Mali Country Profile

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General Information

Political Climate

Mali has undergone substantial political changes since the 1990s, including the holding of the country's the first democratic transfer of power that took place with the elections of 2002 when President Amadou Touré peacefully assumed power. Touré was re-elected in April 2007 amid allegations of fraud from the opposition, but international observers declared the election results valid. Mali remains one of the least developed countries in the world, although several reforms intended to foster economic growth and decentralise the political system have been introduced since the early 1990s. Overall, Mali is considered to be politically stable and relatively peaceful with the central state's monopoly on power only contested by Tuareg rebel groups in the country's northern regions. In April 2011, Touré appointed Sidibé Cissé making her the first female Prime Minister of Mali.

Even though governance has been significantly improved, several observers agree that corruption is still endemic at most levels of society in Mali. According to the US Department of State 2010, the general public and the international donor community are well aware of the situation, and have been working with the Malian government on reducing corruption; however, improvement has been slow. Despite that the government has declared the eradication of corruption to be a priority, the country continues to suffer from widespread corruption at all levels, as reported in the Bertelsmann Foundation 2010. The US Department of State 2010 states that corruption remains a significant problem in government procurement and dispute settlement. Furthermore, an ineffective and corrupt judicial system, and impunity of corrupt officials continue to hinder the implementation of anti-corruption measures. According to Afrobarometer 2008, 31% of the surveyed households believe that the current government is handling the fight against corruption ‘very badly’, and 30% of the surveyed households believe that most government officials are involved in corruption. Furthermore, surveyed business executives in the World Economic Forum Global Competitiveness Report 2010-2011 reveal to have very little trust in the ethical standards of politicians in Mali.

In 1999, an ad hoc anti-corruption commission was established with assistance from the World Bank, which recommended a number of anti-corruption measures focusing on limiting opportunities for corruption, applying penalties and ensuring the transparency of public transactions. The successor to the ad hoc commission was an anti-corruption unit, the Support Unit to the Control Structures of the Administration (CASCA). Furthermore, the Office of the Auditor General (OAG) was established in 2003 to evaluate the performance and impact of the public financial administration. According to the US Department of State 2010 Human Rights Report, a 2009 report released by the OAG in 2010, highlighted instances of fraud and mismanagement that had resulted in the loss of approximately USD 226 million, an 8% increase from the previous year. Impunity is a recurring problem since corrupt officeholders are rarely punished unless they are exposed in the press or fall out of the government's favour. The OAG has begun to combat this, exposing a number of large corruption cases, and it is finally beginning to take these cases to court and secure successful prosecutions. Several improvements have been made in regards to strengthening the public expenditure management (PEM) system as well as budget formulation and execution. Of the entities that were discussed in their 2007 report, 61% of the OAG's fraud prevention and financial management recommendations were implemented. The progress made in deepening democracy and improving governance at many government levels has received strong support from international donors. However, despite political will, Mali continues to hold relatively low rankings on various corruption indices due to the government's failure to curb corruption. This failure stems partly from a lack of coordination between top-heavy administrative structures designed to combat corruption.

Business and Corruption

Since the early 1990s, the Malian business environment has been characterised by increasing market liberalisation, openness to foreign trade and investments, and GDP growth rates superior to the overall Sub-Saharan regional average. The Informal sector remains large and vibrant in Mali, and according to the World Bank & IFC Enterprise Surveys 2010, more than 75% of service companies surveyed report that they must compete against unregistered or informal companies. According to African Economic Outlook 2011, the Malian economy grew by a rate of 4.5% in 2010, and the inflation rate dropped considerably from 9.2% in 2008 to 1.4% in 2010. The Malian government has successfully tackled inflation by granting reductions in valued added tax and customs duties, increasing salaries and subsidies, and by reinforcing price monitoring. According to the US Department of State 2010, the government's desire to boost investments is reflected by the structural adjustment agreements signed between Mali and the World Bank and IMF, as well as its own poverty reduction strategy that followed, all of which emphasise the role of the private sector in developing the economy. This means that domestic and foreign investors are treated equally, and that foreign investors can own 100% of any company they create. However, the state continues to hold control over key economic sectors, most notably the two major exports, cotton and gold. Foreign investment is highest within extractive industries and a significant number of foreign oil exploration companies have committed themselves to investing USD millions searching for oil and gas in Malian desert. The structure in charge of promoting the petroleum sector is the Authority for Petroleum Exploration Promotion in Mali (AUREP) under the Ministry of Mines, Energy and Water.

The level of foreign investment outside extractive industries, such as the mining sector, remains low. One of the main reasons for the lack of significant foreign investment is the high level of corruption. Several sources report on the extent of corruption in Mali and how it influences the business climate. For instance, business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 rank corruption as the second most problematic factor for doing business in Mali, exceeded only by access to financing. Surveyed business leaders give the level of diversion of public funds to companies, individuals or groups due to corruption a score of 2.6 on a 7-point scale (1 being 'common' and 7 'never occurs). Business executives also indicate that the ethical behaviour of companies in Mali constitutes a competitive disadvantage. According to the World Bank & IFC Enterprise Surveys 2010, there are strong indications that petty corruption is very widespread in Mali, given that approximately 19% of companies pay facilitation payments to 'get things done', while 25% identify corruption as a major constraint.

