Mali 2014 - African Economic Outlook - by Abdoulaye Konaté and Bécaye Diarra - AfDB OECD UNDP

MaLI

2014

Abdoulaye Konaté / a.b.konate@afdb.org Bécaye Diarra / becaye.diarra@undp.org

www.africaneconomicoutlook.org

Mali

MaLI • The economy returned to growth (5%) in 2013 after the economic recession triggered by the complicated political crisis of 2012. This should continue in 2014 and 2015 driven by good secondary and tertiary sector performance and favourable weather.

• The government maintained budget discipline in 2012 despite the recession and suspension of foreign aid. Co-operation with the country’s technical and financial partners resumed in 2013.

• Government worked with the international community to ease the humanitarian crisis but could not prevent the poverty rate rising to 42.7% in 2012 from 41.7% in 2011.

Overview The macroeconomic situation markedly improved in 2013 after the food shortages and political and security crises of 2012 (including a military coup on 22 March 2012 and the start of a nine-month rebel occupation in early April of the northern two-thirds of the country) that triggered a war in January 2013.

The 2012 recession was due to a 2.2% fall in the secondary sector and an 8.8% slump in the tertiary, while the primary sector expanded by 8.1%. Real gross domestic product (GDP), having shrunk by 1.2% in 2012, grew about 5% in 2013 driven by the tertiary sector (+6.7%), and while growth slowed in the primary sector (to 5.8%) it returned in the secondary (+0.6%).

Medium-term macroeconomic prospects are good. The overall recovery should continue in 2014 (6.7%) and 2015 (5.6%) boosted by agriculture, gold-mining and a tertiary sector recovery. But these prospects are at risk from the volatile prices of the country’s two main exports, gold and cotton, and the delicate security situation.

The political instability and occupation of the north quickly led to deterioration of an already fragile social situation. The UN Development Programme’s 2013 Human Development Index ranks Mali only 182nd out of 187 countries, with a score of 0.36. The slight drop in the poverty rate did not reduce the number of people affected, which grew from 5.7 million to 6.4 million between 2001 and 2010. The high fertility rate (6.7 children per woman) hampers poverty reduction and results in large dependency ratios, worsens maternal mortality and entrenches gender inequality in various sectors. It also puts great pressure on the government’s ability to provide basic services for all, such as education, healthcare, social protection and security.

Mali was on target to meet the 2015 Millennium Development Goals (MDGs) for universal primary education, controlling the spread of HIV/AIDS and access to safe drinking water. But progress made in recent years has been damaged by the occupation of the north and these MDGs may not now be achieved.

The humanitarian situation in the north is still very unstable, with more than 1 390 000 people needing urgent food aid, 496 000 children under five in danger of acute malnutrition and refugees and displaced people returning to their home regions in difficult conditions.

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Mali Figure 1. Real GDP growth Real GDP growth (%)

Western Africa (%)

Africa (%)

% 10 8 6 4 2 0 -2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013(e)

2014(p)

2015(p)

Source : AfDB, Statistics Department AEO. Estimates (e); projections (p).

Table 1. Macroeconomic indicators 2012

2013(e)

2014(p)

Real GDP growth

-1.2

5.0

6.7

2015(p) 5.6

Real GDP per capita growth

-4.2

2.0

3.6

2.6 2.2

CPI inflation

5.3

0.3

2.1

Budget balance % GDP

-1.3

2.5

3.9

4.5

Current account balance % GDP

-3.0

-9.8

-14.3

-17.0

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.

Recent developments and prospects The economy remains very vulnerable to external shocks. GDP is especially at the mercy of the weather because it relies mostly on a primary sector strongly dependent on rain-fed crops. Gold is the country’s main export (75% by value in 2012) contributing about a quarter of GDP. Cotton was 15% of export earnings and 1% of GDP in 2012. While the country remains highly dependent on the primary sector (36% of GDP), the tertiary sector is close behind, at 35% of GDP and growing.

After 5.5% average annual growth between 2001 and 2011 – higher than the West African Economic and Monetary Union (WAEMU) average of 3.9% – the economy fell into recession in 2012 and GDP shrank 1.2% because of the food, political and security crises. A return to political stability, mainly through presidential and parliamentary elections in 2013, allowed economic growth to resume.

