to the traditional sector and most reliable in estimating the modern sector. Never- theless they are probably reliable enough to give a general impression of the relative importance of the main sectors which contribute to the national product. 33. Total wages and salar'es in the private modern sector in 1964 are estimated at CFAF 5.4 billion3 Total modern private employment amounted to 9,300 in 1964, of whom some 33% were foreigners (both African and Euro- pean). The foreigners held the great majority of executive and skilled posi- tions. In the highest class of wages and salary earners, foreigners held 94% of the positions and earned 50% of all wages and salary payments. In general, Mauritanians held two-thirds of the jobs in the private modern sector but received only one-third of total wage and salary payments. It is estimated that foreigners habitually transfer over 50% of their income abroad. In 1964 this would have amounted to transfers of some CFAF 1.8 billion or more. 34. Employment in the modern public sector amounted to about 8,200 excluding the security forces. Total wage and salary payments in the public sector amounted to CFAF 4.1 billion in 1964. Foreigners were estimated to constitute some 10% of public employment. A large number of foreigners in the public service receive most of their remuneration from technical assis- tance programs paid by other countries and international organizations. 35. Income per capita in the modern sector may be roughly estimated to exceed that in the traditional sector by some ten times on the average. If foreign workers are excluded, Mauritanian income per worker in the modern sector may be estimated at five times the traditional sector. 36. The figures on the distribution of the gross domestic production at factor cost in 1964 indicate that the traditional sector produces some 52% of the total, mining 24%, and commerce 11%. 37. Thus the bulk of the working force is engaged in producing less than half the domestic product. Moreover, the large proportion of the national product produced in the mining sector is offset by heavy factor payments abroad by the enterprise producing the iron ore (MIFERMA), as well as by the considerable transfer payments by the foreign workers who receive the greatest part of the private wage and salary payments. The sum of factor payments abroad by enterprises and wage and salary earners was estimated at CFAF 8.8 billion in 1964. GNP was accordingly estimated at 26.9 billion compared with GDP of 35.7 billion in 1964 (at current market prices). 2/ Preliminary estimates produced in the French Ministry of Cooperation. 3/ National accounts estimate.  - 9 - 38. Although Gross Domestic Product estimates are available for the years 1959, 1962 and 1964, the breakdown of the figures is not comparable for each year. From 1959 through 1962 the gross domestic product (in current market prices) increased from CFAF 14.5 billion to CFAF 24.4 billion, an annual rate of increase of some 20%. Of this CFAF 9.9 billion increase, the mining sector accounted for CFAF 7.3 billion while the tradi- tional agricultural, livestock and fishing sectors accounted for only CFAF 0.7 billion. The balance of the increase was principally accounted for by the Government sector, mainly salaries whose product rose from CFAF 2.5 billion to CFAF 3.4 billion. The main cause of this growth was the rise in gross fixed capital formation, consisting almost entirely of imported capital by MIFERMA, which rose from 9% of GDP in 1959 to almost 70% of GDP in 1962. Average per capita incbme rose from an estimated $65 to over $100 in this period. As a result the share of the traditional sector in the national product fell from 71 to 45% between 1959 and 1962. 39. Accordingly, even with a rate of growth of 20% annually in the gross domestic product induced by investment in the enclave industries, very little effect was observable on the traditional sectors. From 1962 through 1964 the rate of growth in current prices remained at 20% a year. The prin- cipal change in the composition of value added to the gross domestic product was the sharp rise in mining output which offset the fall in building activ- ity as a result of the completion of the MIFERMA iron mining facilities. Important increases are also indicated for the tertiary sector mainly com- merce. The national accounts estimates show a rise of CFAF 3.9 billion in the rural sector which principally concerns livestock herding. As neither the quantities nor values of rural sector output can be determined with any precision, the stated growth shown may be subject to a wide margin of error. In the period 1959-1964 account should be taken of an average annual esti- mated price rise of some 4%. From 1964 through 1966 the Mission estimates that the rate of growth was about 8% on an average annual basis principally because of the levelling off of the rate of increase in mining output and the slow rate of growth assumed in the rural sector. In the subsistence economy where there is little evidence of technological change, rises in output probably approximate the growth in population. Average per capita income in 1964 may be estimated at some $140. (See Appendix II) Livestock 40. The livestock herds of Mauritania represent the greatest resource of the country's traditional sector as well as the principal occupation of its people. Livestock contributes about CFAF 10 billion to the gross domes- tic output; the entire agricultural sector including livestock produces a GDP of some CFAF 13 billion. There are an estimated 2 million cattle, 6 million sheep and goats, 500,000 camels, and 150,000 horses and asses. 41. The principal factors limiting the development of livestock are: (1) The quantity and quality of pastures. (2) The availability of drinking water. (3) The pathology and sanitary condition of the animals.  - 10 - 42. In general, animals in the drier zones are healthier and less subject to disease than those in the more moist regions. As indicated earlier, the increased concentration of animals under transhumance in the south during the dry season causes a deterioration in sanitary conditions and in the quality of pasture. In addition, vast areas cannot be used in a rational manner to pasture the herds because of the absence of drinking water for man and beast during a large part of the year. Over the centuries these conditions have produced a breed of animal under transhumance particu- larly adapted to the terrain. In effect, the animals are subject to alter- nating periods of famine and feast. They often go two and three days with- out water during the long marches between pastures. The African Zebu cattle are of two distinct types - the Moorish Zebu and the lower yielding Peul Zebu. This is the only type of animal able to survive the natural climatic conditions of the country as well as resist the epizootic diseases which afflict animals in the more temperate zones, although even the Zebu can bene- fit greatly from sanitary protective measures. 43. Under these conditions it is not surprising that the productivity of the animals is less than that of herds in more favorable climates. Never- theless despite the regular deprivation of food and water to which they are subject, the herds survive, reproduce and provide nourishment for a human population while leaving an important surplus for export. The limited know- ledge of the physiology of the African Zebu makes it difficult to cross breed it successfully with superior yielding types of animals. The natural condi- tions of the country together with the physiology of the Zebu makes it impossible to apply European or American coefficients of converting fodder into meat and milk. 44. Bovines do not reach maturity until after the fifth year, the cows do not become fertile until the third year, the birthrate rarely exceeds 60% and the rate of survival is 50%. Beef cattle in the traditional live- stock culture are marketed young, often yielding less than 300 kg. on the hoof and returning less than 50% per carcass. Meat and milk yields are correspondingly low for sheep and cows. Virtually all of the milk is con- sumed by the herders, thereby depriving the young calves of adequate nour- ishment and leading to high mortality rates. Accordingly, the annual rates of output as a percentage of total herds is estimated at 8% for bovines, 30% for sheep and goats and 5% for camels. 45. In addition to the low rates of return, the system of distribution and marketing of livestock is primitive. At maturity, the animals are sold on consignment, usually against an advance, at the major livestock centers, particularly Kaedi, Kiffa and Nema, to middlemen who drive them through Senegal where they are fattened en route to markets in Dakar. It is a system in which a large degree of confidence exists between herder and merchant. The merchant or middleman sells the cattle on the market in Dakar and then pays the herder. Payment from the Dakar market is irregular as the herders come into contact with the sedentary settled areas during only one part of the transhumance cycle. During these contacts a system of barter of animals for grain and other products also takes place. In general, the herder is dependent on middlemen and the vagaries of a market which is from 500 to 1,000 km. from the collection points in Mauritania. It is a system which nevertheless yields returns to Mauritanian herders which compare favorably with the experience of other African livestock raising areas.  Crop Agriculture: Millet-Sorghum 46. The main crops produced in Mauritania are millet and a close rela- tive, sorghum. Output is estimated at some 110,000 tons a year. Three types of culture are identifiable. The first and by far the most important, accounting for some three-fourths of total output, is farming in the flood plain of the Senegal River (culture de d6crue) and its tributaries. The millet is planted in areas (the oualo) where the river flood has receded. Some 40% of flood plain output is in the Brakna/Gorgol region and 15% in the Guidimaka regions of the river, the yield is an estimated 400 kg. per hectare. The low returns are due to the use of extremely primitive tech- niques of cultivation, the irregularity of the flood which can double in area from one year to another, and the general inadequacy of water given the techniques of cultivation. Planting usually takes place late, in March and April, after the ground has already lost a considerable amount of moisture. The ground is not tilled; a forked stick is used to make a hole into which the seed is inserted. The growth of the plant is entirely dependent on the remaining moisture in the ground which is diminished con- siderably by the hot dry winds which blow from the East starting in April and May. 47. The second type of millet-sorghum culture is that dependent on rainfall. Average yields are about 300 kg. per hectare. In the Guidimaka, where rainfall is some 500 mm a year, yields are higher. The crop is planted with the same primitive techniques described above at the first rainfall. Occasionally, a second crop may be obtained depending on the amount of rainfall. The principal limitations on this type of culture, aside from technique, are the irregularity of annual rainfall and the general lack of adequate moisture which is further accentuated by the rapid evapora- tion of moisture in a dry climate. 48. The third type of millet-sorghum culture is grown largely by the nomadic herders and may be considered a strictly secondary activity to their principal occupation of raising livestock. It is based on the brief periods of flood which follow the intense but short desert rainfalls. The collection of water in the wadis leaves enough moisture to produce a poor crop. In the last generation, a number of small dams were erected by the Government and occasionally by local communities to retard the flow of the water and in- crease the inundated area. The investment in these dams has yielded ex- tremely low returns, while providing some crop supplement to the livestock output of the nomads and to a few sedentary villages in the pasturelands. Where there is virtually no opportunity cost of labor, the increased output of millet, however meager, may be defensible on social grounds. However, the opportunity cost of capital is considerably higher than zero, and it is on these grounds that the investment in dams of this type may be questioned. 49. The total domestic output of millet is insufficient to meet domestic consumption requirements. Accordingly, a gradually increasing quantity, in accordance with population growth, has been imported annually from Senegal and Mali. Last year, an estimated 30,000 tons of millet was imported.  - 12 - Dates 50. There are an estimated 1 million date palm trees in Mauritania. They are concentrated in the oases of the Adrar, Tagant, Assaba and the Hodh. Annual production is estimated at 10,000 tons which is apparently sufficient to cover domestic consumption needs. With few exceptions, date palms grow wild without pruning or special care. Yields are accordingly low and variations in quality are considerable. Although adequate ground water appears to exist for irrigation in the main producing areas, the modern large scale cultivation of dates is retarded by a number of factors. Principal among these is the fact that it takes a tree about five years to bear fruit. With limited capital, few Mauritanians can afford to invest in plantation culture without return over such a long gestation period. In fact, the bulk of the trees are owned by a few absentee landlords whose principal occupation is livestock. They have little interest in the diffi- cult process of introducing modern technology in cultivation, packaging and distribution, to say nothing of directing the relatively large labor force that a plantation culture of dates would require. Accordingly, they are satisfied to rent their trees for the annual output and collect whatever revenue this yields. Other Crops 51. Small quantities of wheat, corn, rice and other crops are grown in isolated areas. The cultivation of vegetables has begun in the oases of Atar and Chinguetti, while market gardening has started on a small scale near Nouakchott and Rosso. In general, great deficiencies exist in the production of vegetables. These deficiencies result in low quality and high prices. 52. The output of gum arabic, which contributes some CFAF 350 to the gross domestic product annually and an export of 2,000 tons (value estimated at CFAF 100 million), is gradually diminishing because of destructive cutting practices.  - 13 - CHAPTER TWO: EVALUATION OF THE FIRST FOUR-YEAR PLAN 1963-1967 53. The first formal Mauritanian Four-Year Development Plan was originally scheduled to cover calendar years 1963 through 1967. Since the approval of the National Assembly was not obtained until July 1963, the effective dates of the Plan were adjusted to cover the period June 1963 through June 1967. Figures comparing the actual results with the projections in the Plan by sector and project are available foz the first three years of the Plan, that is June 1963 through June 19661/ Since the end of 1966 the Plan has no longer been considered an effective guide to development planning. The Government decided to use 1967 as a year of reassessment and preparation for a new four-year plan scheduled to start on January 1, 1968. I. Objectives 54. The Plan was based on two fundamental objectives:2/ (1) To complete the independence of the country by reducing its effective subservience with respect to its dependence on foreign financing and on foreign personnel. (2) To prepare the base for the next stage of develop- ment beginning in 1967 which was to be a stage of social economic development for the benefit of the entire nation. 55. The first objective was to be accomplished by a policy of "draconic" austerity in public expenditures coupled with fiscal reforms to increase revenues leading to an elimination of the current budget deficit. Adequate credits were to be provided for maintaining the national capital stock while a proper investment budget was to be established. 56. A program of systematic training and placement of personnel based on a census of the needs at all levels was to be undertaken in order to reduce the dependence on foreign resources while providing for the increas- ing demand for trained cadres thereby enlarging the absorptive capacity for investment. 57. The second objective was to be accomplished in part by a series of basic studies of the nation's human and material resources to enable the objectives of the Second Plan to be quantified. In addition, a program of 1/ Bilan Plan Quadriennal 1963-1966 de 3 ann6es d'ex6cution, R6publique Islamique de Mauritanie, 1967. 2/ Plan Quadriennal de D6veloppement Economigue et Social, 1963-66, R6publique Islamique de Mauritanie.  - 14 - basic infrastructure investments was envisaged for roads, communications, schools and hospitals including the stimulation of regional poles of development. In the livestock sector, sanitation, water projects and capital intensive processing and commercialization facilities were pro- jected. In agriculture, major dependence was placed on pilot hydro- agricultural works. Social investments were to be limited to the minimum. Encouragement was to be given to the establishment of small Mauritanian production and service enterprises to integrate the public services, the big enterprises and the traditional sectors. II. Evaluation of Results 58. The results of the Plan for the first three years and in some respects up to the present can be evaluated in two ways. First, the results can be compared with the stated objectives. Second, the economic activities which occurred during the Plan period, and which may be considered to have had some relation to the Plan, may be evaluated in terms of such criteria as the optimal use of resources and their contribution to economic develop- ment. 59. No elaborate analysis is necessary to determine that the funda- mental objectives were by and large not achieved. With respect to reducing Mauritania's dependence on external finance, it is true that the Government renounced the French current budget subsidy in 1963 and simultaneously introduced an austerity budget designed to force current expenditures to match current revenues. Some new tax revenues were obtained, but the reform of the fiscal system foreseen did not take place. In fact, current revenues rose by 50% between 1963 and 1967 (budget projection) while current outlays rose by 18%. Most of the rise in receipts was from increased taxes and advances paid by the MIFERMA iron mines. 6o. Budgetary resources were often allocated on grounds other than their likely contribution to economic development. In the absence of an adequate system of control, personnel expenditures rose by 26% from 1963 to 1967 while cther expenditures were either stable or decreased in this period. High priority outlays were subjected to the draconic economies proposed by the Plan. For example, instead of providing adequate credits to maintain the national capital stock, maintenance outlays were cut from CFAF 107 million in 1963 to CFAF 81 million in 1964 and only 143 million was projected for 1967. According to the Mission's calculation at least CFAF 250 million would have been necessary annually just to have adequately maintained road systems. Instead of creating a proper investment budget to administer the available foreign investment resources to the big works,the State investment budget included only a number of residual items which could not be covered in the current budget and which could be paid out of special supplementary grants from the FAC. The bulk of the investment program re- mained outside the State investment program and was financed and supervised directly by the FAC and FED under a system of agreements with the Mauritanian Government. A more detailed analysis of the fiscal situation is contained in Chapter Five.  - 15 - 61. Only limited progress can be said to have been made in reducing the dependence on foreign personnel. The census of requirements for tech- nically trained personnel at all levels which was to have been the basis for a systematic program of training and placement was evidently never carried out. In some respects, the information available today on the composition and size of the labor force in the modern sector is inferior to what was published in 1962. Recent organizational changes in the Government have focused attention once again on the problem of training and there are pros- pects for improved performance in this field. Because of the limited progress made to date with the Mauritanization of the public services and because of the rising requirements for trained people, the number of foreign technical personnel has remained approximately constant during the past four years. In a number of fields there are not enough technically trained people, either expatriates or Mauritanians, to perform the work required. 62. The second fundamental objective concerned the preparation of the basis for general economic and social development during the Second Plan period. This was to be accomplished mainly by the completion of certain fundamental studies as well as by a program of infrastructure investments. The program of studies was based on the quite reasonable proposition that national planning was impossible in the face of an almost total lack of knowledge about the demography, family consumption habits, commerce, surface and sub-surface resources and rural production. 63. But the only statistical study accomplished, at least in part, was that by SEDES on demography. The results of a pilot inquiry undertaken in 1962 were published in 1964. This was followed by a more general demographic survey in 1964-65, the provisional results of which were published in October 1966.1j 64. This study is being revised and a complete census will be under- taken later at a time as yet unspecified. Financing has not yet been ob- tained for the family budget study while the study of interior and exterior commerce has been postponed until the next plan. 65. A modest program of geological aerial surveys and geological mapping was included in the Plan. This program is largely on schedule and has resulted in some interesting indications of mineral deposits (beryllium, chrome, fluorine). In view of the extent of area to be surveyed the sums projected in the Plan were not large. No detailed studies of agricultural land resources exist. There are also no reliable statistics on output in the agricultural sector. Figures on the livestock sector are only partially reliable. 66. In general it is no exaggeration to say that the basic knowledge of the country's people and resources at the beginning of the Second Plan period has advanced only slightly since the outset of the First Plan. 3/ Enquete D6mographique 1964-65: generalit6s, m6thodologie, r6sultats provisoires. Republique Islamique de Mauritanie Minist6re des Finances, du Plan et de la Fonction Publique, SEDES, October 1966.  - 16 - 67. In transport infrastructure the objective of the Plan was to relieve the isolation of the eastern part of the country by creating a coherent network of roads and other means of communication which would progressively replace the c8mmercial circuits around Dakar with commercial circuits centered around Nouakchott and Port-Etienne. These investments were to be limited to a level consistent with the capacity of the current budget to provide adequate maintenance outlays. 68. Actual payments on investments for roads amounted to CFAF 633 million in the first three years, compared with CFAF 875 million projected.L/ The Rosso-Nouakchott road projected for completion during the Plan will not even get under way until this year partly because of design changes and other problems. The work on the Kiffa-Kaedi road was completed but because of gross errors in design the work will have to be largely done over. Modest improvements were made on a number of other interior tracks in the desert. Financing was not obtained for important projected routes in the south, in particular the Rosso-Kaedi road. 69. Investments in river works reached only CFAF 28 million out of CFAF 150 million projected, mainly for the port of Boghe. Only a study was completed, no financing was obtained. The wharf at Nouakchott, the key investment in the policy to tie together the east and west, was completed in three years with total payments of CFAF 608 million compared to CFAF 520 million projected. 70. In education and training approximately less than half the sums projected were actually spent in the first three years as a result of delays. The school age population was stabilized at a lower number than had been expected. Secondary school enrollment was not sufficiently selective and classes were larger than foreseen. With a lower than expected primary school population, the program of regionalizing secondary instruction was stopped. Specialized and vocational training goals were only partially met. 71. In public health total payments were some 100 million less than the CFAF 743 million projected. The Nouakchott hospital was put into service with some delays and a number of clinics and centers were opened. 72. In the fields of urban development, water and electricity, total public expenditures were CFAF 470 million rather than CFAF 2.8 billion as projected, although financing was obtained for CFAF 2.5 billion. In particu- lar, the projects for increasing Nouakchott's water supply were subject to great delays, changes and cost increases. 73. Expenditures for local government and national defense buildings reached about one-third of the amounts projected in part because of the lack of foreign financing. Investments in rural production which were projected at CFAF 1.9 billion or some 9 percent of total investments, for the three- year period, lagged far behind with actual expenditures of CFAF 688 million. 4/ Bilan Plan Quadriennal 1963-1966, op. cit.  - 17 - 74. The abattoir/refrigerator plant and feeding ranch at Kaedi which was supposed to start operating in 1963-64 has not yet been completed. The cost will exceed the original estimate. 75. Several small hydro-agricultural projects were begun with ques- tionable results. Of 66 wells projected for the Hodh, 20 were completed. Work was completed on 20 new vaccination parks, and the program of vaccina- tion was continued. 76. As for the objective of creating a number of small Mauritanian enterprises to produce goods and services as part of a network of activity tying together the previously isolated sectors of the economy, actual results are difficult to evaluate. With the completion of the wharf at Nouakchott, the Government created a monopoly on the import of basic consumer goods (Sonimex) with a view to replacing imports from Dakar. In 1964, a national control service (ONTP) was set up for the Road Transport industry which has the power both to allocate freight and to set rates. Neither of these developments was foreseen in the Plan and both have involved considerable expenditures on the part of the State. As is explained in more detail in Chapter Three, there are serious grounds for questioning the success of these organizations in meeting national objectives. 77. The published analysis of the first three years of the Plan_./ indicates that projected public and private investments for the first three years of the Plan totalled CFAF 22.7 billion whereas investments realized totalled CFAF 28 billion. Another CFAF 1.3 billion of so-called realiza- tions took place outside the Plan. In this context realization refers to finance obtained, not to actual expenditures. Investment expenditures amounted to CFAF 18.5 billion during this period. Of the CFAF 5.3 billion excess of investments realized over those projected, CFAF 3.4 billion can be attributed to the mining sector alone which was dominated entirely by MIFERMA. The costs of investments in mining and processing facilities considerably exceeded the amounts originally believed to be necessary. 78. In the fishing industry, the investment funds obtained were more than double the CFAF 1.5 billion forecast. The considerable over-investment in facilities which largely accounts for this is discussed more fully in Chapter Four. 79. The important question to consider in evaluating the outcome of a development plan is not whether the amount of money obtained or spent exceeded the amounts projected. As has been shown, the principal reason for the excess in this case was the higher than estimated cost of a private mining investment. Not only was this unrelated to any influence by the planning mechanism of the Government in directing resources to achieve national objectives, but insofar as the excess expenditure did not involve a comparable rise in output, the returns per unit of investment were reduced. In the case of MIFERMA, the failure to realize profit expectations is an indication of higher than estimated costs as well as lower market prices for iron ore. Investment by itself is not necessarily beneficial to develop- _/ Plan Quadriennal 1963-1966, op. cit.  - 18 - ment. What is important is the stream of output an investment will produce, which ultimately can be reduced to its rate of return or profitability. It is only by increasing the productive capacity of the economy that investment becomes important. 80. In a significant number of cases investments undertaken during the period of the First Plan exceeded projected amounts because of faulty fore- casting, errors in execution or changes in plans. More importantly, in a significant number of cases investments were undertaken without regard to the criteria of highest priority based on the contribution to development. Projects were not ranked according to their rates of return. In some cases projects were undertaken as if the funds involved were virtually a free good. While it is true that the principal sources of plan finance in the public. sector are FAC and FED grants, as long as these are not unlimited in amount, it is necessary to treat them as a scarce resource whose allocation must be subject to the same rate of return test as any other expenditure undertaken in the name of development. A notable case in point is the fishing industry in Port Etienne. Clearly excess public and private resources have been and are being invested without regard to the fact that neither the necessary quantity of fish nor adequate final markets have been secured to enable installed capacity to be used at even the minimum levels necessary to avoid losses. Even on the assumption that both fish and markets were available, the capacity of the port was made too small to handle them. To the extent the investment involved is not profitable, i.e. does not return enough to make a normal profit after covering replacement charges on capital, the capital invested has in effect been lost. Instead of investment increasing the national wealth in this case, it has decreased it, since such investment could have been employed elsewhere at a higher return. 81. In terms of national accounting, badly conceived investments can be misleading as they contribute to the gross domestic product and give an illusion of far greater real growth than that which has occurred. III. The Conceptual Problem 82. Much of the success or failure of planning depends on whether the development problem is properly conceived by the planners and, in particular, whether the Plan is based on a realistic evaluation of the facts at the time it is drawn up. Planners must find the optimal way of achieving stated objectives, given scarce resources and the limited absorptive capacity of the country. If a development plan is well conceived, it will not only allocate existing resources in an optimal way but it will lead to the growth of new resources which can be used to stimulate future growth. In the proc- ess of the growth and change brought about by a plan the number of profitable alternative uses of resources should be made to increase. In effect, this means that absorptive capacity should be increased and the prospects for greater growth enhanced. In the case of Mauritania, the widening of the number of profitable choices would lead to much greater independence and control over future development by Mauritanian policy makers.  - 19 - 83. The projected allocation of public and private resources in the last plan provides an important clue about objectives and priorities. 84. A third of total investment was allocated to mining,almost equally divided between iron ore at Zouerate and copper at Akjoujt. Urban development, both regional and in the main centers, was allocated 15% of total investment. A further 12% was allocated for transport and communica- tions infrastructure and only 9% for the rural sector (agriculture and livestock). Studies, which were one of the main objectives, were allocated less than 6% of total investment. 85. The planning authorities and Government can directly influence only the public sector. While 60% of private sector investment was in mining and the Government played a substantial role in the granting of concessions and in fixing the terms of operating conventions, the basic decision to exploit the deposits as well as the bulk of the capital re- quired belonged to private foreigners. The public sector accounted for about half of total projected investment. In the public sector close to a fourth was allocated to transport and communications infrastructure and an almost equal amount to urban development. Rural production received 17%. About half of this was allocated to agriculture mainly for several capital intensive hydro-agricultural projects. Of the balance allocated to the pastoral (livestock) sector about two-thirds was for the construction and maintenance of rural wells and about one-third for refrigerator plants and abattoirs. A small sum was set aside for immunization parks. Training and education received only 6.7%, of which about half was for secondary, general and technical education; a small share was for vocational training. The fishing industry at Port-Etienne was allocated some 7% of total public investment. 86. Nearly half of the allocation of public investment resources, including a large part devoted to transport infrastructure and urban development, was not allocated in accordance with productive criteria. In the case of transport infrastructure, present studies indicate that only the route Rosso-Nouakchott may be economically justified in terms of present and potential freight tonnage. Similarly the wharf at Nouakchott and the port facilities at Port-Etienne may be justified by the role assigned to these ports as centers of national economic activity. 87. One might reasonably ask what investment test was applied to the other one billion or so of road investment to say nothing of the invest- ments projected in other forms of communication. The Plan itself projects expenditures by project which are not evaluated by rate of return or by their place in a national pattern of mutually complementary investments. Even where investments are undertaken for non-development reasons their cost in lost output should be made clear to policy makers.  - 20 - Table 1: ALLOCATION OF INVESTMENTS OF THE FOUR-YEAR PLAN 1963-1967a/ (CFAF millions) % of % of % of Total Nature of Amount of Public Private Plan Investments Invest- Invest- Invest- Invest- ments ments ments ments General Studies: Public 580.8 4.3 - ) 5.7 Private 1,000.0 - 7.0 ) Transport & Communication Infrastructure: Public 3,191.0 23.5 - ) 12.1 Private 160.0 - 1.1 ) Rural Production: Public 2,352.0 17.4 - 8.6 Private 48.o - 0.3 Mining Production: Public 800.0 5.9 - ) 33.8 Private 8,58o.o - 6o.5 ) Fishing Industry: Public 960.0 7.1 - 6.9 Private 95o.0 - 6.7 Services & Commerce: Public - 0.0 - ) 4.6 Private 1,270.0 - 9.0 ) Training of Personnel, Educa- tion and Information: Public 922.5 6.7 - 3.3 Private - - 0.0 ) Health & Hygiene: Public 770.4 5.7 - 2.8 Private - - 0.0 Urban and Municipal Development: Public 3,043.0 22.4 - ) 14.5 Private 980.O - 6.9 ) Administrative, defense, interior, judicial and foreign affairs: Public 947.0 7.0 - 7.7 Private 1,200.0 - 8.5 ) TOTAL: PUBLIC 13,566.7 100.0 - ) 100.0 PRIVATE 14,188.o - 100.0 ) a/ The figures in this table refer to the entire four-year plan period, whereas the preceding analysis of the outcome is based on the projections and experience of the first three years. Source: Plan Quadriennal, op. cit., p. 10.  - 21 - 88. Urban development may well have some justification in a program of development, but it is doubtful whether there is any necessary or direct relation to production. While such investments may well be justified for other reasons, relating to the establishment of a new state, it must be recognized that they involve large recurrent and maintenance expenditures. It is not only a matter of the allocation of scarce current investment resources but also involves the use of future resources. Thus the growth of present and future output is adversely affected by a misallocation of investment resources in the past. One of the problems of resource alloca- tion in the past seems to have been that infrastructure investment was regarded as a necessary precondition to economic development.1 89. The rural sector, agriculture and livestock, employs about 90% of the population the bulk of whom are living at subsistence levels of consumption. In agriculture, the allocation of the bulk of the investment funds to highly capital-intensive projects was based on an incorrect analysis of productive possibilities. This analysis was based on the assumption that the ecological limits had been reached in the culture of millet and sorghum. It was assumed that even if improvements were made by submerging the fields and using better technology such as fertilizers,fungicides, and plowing, the maximum increase in output that could be achieved would be 30% and then only over a long period. Capital-intensive agricultural works including the diversification of crops could increase production more rapidly but then only if investments ranged in the billions of CFAF. The basic deficit in foodstuffs would remain presumably in any case because of demographic pressures.7/ 90. The results of recent experiments indicate that traditional pro- duction can be raised substantially through the use of fertilizers, fungi- cides and plowing. Also, the 50% yield increases projected for the flood plain areas and those somewhat lower for the dry farming areas are not only conservative for an average four-year goal but are attainable at relatively small cost (see Chapter Four, Section I, A). Further, output can be raised 6/ For example, a recent planning document points out that the small pro- portion of investment devoted to the rural sector was based on the proposition that the construction of a complete infrastructure (roads, maritime, air, etc.) was an essential precondition for Mauritania. This choice was considered realistic and wise as Mauritania at the time of its independence did not contain the infrastructure or experienced administration necessary to permit the undertaking of "classical" eco- nomic programs and to set precise quantitative objectives, except for limited agricultural and pastoral operations which could serve as poles of training for future economic development. Nowhere does one find any consideration of the returns to investment or justification of the choices on economic grounds. See Plan Quadriennal 1963-66: 3 ann6es d'ex6cution, op. cit., p. 27. 