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The Central Bank’s latest interim measures aim to improve the financial health of Mauritanian banks. These requirements could lead to a complete restructuring of the banking landscape, which includes a large number of institutions.
Like the monetary authorities of the countries of the West African Economic and Monetary Union (Umoa), which announced the doubling of the minimum capital of the 65 West African banks in the CFA zone, the Mauritanian Central Bank has also adopted a series of measures.
Therefore, the Mauritanian Monetary Authority decided to double the minimum capital of banks operating in the national territory, increasing it from 1 to 2 billion ouguiyas (i.e. 10 to 20 billion old ouguiyas), with the obligation to release all the capital.
Better yet, to strengthen the financial foundations of the country’s banking institutions, the country’s monetary policy guardian is demanding that banks increase their capital to 3 billion ouguiyas. An increase that could lead to recourse to investors in different forms: capital increases, creation of reserves, subordinated bonds, mergers and acquisitions, etc.
According to the directive published on December 27, this measure retroactively gives banks six months to comply with the new regulations.
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These measures will not only make Mauritanian banks more financially sound in an increasingly risky environment, but are also expected to improve financing of the economy, particularly SMEs and SMIs, thanks to new banking resources.
To better understand the reasons behind such a decision, Le360 Afrique spoke to Abdallahi ould Awah, Professor of Economics at the University of Nouakchott. Ould Awah wanted to recall the historical context of the emergence of the first Mauritanian banks, all of which were public, their transition to the private sector in the wake of privatizations in the mid-1980s, the emergence of private banking groups and the low level of bank interest rates…
As for the new measure, he believes that this decision is beneficial in that it provides a more solid financial basis for the Mauritanian banking sector.
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However, he explains that its application requires accompanying measures to prevent a serious crisis at sector level and the disappearance of certain institutions. In fact, this increase should be easy to achieve for the subsidiaries of foreign banks and certain major Mauritanian banks. On the other hand, more fragile banks risk running into difficulties and may have difficulty finding potential investors given the saturation of the Mauritanian market.
Some observers believe that this decision by the Central Bank should contribute to the restructuring of the national banking sector, which has a large number of banks. To illustrate: Mauritania, which has no financial center and a population of less than 5 million, has more banking institutions than neighboring Morocco, despite having eight times the population and whose wealth, measured by GDP, gross domestic product, is more than 13 times higher.
By Amadou Seck (Nouakchott, correspondence)
January 12, 2024 at 12:22 p.m
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