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The macroeconomic picture greatly improved and the return of foreign aid brought a resurgence of public investment. A strong harvest that benefited from good rainfall kept food prices down. Together with the tight monetary policy of the Central Bank of West African States (CBWAS) this enabled inflation to be held to 0.3%, well below the WAEMU limit of 3%.

The economic revival begun in 2013 produced estimated real GDP growth of 5% thanks to a good 2012/13 harvest and a stronger telecommunications sector.

The primary and tertiary sector performances should lead to continued short-term recovery, with overall growth of 6.7% in 2014 and 5.6% in 2015 – optimistic predictions that could be compromised by volatile gold and cotton prices, as well as the fragile security situation.

Table 2. GDP by sector (percentage) 2008

2013

39.8

42.8

6.8

7.2

Manufacturing

5.8

6.3

Electricity, gas and water

2.1

2.3

Construction

5.4

4.9

Wholesale and retail trade, hotels and restaurants

15.8

16.4

Transport, storage and communication

6.2

6.0

Finance, real estate and business services

7.8

5.4

Public administration, education, health and social work, community, social and personal services

10.1

8.7

100.0

100.0

Agriculture, hunting, forestry, fishing of which fishing Mining of which oil

of which hotels and restaurants

Other services Gross domestic product at basic prices / factor cost Source: Data from domestic authorities.

Macroeconomic policy Fiscal policy In 2013, the country had to absorb the impact of the complicated crisis of the previous year.

The return of foreign aid meant renewed public investment which, with higher cereal production, helped a return to growth. The 2013 budget included higher revenue and spending. The draft budget deficit – XOF 31 billion (CFA franc BCEAO) – was mainly funded by external sources. Budget support by technical and financial partners (TFP) is estimated at 6.8% of GDP in 2013 (up from 0.7% in 2012).

The primary balance recovered and is estimated at 3.1% of GDP (compared with -0.7% in 2012).

The government plans a cautious budget policy for 2014, aimed at absorbing the effects of the political crisis, with the return of government in the north, the renewal of public investment, and implementation of the economic recovery plan). It should produce a bigger overall surplus of 3.9% of GDP in 2014 (up from 2.5% in 2013). A debt sustainability analysis (DSA) in 2013 considered that Mali remains at moderate risk of excess debt. The country is still very vulnerable to international gold and cotton price fluctuations with gold representing 75% of total export value). The external debt is entirely public (30% of GDP in 2013). Domestic debt remains low, (3.7% of GDP). Arrears are estimated at XOF 26 billion in 2013, below the XOF 29 billion set in the country’s agreement with the International Monetary Fund (IMF).

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Mali Table 3. Public finances (percentage of GDP) 2005

2010

2011

2012

2013(e)

2014(p)

2015(p)

Total revenue and grants

19.9

20.4

21.1

17.7

23.1

24.8

25.0

Tax revenue

15.4

14.6

14.6

14.5

16.0

17.1

18.1

4.0

3.1

3.9

0.2

4.1

4.7

4.0

24.6

22.5

24.8

19.0

20.6

20.9

20.5

Grants Total expenditure and net lending (a) Current expenditure

14.6

14.3

16.2

15.8

17.1

17.3

16.7

Excluding interest

13.9

13.9

15.5

15.2

16.5

16.7

16.2

Wages and salaries

4.8

5.0

5.3

5.6

5.5

5.2

4.9

Interest

0.6

0.4

0.6

0.6

0.6

0.6

0.5

9.3

7.9

8.7

3.3

3.6

3.7

3.7

Primary balance

Capital expenditure

-4.1

-1.7

-3.1

-0.7

3.1

4.4

5.0

Overall balance

-4.7

-2.1

-3.7

-1.3

2.5

3.9

4.5

Note: a. Only major items are reported.

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors' calculations.

Monetary policy Mali belongs to WAEMU and shares the institutional arrangements of the franc zone (pegging of the CFA franc to the euro, guaranteed convertibility of the CFA franc by the French treasury, free capital transfers inside WAEMU and pooling of exchange reserves). CBWAS monetary policy aims to maintain medium-term price stability. Inflation pressures arose in 2012, but these were mainly a result of the crisis and not due to failure of the cautious regional monetary policy.

