REPUBLIQUE ISLAMIQUE DE MAURITANIE

Honneur, Fraternité, Justice
Présidence du Conseil Militaire pour la Justice et la Démocratie

Ordonnance No. 2007/005 regulating Microfinance Institutions

The Military Council for Justice and Democracy has deliberated and adopted; The President of the Military Council for Justice and Democracy, Head of State, promulgates the Ordinance as follows:

Title I: General Provisions

Article 1: Definitions

For the purposes of this Ordinance, the following terms are defined as follows:

« Microfinance Institution » (MFI): financial institutions with a special legal status that habitually carry out credit and/or savings collection operations, primarily intended for members or low-income clients.
These institutions may also offer other financial services, subject to compliance with applicable regulatory provisions and their respective approvals.
Umbrella structures: unions and federations of MFIs as provided for in this Ordinance.
Institution: MFIs and their umbrella structures.
Member: any person who subscribes to at least a portion of the social shares or associative capital of an MFI of Category A as defined in Article 4 below.
Client: any natural or legal person who benefits from the services of an MFI of Category B or C as defined in Article 4 below.

Article 2: This Ordinance applies to « Microfinance Institutions » (MFIs) operating within the territory of the Islamic Republic of Mauritania, as well as to their umbrella structures.

Article 3: The supervisory authority for MFIs is the Central Bank of Mauritania, hereinafter referred to as the « Central Bank ».

Article 4: MFIs are subdivided into three categories and must adopt, as applicable, the following legal forms:

1°/ Category A: Non-profit and mutualist institutions offering savings and/or credit services limited to their members. They must be established as non-profit associations or financial cooperatives. 2°/ Category B: MFIs established as public limited companies (SA) offering credit and/or savings services to the public. 3°/ Category C: Development programs, projects, and associations, as well as dedicated microfinance units within them, which offer credit services but do not collect savings, with the exception of:

guarantee deposits,
deposits constituting a prerequisite for credit, held in a dedicated account until the financing operation is completed.

Article 5: Category A MFIs may operate either independently or within a network.

Article 6: In the absence of an umbrella structure, the Central Bank may designate, in consultation with the concerned institutions, a body to temporarily fulfill this role.

Article 7: The umbrella structure must be established as a financial cooperative, an Economic Interest Grouping (GIE), or a public limited company (SA).

The capital and voting rights of the umbrella structure must be held by at least 65% by the member MFIs of the network, or, in the case of a federation, by the unions.
The umbrella structure must ensure, on behalf of network members, the following prerogatives and services:

representation before third parties, including supervisory and control bodies, as well as all network partners;
definition and implementation of measures necessary to ensure network cohesion and guarantee financial balance, particularly compliance with prudential standards by member institutions;
exercise of disciplinary power and implementation of recovery measures and monetary sanctions against member institutions;
definition of specific accounting standards and procedures, in compliance with the professional chart of accounts and supervisory authority requirements;
preparation of consolidated accounting documents and other statements defined by the supervisory authority;
organization of financial solidarity among member MFIs, within the overall financial balance of the network;
establishment of a network internal control system, in accordance with supervisory authority requirements;
technical assistance to member institutions, particularly regarding organization, operations, accounting, training, and education;
setting of conditions for admission, exclusion, or withdrawal of member institutions.

Article 8: Any institution subject to this Ordinance is an ex officio member of the MFI professional association, whose statutes must be approved by the Central Bank.

The primary objectives of the MFI professional association are:

representation and defense of the collective interests of the profession;
performance of tasks and services useful to the profession.
It may be consulted by the Central Bank on any matter concerning the profession. Likewise, it may submit proposals to the Central Bank in this regard.
It is authorized to appear in court when it considers that the interests of the profession are at stake, particularly when one or more of its members are involved.
The Central Bank may, upon request by the MFI Professional Association, create and/or manage any service of common interest for the association or profession, within the limits set by the Central Bank's Statutes.

Title II: Authorized Operations, Approvals, and Registration

Chapter 1: Institution Operations

Article 9: MFIs may carry out, in accordance with their respective approvals and registrations, savings collection, credit granting, investment, or other operations related to their activities, in compliance with the provisions of this chapter.

Article 10: For Category A institutions, savings are considered to be funds, other than social shares or associative capital contributions and membership fees collected by the institution from its members with the right to dispose of them within the framework of its activity, subject to restitution upon request by said member or according to agreed terms.

For Category B institutions, savings consist of funds collected by the institution from the public, with the right to dispose of them within the framework of its activity, subject to restitution upon request by the depositor or according to agreed terms. Category C institutions may not collect savings, with the exception of guarantee deposits and sums left by clients to honor their commitments. Unions and federations may collect savings from affiliated institutions.

Article 11: Institutions may receive other external resources in compliance with their statutes and applicable regulations. These may include grants, loans, and capital endowments.

