Interview with Abdel Aziz Ould Dahi, governor of the Central Bank of Mauritania

Appointed Governor of the Central Bank of Mauritania in January 2015, Abdel Aziz Ould Dahi 2008 was, until his appointment, Chief Executive of the National Health Insurance body (CNAM).

The 52-year-old Dahi has a Masters in e-governance from the École Polytechnique Fédérale in Lausanne (Switzerland) and following doctoral research in the economics of development at the École des Hautes études en Sciences Sociales in Paris he was responsible for the Y2K programme as the Director of the Government Internet Centre from 1999 to 2007. A founding member of the Community of Management Practitioners, he is also Chairman of the Think Tank Mauritanie perspectives and co-author of the collective work Vers l’e-gouvernance, pour une nouvelle administration numérique (‘E-governance, for a new digital administration’).

From your perspective as the Governor of the Central Bank, how do you rate the performance of the Mauritanian economy?

Rather well, as the outlook for growth should enable us – thanks especially to income from the gas sector – to consolidate our fundamentals. Inflation is under control at around 3% and we are in discussions with the IMF for a budget extension. What we really want to do is have a more active monetary policy in view of the anticipated influx of foreign currency and be able to better manage bank loans to the private sector in Mauritania to encourage more investment. As long as a certain number of structural reforms have not been implemented, we will continue to drive inflation due to our massive purchases of imported food products and hydrocarbons. As for our level of debt, it is quite well contained in view of the infrastructure investments we have had to make. I would nevertheless like to emphasise that servicing the debt represents only 12% of our GDP, which is very reasonable compared to other countries.

On 1 January 2018, you released the new versions of the national currency, the Ouguiya at a rate of 10 to 1 in relation to the old one. Why does Mauritania need this demonetisation now?

There are three main reasons for this monetary reform: on the one hand, the fight against disguised inflation by reducing the mass of bank notes in circulation, thus facilitating trade; then, reducing the costs of maintaining notes and coins due to the predominance and excessive use of cash in our country, as in most other African countries; and finally, improving the quality of the bank notes to combat counterfeiting.

Is this a devaluation in disguise?

Not at all; since the creation of the Ouguiya in 1973, our currency has anyway been greatly eroded. What’s more, for the first time in the history of our national currency, the whole range of the Ouguiya has been changed, including the old coins that have little or no monetary use. The fact that the smaller denominations were no longer used was causing unjustified price increases. 

The valuation of the new coins and replacement of the old 100 and 200 Ouguiya notes by new 10 and 20 Ouguiya coins allows us to considerably reduce the costs of maintaining notes and coins. The cost of coins is much lower than that of notes and that is why we decided that the denominations with the widest circulation would be in the form of coins.

The choice of using polymer bank notes is an innovation for Africa. What were your reasons for doing it?

That’s right, we are one of the few African countries to do so. Of course, there are big countries like Canada, Australia and New Zealand and some Asian countries that have already adopted this revolutionary technology. The reason why we decided to follow is that it increases the useful life of the notes and therefore reduces the cost of maintenance, and it also helps to limit counterfeiting. These notes cannot be copied. In studies, polymer notes last about nine years, but we believe their useful life will be at least five years in view of our particular circumstances, where cash transactions are predominant. This should allow us to recoup our initial investment over three years, with the printing of polymer bank notes in Canada and the new coins at the mint in Paris.

Are you satisfied, six months after the start of the operation?

Yes, because there have been no major incidents despite the huge size of Mauritania and the need to distribute the new notes while recovering the old ones.

As of 1 July 2018, a single range of Ouguiya is now in circulation; it will still be possible to exchange the old notes until 31 December 2018, but only at the counters of the Central Bank.

Thanks to a far-reaching communications campaign targeting all users through all available channels of communication, I have to say that the results have greatly exceeded our expectations: after 5 months, we had already recovered over 95% of the value of the mass in circulation. So, we are very hopeful that the remaining 5% will have been recovered by the end of the year.

What’s more, the branch networks of the banks that cover almost the whole country have played a very important role by offering users – including those with no bank accounts – a free-of-charge and completely confidential exchange of their old bank notes.