The government did not have recourse to monetary funding for the budget deficit in 2013. The rise in food and fuel prices after the 2012 military coup was curbed and the combined effect of a non-expansionist monetary policy and the good harvest held inflation to 0.3%.

Economic co-operation, regional integration and trade Terms of trade seriously worsened, from 13.9% in 2012 to -12.9% in 2013. The deficit in the external current account (including grants) increased in 2013 to 9.8% of GDP (from 3.0% in 2012) as the value of exports (cotton and gold) dropped. Total exports (23.5% of GDP) were XOF 1 278.7 billion (down from 1 359.8 billion in 2012). Imports (29.9% of GDP) rose from XOF 1 450.8 billion in 2012 to 1 663.5 billion in 2013, mainly due to food product imports. The current account deficit should continue to worsen in 2014.

Mali has ratified nearly all the regional integration and co-operation agreements and protocols, especially with the Economic Community of West African States (ECOWAS) in 1975 and with WAEMU in 1994. It takes part in strengthening the regional integration process and continues efforts to improve the compliance with regional agreements of its economic and financial policies. Negotiations for an economic partnership agreement with the European Union (EU) are going on within ECOWAS. Trade liberalisation could boost Mali’s competitiveness in this respect but would also mean loss of customs revenue. The government backs the regional position that aid (including financial) to modernise local industry is needed to make up for this.

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Table 4. Current account (percentage of GDP) 2005

2010

2011

2012

2013(e)

2014(p)

2015(p)

Trade balance

-2.6

-7.2

-3.1

0.7

-6.4

-9.8

-12.5

Exports of goods (f.o.b.)

20.1

21.9

22.5

28.4

23.5

21.2

19.2

Imports of goods (f.o.b.)

22.7

29.1

25.6

27.7

29.9

30.9

31.7

Services

-5.7

-6.7

-6.7

-7.4

-20.3

-8.1

-7.7

Factor income

-3.8

-4.5

-4.3

-4.9

-4.6

-4.7

-4.3

2.0

5.7

8.0

8.6

21.6

8.2

7.5

-10.1

-12.7

-6.2

-3.0

-9.8

-14.3

-17.0

Current transfers Current account balance

Source: Data from the Central Bank and domestic authorities; estimates (e) and projections (p) based on authors' calculations.

Debt policy Under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI), the government’s contracted or guaranteed foreign debt fell from 89% of GDP in 2001 to 19.9% in 2006. It increased to 26.4% at the end of 2012, mainly because of new loans from the International Development Association (IDA), the African Development Bank (AfDB), the Islamic Development Bank (IsDB) and the IMF. The internal public debt was small (3.7% of GDP in 2013) and was mostly treasury bills and bonds floated on the WAEMU market and loans from commercial banks. Because of the crisis, financial operations in 2012 accumulated arrears, both domestic (XOF 29 billion) and external (on a Libyan loan of about XOF 2 billion). These were dealt with in the 2013 and 2014 budgets and are currently being absorbed.

The latest DSA by the IMF and the World Bank in 2013 assessed Mali’s risk of excess debt as moderate. The foreign debt is entirely concessional and 79% multilateral. Vulnerability to external shocks has increased due to more erratic gold exports. According to sensitivity tests, if exports were to be permanently 30% lower, the ratio of debt to exports in net present value (NPV) would exceed the sustainability limit (150%) from 2017. The limit would also be exceeded if loan conditions were less favourable. So a prudent budget policy will be followed, to ensure the debt is sustainable while medium-term gold export prices are low and undiversified exports, and external needs will continue to be met by grants and by loans that are least 35% concessional.

Figure 2. Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services) Outstanding debt (public and private) /GDP

%

Debt service/Exports

120 100 80 60 40 20 0 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source : IMF (WEO & Article IV).