Public or public/charitable origin funds destined for institutions:

must pass through the account of the concerned institution opened at the Central Bank or a Mauritanian bank,
must obtain a non-objection opinion from the Central Bank when they exceed an amount fixed by Central Bank instruction.

Article 12: A credit operation is considered any act by which an institution provides or commits to providing funds, within limits set by the Central Bank, to a member or client, subject to the beneficiary's obligation to repay these funds plus remuneration according to terms agreed between the parties.

Signature guarantees, credit leases, and other hire-purchase mechanisms are considered credit operations.

Article 13: Financing operations that do not use interest rates and practice profit-and-loss sharing systems are considered credit operations.

Article 14: Institutions with surplus resources may make investments with the Central Bank, the State, banks, financial institutions, or other MFIs or umbrella structures.

These credit operations will be governed by Central Bank instructions, which will determine the capital level, credit ceilings, usury rates, and prudential standards applicable to each category.

Article 15: Operations performed by institutions as intermediaries are confined within Mauritania. For operations with foreign entities, establishments without Central Bank authorization must use the services of a Mauritanian bank.

Article 16: Category A and B institutions, as well as network umbrella structures, may make transfers to members or clients of approved banks or MFIs or umbrella structures.

They may, with specific authorization from the Central Bank, manage and make available electronic payment instruments to clients, and enter into partnerships with any company for the provision of these services, under the institution's responsibility.

Article 17: Approved unions and federations may be authorized by the Central Bank to carry out credit operations with clients, for amounts and under conditions specified in the approval decision.

Article 18: Subject to compliance with applicable regulations, any institution may conclude agreements with similar institutions, organizations, or financial institutions to help its members or clients acquire goods and services offered by third parties within the framework of its objectives.

It may subscribe to insurance contracts to cover risks related to its activity and also subscribe to any insurance for the benefit of its members or clients, individually or collectively, within limits set by the Central Bank. It may present insurance contracts to its members or clients in compliance with intermediary regulations for insurance operations. A Category A or B institution may create, as needed, service companies to meet the needs of its members or clients and achieve its objectives. Furthermore, it may undertake any ancillary activity deemed useful for the benefit of its members or clients, such as safe deposit box rentals and training. These operations must relate to the institution's main activity.

Article 19: The Central Bank may set a ceiling on the conditions of credit operations by institutions to their members or clients.

Chapter 2: Approvals and Registrations

Article 20: Any institution considered an MFI or umbrella structure under this Ordinance may not operate without prior approval by the Central Bank or registration with it.

For networks, approval may be granted on a collective basis to the union or federation or to the acting structure, according to modalities and conditions defined by the Central Bank. Likewise, no one may, without prior approval or registration, claim the status of institution, nor use, in any language, terms related to the operations referred to in Article 1, in its name, corporate title, signboard, or advertising.

Article 21: The approval request for institutions in Categories A or B, or as umbrella/network bodies, or registration in Category C, is submitted directly to the banking supervision department of the Central Bank.

The Central Bank verifies that the file contains all requested elements and issues a deposit receipt.
For Category A MFIs and their umbrella/network bodies, the Central Bank has a three-month period, after issuing the deposit receipt, to grant or refuse approval. Failure to respond within the deadline constitutes approval. For Category B MFIs, the Central Bank has a six-month period, after issuing the deposit receipt, to grant or refuse approval. Failure to respond within the deadline constitutes approval. For Category C MFIs, the Central Bank has a one-month period, after issuing the deposit receipt, to grant or refuse registration. Failure to respond within the deadline constitutes registration. The deadlines for different categories cease to run upon notification by the Central Bank of a request for supplementary information; they restart according to the initial term upon receipt of the information, submitted directly to the banking supervision department and documented by a deposit receipt. The decision granting approval or registration is published in the Official Journal. It specifies the category in which the institution is classified and lists the operations it is authorized to perform.

Article 22: The exercise of any operation not provided for in the approval deed requires complementary authorization from the Central Bank, granted based on proven financial, technical, and human capacities.

Prior authorization from the Central Bank is required for any change in approval conditions.

Article 23: A Central Bank instruction specifies:

the conditions for granting and withdrawing approvals for Category A and B institutions, umbrella structures, and networks;
the conditions and modalities for registration and deregistration of institutions in Category C, and the limits on activities exercised by Category C MFIs;
the conditions and modalities for designating central animation and promotion bodies of networks, pending the creation of umbrella structures.

Article 24: The Central Bank is authorized to conduct investigations with natural or legal persons who, based on a strong presumption, are suspected of habitually performing operations reserved for microfinance institutions without approval or registration.

If these investigations confirm the facts, the concerned person may be brought before the competent jurisdiction by the Central Bank.

Title III: Operations, Mergers, Divisions, Dissolutions, and Liquidations

Article 25: Subject to the provisions of this Title, specific control rules applicable to each category of microfinance institutions and umbrella structures may be further specified by Central Bank instruction as needed.