7/ Plan Quadriennal, op. cit., p. 24.  - 22 - on the extensive margin simply by bringing unused ground under cultivation. This again is relatively simple if animal drawn plows are introduced, enabling each farmer to extend the amount of terrain he can cultivate. In effect, this is what was done in the dry farming area of the Hodh Oriental with some success. Shortages of manpower prevented this terrain from being used up to now. Such a program which would increase productivity and production could close the food gap within a few years. Third, hydro- agricultural works of the type projected in the Plan are not aimed at in- creasing the production of millet and sorghum. These may be considered only as by-products of rice,as rice is the only crop for which the return might justify the relatively large investments required. The huge sums spent so far have increased output relatively little. For example, the dams of the East which will cost CFAF 350 million will not be able to inundate enough terrain for the production of millet to yield more than a negligible rate of return, if any. Perhaps only the project for the Plain of Boghe, which is still in the experimental stage, might become profitable if modifications are introduced (see Chapter Four). 91. In the pastoral sector it was erroneously assumed that fundamental changes in the system of commercialization would be necessary to improve the standard of living of the farmers. By emphasizing the potential con- sumption of meat in the new urban centers, the Plan called attention to a very limited market. While this market is worth exploiting, it can hardly affect the incomes of the bulk of the livestock herders. Even the Kaedi abattoir-refrigeration plan when at capacity after some years will lead to exports of not more than 3,000 tons a year. The livestock sector relies on the export of live animals on foot through Senegal. This amounts to some 30,000 tons annually plus some 20,000 tons of local consumption. This system yields relatively high returns in comparison with meat production elsewhere in Africa. To attempt to change the system in a short period with massive investments and motorized transport could cause costs to rise sharply and returns to the farmers to fall. The one area where substantial gains in output have been made is sanitation. The installation of 20 rela- tively cheap vaccination stations during the last few years, even though not well located, and the new wells have been principally responsible for a rise in the number of animals produced. Further investment in this direc- tion would seem warranted by the favorable results achieved so far, although returns will necessarily diminish as the program of vaccination becomes increasingly successful, 92. Finally, as far as developing alternative investment possibilities and thus increasing the absorptive capacity for new profitable investments, the Plan must be considered to have been deficient in concept. The Plan contains no systematic program to accomplish this objective, an objective intimately related to future economic development. In education the sums allocated to creating new cadres and to providing vocational training were not directed to carefully evaluated future needs. Investment in such training can be among the most productive from the point of view of adding to national income.  - 23 - 93. Note has already been taken of the failure to accomplish even the basic studies projected in the Plan at a relatively small cost in relation to total public investment output. In the absence of basic knowledge of the economy and its resources the possibilities of widening the scope of investment planning are limited. 94. Even the formation of rational economic policy is rendered difficult by the absence of basic statistical studies. For example, the lack of reliable external trade statistics makes it difficult to formulate a policy with respect to custom duties and the customs union with Senegal. The size of the market for basic consumer goods can only be guessed by the State import agency. The losses in resources because of incorrect decisions or failure to make timely decisions in matters such as these can be enormous. 95. In summary, the Plan may be said to contain three basic defi- ciencies in conception. First, it was not oriented towards increasing output, rather it overemphasized investments which either inherently involved no rate of return or could not be justified by any rational cal- culation of return. Second, the basic assumptions with respect to the traditional sectors containing the bulk of the population were faulty. Not only was the share of investment funds allocated to these sectors too low but the funds provided were to a great extent misallocated. No doubt misconceptions with respect to the production possibilities in livestock and agriculture also influenced the programs of technical training for these sectors. Finally, the Plan did not adequately provide for widening the scope for profitable investments in the future. The program of proj- ected studies was limited, and the program for training personnel needed in order to undertake new investments was inadequate. 96. In addition to these conceptual weaknesses the Plan contains no analysis of rates of return, nor priorities in terms of resources available or timing of investments for achieving the optimum results. There is little or no analysis of the relation between sectors and accordingly of the relation among investments in one sector and those in another. The sectoral discussions are not based on long range per- spectives. It is thus difficult to establish priorities between projects in individual sectors and perhaps impossible to draw up meaningful list of projects for study and future financing. 97. The following table sets forth the quantitative objectives of the Plan by sector to the Gross Domestic Product.  - 24 - Table 2: PLAN OBJECTIVES (in 1962 market prices) (CFAF billions) Average 1962 1966 annual rate of growth % Primary Sector 11.0 11.8 2.0 Secondary Sector 7.9 15.7 19.1 Mining (0.6) (9-5) 100.0 Food Industries (0.2) (0-7) 32.0 Buildings (6.9) (5.2) -5.8 Diverse (0.2) (0-3) 10.7 Tertiary Sector 2.1 3.3 11.9 Administration Salaries 3.4 3.8 2.7 Gross Domestic Product 24.4 34.6 9.2% 98. The great bulk of the projected increase in GDP was in the mining sector. Important gains were also forecast for the fishing sector. The building sector was projected to decline as a result of the completion of the MIFERMA and other investments. In accordance with the objectives stated and the planned allocation of investment under the Plan the rural sector was expected to show very little progress and it was assumed that per capita incomes 8Zould remain virtually stagnant given the anticipated rise in popu- lation. 8 8/ Plan Quadriennal, op. cit., p. 233. "The rural sector will show a very slow rate of progress since the main objectives of the Plan concern infrastructure, training of personnel and the equilibrium of the national budget and since in addition the development of the rural sector requires a time consuming period of training the rural population in modern techniques of cultivation and large investments which have not been able to obtain approval in the period 1963-1966."t Loc. cit., p. 232.  - 25 - IV. Administration and Execution 99. If the national plan is to be anything more than a statement of good intent it must be administered by an organization capable of coordina- ting, supervising the execution of, and adjusting programs in the short term in the light of experience and the resources available. When the Plan was published, provision was made to place it under a Commissioner General in the Office of the President. The Commissioner General was to be respon- sible for the administrative services and consultative organs dealing with the elaboration, application, animation and control of the Plan except for certain specific tasks which were relegated to the appropriate Ministries. The Plan Organization was to take its authority directly from the highest office in the country as the importance of the Plan as the "engine of development" was such that it would influence the political situation and the Plan Organization would be required to arbitrate between the different sectors of national economic activity. The Plan Organization was shifted in 1965 to the Ministry of Finance and in late 1966 to the Ministry of Foreign Affairs. The Plan Organization today has no authority to coordinate the development activities of the various parts of the Government nor can it supervise the execution of projects. Even the process of studying, gaining approval and finding finance for new projects often escapes its control as individual ministries frequently deal directly with higher authorities and external sources of finance. Finally, the Plan Organization is inadequately staffed to perform real planning functions. There are neither qualified personnel to draw up new plans by examining the alterna- tives open to the economry and selecting the optimum way of using scarce resources to achieve objectives, nor people capable of evaluating the economic impact of the programs underway. 100. The Plan Organization consists of three experienced senior expa- triate officials plus a Director and his newly appointed Deputy. One service translates the projects proposed by individual ministries into requests for foreign financing. This is a coordinating and negotiation function which is particularly important as virtually all financing comes from the FAC and FED. A second senior official supervises and controls expenditures for projects financed by FAC and FED. His presence is a necessary condition to receiving finance from these agencies. A third service is the Government's Statistical Service and is only indirectly related to the functions of a planning agency. (See Chapter Five for a fuller discussion of the Plan Organization.) 101. Given its recent history, lack of authority and lack of personnel, the Plan Organization cannot be held responsible for the deficiencies in execution which were outlined earlier. A review of the experience of the first three years of the Plan indicates that a significant number of projects selected were not carefully and competently studied even when foreign con- tractors and consulting firms were involved. This has not only led to widespread delays in execution but has also been responsible for costs greatly exceeding estimates in a significant number of cases. With no effective coordination of the development programs under way, government supervision and control was spotty and at times nonexistent. The loss to the national economy from these delays, excessive costs and at times non- profitable projects has been enormous.  - 26 - CHAPTER THREE: A STRATEGY FOR DEVELOPMENT I. General Perspectives 102. The Islamic Republic of Mauritania is a young country with an old and rich heritage. It has been sovereign only since 1960 and the present form of Government was adopted only in 1962. Accordingly, its administrative apparatus lacks experience in running the day to day affairs of a modern government to say nothing of the problems of formulating economic policy and drawing up and executing a national plan of economic and social development. Although the political entity exists, the difficult process of creating a nation from what was, not long ago, a tribal society, is still going on. The country is vast and the relatively small, primarily nomadic population is concentrated in widely separated areas of economic activity such as the mines and oases in the Northwest, the farming regions of the river and the vast pastures of the South and East. The traditional commercial and cultural ties with the neighboring states of Senegal and Mali in the South and East still exert a strong pull and in the case of livestock constitute a necessary economic outlet. Finally, there are ethnic and cultural differences between the dominant Moors North of the river and the diverse, largely farming, Negro tribes on the river banks. Despite these obstacles great progress has been made in establishing Nouakchott as the political and administrative capital of the country. It is increasingly drawing to it an important part of the trade with the South and East as part of a process of tying the country together along economic lines. Most importantly the political system has produced a large measure of stability and even unity of purpose, both essential pre-conditions for economic stability. 103. Mauritania nevertheless has a harsh climate and is poor in natural resources. Its people are largely uneducated, with a subsistence standard of living in a basically barter economy. The country lacks a modern transport and communications infrastructure. At present there is insufficient traffic to justify major investments in this field. It is deficient in economic and social institutions and generates little in the way of mobilizable savings to finance development. 104. Development planning must proceed from the facts as they are. The economic choices open to the Government are limited by the structure of the economy, the nature of the labor force and the resources available for investment. In the end the real development decisions concern the choice of investments in terms of short- and long-run profitability criteria. If other than profitability criteria are used it must be recognized that part of potential growth has been sacrificed for other reasons. 105. In our approach we have assumed that the basic objective of economic development is to increase the economic well-being of the bulk of the people. This approach does not deny the desirability or even necessity of expenditures for welfare, culture or national sovereignty.  - 27 - Rather it is based on the proposition that in a poor country such expendi- tures will inevitably be limited and that the best way of providing for non-economic needs is to increase economic resources so that in the future adequate amounts will be available for such purposes. This implies some sacrifice of present consumption on the part of the Government and the people. It further implies that maximizing profitable outputs will be the aim of national policy. More specifically we believe that the most effective policy is to maximize short-term growth. Not only are accurate long-range predictions difficult to make with inadequate knowledge, but short-run maximization is most likely to produce the greatest gains with the least distortions. Where appropriate we have taken into account the long-range perspectives in each sector. These longer-range perspectives provide a basis for choosing among the short-range alternatives. If the selection process is done in a rational way the resources available in the future will have increased, the structure of the economr will have changed and alternatives not now possible will become profitable. In short the horizons given to planners and decision makers will increase over time and the objective of improved welfare will be achieved more rapidly. This is not to say that long-range pay-off decisions should not be made. On the contrary, given the long-range perspectives in each sector certain investments should be made now in order to make available the volume and kinds of output needed at various times in the future. This is best illustrated in the case of technical training where long lead times are required to produce trained manpower for future needs. The problem is not to overinvest in such long-run pay-off projects otherwise both the current and the future resources needed for maintenance and replacement will in effect have been sterilized to the detriment of growth in both the short and long run. II. The Sectoral Perspectives 106. As has been pointed out, the Mauritanian economy is strongly dual in character. The modern mining and fishing sectors have been or are being rapidly developed in the North by outside capital and skills. These "enclaves" of Western capital and production have had and will continue to have little influence on the basic productive structure of the economy and the mass of the people. The mining sector yields important revenues to the Government budget. These revenues can be expected to increase significantly only in the distant future after the copper mine becomes fully exploitable. The amounts involved are not, however, sufficient to liberate the Government from the tyranny of inadequate current resources in relation to current needs. An increase in current budgetary resources will remain dependent on the growth of output and incomes in general. In fact development financing must still be provided in the form of external assistance. The exports produced by the industries can be an important basis for the acquisition of additional resources through foreign borrowing. However, even in this case, sufficient domestic current tax revenues must be generated to service new debt. The fishing industry has been less well planned than the mining enterprises. Substantial investment has taken place without regard for properly timed complementary investments and elementary supply and demand factors. This is a result of poor public and private planning and can only be remedied by a thorough review of the situation which would lead to a  - 28 - series of specific proposals designed to provide a minimum level of profit- ability for the investments already made. No new investments are recom- mended at the present time. Little in the way of resources can be expected to accrue to the State to finance development in the near future. The enclaves provide limited employment opportunities for skilled labor and limited markets for the agricultural products of the rest of the country. 107. The basic problem is what to do about the 90% of the population in livestock herding and in millet farming. Our assessment of the economy indicates that a great deal can be done to significantly increase output in these sectors by the intelligent allocation of investment resources and the application of appropriate Government economic policies. Precisely because productive methods are so backward and land resources underutilized, the introduction of higher yielding inputs and strategically placed invest- ments such as wells and plows can increase output greatly. Our strategy is to propose a coordinated action program of investments, training and public policy by priority designed to exploit these potential gains as rapidly as possible. To avoid a dispersion of talent and resources we will propose a concentration of effort in key livestock areas of the South and East and in the heavily populated millet zones of the Gorgol-Brakna region. The most important gains are projected for the export-oriented livestock sector. Significant increases in output in the cultivation of millet will lead to import substitution. Simultaneously we will propose a program of project studies designed to produce a series of feasible projects for execution during the succeeding period of the Third Plan. The projects suggested for the later period of the Second Plan will be complementary - e.g. rice and sugar cane cultivation - to the basic short-run purpose of raising the livestock and millet output. As population pressures are not great1! the gains in basic output should be reflected in significant per capita income gains by the bulk of the population. 