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Mali

Economic and political governance Private sector The March 2012 institutional crisis damaged Mali’s country risk perception and the business climate. In the World Bank report, Doing Business 2014, it dropped from 153rd to 155th place out of 189 countries for ease of doing business. But for paying taxes, it rose from 170th to 153rd place, while it lost ground on the indicators for: starting a business (-17 points), dealing with construction permits (-13), registering property (-10), resolving insolvency (-9) and electricity connection (-3).

The indicator for protecting investors remained the same at 147th place.

The cost of setting up a business – 76.7% of per capita income – is higher than the sub-Saharan average of 67.4%, while the number of procedures (5) and the time required (11 days) are less than the sub-Saharan average (8 procedures and almost 30 days). Generally, such problems are related more to relatively high costs than to procedures and time taken.

Mali passed a new investment law in 2012 that should boost the private sector and its capacity to expand, although the institutional crisis largely prevented it being applied.

Financial sector Mali has thirteen commercial banks and two financial institutions. The seven biggest banks have 82% of all assets. The average solvency ratio is 11%. The country’s membership of the WAEMU area contributes to financial stability, and prudent supervision by the independent Central African Banking Commission (COBAC) is also a big help.

The security and constitutional crisis hit the financial sector hard in 2012, mainly because banks were closed in the three northern regions. When these areas were liberated in early 2013, the government restored security and banks reopened, including the CBWAS branch in the town of Mopti. Despite the crisis, the banking system remains fairly stable and robust with significant shareholders.

Financial sector indicators show that while Mali is comparable to most WAEMU members, its lending rate is still above the WAEMU average. Monthly surveys show it averaged 8.92% in 2013 (9.01% in 2012), compared with the WAEMU area’s average of 7.72% in 2013 (8.00% in 2012).

Credit to the economy in 2013 was XOF 1 216 billion (1 099.2 billion in 2012). Lending to the private sector was 55.3% of this in 2013 and 83.2% in 2012. The banking sector generally still makes a low contribution to funding the economy, with credits at 22.4% of GDP in 2011 and 2012 and 21.4% in 2013 (compared with 28.3% in Ghana and 103% in Morocco).

The government continues to implement an action plan (passed by WAEMU’s Council of Ministers in 2007) to increase bank use to 20% of the population by 2012. The figure in Mali was 6.9% in 2013 (up from 6.1% at the end of 2012). The percentage with access to financial services remained very low, at 20.7% at the end of 2013 (up year-on-year from 17.2%), including services offered by microfinance institutions.

Like other WAEMU countries, Mali has no restrictions on standard international payments and transfers. To help small and medium-sized enterprises (SMEs) get bank credit, the government and CBWAS are considering a register of bank guarantees open to everyone, which will speed up activation of the guarantees if loans are not repaid.

Public sector management, institutions and reform The growth and poverty reduction strategic framework (GPRSF) is the sole medium-term focus of Mali’s development policy and the main guide for all TFPs. A 2012-17 GPRSF was approved in December 2011, built around: speeding up sustainable growth that will benefit the poor and create jobs and generate income; strengthening long-term development and fair access to quality social services; and promoting institutional development and governance.

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Government efforts to improve all forms of governance are yet to produce results. The situation greatly deteriorated with the 2012 crisis, which undermined the advances that had been made, especially under an action plan to improve and modernise public finance management (PAGAM-GFP 2011-15). An AfDB survey gave Mali’s policies and institutions a score of 4.0 in 2012 (down from 4.2 in 2011) and 3.9 for governance (4.1 in 2011).

The Mo Ibrahim 2013 index of governance in Africa downgraded Mali to 27th place in 2012 (with a score of 50.7 out of 100), from 22nd place in 2011 (53.6), which was below the continental average of 51.6 and the West African average of 52.5.

Mali remained high in Transparency International’s 2013 Corruption Perceptions Index, at 127th out of 177 countries, with a score of 28 out of 100. The government wants to increase transparency for all citizens dealing with public bodies and a law is being drafted to ban illegal enrichment and require all senior officials to declare their wealth annually.

The justice development programme (PRODEJ 2010-14) resumed after an interruption in 2012 and focused in 2013 on reorganising the judicial sector, strengthening the capacity of judges, especially concerning human rights cases, fighting corruption and financial crimes and encouraging transparency. All the country’s prosecutors and court presidents were transferred to other posts at the end of 2013.