According to the US Department of State 2010, government procurement is rife with corruption. This situation is illustrated in the World Bank & IFC Enterprise Surveys 2010, in which 23% of companies expect to give gifts to secure a government contract. Business leaders surveyed by the World Economic Forum Global Competitiveness Report 2010-2011 indicate that it is quite common for government officials in Mali to favour well-connected companies and individuals when deciding upon policies and contracts. In order to fight this, the government requires all procurement contracts to be inspected by the General Department of Public Markets which determines whether procedures meet the requirements of fairness, price competitiveness, and quality standards. In order to best reduce the risk of extortion and demands for bribes in the procurement process, foreign investors considering bidding on public tenders in Mali are advised to use a specialised public procurement due diligence tool. Based on the above, foreign investors considering establishing themselves in Mali are generally advised to consult with experienced attorneys, to develop, implement and strengthen integrity systems, and to carry out extensive due diligence before committing funds or when already doing business in the country.

Regulatory Environment

Through the Structural Adjustment Programmes (SAPs) introduced in the early 1990s and its subsequent Poverty Reduction Strategy Paper, the Government of Mali has striven to adopt more transparent regulatory policies and effective laws to spur market competitiveness. For instance, the Commerce, Mining and Labour Codes adopted in 1992 were introduced to meet the requirements of fair competition and to ease bureaucratic procedures. The Investment Code 2005 (in French) has reduced the application process to start a business and emphasised investments that promote handicrafts, exports, and labour-intensive companies. The Mining Code (in French) encourages investments in medium and small-sized mining companies, awards two-year exploration permits free of charge and does not require companies to lease areas explored thereafter. Furthermore, Mali's efforts in reducing regulatory barriers is reflected in numbers from the World Bank & IFC Doing Business 2011 that show that operating in Mali requires less procedures and time spent on procedures than the regional averages related to starting a company, dealing with licences and registering property. Similarly, the World Bank & IFC Doing Business 2011 indicates that Mali has facilitated trading across borders by making it possible to submit customs documents electronically.

Nevertheless, business executives surveyed in the World Economic Forum Global Competitiveness Report 2010-2011 perceive government administrative requirements to be quite burdensome. Moreover, business executives also report that government policy-making is sometimes opaque and that government officials may favour well-connected companies and individuals when deciding on policies and contracts. Commercial regulations can be ambiguous and inconsistent, and the lack of transparency increases start-up and overall operational costs. Similarly, the African Economic Outlook 2011 identifies some of the constraints that companies continue to encounter when conducting business in Mali. These include a weak legal and regulatory framework, an inefficient judicial system, a cumbersome tax system, an inadequate financial system, under-developed infrastructure and almost non-existent business support services. Moreover, the Malian regulatory environment holds several areas where investors may encounter corruption. According to the Bertelsmann Foundation 2010, government officials often make demands for illegal ‘fees’ from those transporting goods through any of Mali's several border customs control posts. Fraud through the use of import licences that create preferential rules for individual companies is also widespread. Furthermore, there are regulations prohibiting monopolies and oligopolies, but corruption severely hampers their implementation, which in turn creates wholesale price-fixing oligopolies in many areas of the economy.

Dispute settlement is another area of concern for companies operating in Mali. According to the US Department of State 2010, questionable judgments in commercial cases have occasionally been successfully overturned at the court of appeals, but complaints from the domestic and foreign business community about the judiciary continue to arise. The US Department of State 2010 advises that companies take note that corruption in dispute settlement is particularly pervasive. According to the World Economic Forum Global Competitiveness Report 2010-2011, business executives still have relatively low confidence in the efficiency and resistance against manipulation of the legal framework for private companies to dispute and challenge the legality of government actions and regulations. In order to improve the situation, Mali has established commercial courts with professional magistrates supported by elected representatives of the Chamber of Commerce and Industry of Mali to handle business litigation. In cases where a dispute cannot be settled locally, the Investment Code 2005 provides for reference to international arbitration. Mali is a member of the Organisation for the Harmonisation of Business Law (OHADA) and has developed corresponding legislation (7-9, in French) - also in the Civil Procedure Code (Art. 753, in French) - through which disputes between foreign companies and the government or domestic companies can be tried in an appeals court outside of Mali. Furthermore, Mali is member of the International Centre for the Settlement of Investment Disputes (ICSID), the New York Convention of 1958 and the World Bank Multilateral Investment Guarantee Agency (MIGA). Foreign companies considering investing or doing business in Mali may find relevant information on legislation and business opportunities at the Conseil National du Patronat du Mali, a private investment council based in Bamako, Mali. Access the Lexadin World Law Guide for a collection of legislation in Mali.