The same thing applies to the public treasury, through its national network, and Mauripost. A lot of the banks took the opportunity of offering the free-of-charge opening of new bank accounts. The result is that nearly 15,000 new bank accounts have been created in addition to the 300,000 that already existed.

This brings the rate of bank account penetration in Mauritania to 30% if we include the Microfinance Institutes, but to between 14 and 15% for ordinary accounts.

One of the main reasons for creating the new currency was to accelerate the development of electronic payments. Where are you with that?

That’s right, the modernisation of our systems and means of payment is one of the major pillars of our strategy. The objective, over time, is to significantly reduce the use of cash by replacing it with other, more secure means of payment that are less costly and more efficient.

The ongoing reform is part of a wider programme to modernise fiduciary management. Concerning electronic payments, we are planning to equip a certain number of big invoicers with VSBs and also the imminent launch of payments over the internet. We have also made extensive progress in preparations for the launch of a mobile banking system. At the same time, we have embarked on other projects, with the official launch on 9 July of the project in support of the modernisation of financial infrastructure in Mauritania (PAMIF) for the sum of $5.6m over a period of 36 months.

This project, supported by the AfDB, aims to speed up, make secure and reliable and increase the volume of financial flows, and facilitate the emergence of new, digital financial services to meet the needs of the population.

It will be financed by a subsidised loan of $5m granted by the African Development Fund (ADF) over a 25-year period and a contribution of $600,000 from the Mauritanian government.

The PAMIF comes in addition to other Central Bank initiatives to improve the business climate and the availability of financial resources for commercial banks to be able to support the development of companies in our country. Approved in December 2017, it was passed by the Mauritanian Parliament on 31 May 2018.

Are there still administrative or legal obstacles to be overcome before Mauritania can properly join the current global monetary system?

Yes, but the review of the legal framework will very soon become a reality with a new law on means of payment enabling the emergence of new players, especially financial intermediaries for retail payments. We are also planning to create a National Payment Centre (NPC), made up of all the stakeholders, which will be a key element in the process of modernising the banking and financial system in Mauritania.

Where are you with the revision of the statutes and the implementation of the vast programme to transform the Central Bank of Mauritania?

We have created a Strategic Steering Centre entirely devoted to it and, at the same time, we have launched a far-reaching organisational transformation programme. As for adopting new legislation, the expectations of citizens, employees and economic players, relations with partners and compliance with international norms and standards are just so many parameters to be taken into consideration in this much-needed transformation.

We have also adopted a roadmap consisting of more than 40 projects that affect all of the bank’s fields of activity (processes, functions, monetary policy, fiduciary management, governance, organisation, information systems, investment in human capital, etc.). The goal is of course the in-depth transformation of the management systems and processes and the organisational structure of the Central Bank through radical, but gradual, reforms to improve its performance over time.

On that point, in terms of human resources, does Mauritania foresee a ‘Mauritanisation’ of the management class? Is the Bank also thinking along those lines?

The Central Bank has adopted an approach to change management focused on internal communications. This participative and inclusive approach has so far made it possible to achieve widespread commitment and buy-in among the personnel at the Bank for all the transformation programmes we have launched.

As for investment in human capital, yes, of course it is necessary. Human resources can be trained and we will always need new skills due to the development of Mauritania. At the Central Bank, we are now developing our financial market and we envisage putting in place capital markets by 2021 in order to diversify our sources of financing. We are therefore very aware of the expectations we have raised and will do all we can to meet them.

What are you doing to protect yourselves against cybercrime?

It is a global problem, not specific to Africa. Africa has, as a continent, so far been spared by this curse as our information systems are less open. However, with modernisation and online services, it is just a question of time. It’s inevitable. So, we must prepare for it and to do so we have set up a unit within the Bank to deal with fintechs and cybercrime.

Concerning the fight against money laundering, Mauritania is a member of the Financial Action Task Force (FATF). Here again, we have set up a financial analysis unit to track all the financial flows, including those that may originate in terrorist activities, transiting through Mauritania.

In the past, Mauritania has had to arrest drug traffickers and terrorists and, in view of our shared borders with Morocco, Mali and Senegal, it is preferable to carry out full-time monitoring. However, for the moment, we have not identified any suspect financial movements that could be a source of concern. But that does not mean that they do not exist. That is why we must be on constant alert, to be able to address any eventualities. n