Natural resource management and environment Efforts continue to include the environment in development strategies and policies in all sectors. The government has ratified all the international legal instruments on environmental protection, including the African Convention on the Conservation of Nature and Natural Resources, the Convention on Wetlands of International Importance, the Convention on Biological Diversity, the UN Convention to Combat Desertification and UN Framework Convention on Climate Change.

It has also implemented national policies and programmes for environmental protection, natural resource management, fighting desertification and strategic investment in sustainable land management. A national climate change policy was drafted in 2011, along with a national strategy and an action plan, but the military coup prevented them from being officially approved.

Management of the environment and climate change were included in 2012-17 GPRSF based on sector Strategic Environmental Assessments (SEAs), but they are not yet integrated into the priority action programme because of the political crisis. The government was very active in early 2012 in drafting a strategic framework for green growth in Mali and setting up a national climate fund. This commitment is an example for other African countries, especially in the sub-region.

Unfortunately, the political crisis prevented their implementation. In addition, the environment ministry only received 10% of its 2012 budget allocation.

The United Nations launched a survey in 2012 of the effects of the Mali crisis on the poor and on management of natural and environmental resources. The conclusions are expected shortly.

Political context The political situation is returning to normal after transparent presidential and parliamentary elections in 2013 following the country’s worst-ever political and institutional crisis in 2012, with a military coup on 22 March and a nine-month occupation of the north by Tuareg rebels of the Mouvement national de libération de l’Azawad (MNLA) and Islamist armed groups. The transitional government focused on regaining control of the north and holding credible and transparent elections before 31 July 2013. A presidential vote was held on 28 July (with a second round on 11 August) in peaceful conditions and a good average turnout of 48.66%. It was won by Ibrahim Boubacar Keita, with 77.61% of the vote. Parliamentary elections on 24 November and 15 December for 147 seats went smoothly. This success ended the political transition and normal constitutional rule was restored.

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Mali The security situation has improved, with the advance of armed Islamist groups towards central Mali halted in January 2013 and the north liberated thanks to the intervention of French troops (Operation SERVAL) and the support of troops from ECOWAS countries and Chad. The international community established a peacekeeping force (MINUSMA) in the north in July 2013.

But the rebels have only been weakened by these operations and they remain active and launch sporadic attacks and suicide bombings. Security is still poor in the Kidal region, where tension is high between Malian troops and Tuareg fighters.

Negotiations with the armed groups under the Ouagadougou provisional peace agreement have not progressed since the presidential elections. The government has tried hard to strengthen national reconciliation and social cohesion, by freeing imprisoned rebels, dropping arrest warrants for some MNLA members and top officials of the high council for the unity of Azawad (HCUA), and by holding national consultations on the situation in the north, including a major conference on decentralisation, another on northern affairs and a local and regional forum in Gao. The meetings brought together government officials, local communities, Malian refugees from neighbouring countries, experts and development partners to put forward solutions for greater decentralisation, better governance, stronger national dialogue and ethnic reconciliation, and economic and social development. MNLA and HCUA supporters boycotted the meetings, saying that any national dialogue had to be held in consultation with the signatories of the Ouagadougou agreement. The government must therefore urgently find a way to restart negotiations with the armed groups so that the peace agreement can be implemented.

Social context and human development Building human resources Development of human resources features prominently in the 2012-17 GPRSF. Education was allocated 20.0% of the 2012 budget but only 17.6% in 2013 because of the crisis.

The significant progress made in education over the past 15 years was set back by the crisis.

However, gross primary enrolment was 78.3% in 2012, the apparent intake rate 64.9% and the completion rate 54.1%. The teacher-pupil ratio improved to 1:40 (from 1:44 in 2011), reflecting the government’s efforts. Despite the crisis, gender parity in gross primary enrolment improved from 0.8 in 2010 to 0.9 in 2012. Mali seems to be well on the way to achieving the MDG of universal primary education by 2015, even though failings in the education system in the north may slow this down.

The government continued its efforts in healthcare, which is a priority in the 2012-17 GPRSF. The main health and social development programme is PRODESS, which is being updated to cover the next few years. Government health spending was almost 9% of the total budget in 2013 (8% in 2012), below the 15% target set by the Abuja Declaration by African heads of state in April 2001.