108. This should lead to a rise in consumption, savings, the import substitution of imported foodstuffs and the commercial exports of meat and animal products. 109. The program proposed in the short run does not involve a sharp break with traditional practices and should accordingly be more acceptable to the producers involved than a program based on the sudden introduction of modern techniques. One important result of increasing output will be the increase in commercial exchanges and the progressive transformation of the traditional subsistence-barter economy to a more sophisticated market economny which will respond better to economic incentives. The Government can assist in this process by encouraging the abandonment of remaining feudal-tribal patterns which either discourage producers by siphoning off a part of potential output gains or limit their personal stake in the land they till or the crop they produce. It is to be sure a difficult process, 1/ Population is estimated to increase at the rate of 1.7% per annum.  - 29 - particularly in sedentary agriculture where knowledge of land tenure arrangements is incomplete. Changes must be introduced gradually so as not to destroy existing socio-economic patterns before they can be replaced by new patterns. 110. The monetization of the rural econory can be encouraged by other Government measures. The subsistence farmer and herder is usually subject to the most exploitation, as he has to borrow on onerous terms from local merchants in order to survive through the non-productive season and then must use his limited output to pay back what he has borrowed. The intel- ligent use of price support and credit policy with a program of developing local cooperatives to store output and finance necessary inputs can break the barter system while providing the means to increase output per man. In this connection the authorities will have to consider the problem of mar- keting eventual regional surplusses. In short, a fully coordinated program will have to be mounted if the proposed development of peasant agriculture is to be successful. The cooperative movement is just beginning in Mauri- tania. Despite difficulties experienced so far we recommend the creation of a series of farmers' associations or simple cooperatives which will constitute the basic institutional element in the execution of the cultiva- tion program. 111. Serious consideration should be given to the effectiveness of the national transport control (ONTP) and basic consumer goods monopoly (SONIMEX) organizations in meeting national objectives. The ONTP has been in existence for several years. The SONIMEX is new and should be given time and means to carry out its functions before any final judgments are made. Both organizations have the same basic objective of supplying the consumer continually and adequately with reasonably priced basic consumer goods from the port of Nouakchott. These goods must be supplied at prices which make them competitive with contraband imported from neigh- boring states if the policy is to be successful. In fact, the pricing policies of the organizations are not coordinated. 112. The implied subsidy of supplying transportation at lower than its economic cost should be recognized. It is the rest of the economy which ultimately pays for such lower freight costs and thus resources are diverted from other more profitable uses. In addition, a policy of arti- ficially reducing freight rates,below the level required,to make goods from Nouakchott competitive in the remote regions runs the danger of encouraging irrational investment in these regions. Such irrational decisions can only be supported by a continued freight subsidy. 113. The issue is not whether State or private enterprise is in prin- ciple preferable. In a country with limited and widely separated markets, as well as few entrepreneurs, the real issue is which form of organization achieves the most practical result. In the present case we see little evidence that either the high costs or limited benefits of the national transport monopoly justifies continuing the complete control of freight rates, the allocation of freight, and new investment in trucks. Accordingly, it is recommended that competition be reintroduced in road transportation  - 30 - in order to gain the benefits of lower costs and competitive pricing of freight traffic. In order to provide resources for necessary subsidies, taxes should be levied by the State on transportation. The State could then pay the subsidies directly from the budget. The main instrument for providing an adequate supply of reasonably priced goods should be SONIMEX. This organization could supply the market in various localities through a network of private intermediaries supported by adequate credit and local stocks. In order to do this effectively, the organization would need increased capital, credit, trained personnel, and a healthier rela- tionship with the private commercial sector. A situation should be avoided in which a State monopoly incurs high cost,because of inefficient operations, and then requires continuous State subsidies which must be provided directly from the budget or indirectly in the form of special tax relief. 114. The entire credit structure needs to be reexamined with a view to creating a system which can respond to the needs for development, both private and public. At present there is a single private commercial bank (BIAO) and a Government Development Bank (BMD). Neither of these institu- tions have been willing or able to grant adequate credits to the productive sectors. In particular, credit resources must be made available to coopera- tives in the rural sector. In fact an enormous annual export of both private and official deposits takes place, which in effect makes Mauritania an exporter of capital. Despite this the Government, SONIMEX, the coopera- tives, and private businesses lack adequate credits to finance their activi- ties. 115. In the field of education no great increase in resources is recommended. While important for cultural reasons,any great expansion in primary and secondary education would greatly increase the recurrent financial charges of the State budget and could only be undertaken at greatly increased cost per pupil in view of the nomadic nature of a large part of the population. Further care must be taken not to graduate more primary and secondary school pupils than can be absorbed in gainful employ- ment by the State or they will have to be absorbed in unnecessary positions at great cost to the budget. In the short run education may be regarded as a consumer good, the supply of which must be limited in the interests of current development. The education program does envisage a change in emphasis in secondary school education toward that more clearly aligned to the needs of the economy. On the other hand spending for technical and vocational education may be regarded as investment in the human resources necessary to achieve development objectives. Detailed recommendations are made in the action program to ensure an adequate supply of trained cadres. The use of scholarships in this connection is also recommended in the program. 116. In transportation and communications infrastructure the great deficiency in facilities is recognized. The Mission believes that the national objectives of making Nouakchott the principal port of entry and of tying it economically with the remote regions of the South and East can be achieved with investments for which financing has already been obtained, There is an urgent need for current financing for maintenance.  - 31 - The exceedingly low present and prospective volumes of traffic on the road network make it difficult to justify further large investments in road construction on purely economic grounds. Further investments in road transport should, in the opinion of the Mission, be postponed until they can be justified by the economic development of the regions in question. While it may be true that roads will generate traffic by their very existence it is doubtful on the basis of our analysis that the traffic so induced would justify the costs, both capital and current, for a consider- able period of time. The real choice is between investing in non-profitable road projects now and investing in immediately profitable, productive projects elsewhere. A good deal can be done to alleviate the paucity and high cost of air travel while reducing the isolation of most of the country by investing further in air infrastructure. Recommendations are made for this field as well as for other forms of communications. 117. Expenditures for rural welfare, urban development and general administration should be limited to minimum levels on the part of both the current budget and the development plan. In particular the State should make a careful review of its personnel policies and reacquire control of its personnel budget which has expanded at the expense of other higher priority needs such as maintenance. A large part of the resources needed for the budget must come from the increased returns of existing taxes. The Mission will make a series of recommendations for increasing tax revenues as well as for changing the tax structure. In addition we will indicate what further studies are required to reshape the fiscal system in accordance with the changing needs of a developing economy. 118. A development program, no matter how realistic and how well it is prepared, can have little impact without an appropriate administrative apparatus to direct it. The Mission has accordingly prepared a comprehen- sive plan for reorganizing the planning service of the Government. This plan envisages the creation of an organization in the Office of the Presi- dent with sufficient staff and authority to enable it to properly control the coordination and execution of the Plan. Recommendations will cover the establishment of a staff competent to revise the Plan in the light of current experience and the availability of resources. Basically a sort of rolling plan is envisaged in which annual plans will be prepared to cover specific programs of action and Government policy measures. The Plan will be coordinated with budgetary policy and available foreign aid. The Plan Organization will be linked to the operating Ministries and High Commissariats through programmers in each organization who will be respon- sible for controlling and preparing sectoral programs based on long-term perspectives. The entire apparatus will be designed to coordinate current economic policy decisions with development planning so as to ensure the optimum use of resources at each stage of development. In effect the plan apparatus will act as the technical economic staff of the President and his Cabinet for the purpose of providing current and long-run economic policy analysis and guidance. In particular an efficient system of project ap- praisal and control needs to be constituted within the planning apparatus.  - 32 - 119. The short-run effects of the action program on the economy should not be exaggerated. Considerable effort and reorganization will be re- quired before the program can get under way. Yet we believe the means exist in Mauritania to make this effort and achieve the large gains in output projected. In addition a large reservoir of funds has been com- mitted to investment programs accepted in the past. These programs will in many cases h,ave to be completed, while in others a reassessment of their importance may lead to new allocations more closely attuned to the current requirements of economic development. 120. In conclusion, the Mission has recommended an action program of specific investment proposals and training programs, by priority, as well as institutional changes and policy measures for each sector. This has been carefully coordinated with the available internal and external re- sources in order to produce a coherent national development effort for the short run. The program is also designed to lead automatically into the next, more sophisticated stage of development and to produce the project analyses required to implement this next stage without creating discontinuities in the pace of economic growth. Even the best set of recommendations cannot make a program of development. This will be up to the Government of Mauritania. Regardless of the external resources required, and they are not overwhelming, only the Government can adopt the policies and take the steps necessary to assure the economic progress of Mauritania.  - 33 - CHAPTER FOUR: PROGRAM OF ACTION Introduction 121. The program of action described in this chapter follows f-rom the strategy outlined in the previous chapter. It is a program of new projects and activities and is based upon our evaluation of development efforts in the past as well as our best judgment as to what can and should be done in the future. The Mission has taken into account the projects presently underway and assumes they will be carried out. The program recommended is not a four-year Development Plan. It should be considered as a series of sectoral programs of development integrated with a strategy of develop- ment involving a recommended pattern of public resource allocation and policy measures. The projects and their cost estimates identified within each sector should be regarded as preliminary and indicative. The Mission studied dossiers available in Mauritania and visited most of the project sites. There was no time for detailed engineering studies, market surveys and an analysis in depth of costs and benefits which alone would justify final decisions to go ahead. Within the limits of the available time and data a broad system of investment priorities by project is suggested. These priorities are designed to achieve the objectives recommended by the Mission and are believed to be consistent with official development policy in Mauritania. 122. The program of action is set in a four-year framework designed to provide main guidelines for the Second Four-Year Plan. The precise timing of each project as well as the specific organizational changes and detailed policy measures required for each project should be specified in a series of successive annual Development Plans. These annual plans will be the Government's blueprints for carrying out the Second Four-Year Plan. I. The Rural Sector A. Recent Developments 123. The bulk of the rural sector in Mauritania is engaged in livestock herding either solely or in conjunction with crop agriculture, mainly millet. For climatic reasons some four-fifths of the population is concentrated in the south in a wide belt which roughly parallels the Senegal River. Around the river sedentary farmers plant millet in the flood plain. Beyond the river the farmers rely on natural rainfall for dry farming. The vast pastures extend north roughly to the 100 mm - annual rainfall boundary with the Western Sahara desert. Dates are grown in scattered oases. 12h. The livestock herds, although well adapted to the harsh climate, are subject to severe losses because of disease. In the absence of adequate statistics, the magnitude of losses are difficult to estimate. However, the Mauritania Livestock Service estimates that pneumonia alone caused losses in 1966 in excess of CFAF 100 million despite the fact that some 700,000 vaccinations were given.  - 34 - 125. In the first 3 years of the First Plan considerable effort was expended to provide sanitary protection for the herds. This consisted of an investment of CFAF 74 million for 20 new immunization parks (in addition to 79 existing parks), and the establishment of an immunization center. Unfortunately the equipment provided was of limited effectiveness because inadequate transport was made available to the Veterinarian Services. Vehicles deteriorated rapidly because of lack of maintenance. 126. A major limitation on livestock production is the lack of suffi- cient water to utilize the vast pastures. At present the herds migrate to the north during the winter rainy seasons and then return south to the already overcrowded area of permanent water where overgrazing and high mortality rates are serious problems. The digging of wells at selected points in the pastures would enable the herds to survive the six months dry season in the north. It is estimated that a modest number of wells with limited yields (1 litre per second) would permit the exploitation of 100,000 hectares for an additional six months which is sufficient to pasture and water 10,000 animals. The establishment of these new hydraulic facilities would yield a gross value added estimated at CFAF 5 million. However, only modest progress was made in this respect during this First Plan period. Some CFAF 375 million was spent for 20 wells and to establish 1 maintenance team. In general, the maintenance of wells is badly deficient as the communities lack adequate financial resources and nothing is pro- vided from the State budget. 127. The processing of meat was initiated by the decision to construct an abattoir and refrigeration plant at Kaedi. It is expected to commence operations in August 1967 with a capacity of some 2,500 tons of meat annually. Three quarters of the output is destined for export with the rest going to the urban centers such as Nouakchott, Port Etienne and Atar. The hope is to export the meat by air to the Canary Islands. Assuming no return freight, the abattoir will yield quite modest profits at production levels in excess of 2,500 tons annually, and will incur losses below 1,500 tons. No solutions have yet been found to the problems of collecting and fattening the animals and the selling and transporting of meat. 128. In addition a small abattoir has been established at Nouakchott and a private tannery is being set up at Kaedi. Studies have been made for a dairy plant for Rosso. A proposal of questionable value exists for a refrigerator-abattoir complex at Kiffa, with foreign financing. 129. Livestock investments during the First Plan totalled CFAF 600 million out of CFAF 1,035 million projected. 130. Little has been done to create an effective fire control program. Fire causes serious losses to the pasture as well as to the gum trees. 131. The cultivation of millet and sorghum is the second most important rural occupation. Yields in the flood plain of the Senegal River vary from 250 kg. to 750 kg. a hectare with a national average of some 400 kg. Nothing has been done to raise these yields except on an experimental basis.  - 35 - These experiments show that average yield increases of some 200 kg. a hectare are relatively easy to obtain generally, through the ule of light plowing (animal drawn), early sowing, and non-parasitic seed.1/ Far more spectacular results have been obtained with deep plowing, fertilizers and higher yielding seed, but the general applicability of these results has not yet been established. Finally the partial mechanization of farming through animal drawn plows will enable presently unused land to be brought under cultivation. 132. The Government has encouraged, with FED financing, the construc- tion of a number of rural dams to retain the seasonal flood waters and thus enable millet and sorghum to be cultivated in the interior of the country. Unfortunately the output of the inundated land is not sufficient to justify the cost of the dams. A further disadvantage of such dams is that over- pasturing takes place in the surrounding areas because of the concentration of population and herds around the area under cultivation. 133. Yields from dry farming approximate 300 kg. a hectare. With early sowing and improved methods of cultivation yields can be raised to 400 kg. a hectare. Through the use of fertilizer, yields can surpass 600 kg. a hectare- in selected experimental plots far higher yields have been ob- tained. 134. In the region of Nema in the Hodh Oriental a program of expanding the area under cultivation through the use of animal-drawn plows has been underway for two years. The plows and animals are financed by Mauritanian Development Bank (BMD) loans to farmers' associations. The program has enabled farmers to greatly increase their output and has led to the in- creasing replacement of imported millet from neighboring Mali. 135. Experiments with date palms on a plantation basis in the region of Konkossa have yielded limited results from the point of view of both quality and profitability. The palm plantations of the Adrar have also yielded limited results because of parasitism. A systematic program is underway to combat this pest and a plant to process dates for export is under construction in Atar. 136. Vegetables are cultivated in a number of areas of which the most important is Atar. Here they are grown in the irrigated areas under the palm trees. Output is 4 tons a month while capacity is estimated at 10 tons. The main market is MIFERMA, which refuses to increase its purchases until problems of quality, variety and packaging have been overcome. / Based on findings of l'Institut de Recherche et d'Agronomie Tropicale (IRAT) and the Richard Toll Experimental Station in Senegal. For example, at Kaedi.  - 36 - 137. The second volume of this report contains a comprehensive review of recent develo ments in other less important crops such as rice, cotton, and sugar cane.3/ 138. The hydro-agricultural works undertaken so far in Mauritania should in most cases be regarded as still in the experimental stage. A serious effort should be made,in the next few years to redress the errors of conception and execution which have been identified in certain pilot projects (Dar el Barka and Keur Macene) before the important investments proposed by the Mission can be justified for inclusion in the Second Plan. In particular further technical and economic studies are required to demonstrate the feasibility of a second crop of sorghum following a first crop of rice. At the same time strongly supported studies must be executed on the serious problem of land tenure in the valley. The necessary legis- lation to solve these problems should be approved and applied in order to guarantee the success of the proposed development program. 139. The second volume contains a fuller discussion of the 6 study projects envisaged by the UNDP for the development of the Senegal River Basin. The study of the proposed dam at Gouina and the study of the 400,000 to 500,000 hectares to be irrigated after the river has been controlled appear to be of little interest for Mauritania at its present stage of development. Both are extremely long-term proposals and must first give some indication of a reasonable cost per hectare of irrigated land before they can become a part of serious long-term planning. In general great care should be taken in considering any proposals which involve a funda- mental change in agriculture away from the present submersion by river flood toward large-scale irrigation. Changes of such magnitude involve economic, technological and cultural factors which will determine whether and how fast such a transformation can be accomplished. 140. No conflict appears to exist between the other proposed UNDP studies and the action programs proposed below for agricultural develop- ment in the river basin. The proposed dam at St. Louis warrants further investigation as it appears to be potentially very beneficial to Mauritania as well as Senegal. B. General Objectives 141. In the past, particularly during the last Plan (see Chapter Two), primary emphasis in development strategy and in resource allocation was given to creating the economic infrastructure and carrying out the basic studies which were to become the foundation for a period of economic and social development in the second plan period. Relatively little was done in the rural sector. In crop agriculture the main emphasis was given to expensive hydro-agricultural works. In livestock useful but limited work was done in animal sanitation and pasture improvement. A start was made on a capital intensive refrigeration and processing plant which was to become a model for the future transformation of the livestock sector. 3/ "Guidelines for a Four-Year Development Program for Mauritania," Vol. II, IBRD,(Washington, D. C., July 1968).  - 37 - 142. The strategy proposed by the Mission constitutes a basic change in the direction of the development effort. In this strategy primary emphasis is given to the rural sector. Within the rural sector instead of concentrating on capital-intensive rural works the Mission proposes a program of substantially raising crop and livestock output by improving the present methods of cultivation and herding. 143. While selected hydro-agricultural works are recommended, these and the studies required to bring them to the stage of implementation are intended to contribute mainly to development in future plan periods. They constitute a logical, complementary step as output levels of the bulk of the rural population rise close to the limits which relatively inexpensive changes in production techniques and organization can produce. Similarly no extension is recommended in the near future of relatively high cost and as yet unproven livestock processing facilities. The proposed program is based on a determination of the technological possibilities in both the livestock and crop agricultural sectors and takes into consideration the problems of furnishing adequate capital, trained manpower and supporting governmental services. In accordance with this strategy, the highest priority projects will be those with the lowest ratios of capital invested to output and those which also affect the largest number of producers. 144. The program is highly operational within the context of a four- year period as it is based on individual projects in selected areas with as careful an evaluation as present data will permit of required inputs and projected outputs. As explained in the introduction, considerable preparation will still be required before individual projects can be under- taken. The program, as projected will have the effect of meeting the basic food needs of the population, of raising per capita standards of living for the bulk of the rural population, and of improving the structure of Mauri- tania's balance of payments. In contrast to alternatives considered, it does not rely upon the uncertain process of spreading the benefits from a few highly capital-intensive projects in order to raise rural income levels. It also does not involve placing the kind of burden on the social structure and the administrative and educational system which the introduction of a more complex technology would require. 145. Our proposed agricultural program 1968-71 is aimed at achieving the following objectives: - intensification of livestock production; - increase of traditional crop output; - introduction of industrial crops. 146. The intensification of livestock production has first priority in the program since this activity represents three-fourths of the gross product of the agricultural sector in the wider sense of the word, (i.e. approximately 10 billion out of 13 billion CFAF) and sustains two-thirds of the country's population.  - 38 - 147. The increase in the livestock herds will help to increase the export of animals on the hoof to traditional markets and to open new markets for processed meat, while maintaining internal consumption at high levels. 148. The increase in the output of traditional crops is the next priority in the program. It is designed to eliminate millet imports and to reduce rice imports while maintaining the present level of consumption per capita. The program emphasizes the production of millet which is projected to increase from 110,000 tons in 1966 to 140,000 tons in 1971. It should be noted that out of this additional production of 30,000 tons, 21,000 tons will be obtained because of the implementation of a program for the more extensive use of land through animal-drawn plows and improved agricultural methods, which will rapidly help to achieve additional pro- duction without requiring a radical change in the present agricultural techniques. 149. The remaining 9,000 tons of millet, together with 9,000 tons of cargo rice, will be obtained as a result of the carrying out of hydro- agricultural projects. 150. The introduction of industrial crops such as sugar cane and cotton has been contemplated by the program in order to enable Mauritania to ultimately discontinue her reliance on sugar imports (estimated at 20,000 tons) and perhaps become an exporter of cotton. Investments and Returns 151. The investment necessary to carry out the entire agricultural program is estimated to amount to CFAF 4,213 million, approximately half in foreign currency, and will lead to an increase in annual production valued at CFAF 2,108 million. (See Table 6.) 152. The carrying out of the Plan will involve a very large increase in the current budgets of the Ministry of Rural Economy. It is estimated that the total amount of these budgets will-increase from -FAF--198 million to CFAF 290 million annually, or an increase of 50%. However, the real cost to Mauritania in personnel may be considerably reduced, because of the possibility of recruitment under programs of international technical cooperation. 153. Special efforts will have to be made with regard to the training of supervisory personnel and in particular extension supervisors and re- cruiting and training officers. Recommendations to improve the curricula of the Kaedi School in order to meet the needs for agricultural supervisory personnel at the intermediate level were made by the Mission to the Minister of Rural Economy and to the High Commissioner for Technical Educational Training. The Mission's views on this subject are contained in the second report.  - 39 - 154. It has also been recommended to carry out extension work in the use of draft animals in agriculture within the framework of cooperative groups and to concentrate the major part of such efforts in the Gorgol- Brakna region which contains a heavy concentration of population and relies heavily on millet production. It will at the same time constitute a testing ground for regional planning. 155. Finally, recommendations have been made to develop agricultural credit with a view to financing the extension program dealing with the use of draft animals and the storage of the millet crop in order to enable the producers to market this commodity at reasonable prices. (See Chapter Five.) 156. As may be seen from Table 6 at the end of the section, a minimum program has been established, which may be expanded into a maximum program depending on the availability of financial resources. The carrying-out of the highest priority program will require a total investment of 2,398 million CFAF and will lead to a rise in gross output valued at 1,800 million CFAF. (See Table 6.) It should be noted that the projects having a second priority are essentially less profitable hydro-agricultural projects. 157. The implementation of all the agricultural projects in the Plan is expected to produce the following results: - an increase in the total value of agricultural production of approximately CFAF 2,000 million annually; - gains in the total receipts of foreign currency exceeding CFAF 1,000 million annually, because of a decrease in some imports (millet, rice, milk) and an increase in meat ex- ports (CFAF 625 million); - increases in employment in the livestock sector and improve- ment of labor efficiency in millet cultivation, mainly because of the utilization of animal traction. C. Livestock Development Objectives 158. In this sector, the objective is to increase the value of annual production by CFAF 1,431 million against an investment of CFAF 1,388 million. (See Tables 3 and 4.)  - 40 - Table 3: LIVESTOCK OBJECTIVES (numbers: thousands of head; quantity of meat: metric tons; quantity of milk: thousands of tons; value: million CFAF) Bovines Sheep & Goats Total 1967 1971 1967 1971 1967 1971 Numbers of head 2,000 2,140 6,ooo 6,400 8,ooo 8,540 MEAT Domestic Consumption Numbers of head consumed 35 41 1,000 1,170 1,0352/ 1,211 Quantity of meat (5,000) (6,090) (15,000) (17,550) (20,000) (23,640) Value of consumption 350 406 2,000 2,340 2,350 2,746 Exports Numbers of head exported 120 15oL/ 800 925 920]/ 1,075 Value of exports 1,500 1,875 1,600 1,850 3,100 3,725 Total Production Numbers of head 155 191 1,800 2,095 1,955 2,286 Value 1,850 2,281 3,600 4,190 5,450 6,471 MILK Production/Consumption Quantity 252 278 163 178 4151/ 456 Value 2,520 2,780 1,630 1,780 4,15o 4,560 Increase 1967/71 Consumption MEAT Quantity: head 6 170 176 meat (1,090) (2,550) (3,640) Value 56 340 396 MILK Quantity 26 15 41 Value 260 150 410 Exports Quantity 30 125 155 Value 375 250 625 Total Increase in Value 691 740 1,431 a/ Add 1,200 T. of canned meat and 1,800 T. of mutton to this consumption. b/ Of which 10,000 head of bovines exported in the form of meat (1,500T.) from the Kaedi abattoir. c/ To which it is necessary to add the export of 10,000 camels (value: CFAF 200 million) and 10,000 horses (value: CFAF 300 million). d/ To which it is necessary to add the consumption of 60,000 T. of camels' milk and about 6,000 T. of fresh milk equivalent to the import of milk products.  - 41 - Table 4: LIVESTOCK INVESTMENTS 1968 1969 1970 1971 Total Animal Hygiene 95 94 15 12 216 Immunization Center 9 9 Vaccination Park 8 8 16 Interstate Antipest Campaign 80 80 160 Equipment Nouakchott Laboratory 5 5 (20 cycles) Vehicles 6 6 7 7 26 Pastoral Hydraulic Works 162 147 225 207 741 Agropastoral Study (lst phase) 10 10 Hydrogeological Study 10 10 20 Maintenance Pastoral Wells (3 brigades) 60 45 52 34 191 Establish 140 Pastoral Wells 82 82 118 118 400 Establish 40 Village Wells 10 10 20 30 70 Rebuild Trarza Wells (2nd phase) 15 15 30 Equipment for Exploration (2nd phase) 10 10 20 Pastoral Improvements 80 2 52 2 136 Pilot Zone at Kaedi (without study) 7 -77 Pilot Zone of Aftout (2nd phase) 50 50 Sharecropping 2 2 2 2 8 Marketing of Animals 107 0 100 0 207 Study of Ranches at Kaedi & Aftout 12 12 Establishment of Kaedi Ranch 95 95 Establishment of Aftout Ranch (2nd phase) 100 100 Industries 13 40 35 88 Dairy at Rosso 3 40 37 7 Study of an Abattoir 10 10 General Total 457 283 427 221 1,388  - 42 - Meat Production Targets 159. On the basis of an assumed rate of increase of the domestic demand for meat of 4% per year during the period of the next Plan, the annual consumption of meat - cattle, sheep and goats - should increase from 20,000 tons at present to about 23,500 tons in 1971 while exports should increase from 920,000 head to 1,075,000 head, including the export of meat processed by the Kaedi slaughter house (1,500 tons being equiva- lent to 10,000 slaughtered head of cattle). The increase in consumption would therefore amount to 3,500 tons in 1971 (valued at CFAF 396 million) and the increase in exports 155,000 head (valued at CFAF 625 million), or a total increase in value of CFAF 1,021 million. 160. These projected targets for 1971 are to be achieved through a numerical increase of the livestock population (which will increase by 140,000 head of cattle and 400,000 head of sheep and goats), through an improvement of the extraction rate, which will increase between 1967-71 from 8% to 10% for cattle and from 30% to 32% for sheep and goats, and through an improvement in the quality of animals, the value of which has not been computed. Milk Production Targets 161. The production and consumption of cowls, ewe's, and goat's milk are projected to increase from 415,000 tons at the present time to 456,o00 tons in 1971, that is an increment of 41,000 tons (10% in four years). It should be mentioned that part of this surplus will be used to improve the feeding of calves. The value of this additional production is estimated at CFAF 410 million. It should be noted that Mauritania imports a certain quantity of sterilized and powdered milk as well as butter corresponding to approximately 6,000 tons of fresh milk (value 350 million CFAF) and that these imports could be reduced after the Rosso dairy project is carried out. Recommendations 162. Sanitary Protection (CFAF 216 million) (1) Establishment of an immunization center at El Ghabra. The creation of this center which will help in completing the prophylaxic infrastructure of the country should take place in 1968 and will require an investment of CFAF 9 million. (2) Establishment of 20 vaccination pens in addition to the exist- ing network. Ten such pens should be established in 1969 and ten in 1970 (CFAF 16 million). (3) Continuation of the interstate anti-rinderpest campaign which will require an investment estimated at CFAF 159 million of which about half will be spent in 1968 and half in 1969.  - 43 - (4) Equipment of the Nouakchott Laboratory involving expenditures of CFAF 6 million in 1971. This Laboratory will be restricted to diagnostics and in particular to the detection of diseases among the livestock. (5) Provision of vehicles for the "Service de l'6levage." The scrapping in 1968 of the whole vehicle fleet of the Service, except for six units should be followed by the gradual purchase of nine short "chassis" and 14 long "chassis" vehicles. This will involve an investment of CFAF 26 million. 