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Investing in the Future
Chinese companies get go-ahead to invest in a range of industries in Mauritania
By Gitonga Njeru | VOL.11 August ·2019-08-16

Friendship Port of Nouakchott built by a Chinese company has become a symbol of economic independence of Mauritania (XINHUA)

Hussein Hamed, 23, a fisherman based in the Mauritanian capital of Nouakchott, catches about $3,500 worth of fish per year, but only 10 percent of his catch is processed in factories nearby. The remainder is sold at throw-away prices to customers on the streets of the city.

With the Mauritanian Government recently announcing that it will license several Chinese companies to open up businesses in his country, he is optimistic that his income will grow.

"I make little from fishing considering it is one of the largest sectors of our economy," he said. According to him, a big chunk of his catch is spoilt as he does not have enough refrigeration facilities. "A lot of my catch is either sold cheaply or not bought as customers probably have other priorities in these harsh economic times. I am happy that some Chinese companies [investing in our country] will open up fish processing plants. My income will rise and it will further motivate me to increase my regular catch [as there will be more chance to have the fish catch processed]," said Hamed.

Currently, there are just a few fish processing plants in the country.

He estimates that the increase in business could mean buying more fishing gears and, based on the processing plant facilities, his income could grow to about $12,000. This would allow him to buy a house and get married.

Range of investments

Hamed is just one of many local Mauritanians set to benefit economically once Chinese investors, mostly in the manufacturing, processing and construction industries, start operating in the country in the second half of this year.

The initiative came about as part of a trade and investment agreement signed in May 2017 when Chinese Minister of Foreign Affairs Wang Yi visited the country.

This has allowed 13 Chinese companies to set up operations in the country this year. The companies, ranging in size from small, medium and large operations, are involved in various sectors from food processing and construction to service industries such as banking. Some notable Chinese companies that will be doing business in the country include Huajia Foodstuff Co., Yantai Connor Foodstuff Co. and some online trading companies such as the globally renowned e-commerce giant Alibaba.

One of the sectors of the local economy to receive the largest boost from this investment is the fishing industry. The industry's production capacity has been declining for years due to many domestic and international challenges.

According to the United Nations Food and Agriculture Organization (FAO), only 5 percent of Mauritania's fish catch is processed, despite over 1.2 million tons of tuna being caught annually. The FAO lists shrimp and tuna as the most common marine species being caught each year in Mauritanian waters. Chinese companies will now invest in this sector, as well as other sectors of the country's economy, bringing job opportunities and increasing earning capacity for local businesspeople like Hamed. Mauritania has the potential to produce over 11.5 million tons of fish per year based on increased investments, according to the FAO.

"There are great prospects in this industry, considering that Mauritania has some of the best fish stocks in the world. We are happy as a government that the completed construction of the Tanit Fishing Project in the port of Nouakchott [by PowerChina Harbor Co. Ltd.] was a success. I can gladly tell you that there are more similar projects [that will begin] between my country and China in the near future," said Ismael Ould Cheikh Ahmed, Minister of Foreign Affairs and International Cooperation of Mauritania.

"Illegal fishing remains a problem and both countries have resolved to work on that. We are in talks with China to help us with security arrangements so that we can tackle illegal fishing within our territorial waters," he said.

Good prospects

Mauritania is divided into 12 regions in an area covering about 1.03 million square km. It had a gross domestic product of $5 billion, and a population of 4.42 million in 2018. The chief economic activities are in agriculture, livestock and mining sectors, according to data from the International Monetary Fund.

"With the exception of fishing, we will increase the mineral production in the country with value addition. We will not just be exporting unprocessed iron ore, gold and copper; but we will be processing it once Chinese investors open up processing plants in the country. We expect the economy to grow by 2 percent this year, but have better projected growth for the next few years of about 7 percent annually from 2021," said Ahmed.

One of the Chinese companies that is performing well in Mauritania is Hongdong Fishery Co. The company signed a $100-million agreement with Mauritania for a 25-year lease on fishing rights. It plans to open three processing plants by mid-2020 to deal with the growing demand for fish. Already, 4,000 jobs have been created since the deal was struck in 2011, according to Ahmed, who took over the foreign affairs portfolio in 2018.

"In future, there is a need for foreign direct investments in some of the country's chief crops of sorghum, millet, rice and maize. Some additional Chinese agricultural companies have applied for operating licenses. The applications are being reviewed and approvals are expected soon. But the 13 companies [mentioned] have already been approved," said Ahmed.

The increase in investments by China in Mauritania, and Africa in general, means that China's Belt and Road Initiative will have to increase the transportation network for trade to thrive. According to the World Bank, only 10,612 km of road network exists in Mauritania. Experts say that more has to be done in this regard by the government for efficient economic growth and development to be realized.

"Obviously, with an area of more than 1 million square km, we need about 100,000 km [of roads] as early as possible. I am glad that we are part of the Belt and Road Initiative, which augurs well for the future. A good road network for business to thrive is essential," said Ahmed.

He said that the per-capita GDP in Mauritania of $1,350 is expected to increase to $1,500 by 2020. Economists say the country's abundant potential and resources are untapped.

"Mauritania has potential; it's just a matter of time before it makes major strides in the global economic arena," said Harris Mule, a renowned Kenyan economist. "It is endowed with minerals such as iron, gold and copper. Only a small portion of those resources are [now] economically exploited to their [full] potential."

According to Mauritania's Ministry of State and Security, the country's foreign tourists increased by 166 percent in 2018. The number grew from 1,500 in 2017 to 4,000 last year.

Mule said there is expectation that these figures could grow even more.

"Big tourist numbers also means future potential for increased foreign investments," he said.

(Reporting from Mauritania)

(Comments to niyanshuo@chinafrica.cn)

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