The main health indicators improved slightly between the last two demographic and health surveys (DHS) in 2001 and 2006. The total fertility rate (TFR) declined from 6.8 to 6.6, maternal mortality fell from 582 per 1 000 births to 464 per 1 000 and the proportion of assisted births rose from 40% to 49%. Infant mortality fell from 112.5 per 1 000 births to 95.8 per 1 000 and under-five mortality from 229 per 1 000 births to 191 per 1 000. The vaccine coverage rate for children (aged 12-23 months) improved from 29% à 48%, while failure to thrive (FTT) among under-fives fell from 38% to 34%. Mali is unlikely to achieve the MDG targets of reducing under-five mortality by twothirds and maternal mortality by three-quarters.

Efforts have also been made in recent years to reduce child malnutrition. Overall chronic malnutrition was 27% in 2011 (down from 34% in 2006) and overall acute malnutrition 10.4% (including 2.2% severe cases), down from 15.2% in 2006. Funding cuts, notably by several aid

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donors, and the large-scale population displacement in the north in 2012 (500 000 people, according to the UN High Commission for Refugees) have disrupted eradication projects and programmes, which risks increasing malnutrition.

Priority national programmes have been drafted to fight HIV/AIDS, tuberculosis and malaria.

The HIV/AIDS strategy was revised for 2013-17 and incidence of the disease has been cut in recent years to 1.3% (from 1.7% in 2001), although the GPRSF report showed a rate of 1.78% among pregnant women in 2012. Efforts were made in 2011 in prevention and providing access to care, including antiretroviral drugs. Detection of tuberculosis has steadily increased, from 18% in 2004 to 29% in 2009. More effort is needed in fighting malaria, as only 23% of infected children under five were treated within 24 hours in 2010.

The suspension in December 2010 of payments by the Global Fund to fight the three diseases, and new rules for managing its funds since 2011, seriously disrupted Mali’s programmes to combat the diseases in 2011 and 2012, when the country seemed likely to achieve the MDG targets of halting the spread of HIV/AIDS and controlling malaria and other major diseases.

Poverty reduction, social protection and labour Political instability and occupation of the north quickly undermined an already-fragile social situation. The 2013 UNDP Human Development Report ranked Mali 182nd out of 187 countries with a human development indicator of 0.36 even though efforts appear to be working. Household surveys show poverty has fallen, from 55.6% (2001) to 47.5% (2006), 43.6% (2010) to a low of 41.7% (2011), though it rose again to 42.7% in 2012. Income poverty remains largely a rural phenomenon, despite the rate of rural poverty falling from 65% (2001) to 51% in 2010. Extreme poverty dropped nationwide from 32% (2001) to 22% in 2011, with clear regional variations. This improvement was two-thirds due to economic growth and a third because of reduction of inequality. Mali has a low growth rate compared with other African countries but the very poor have benefited from what growth there has been.

The small decline in poverty was not enough to reduce the number of poor, which increased from 5.7 to 6.4 million between 2001 and 2010. High fertility (6.7 children per woman) greatly hampers poverty reduction, generates high dependency ratios, increases maternal mortality and prolongs gender inequality in various sectors. It also puts great pressure on the government’s ability to provide basic services (education, healthcare, social protection and security) for all.

The humanitarian situation is still very precarious in the north, with more than 1 390 000 people dependent on emergency food aid and 496 000 children under five in danger of acute malnutrition.

Refugees and displaced people returning to their home regions make things more difficult.

According to the UNHCR and the International Organisation for Migration (IOM), 9 419 refugees and 137 000 displaced people have already returned to the Gao and Timbuktu regions despite the insecurity and lack of social services. Displaced people were estimated at 254 822 in January 2014 and refugees at 168 100 – living in Mauritania (66 198), Niger (50 000)) and Burkina Faso (49 975). The United Nations launched a consolidated appeals process (CAP) for USD 477 million to meet Mali’s major humanitarian needs, but by early 2014 only 55% of this had been raised.

