Jan 23 Mauritania's central bank says it will develop Islamic finance as part of efforts to modernise the banking system and make long-term loans available to companies.
"A strategy for the development of Islamic finance is currently being prepared. It will identify the key levers to promote and revitalise the sector to its full potential," central bank governor Sid'Ahmed Ould Raiss said in a speech this month.
With 3.2 million people, Mauritania has reserves of iron ore, copper and gold and is encouraging exploration in its offshore oil and gas sector. Its economy grew 6.9 percent in 2013.
But local banks have struggled to support the economy with adequate levels of long-term funding, Raiss said. In the first half of 2013, 79.3 percent of all bank credit was in the form of short-term loans of one year or below, a deterioration from 76 percent in 2012.
"One of the main obstacles to private sector development is the scarcity of long-term financial resources."
Plans to modernise the financial system will be rolled out over a five-year period, starting in the first quarter of 2014, Raiss said without giving further details.
Islamic finance, which follows religious principles such as bans on interest and gambling, is making inroads in several sub-Saharan countries including Nigeria and Djibouti.
The planned creation of a securities exchange in Mauritania would allow the issuance and trading of both conventional and Islamic financial instruments, including Islamic bonds, Raiss added.
Last year saw the launch of two new Islamic lenders in Mauritania: Banque Al Muamalat As Sahiha and Maurisbank. Banque Islamique de Mauritanie started operations in 2011; it is 60 percent owned by the Jeddah-based Islamic Development Bank and 40 percent by Turkey's Bank Asya.
Last month, the country's ruling party secured a majority in parliamentary elections, and the once-outlawed Tawassoul Islamist party joined parliament for the first time. (Editing by Andrew Torchia)