Chapter 1: Organization and Operation of Financial Cooperatives

Section 1: General Provisions

Article 26: The provisions of this chapter apply to Category A MFIs established as financial cooperatives, as well as to unions and federations established under the same form.

Law 67-171 on cooperation and texts adopted for its application or modification do not apply to financial cooperatives.

Article 27: Financial cooperatives are governed by the principles of mutualism or cooperation. They must comply with mutualist or cooperative action rules, particularly the following:

1°) membership is free and voluntary;
2°) the number of members is unlimited;
3°) operations are democratic, notably in MFIs established as financial cooperatives, by the principle that each member has only one vote, regardless of the number of shares held; 4°) proxy voting is permitted only in exceptional cases and within limits set by internal cooperative regulations; 5°) remuneration of social shares is limited; 6°) the establishment of a general reserve is mandatory. Amounts placed in reserve cannot be distributed among members; 7°) actions aimed at the economic and social education of cooperative financial members are prioritized.

Article 28: A Central Bank instruction specifies any provision likely to facilitate the establishment, implementation, and operation of financial cooperatives.

It also indicates their control and surveillance mechanisms and modalities. Without limiting the above, the instruction determines:
1°) eligibility, resignation, suspension, or dismissal conditions for members of the cooperative's governing bodies; 2°) the role of the cooperative's governing bodies, as well as the scope, limits, and conditions for exercising their powers; 3°) composition and characteristics of social capital.

Section 2: Organization

Article 29: Subject to specific provisions of this Ordinance and implementing texts, the statutes of a financial cooperative determine, among other things, its purpose and duration, registered office, conditions for admission, suspension, resignation, or exclusion of members, and modes of administration and control.

Article 30: Statutes must be prepared in four (4) copies, two (2) of which are filed with the registry of the competent court.

Any subsequent modification to the statutes, as well as acts or resolutions resulting in the nullity or dissolution of a financial cooperative or organizing its liquidation, are subject to filing with the registry and written declaration to the Central Bank within one month from the date of the general meeting that decided on these modifications.

Article 31: In addition to founders, any other persons sharing a common link as defined in this Ordinance may be members of a financial cooperative. Each member subscribes to at least one social share.

Article 32: For the purposes of this Ordinance, a common link refers to identity of profession, employer, place of residence or affiliation, association, or objective.

Article 33: Any resignation, exclusion, or death of a member results in the settlement of their claims and debts with respect to the financial cooperative.

After this settlement, the resigning or excluded member, or the heirs of a deceased member, have no rights to the cooperative's assets.
However, an heir of a deceased member may decide to take over the social shares held by the member, within the framework of an agreement between all heirs and the financial cooperative.

Article 34: The financial liability of members towards third parties is engaged up to at least the amount of their social shares.

Section 3: Operation

Article 35: Within a single financial cooperative, management and control functions are exercised by distinct bodies.

Article 36: The policies of the financial cooperative are adopted by the general meeting or the board of directors acting by delegation, in compliance with prerogatives attributed to network umbrella structures.

Article 37: Any loan to the management of a financial cooperative and to persons whose interests or relationships with the cooperative or network it belongs to may influence its decisions must be authorized by the competent body, by a decision taken by the qualified majority provided in the statutes.

Management of an institution includes all persons exercising direction, administration, control, or management functions in that institution.

Chapter 2: Mergers, Divisions, Dissolutions, and Liquidations

Article 38: Two or more institutions of the same level and category may group together to merge and form a new institution.

An institution may divide into two or more institutions.
The conditions and modalities for merger or division are specified by Central Bank Instruction.

Article 39: The dissolution of an institution may be voluntary or forced. Dissolution is considered voluntary when decided by a qualified majority of three-quarters of members or shareholders, convened in an extraordinary general meeting.

The Central Bank is informed of the holding of the general meeting and its agenda at least eight days before the decision date. The Central Bank may then take conservatory measures, including forced liquidation if applicable. Dissolution is considered forced when the decision originates from the Central Bank or a competent jurisdiction.

Article 40: The dissolution decision entails the liquidation of the institution. It must be accompanied by the appointment of one or more liquidators by the extraordinary general meeting when dissolution is voluntary, or by the Central Bank or competent court, as applicable, if it concerns forced dissolution.

Article 41: Umbrella structures may be associated, by the dissolution decision, to the conduct of liquidation operations for affiliated institutions.

Article 42: At the close of liquidation, if a surplus remains, the general meeting may decide to allocate it to the reimbursement of members' or shareholders' social shares.

The remaining balance, if any, is allocated to another institution or to social or humanitarian welfare organizations.

Article 43: Subject to provisions set forth in this Ordinance, the liquidation procedure is carried out in accordance with rules relating to the liquidation of commercial companies.