Gender equality Mali has ratified the main regional and international agreements on women’s rights, including the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW), the African Charter on Human and People’s Rights (ACHPR) on the Rights of Women in Africa, and the Declaration on Gender Equality in Africa. The government created the institutional means in 2011 to implement a national gender policy adopted in November 2010, (PNG-Mali).

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Mali However, with the occupation of the north by armed Islamist groups in 2012 human rights were seriously undermined in the rebel areas, especially for women. Women and girls were targets of physical and psychological violence, including kidnapping, rape, dress restrictions, bans on popular entertainment and mixed gatherings. Care of pregnant women and child health also deteriorated. The UNDP Human Development Report gives Mali one of the world’s highest gender inequality scores (0.64). Promoting gender equality is a big challenge for Mali, notably through equal access for women to development and training, to productive economic activities and resources, as well as the elimination of gender violence.

Thematic analysis: Global value chains and industrialisation in Africa Mali focuses on growth of global value chains (GVC) through its programme for competitiveness and agricultural diversification (PCDA) and integrated economic growth initiatives (IICM).

The PCDA is a government project to promote supply chains to raise and diversify income and economic opportunities in the countryside, by improving supply chain organisation and efficiency (from production to marketing) in commercial agriculture, livestock and fisheries, where Mali has clear competitive advantages. It aims to promote commercial farming as an alternative to subsistence and is a chance for professionals to expand their sources of income through more responsive and efficient commercial farming.

The project is targeting the transformation of the value-added market chain into fully-fledged industries that boost development, based on growth shared by the private sector and small farmers to create value at every step in the chain. The project acts in response to requests from the private sector and encourages dialogue and public-private partnerships through contracts to bring producers to markets. The crop sectors involved are mangoes, potatoes, shallots, onions, shea butter, papayas, tomatoes, fish, milk, meat and on the hoof livestock.

Joining GVCs offers Mali a real chance to create jobs, especially for young people, as well as access to new technology with skills training and growth of more value-added economic activity that can help industrialise the country. But the dangers of GVCs include: the development of foreign economic enclaves with poor links to the local community, the over-exploitation and exhaustion of natural resources, the undermining of social and environmental standards (especially in mining) and exposure to imported crises through the wider links to the world economy.

The country has the potential to profit from GVCs in the extractive sector, agro-industry, livestock, crafts and tourism. To make good use of them, the government needs to adopt policies and strategies to remedy weaknesses such as the country being landlocked, access to and reliability of energy, shortage of a trained workforce, low consumer buying-power and corruption.

Setting up a plant to process mangoes at the Diguiya women’s cooperative in Yanfolila, backed by the government and the UNDP, is a good example of a project to increase the added value of fruit and vegetable exports, boosting the skills and living standards of co-op members. Annual production capacity is about 150 000 jars of jam for domestic and foreign markets, which could be expanded to process other fruit. First-year annual turnover is estimated at almost XOF 40 million, and should rise to XOF 205 million after five years. The plant employs 20 people directly and also generates indirect employment for local farmers, pickers and suppliers.

Cotton is the country’s second biggest export and an AfDB project (FAFICOT) to support the cotton-textile sector is also helping to grow value chains. It supports not only increasing production and productivity (through improved inputs, agricultural research, regional scientific co-operation and easier credit access for growers), but also focuses on marketing and distribution (linking growers to markets, building and improving rural roads and building storage warehouses) and processing (creating and strengthening national processing capacity).

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Mali

Potential partners in developing GVCs in Mali include Europe (as part of the EU/ACP partnership), China and some emerging countries (India, Brazil, Turkey and Venezuela) and North Africa (Morocco, Egypt and Tunisia), with which Mali is developing very close trade, financial and economic ties. The Banque internationale pour le Mali (BIM), which was been bought by the Moroccan group Attijariwafa Bank, is working on increasing trade and industrial relations between Malian and Moroccan firms. It should play a big part in expanding value chains in Mali through MoroccanMalian joint-venture firms. Attijariwafa is expected to make it easier to attract more Moroccan funding for the potential Malian value chains. Plans to open an Indian tractor-assembly plant in Samaya, a few kilometres from Bamako, could launch another value chain.

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African Economic Outlook

Š AfDB, OECD, UNDP 2014