163. Provision of Water Stations: CFAF 741 million (1) Studies: In order to determine the proper location of wells in the Trarza area, an agropastoral study should be under- taken at the beginning of the Second Plan in that region at a cost of CFAF 10 million. In addition hydro-geological studies should be carried out in 1969 and 1970 at a total expenditure of CFAF 20 million. (2) Maintenance of pasture wells: The maintenance of the existing wells will require the creation of three maintenance teams at Aioun, Nema and Aleg. Upkeep for these three teams is included as well as for the team already existing at Rosso. Total estimated expenditures of CFAF 191 million are to be distributed as follows: (million CFAF) 1968 1969 1970 1971 Aioun maintenance team - Creation 5o - Upkeep 10 10 10 Nema maintenance team - Creation 25 - Upkeep 7 7 Aleg maintenance team - Creation 25 - Upkeep 7 Upkeep of the existing Rosso team 10 10 10 10 Total 60 45 52 34  - 44 - (3) Installation of 140 wells in the East at a total cost of CFAF 400 million. However, out of this total, CFAF 40 million should be assigned to development work teams-for the digging of 40 wells. (4) Creation of community wells, of which 20 will be in the North and 50 in the Senegal and Gorgol River valley. This program is to be carried out by development work teams and will cost an estimated CFAF 70 million spread over 4 years. (5) Repairs to Trarza wells involving an expenditure of CFAF 30 million, to be carried out in 1970 and 1971. (6) Equipment for exploratory drillings. The exploratory drillings which would be carried out under a recently approved United Nations Special Fund project could lead to the identification of exploitable wells. The equipment for such drillings will cost CFAF 20 million. 164. Improvement of Pastures: CFAF 136 million (1) Livestock pilot zone at Kaedi: The establishment of this zone is designed to disseminate practical animal husbandry methods with a view to improving meat production in a region designed to become an important center for the processing of animal products (Kaedi slaughterhouse). This project will call for an investment of CFAF 78 million to be carried out in 1968. (2) Livestock pilot zone of Aftout-es-Sahel: The creation of this zone is designed as a test for the development of cattle breeding in the Aftout-es-Sahel, a region with abundant good quality pasture which can be supplied with fresh water through improvements in the delta. The invest- ment necessary for this purpose will amount to CFAF 50 million in 1970. (3) Farm draft animals: Through a system of payments in kind farmers can be encouraged to create their own draft animal teams. This project will require an investment of CFAF 8 million over a periodof four years and should be based on careful studies of methods of implementation especially with regard to the selection of farmers and the reimburse- ment of advances. 165. Marketing of Cattle: CFAF 207 million (1) Study of the Kaedi and Aftout ranches. A credit of CFAF 12 million is estimated to be necessary for carrying out this study in 1968.  (2) Establishment of a ranch at Kaedi. This project is designed to corral cattle on the hoof and ensure the annual fattening of a given number of cattle on a rationally exploitable pasture to provide the Kaedi slaughterhouse with quality ani- mals. An investment of CFAF 95 million is forecast for 1968. (3) Establishment of a ranch at Aftout-es-Sahel for the same purpose as that of the Kaedi ranch. An investment of CFAF 100 million should be completed by 1970. 166. Animal Product Industries: CFAF 88 million (1) Establishment of a dairy complex at Rosso. This project aims at reducing the import of dairy products that are equivalent to 6,000 tons of fresh milk. The dairy which may market its production at Rosso and Nouakchott shall consist of a dairy farm and a collecting center. The study of the project should be undertaken in 1968 at a cost of CFAF 3 million and the installation of the dairy should be carried out in 1969 and 1970 at a cost of some CFAF 75 million. (2) A study of a slaughterhouse, the location of which is to be determined, shall be undertaken in 1968 and will require a total expenditure of some CFAF 10 million. D. The Development of Crop Production Objectives 167. The plan of action in this field aims in particular at increasing the production of millet and rice through the use of draft animals in agriculture and the carrying out of hydro-agricultural improvements. This program is expected to lead in the subsequent phase to the production and processing of such industrial crops as sugar cane. Its implementation should involve investments totalling CFAF 2,642 million and an increase in annual production valued at CFAF 678 million. Out of this investment CFAF 70 million should be for studies, investigations and research on the develop- ment of crop production. These studies will deal with family consumption and budgets, agricultural investigations in the areas under development (CFAF 50 million) and studies and research concerning the date palm trees (CFAF 20 million). Recommendations 168. Program for Improving and Carrying Out Millet Cultivation (Animal Traction): This program is recommended for implementation essentially in the Gorgol/Brakna area and to a lesser extent in the Nema, Selibaby, Aioun, Kiffa and Rosso areas. This program should increase the annual production of millet by 21,000 tons valued at CFAF 315 million and involve a total investment of CFAF 278 million broken down as follows:  - 46 - (million CFAF) Area Total Grants Medium-term Credit2/ Gorgol/Brakna 198.7 139.5 59.2 Other areas 79.5 7.5 72.0 Total 278.2 147L/ 131.2 a/ Equipment, draft animals, silos. b/ Cost of supervisory extension personnel (salary of 180 extension agents plus travel and lodging expenses). (1) Gorgol-Brakna Area. This region essentially consists of the two districts of Gorgol and Brakna but the program will only cover a stretch of about 50 kilometers deep along the Senegal River. To this region we have annexed the watershed of the Gorgol Noir (Gorgol complex and Foum el Gleita dam) in the Assaba district. This region is inhabited by about 200,000 people, of which some 100,000 lead a more or less sedentary life and derive their livelihood from agriculture, in particular from the growing of millet. The production of millet amounts to approximately 50,000 tons in an area of about 100,000 hectares. In this region of relatively high human con- centration and important agricultural potential, the methods to be used for improving and expanding millet cultivation will yield an additional estimated annual production of 13,500 tons and require a total investment estimated at CFAF 198.7 million. In addition to this investment, financing will have to be provided in the form of short-ter loans for the purchase of fertilizer (CFAF 66.8 million)4 and fungicide (CFAF 2.8 million). As well, a credit of CFAF 16.4 million will be appropriated in the current budget of the agricultural ser- vices to cover the remuneration, travel and lodging expenses of 15 extension supervisors. The necessary supervisory staff will consist of 15 extension supervisors and 150 extension workers. 4/ 7.2 million in 1969; 21.6 million in 1970 and 38 million in 1971.  - 47 - (2) Intervention in the Nema District and in the Areas of Aioun, Kiffa, and Rosso. The district of Hodh Oriental includes a population of approximately 120,000 people, of which 70,000 are engaged in cattle breeding and 35,000 in agriculture (millet, sorghum, niebe, groundnuts) carried out essentially in the Sahel-Sudanese climatic zone. Millet is grown on about 20,000 hectares and its production does not appear to exceed 10,000 tons. The region shows a deficit in millet and its distance from the river prevents it from receiving supplies at reasonable prices. The implementation of the extension program concerning draft animals in all the areas will yield an estimated additional annual production of 7,500 tons and require an estimated investment of CFAF 79.5 million. The necessary supervisory personnel will consist of 30 extension workers headed by 3 supervisors who are already on the spot. The program of work for the whole Gorgol-Brakna area and the other areas covers the following: (a) Extension of areas for the cultivation of millet: 13,500 hectares in the Gorgol-Brakna area and 9,140 hectares in the other areas, or a total of 22,640 hectares. (b) Improvement of the yields on a total area of 34,620 hectares, of which 18,000 hectares in the Gorgol-Brakna area and 16,620 hectares in the other areas. The project will include an estimated total of 57,260 hectares and involve more than 12,000 farmers. 169. Hydro-Agricultural Development Schemes: These schemes will cost an estimated total of CFAF 2,319 million and yield a gross annual production valued at CFAF 363 million. This disproportion between the amount of the investment and the results to be obtained can be explained on the one hand by the high cost of these schemes and, on the other hand, by the incorpora- tion of expenditures in the total amount of the investments, the effects of which will be felt after 1971: (1) Studies. The following studies are recommended under the action program:_ / The program of studies of the Boghe, Gorgol, R'Kiz and Keur Macene projects have been included in the following paragraphs relating to these development areas: (3), (4), (5) and (6)(a).  - 48 - Million CFAF Hydro-geological study for water prospecting in the intermediate sandstones of the Affole (Assaba) 25 Hydrological studies of the Kara Koro 12 Hydrological studies of the Hodh 12 Counterpart funds from the Government of Mauritania on behalf of the UN Special Fund project: - for the establishment of a subterranean water authority 90 - for studies of the development of the Senegal River 260 399 (2) Development of the Dar-el-Barka project area (200 ha.). The additional development of this area will help to obtain the following crops: 1st Cycle Cotton : 60 ha. yielding a production of 125 tons Corn : 70 ha. yielding a production of 175 tons Rice : 75 ha. yielding a production of 150 tons Vegetables : 13 ha. - p. m. 200 ha. 2nd Cycle Millet : 200 ha. yielding a production of 150 tons The expected production is valued at CFAF 10 million. The development of the project area is virtually completed and will cost CFAF 100 million in total. Only an additional credit of CFAF 10 million is scheduled to cover the current expendi- tures of the project area for an additional year (up to May 1968). (3) Improvement of the Lower Part of the Boghe Plain (3,500 hectares). This development scheme would enable rice to be cultivated under controlled submersion on 3,500 hectares. It would yield an output of 7,000 tons of rice in the first cycle and an additional 4,000 tons of sorghum in the second cycle. The whole annual output would have a value of CFAF 151 million.  - 49 - The investment necessary will amount to CFAF 600 million and will cover the construction of a flood control dike and the installation of sluice gates to control the rise and fall of water in the plain. Pumps could be used in order to achieve, if necessary, preliminary irrigation and drainage. (4) The Gorgol Development Schemes (32,500 hectares of which 10,000 hectares will be brought under cultivation around 1971). The proposed schemes consist of the study and construction of a reservoir dam on the Gorgol Noir at Foum-el-Gleita in order to ensure on the one hand, before 1971, the growing of flood plain crops around the lake created by the dam with the lowering of the water level (5,000 hectares). The scheme envisages the subsequent irrigation of 2,500 hectares to be developed for the cultivation of sugar cane below the dam. Furthermore, a dike with sluice gates should be erected at the mouth of the Gorgol River in Senegal to retain the water of the Gorgol and control the rise of the Senegal River. This structure would permit the cultivation of rice on 5,000 hectares and sorghum on 5,000 hectares and the exploitation of pastures on 15,000 hectares covering the lower fringe. Finally, provisions should be made for a small 20-hectare experimental project area to determine the possibilities of intensifying the crop output on the lower plain. Another experimental project area for the cultivation of sugar cane should be made operational in anticipation of the completion of the dam. The program calls for a total investment of CFAF 755 million. This includes a study of the dam and a study of the develop- ment of the sugar cane growing area and of the lower plain at a cost of CFAF 110 million, the construction of the dam and the installation of two experimental project areas and of the dike at a cost of CFAF 595 million, and the qxpenditures for supervisory personnel estimated at CFAF 50 million. This CFAF 755 million investment is expected to yield the following results by 1971/72: (i) Lower Gorgol (downstream) Upper fringe : 2,000 ha.y of rice yielding 4,000 tons Intermediate fringe : 5,000 ha. of millet yielding an additional 1,500 tons Lower fringe : 15,000 ha. of pastures Experimental project area : 20 ha. - p. m. / On a total surface of 5,000 ha.  - 50 - (ii) Gorgol - upstream (Foum-el-Gleita dam) Upstream from dam : 3,000 ha.7/ of millet yielding 1,800 tons Downstream from dam : 2,5008/ha. of sugar cane - p. m.- Experimentai project area : 25 ha. of sugar cane - p. m. The total value of the annual production anticipated is CFAF 101.5 million. The following areas are recommended for development after 1971: a sugar cane cultivation area, a sugar mill as well as the development of the following crops: 3,000 additional hectares to be used for rice cultivation in the lower Gorgol and 2,000 additional hectares of millet upstream from the Gorgol. The value of the gross agricultural production which would result from the development of the Gorgol project, as a whole, between 1971 and 1975 could reach a total close to CFAF 500 million, out of a total investment of approximately CFAF 2 billion. (5) Additional Development of the R'Kiz Lake (2,000 hectares). The filling of the lake through flooding by the Senegal River is more or less controlled by two sluice gate structures already built on marigots. The construction of a third sluice gate structure (at a cost of some CFAF 20 million) would create a water reserve for irrigation as well as improve the agricultural output of the lake region. Furthermore, an experimental 20- hectare area is recommended for development (at a cost of CFAF 20 million). The supervisory personnel for this purpose will cost CFAF 30 million. The investment proposed totals CFAF 80 million (includes CFAF 10 million for the study of the project as a whole). This development is expected to yield the following estimated annual output valued at CFAF 35 million: Millet (in season) 1,000 ha. yielding 1,000 tons Corn 500 ha. yielding 1,000 tons Niebe 500 ha. - p. m. (6) Development of the Delta (1,900 hectares). The development of four selected project areas in the delta would ensure an esti- mated annual production valued at CFAF 50 million and necessitate an investment of some CFAF 275 million. 7/ On a total surface of 5,000 ha. 8/ The production of sugar cane will not commence until after the develop- ment of the sugar cane project area, around 1973-74.  - 51 - (a) The further development of a pilot project area at Keur Macene (100 hectares) is estimated to require CFAF 5 million in addition to the CFAF 12 million already spent and should ensure an annual production of 200 tons of rice valued at CFAF 3 million. The studies for the development of the entire plain of Keur Macene (5,000 ha.) will cost over CFAF 25 million. (b) The development of the M'Pourie project area (1,200 ha.) is estimated to require an investment of some CFAF 200 million for the construction of a dike, the installation of 3 series of "casiers" for the cultivation of rice under controlled submersion, and pumping equipment for the irrigation of middle level and high level lands for draining the ground while the river is too high. An annual production of 2,400 tons of rice valued at CFAF 31.2 million is expected. (c) The development of the Rosso project area (100 hectares) is estimated to require an investment of CFAF 20 million to obtain an annual output of 200 tons of rice valued at CFAF 2.6 million. (d) Finally, the development of the Garat "casier" (500 hec- tares)selected in principle by the UNDP/INTERSTATE Committee project: "Hydro-agricultural Studies of the Senegal Valley - Second Stage" will require the installa- tion at the mouth of a marigot of a sluice gate structure which will allow water to accumulate perennially for irrigation purposes and will control the infiltration of salt water. An investment of CFAF 25 million (Mauritanian counterpart) is estimated to be necessary to obtain a production of 1,000 tons of rice valued at CFAF 13 million plus a second crop to be determined. Small Scale Developments on the Senegal River Upstream from Kaedi (660 hectares). It is proposed to develop three small pilot basins upstream from Bakel (360 hectares) and a project area upstream from Matam (300 hectares) for the cultivation of rice under controlled submersion after sowing under rainy conditions. The cultivation of millet after rice could also be envisaged. The total cost of this development is estimated at some CFAF 30 million and the annual production is estimated as follows: 400 tons of rice on 200 hectares; 400 tons of millet on 460 hectares. As 330 tons of millet now produced on the 660 hectares under cultivation are to be deducted, this will give an additional value added of CFAF 7 million.  (8) Construction of Two Flood Retention Irrigation Dams in the Hodh (1,500 hectares). This project requiring an estimated investment of CFAF 60 million will lead to an additional production of millet (on some 1,500 hectares) valued at CFAF 9 million. (9) Creation of a Hydro-agricultural Work Unit. This unit will ensure prompt intervention whenever the need arises, particu- larly in the case of private enterprises which lack the possibility of carrying out under contract a series of small maintenance, repair and even hydro-agricultural development work. The cost of equipping this unit is estimated at CFAF 30 million and the operating cost will amount to some CFAF 80 million for the four years, i.e. a total of CFAF 110 million. E. Forestry 170. The program to control brush fires aims at conserving pastures and ligneous vegetation, in particular gum trees. In order to preserve this capital from progressive deterioration, a program for the establish- ment and maintenance of fire belts should be carried out in areas with high agricultural potential. Reforestation should be undertaken on a trial basis. The total necessary investment is estimated to be some CFAF 178 million. 171. Protection of Gum Tree Plantations and Pastures (CFAF 138 million). The following work should be undertaken: (1) Opening of 2,800 kilometers of fire belts in areas with a high density of gum trees and 2,000 kilometers in areas to be equip- ped with pasture wells according to the Plan. An investment of about CFAF 72 million will be necessary for this purpose. (2) Maintenance and reopening of 3,000 kilometers of previously established fire belts requiring a total expenditure of some CFAF 36 million. (3) Equipping of four watch teams involving a total expenditure of some CFAF 30 million. 172. Measures Directly Affecting Forestry Production (CFAF 40 million). (1) Trial improvements of 600 to 700 observation areas of which 50 are to be located in classified forests. An investment of CFAF 5 million is estimated to be necessary for the purchase of one vehicle and for its maintenance over a period of four years.  (2) Reforestation on a trial basis of 50 hectares at Fodar, Boghe, Maghama and Rosso at a cost of CFAF 2 million. (3) Establishment of three trial project areas for the rehabilita- tion of gumtreesat a cost of CFAF 20 million. (4) Drawing up of a map and carrying out of "andometric" studies on gum tree plantations on a surface of 250,000 square kilo- meters involving an expenditure of some CFAF 10 million. (5) Drafting of a new forestry code: cost estimated at CFAF 3 million.  - 54 - Table 5: FORECAST OF ANNUAL CROP PRODUCTION FOR 1971 (The figures in brackets are partial figures which should not be included in the total) Value of Produc- Invest- tion ments II Surface Rice Millet Cotton Corn I II T (ha.) (---------- tons ----------) (million CFAF) (%) 1. Agricultural Studies 70 2. Development of Animal-drawn Cultivation 22,64Oa/ 21,000 315 278 0.9 3. Hydro-Agricultural Development Hydro-Ai cultural Studies_ _ (399) Keur Macene Basin 25 Hydrology Kara Koro 12 Hydrology Hodh 12 Contribution of Spe- cial Fund Project 35_ Dar el Barka 200 150 150 125 175 10 lOJ 1 Lower Plain Boghe 3,500 7,000 4,ooo 151 600 4 Gorgol Project(10,000) (4,ooo) (3,300) (102) 755 Gorgol (down- stream) 7,000/ 4,00oo 1,500 75 Gorgol (up- stream) 3,0002/ 1,800 27 R'Kiz Lake 2,000 1,000 1,000 35 80 Delta Develop- ment (I,900? (3,800) (50) (275) Keur Macene'/ 1002/ 200 3 30O M'Pourie 1,200 2,400 31 200 6 Rosso 100 200 3 20 8 Garat 500 1,000 13 25 Small Scale Developments Upstream from Kaedi 660 4oo 70 7 30 4 2 Dams at Hodh 1,500 600 9 60 6.6 Maintenance Teams 110 Total 3 19,760 15,350 9,120 125 1,175 364 2,319 Total 1 & 2 & 3 (rounded) 42,400 15,00O0I 30,000 125 1,175 679 2,597 (Footnotes on next page)  Footnotes to Table 5 a/ Extension of areas under cultivation to which must be added approxi- mately 30,000 hectares, the present yields of which are to be improved. i Of which 90 million for the establishment of a subterranean waters authority, 260 million for studies concerning the development of the Senegal River. c/ To which should be added 100 million already spent or programmed until May 1968. d/ To which should be added 3,000 hectares for rice cultivation in 1971. i To which should be added 2,000 hectares for millet after 1971 and 2,500 for sugar cane. f/ Developments already completed: 12 million. i Paddy rice corresponding to about 9,000 tons of cargo rice. h/ The cost of studies for Bogh6, Gorgol, R'Kiz and Keur Macene is in- cluded in the cost of development work for these projects. i/ To which should be added about 3,900 ha. of rice after 1971. / Of which CFAF 25 million for the study of the development of the entire plan of Keur Macene (5,000 ha.).  - 56 - Table 6: SUMMARY INVESTNENTS AND PRODUCTION (million CFAF) Gross Annual Projects Investment Production 1971 I. Program of highest priority 1. Livestock development 1,388 1,431 2. Agricultural development - agricultural studies (rainfed) 50 - hydro-agricultural studies: hydrology Kara Koro 12 hydrology Hodh 12 Boghe project 35 Contribution to the UNDPa/ 350 - Development of rainfed agriculture 278 315 - Hydro-agricultural development: Dar-el-Barka 10 10 Lac R'Kiz 80 35 Keur Nacene pilot project 5 2 Development above Kaedi 30 7 3. Forests - studies of gum trees and pastures 10 - protection of gum trees and pastures 138 Total I 2,398 1,800 II. Program of Second Priority 1. Hydro-agriculturaJ studies - Gorgol projectb/ 110 - Garat projectb7 25 13 - Keur Macene project (5,000 ha. plain) 25 - Hydrogeology of the Assaba 25 2. Hydro-agricultural development - Boghe 565 151 - Gorgol 645 101 - M'Pouriec/ 200 31 - Rosso 20 3 - two dams in the Hodh 60 9 - maintenance teams 110 3. Forests 30 Total II 1,815 308 TOTAL I & II 4,213 2,108 a/ To be specified later. / The execution of this project is tied to UNDP assistance. c/ The execution of this project is tied to Chinese technical assistance.  - 57 - II. Fisheries A. Recent Developments Fish Production 173. The yield of ocean fishing off Rio de Oro and Mauritania can be estimated in broad terms at a maximum of 300,000 tons (CFAF 20 billion) per year obtained from some 600 vessels and boats of all kinds. 174. Only 18,000 tons9/ of fish (value CFAF 500 million) reach Port- Etienne, 15,000 tons from a Canarian fleet (70 medium-size vessels) based at Port-Etienne, 2,000 tons from a local fleet (34 units, principally 6.5 me- ter boats) and 1,000 tons from the Imraguen tribesmen who fish from small boats and along the shore. The number of Mauritanian fishermen cannot exceed 300 and their total earnings are of the order of CFAF 25 million. 175. The utilization of fish cargoes discharged at Port-Etienne and on the Mauritanian Coast is as follows: almost the whole of some 500 tons 2/ of fish is consumed by an estimated population of 10,000 living in com- munities along the coast, representing an average consumption of 20 kg. per head for this group. The consumption of dried fish is very small and appears to amount to a few hundred tons, including the 160 tons imported. from Senegal. Therefore 17,000 tons of fish go toward exports: 15,000 tons produce (after processing) 5,000 tons of salted and dried fish, principally exported to the Congo (Brazzaville), the balance of 2,000 tons of frozen fish are exported to Italy, Portugal and Greece through the SOMAUPECO and Guelfi companies. 176. The local shipping involved in the discharge of fish at Port- Etienne includes about 100 medium-sized and small vessels. It is, however, growing and 14 high-tonnage vessels (including 2 refrigerated cargo vessels) have already been ordered by SOMAP and should be capable of a total annual catch of 24,000 tons, although the results achieved by the first four vessels delivered at the end of 1966 and in early 1967 have so far been unsatisfac- tory. 177. The yield of the remainder of the fisheries, some 270,000 tons, is not landed at Port-Etienne but is exported to the metropolitan countries of the international fishing fleet, where it is generally frozen. - 2/ To this figure should be added some 15,000 tons of fish obtained from the River Senegal (value CFAF 500 million) by 500 full-time and 10,000 occasional fishermen; this yield is consumed by an estimated riparian population of 200,000 (75 kg. per head), 2/3 as fresh and the rest as salted and dried fish. 10/ To this figure should be added the consumption of fish from the River Senegal, i.e. some 15,,000 tons, almost entirely locally consumed, and also perhaps a further 500 tons of sea fish not brought ashore through Port-Etienne.  - 58 - 178. This yield is as follows: - 250,000 tons (including perhaps 60,000 tons obtained from Mauritanian territorial waters) caught by the international fleet of some 300 vessls; - 20,000 tons taken entirely in Mauritanian territorial waters by the Canarian fleet of 130 vessels; - 1,000 tons of crayfish taken by 30 French crayfish boats. 179. An additional yield, which is very small, is obtained by foreign companies fishing in Mauritanian waters under special agreements, such as the Soci6te Africa Peche which in 1966, with one vessel, landed catches totaling 600 tons at Leghorn, Italy. Investments in Port-Etienne 180. The aim of the investments envisaged under the terms of the First Four-Year Plan was to create a harbor with a discharge capacity of 50,000 tons and processing industries for 50,000 tons of fresh fish (salted and dried, frozen, fishmeal) per year. As will be seen in the following chapter the investments actually made go beyond the objectives of the First Plan and, in point of fact, the processing industries now in the course of installa- tion will soon have a capacity exceeding 300,000 tons per year although the port has unloading facilities for only 50,000 tons. Total,investments under the First Four-Year Plan amounted to CFAF 7,090 billion-Li/ CFAF millions - installation of port equipment (principally quay and cold storage plant) 1,279 - construction of SOMAUPECO cold storage plant 200 - construction of Guelfi Company's cold storage plant 857 - purchase by SOMAP of a fleet of vessels and construction of a fishmeal factory by SOMIP 2,739 - engineering repair shop (SCAM) 15 - investments by IMAPEC with a view to the establishment of fishmeal, salted and dried fish and canning factories 2,000a/ Total 7,090 a/ On the basis of later information it appears that IMAPEC will invest CFAF 1 billion only in the initial phase. llj To this figure should be added some CFAF 500 million earlier invest- ments.  181. Of this total CFAF 3,749 million have been or would have soon been invested in the form of public funds, including the loans from the Caisse Centrale, FAC and BMD. Private investments of CFAF 3,341 million are in the form of authorized capital (10%) and of loans from the Caisse Centrale, the Banque Mauritanienne du Developpement (Mauritanian Develop- ment Bank) and the Banque Dreyfus (12%); the balance is in the form of supplierst credits. 182. These investments are now being made and have already provided the port with unloading facilities with the aforementioned capacity of 50,000 tons and with processing facilities for 52,00o tons of fresh fish. The potential output of the latter will be raised to 330,000 tons by 1968. This raises the question of bringing the port's discharge capacity into line with the potential output of the fish processing plants. Processing Industries 183. The volume of activity in the fish processing industries at Port- Etienne is on a relatively limited scale, despite the existence of an already significant capacity, which will continue to increase until the end of 1968. The industry at present employs 300 persons, receiving incomes totaling CFAF 25 million. The Fish-drying and -salting Industries 184. The firms already in existence, SICGP and EGA, annually process some 15,000 tons of fresh fish, with a final yield of 5,000 tons, although their theoretical capacity is estimated at 30,000 tons of fresh fish. Furthermore, IMAPEC intends to develop between now and 1968 additional capacity amounting to 30,000 tons, so that by 1968, when this is available, the total capacity will be 60,000 tons. At the present stage, the fish- salting and -drying industry employs some 250 persons, paying some CFAF 20 million in wages and salaries. The Cold-storage Industries 185. Only 2,200 tons of fish (10 tons per day) were being frozen in 1966, although the total capacity available at present is on the order of 22,000 tons (110 tons per day). Moreover, this capacity will increase by 15,000 tons (75 tons per day) in 1968, on the completion of the construc- tion of the port cold-storage plant. By that date the total cold-storage capacity is expected to be 37,000 tons (185 tons per day). The Fishmeal Industry 186. At present there is no plant manufacturing fishmeal, although the projects wing undertaken by SOMIP (600 tons per day) and DMAPEC (100 tons per day)L/ will result, by the end of 1967 or more likely by 1968, in the 12/ But only 50 tons per day in the first phase.  - 6o - creation of an annual processing capacity of 210,000 tonsL3/(700 tons per day) with a potential output of some 40,000 tons of fishmeal. The Canning Industry 187. This industry does not yet exist but should be brought into being during 1968 through the agency of IMAPEC, which intends to develop the capacity to can 7,000 tons of fresh fish. 188. In summary, of the total processing capacity available of 52,000 tons, only 18,000 tons is being effectively used. Moreover, the total processing capacity expected to be available in 1968 will be sufficient to handle more than 300,000 tons of fresh fish. The Supplying of Port-Etienne with Fish 189. The only measure taken along these lines has been the placing of an order by the SOMAP-SOMIP group for fourteen vessels capable of supplying some 24,000 tons of fresh fish. 190. In the meanwhile, until a satisfactory Mauritanian fishing fleet has been brought into being, charter parties with foreign vessels have reportedly been made for the landing at Port-Etienne of a preagreed tonnage and for fishing in the area formerly adjoining Mauritanian territorial waters. It has been agreed that the factories at Port Etienne should pro- cess the fish landed, that the catch should retain the nationality of the vessels under charter and that the responsibility for the sale of the finished product should therefore remain with the latter. For instance, the firm of SOPESUD formed in 1966 by a group of ship-owners from La Rochene, France, with 6 fishing trawlers and 3 cargo trawlers, was to deliver a weekly catch of 100 tons to La Rochelle and a similar quantity to the factories at Port-Etienne (2,500 tons per year). No catch has so far been landed at Port-Etienne. On the other hand, landings at La Rochelle are continuing with SOMAP's 2 refrigerated trawlers being used as carriers. Moreover, 48 trawlers flying Panamanian or Greek flags were reported to have made contracts with the Guelfi Company for the delivery of 40,000 tons of fresh fish. The contracts apparently required that the unlanded tonnage should be subject to a duty of 3 francs per kg. payable to SOMAP. To the extent that these contracts have been properly executed, it can be assumed that only 1/3 of the tonnage covered by them will in fact be landed in 1967 i.e. 13,000 tons, of which some 4,000 tons will represent fish to be frozen. It appears that the balance of 27,000 tons will be subject to duty at 3 francs per kg. and will produce a profit of CFAF 81 million payable to SOMAP. 191. Despite all the efforts that have been made to supply Port-Etienne with fresh fish, it is not expected that landings in 1967/68 from existing shipping, the recently ordered fleet and the vessels under charter, will exceed 60,000 tons, of which 14,000 tons will be put in cold storage. 13/ On a single-shift basis only.  - 61 - The Administrative Structure 192. The administration of the fisheries sector is undertaken by the Department of Fisheries, which supervises the maritime region based on Port-Etienne and is responsible to the High Commissioner for Industriali- zation and Mining. Port-Etienne also possesses a fisheries laboratory, which has at its disposal the "Almoravie," a small scientific research vessel. The surveillance of territorial waters is the responsibility of the Mauritanian Naval Force. It has one small second-hand motor launch and a second 17-meter launch just brought into service. Delivery of a third launch is expected soon and a proposal to purchase two new 19-meter launches in 1967 is at present under consideration by FAC. There may therefore be five launches engaged in the surveillance of territorial waters. Training for fishermen is provided at a fisheries section of the Mamadou Toure Center, although this Center does not come under the Depart- ment of Fisheries. The fisheries sector is administered by five senior officials, of whom two are Mauritanians (two at the Department of Fisheries, one assigned to the Port-Etienne region and two to the Port-Etienne lab- oratory). B. Objectives 193. The capacity of the plants to be established at Port-Etienne has been estimated at 314,000 tons of fresh fish. The actual target has been fixed at 170,000 tons (including 18,000 tons actually being landed). This represents the minimum profitable utilization of this capacity, as indicated in the following table: Total Fresh Fish Projected to be Finished Capacity f Processed Product i Plant sa2 Minimum Level Dried and salted fish 60,000 33,000 11,000 Frozen fish 27,000 24,000 14,0002/ Fishmeal 210,000 109,000 24,000 Canned fish 7,000 4,000 3,000 Total 31h,000 170,000 52,000 a/ 200 working days have been assumed in the case of the cold storage plants and 300 in that of the fishmeal plants. i Including the current production of 5,000 tons of salted and dried fish and 2,200 tons of frozen fish. c/ Including 4,000 tons of fillets obtained from 10,000 tons of fresh fish and 10,000 tons of frozen whole fish obtained from 14,000 tons of fresh fish. / This capacity could be doubled if two shifts were employed on a 24- hour basis.  - 62 - 194. To reach this objective it has been estimated that it will be necessary to invest CFAF 5.5 billion, mainly for the creation of a Mauri- tanian fishing fleet and for the expansion of the port. As the investments that have already been made, and are in course of being made, amount to CFAF 7.5 billion, the total investment cost will rise to CAF 13 billion for a gross yield of a maximum value of CFAF 2 billion.;-1/ The total number of jobs, both on shore and sea, that will be created will lie between 2,000 and 2,500 and will produce a total wage-packet of between CFAF 500 and 750 million annually. 195. In particular with respect to the processing factories the annual value of the output of the finished product (52,000 tons) to be obtained from 170,000 tons of fresh fish can be estimated at between CFAF 2.5 and 3 billion (including the CFAF 500 million currently being realized) and the additional jobs that will be created in the processing factories at 700 (CFAF 200 million in wages). There are 300 jobs at the present time. 196. The problem is therefore not to create additional processing capacity, since the capacity being brought into existence already appears so large that it is doubtful whether it can be fully utilized. Rather what is needed is to supply adequate quantities of fish to the factories at Port-Etienne and ensure their sale on foreign markets. C. Recommendations The Stock of Exploitable Marine Resources 197. The importance of a better understanding of maritime resources off the Mauritanian coasts springs from the need to ensure the rational exploitation of the fishery resources and to fix the quantitative and qualitative yields of the areas exploitable by different types of vessels. On the basis of the results of the trawling undertaken in 1962 by the French research vessel "Thalassa," it appears that the most productive areas are those at a depth of less than 150 meters. Moreover, it is nbw practically certain that yields have continuously fallen, especially during the last ten years. According to information supplied by the Greek fishing fleet, yields appear to have fallen from 1,115 tons per year per vessel in 1961 to 845 tons per year per vessel in 1963. Indications from Greek, Spanish and Polish vessels suggest that the reduction in the more valuable species has been on the order of 50% over a period of ten years. Further- more, according to reports from French vessels, catches of rosy crayfish, taken at depths of 200 to 400 meters, have fallen by 70%. In the face of this disquieting situation, it is essential to undertake, without delay, an intensive biological study with a view to ascertaining the quantities and qualities of fish that should be taken off the Mauritanian coasts and in the Mauritanian territorial waters. In drawing up this inventory of 14/ Value based on the following unit prices: CFAF 90 per frozen fillet; CFAF 41 per frozen whole fish; CFAF 73 per salted and dried fish and CFAF 28 for fishmeal.  - 63 - resources, it would appear best to make use of either the Thalassa for a period of two years or, failing this, a trawler of a similar type to be acquired by the Mauritanian Government. The purchase of such a trawler would involve an expenditure of CFAF 30 million. The remuneration of experts and of Mauritanian personnel is estimated at CFAF 9 million and the operating costs of the trawler will amount to CFAF 4 million. The total cost over 2 years will be CFAF 43 million. Preparation of a Market Study 198. Parallel with the drawing up of an inventory of the exploitable marine resources off the Mauritanian coasts, it is essential to proceed with the preparation, at the earliest possible stage, of a market study of possible outlets for the products to be processed at the factories of Port Etienne. The cost of this study has not been estimated. It is a fact that over the past ten years the consumption of fishmeal and frozen fish in the countries of the European Common Market has increased by 10% and 3% respectively, although the outlets for the canning factory appear limited. On the other hand, the international fishing fleet operating off the Mauritanian coast and in Mauritanian territorial waters has long had a strong foothold in these markets, so that even a partial entry into them by the future Mauritanian fishing fleet will be far from easy. In order to obtain a thorough and objective market study, it will be desirable to hire the services of a specialized company, unconnected with the interests already involved in offshore Mauritanian fisheries. The Creation of a Mauritanian Fishing Fleet 199. The yield of the international fishing fleet, which has been progressively contracting over a period of ten years, is estimated in broad terms to be 250,000 tons of selected marketable fish, after returning some 500,000 tons of fish to the sea as unacceptable. If the objectives cited earlier are reached, 61,000 tons of selected marketable fish will be required for processing in Port-Etienne and 109,000 tons of other fish for fish meal. Even though only half of the vessels of the future Mauritanian fishing fleet will be in Mauritanian territorial waters, the others opera- ting in international waters, the fleet will be faced with two major prob- lems: The surveillance of territorial waters that have been very much extended under the terms of the Act of January 21,1967 and competition from the international fleet fishing offshore. So far as the latter is concerned, the intervention of the Mauritanian fishing fleet will have the effect of lowering the average yield of each vessel and therefore raising the cost price of catches, which is likely to make it more difficult to dispose of the fish on traditional markets. Moreover, it is doubtful whether the new Mauritanian vessels can hope to achieve, at least at the outset, a yield comparable to that of an international fishing fleet that has been operating on the high seas for decades. Furthermore, in any case, it will take from ten to fifteen years to train the 1,260 seamen required to create the Mauri- tanian fishing fleet.  - 64 - 200. After subtracting from the figure of 170,000 tons the catches at present being landed (18,000 tons), and those from the fourteen vessels recently ordered by SOMAP (24,000 tons), a further 128,000 tons of fish will still have to be landed. To land a catch of this size, it has been estimated that the additional shipping required by Mauritania should take the form of forty-eight heavier vessels (55 meters in length) and thirty lighter vessels (15 meters in length). The yield of the heavier vessels would be on the order of 110,000 tons and their cost would amount to CFAF 3,840 million. The yield of the lighter vessels would be some 18,000 tons and their cost CFAF 560 million. The total cost would therefore be CFAF 4,400 million and the number of seamen required to man these vessels would be as follows: Heavier vessels 960 seamen Lighter vessels 300 seamen Total 1,260 seamen It is suggested that about one-third of the suggested Mauritanian fleet be purchased from 1968-1971 (CFAF 1,400 million). Training of Seamen 201. The Mamadou Toure Center at Port-Etienne has a small-craft fisheries section which, since 1961, has been training twelve seamen a year. This Center provides theoretical studies on shore and sea training in a pinnace. To train the 1,260 seamen required for the Mauritanian fleet that is envisaged (78 vessels), it would appear desirable to im- plement the Gautier project formulated in January 1967. The object of this project is to broaden the scope of the training being given at present in the small-craft fisheries section of the Mamadou Toure Center and to form a new industrial fisheries section. The two sections would provide facilities for the training of about one hundred skilled seamen-fishermen each year and thus be in a position to award tickets as masters of small fishing-boats and large mechanized fishing-vessels to selected seamen who had received a full theoretical and practical training. The practical training would take place on a school-trawler of 25 to 30 meters, which would cost some CFAF 30 million. Allowance would also have to be made for the expenditure of CFAF 5 million on the accommodation of personnel and the purchase of equipment. The operating costs of the school-trawler, excluding those of the teaching personnel to be provided under bilateral technical assistance arrangements, should be met from the proceeds of the vessel's catch. 202. Assuming normal operation of the two sections engaged in the training of seamen, it would take ten to fifteen years to train 1,260 seamen and establish the Mauritanian fishing fleet on a fully operational basis. It is therefore essential to find, in the meanwhile, some alterna- tive means of supplying the factories at Port-Etienne with fresh fish.  - 65 - Charter-Parties for Foreign Vessels 203. Until the Mauritanian fisheries fleet is brought into being, dependent as it is, by the rate of progress that can be achieved in the training of seamen, some provisional solution must be sought that will provide regular supplies for the manufacturing plant at Port-Etienne. This solution might take the form of charter-parties with foreign vessels authorized to fish in Mauritanian territorial waters. Such contracts appear to have already been concluded with forty-eight Panamanian and Greek vessels, who have undertaken to land 40,000 tons of fresh fish. The solution of the charter-party has the advantage of providing for the delivery to the factories at Port-Etienne of a given quantity of fish that will be processed on a contract basis at a reasonable pre-agreed price, the marketing of the catch being left to the firms under charter. Moreover, such contracts should explicitly provide for the obligation to land a given tonnage or, failing this, for the payment of heavy penalties as compensation to the factories that, as a result, are forced to work at less than capacity. On the other hand, the danger of such a solution is that it may contribute to the impoverishment of Mauritanian territorial waters. This is why fishing undertaken by vessels under charter should be strictly regulated and supervised by the Mauritanian authorities, whose capacity to enforce such measures should be strengthened at the earliest possible stage. Furthermore, trawling should be strictly prohibited to all vessels, whatever their nationality, within a coastal strip six miles wide. As the fish resources of territorial waters are limited, (they are estimated at approximately 80,000 tons) and until such time as a Mauri- tanian fishing fleet is established, it may be desirable to consider some means of interesting some of the deep-sea fishing vessels of the inter- national fleet in the operation of the factories at Port-Etienne. In this way the resources now available to these factories could be supplemented with supplies from deep-sea fisheries. Expansion of Port Installations 204. On the assumption that the supplies available to the industries at Port-Etienne are to be increased to 170,000 tons, it will be necessary to increase the landing facilities of the port, which can only handle 50,000 tons now. Measures should be taken to construct a breakwater to protect the port, to install a 650-ton slipway and to expand the Societ6 SCAM so as to provide adequate repair and maintenance facilities for vessels. This additional investment in the port would amount in all to CFAF 845 million. The Protection of Territorial Waters 205. Under the provisions of the Merchant Marine and Fisheries Code of 1962, Mauritanian territorial waters were extended to six miles. In an adjoining zone of six miles (see map No. 1) fishing was also subject to regulation by the Mauritanian Government. Under the terms of the Act dated January 21, 1967, Mauritanian territorial waters have been extended to twelve miles based on a straight line running from Cap Blanc to Cap Timiris (see map No. 2). The so-called "adjoining area" has therefore been elimi- nated. The fisheries permits granted to SOPESUD and to the forty-eight  - 66 - Panamanian and Greek vessels have therefore ceased to be valid. This significant extension of Mauritanian territorial waters is undoubtedly advantageous, since it will reserve for Mauritania the right to exploit the country's most important maritime resources. But these benefits cannot be realized until the new limits of Mauritanian territorial waters have been recognized, at least by those countries whose fishing fleets operate off the Mauritanian coasts. Such recognition is in fact essential, if Mauritania's police fleet is to be able to intervene legally and to secure the effective performance of charter-parties made with vessels authorized to fish in its territorial waters. In any event, whether under the terms of the limits set by the Act of January 21, 1967 or under those of any new limits that may be negotiated, Mauritania's inspection and control facilities must be increased. It would appear necessary to proceed with the purchase, for a sum of CFAF 150 million of either two 28-meter launches or five 8-meter launches, thus increasing the police flotilla from three to five launches (or to eight launches on the second assumption). III. Mining 206. The proving of fairly rich reserves of iron and copper ore at Fort Gouraud and Akjoujt, respectively, held out the promise of a consi- derable economic potential which might be a base for the future economic development of the newly constituted Islamic Republic of Mauritania. A. MIFERMA 207. MIFERMA was set up with a total capital stock of $53.2 million (CFAF 13.3 billion) by a number of French, English, Italian and German shareholders. Total investments through 1966 were in excess of $200 million. The bulk of these investments was completed by the end of 1963. When exploitation began in 1963 the Mauritanian Government purchased 5% of the capital stock. The most important external source of finance was a 6 1/4%, 15-year loan of CFAF 16.3 billion ($66 million) from the IBRD, granted in March 1960 and guaranteed by France and Mauritania. In addition, the company received a CFAF 2.5 billion, 3%, 24-year Caisse Centrale loan and a CFAF 5.25 billion loan from the French Treasury in two tranches with terms of 5.6% for 13 years and 6 to 6.5% for 12 years respectively, partly guaranteed by the French Government. A consortium of French banks also granted a medium-term revolving credit of CFAF 3.5 billion, rediscountable with the Cr6dit National of France. The guarantees of the two governments as well as the concessional terms of part of the financing amounted to an important subsidization of the project. 208. Proven reserves as of January 1, 1967, amounted t5 some 144 million tons of relatively pure ore of 60% or better iron content.L 5 In addition, there will be tailings of 26 million tons of extracted mixed ores of less than 60% iron content,the use of which is presently under study. A final study on the size of the basic reserves will not be completed until 1969 Present reserves should be sufficient for twenty years of exploitation. 25/ World Bank Mission estimate.  - 67 - Table 7: CAPACITY OF FRESH FISH PROCESSING INDUSTRIES AT PORT-ETIENNE (tons) Theoretical capacity Total capacity assumed Per day Total 1. Cold-storage plants -SOMAUPECO 10 tons/day 2,000 1,500 -Guelfi Company 100 tons/day 20,000 10,000 -Port cold storage plant 75 tons/day 15,000 10,000 Total 185 tons/day 37,000 21,500 2. Fish-meal factories -SOMIP (one shift only) 600 tons/day 180,000 100,000 -IMAPEC 100 tons/day 30,000 20,000 Total 700 tons/day 210,000 120,000 3. Salted and dried fish factories -SIGP 12,000 -EGA 18,000 15,000 -IMAPEC 30,000 18,000 Total 60,000 33,000 4. Fish canning -IMAPEC 7,000 4,000 GRAND TOTAL 885 tons/day 314,000 178,5oo  - 68 - Table 8: ESTIMATE OF PQSSIBLE FURTHER INVESTMENTS IN FISHERIES-/ 1968-72 (million CFAF) Mauritanian Fleet 1,400o/ Port extension and slipway 845 School, research and patrol boats 230 Total 2,475 a/ The figures for further investments cannot be specified with precision as decisions to invest should depend on the results of the proposed market and resources study as well as upon other factors discussed in this section. b/ Assumes that about 1/3 of the suggested Mauritanian fleet will be purchased during this period.  RIO MAURITANIE_ DE ORO/ PRECEDENTE LIMITE DES /EAUX TERRITORIALES (6 milles au nord du Cap Timiris) I / F;ZQ MAURITANIA FARMER LIMIT OF THE 1,,tj f / \ TERRITORIAL WATERS PORT ETIENNE I(6 miles to the north of Cape Timiris) AVANT LA LOI 21-1-1967 CAPMg/ 7 i BEFORE LAW OP 21-1-1967 BLANC IDR~~~~~~~~~~' JULY 1967   DE MAURITANIE ORO! NOWELLE LIMITE DES j EAUX TERRITORIALES (12 milles au nord du Cap Timiris) I MAURITANIA NEW LIMIT OF THE PORT ETIENNE DU ) \TERRITORIAL WATERS z(12 miles to the north of Cape Timiris) BLAN < ->-i. t DEPUIS LA LOI DU 21-7-1967 SINCE LAW OF 21-7-1967 JUNE 1967   - 69 - 209. The MIFERMA project was originally regarded as the key to the future economic development of the country. It was thought that it would enable Mauritania to accelerate the pace of the very slow progress which its otherwise limited resources made possible. It was to bring the age of industrialization to Mauritania while providing budgetary surpluses which would make the country self-supporting as well as able to finance an investment program. 210. In fact, MIFERMA has not been able to earn the profits originally projected because of a combination of rising costs and reduced interna- tional prices for its ore. Operations started in 1963, nearly a year earlier than projected. The original expectation was that earnings in 1964 and 1965 would be sufficient to write off some $7 million in prelimi- nary expenses while leaving a net profit of some $8 million. In fact, the company wrote off only $4.5 million by the end of 1965 after losing $5.5 million in 1963. Profits in 1965, before preliminary expenses, were half as large as projected in 1960. 211. The main elements in causing higher costs than originally foreseen were the increased costs of repairs and maintenance. Labor costs were also higher. The required labor force greatly exceeded original estimates. In particular, the cost of operating the 675 km. railway was double that ex- pected. Even with big increases in tonnages handled the cost per ton of ore produced rose 10%. In short, wear and tear on rolling stock and parts required more rapid replacement than was anticipated. Other expenses such as interest charges have also risen because of the necessity to borrow in order to finance the higher output levels and because of inadequate cash generation. 212. Prices received per ton are a function of prevailing interna- tional prices, long-term contracts with buyers and the quality of the ore produced. MIFERMA's actual prices have been some 12% under expected prices as a result of the decline in world prices through 1963. Output is a function of both the technological production possibilities, which until now were estimated at less than 7.5 million tons annually, and the market. In fact, total tonnage shipped rose to 7.2 million in 1966. On the market side, MIFERMA has several advantages. Its location close to Europe,with rapid loading facilities,gives it an important freight rate advantage. The quality of its ores also gives MIFERMA a strong competitive position. With an elab- orate investment in mixing facilities, and seven distinct qualities of ore, its product mix can to a limited extent be directed to meet the varying demand conditions of ore users. This increases both the potential size and stability of the firm's market. Another important market factor is that about half of the firm's shares are held by steel companies who are committed to buy over 3 million tons a year, although at a discount from list prices. 213. Mauritania's interest in the profitability of MIFERNA stems from the concession granted by the GMvernment in 1959 which establishes a so- called "Long-Term Tax Scheme."L6/ The relevant parts of the tax scheme may 16/ Mauritania also owns 5% of the shares of MIFERMPA.  - 70 - be summarized as follows: (1) The basic principle calls for MIFERMA to pay a tax of 50% on its net earnings before any duties. Since no net earnings were expected in the initial years special taxes were levied on imports and exports in order to provide some revenue for the Mauritanian Government. These tax payments were to be deducted from eventual income tax on earnings. (2) An ad valorem duty of 5% on imports of equipment and material of all kinds was payable during the installation period of three years and three years thereafter ending June 30, 1966. After this date all imports by MIFERMA were subject to the full duty at 1959 rates. (3) During the exploitation period, which began with the first commercial shipment of iron ore in 1963, the sum total of import duties was to be adjusted by a so-called "complementary duty" to make them equal to 6% of the FOB value of iron ore exports up to 4.5 million tons a year and 9% of the value of exports exceeding 5.5 million tons. In no year could the tax fall to less than 6% of export earnings. 214. From 1960 to 1963 actual payments by MIFERMA to the Mauritanian Government under the Long-Term Tax Scheme were quite close to the original total of CFAF 1,110 million projected for this period. However, by the endof 1966, a total of CFAF 4.7 billion had been collected compared with CFAF 5.7 billion projected. 215. By 1966 revenues from MIFERMA amounted to between one-third and one-fourth of total current Government revenue; a shortfall of CFAF 1 billion represented considerable potential loss to the budget. 216. According to the original estimates MIFERMA expected to reach annual sales of 5.3 million tons by 1966. A considerable rise in proven reserves from an original 94 million tons together with the tight financial position caused by lower prices and higher operating costs led the firm to increase output to 7.2 million tons in 1966. Without this rise in output the contribution to Government revenues would have been significantly lower. 217. Even with these adjustments in total output the future prospects for the company were not bright because of the likelihood of further decreases in iron ore prices ahd increasing costs. Reduced orders from overseas made it unlikely that shipments could be maintained in 1967 and lower average prices were expected. 218. To remedy the situation the company revived the idea of exploiting the relatively rich F'Derik deposits, once postponed because of the tight financial situation and the increases in output achieved in the other deposits. Investment for additional capacity at F'Derik is estimated to cost less than half the average investment per ton in the rest of the enter- prise. It is likely that the company follows a policy of long-run profit maximization taking into account the capacity of its market to absorb ore at remunerative prices.  - 71 - 219. The developing of the 27 million tons of oreL7/deposits at F'Derik will require a further CFAF 5 billion ($20 million) of investment. In order to avoid the excessive financial burden which the payment of the full import duty would have required, a new protocol was signed in 1966 to expire in 1971 which essentially limits total taxes to 9 of the FOB value of exports of ore assuming these exceed 5 million tons