Private Sector Development
Mali moved up in 2010 from 155th to 153rd place out of 183 countries surveyed in the World BankÃ¢â‚¬â„¢sÃ‚Â Doing BusinessÃ‚Â report. Its ratings improved for registering property (+10 places), closing a business (+10 points), starting a business (+4 points),Ã‚Â dealing with construction permits (+4 points), trading across borders (+4 points) and enforcing contracts (+2 points). Reducing the number of start-up procedures to six (the sub-Saharan average is 8.9) and the time taken to eight days (sub-Saharan average 45.2) also helped business creation.
Further progress is needed, however, especially in making it easier to get loans and protecting investors, and the government is drafting a new investment law focusing more on investorsÃ¢â‚¬â„¢ rights and obligations and less on incentives and tax breaks. SMEs/SMIs were also helped in 2010 with a joint funding arrangement, implementation of the second phase of a programme to support retail businesses and a guarantee fund for craft workers.
The private sector still faces obstacles, including lack of confidence in the legal system, flaws in the investment and mining laws, low worker productivity, a rather rigid labour law, under-developed physical infrastructure, expensive water and electricity, an undeveloped financial sector, problems getting medium- and long-term loans, and poor corporate governance. A law setting general policy for the private sector was passed in December 2010 to bring together the resources of all parties to ensure the sectorÃ¢â‚¬â„¢s viability and help it to contribute more to economic growth.
Other Recent Developments
Financial system development
Financial institutions are under the prudential supervision of the West African Banking Commission, but the financial system is still fragile as banks are highly vulnerable to sector shocks, especially in cotton, and also because of the small number of borrowers. Prudential norms are insufficiently enforced: the bank sector is under-capitalised and portfolios mediocre, with more bad loans than the WAEMU area average. Financial intermediation is also very weak: domestic lending was up only 4% in 2010 (17% of GDP), while deposits grew 22% (14% of GDP).
Despite substantial progress in the sector in the past two years, access to financial services is still limited, with less than 5% of population having a bank account or taking out loans. Financial services andÃ‚Â products are inadequate, usually restricted to short-term loans only, and banks have few branches. Things are worse in the countryside, with little financial infrastructure and no structured agro-industry chains apart from cotton, but the growth of payment facilities to receive remittances from relatives abroad is helping to bring rural areas into the financial system.
Banks focus on lending to a small number of big customers to the detriment of SMEs, which get about a quarter of all loans and advances, compared with 80% in Senegal. However, rapid growth of microfinance institutions (MFIs) in recent years (now used by more than 40% of households) has spurred some banks to offer joint services, thus strengthening the MFIs.
The non-bank financial system, mainly social security institutions, expanded in 2010 as the government set up insurance and health bodies (theÃ‚Â Caisse nationale dÃ¢â‚¬â„¢assurance maladieÃ‚Â and theÃ‚Â Agence nationale dÃ¢â‚¬â„¢assistance mÃƒÂ©dicale) and converted the national pension fund (Caisse des retraites du Mali) into theÃ‚Â Caisse nationale de sÃƒÂ©curitÃƒÂ© sociale. Mali has not been very active in the West African capital market, and the government has not used the bond market.
The government stepped up its plan to boost the financial sector (begun in 2009), and priorities for 2011 include reorganising the housing bank (Banque de lÃ¢â‚¬â„¢habitat du Mali) in readiness for privatisation in 2012, increasing the minimum capital requirement for banks and other financial institutions in line with WAEMU rules (XOFÃ‚Â 5Ã‚Â billion on 31 December 2010 and XOFÃ‚Â 10Ã‚Â billion at a date to be decided), setting up a credit guarantee mechanism for SMEs (including a guarantee fund and a private sector investment fund), stimulating microfinance with new rules and a national expansion plan, and encouraging Malians abroad to send their remittances through the banking system.
The government continued to reform the public sector in 2010 under its institutional development programme, the framework paper for national decentralisation policy, and the Pagam/GFP.
Decentralisation efforts have focused on boosting the capacity of local government and transferring resources and powers. The main decentralisation laws have been amended, including Law 93-008 (11/02/1993) on free administration of local government, Law 95-034 (12/04/1995) establishing a code for local government rules and Law 00-044 (07/07/2000) stipulating funding for towns, prefectures (cercles) and regions. A law on setting up, organising, running and supervising local public services has been passed. These measures should help to improve the local government institutional framework and financial governance and help transfer money and powers to local authorities.
The government continues to reform public finance management under the Pagam programme, which has made significant progress, strengthening the institutional and regulatory handling of public procurement, improving operation of the spending chain, executing the budget and enabling accounts to be presented in real time, streamlining budget forecasting and continuing to enlarge and monitor the tax base. A 2009 external review of Pagam/GFP still pointed to weaknesses, however, especially with internal and external monitoring. All parties involved (government, civil society and the TFPs) took account of this in drafting the second (2011-15) phase of Pagam/GFP, which was adopted by the government in July 2010.
MaliÃ¢â‚¬â„¢s lack of a coastline is aggravated by the shortage of basic social and economic infrastructure, including transport, energy, telecommunications, water and sanitation, which continues to prevent the economy from being competitive and living standards from improving, despite good progress in recent years.
The road network is not very extensive, with 3Ã‚Â 619Ã‚Â kilometres of paved roads in good condition, 5Ã‚Â 772Ã‚Â kilometres of good unsurfaced roads and 719Ã‚Â kilometres of track roads. Upkeep of the network is the main problem for the road transport sector. The roads department pays for this chiefly with money from user tolls, which increased substantially, to XOFÃ‚Â 12.1Ã‚Â billion in 2009 (XOF 4.7Ã‚Â billion in 2008).
Other forms of transport remain little developed, despite efforts to modernise airports, of which the country has six of international grade (Bamako, Gao, Kayes, Mopti, Sikasso and Tombouctou), in addition to twelve secondary and four private airfields. The government has extended its programme to open up remote areas and overcome its landlocked situation, notably including the second phase (2008-12) of its plan for investment in the transport sector (PST2).
The governmentÃ¢â‚¬â„¢s priority remains to provide as many people as possible with cheap and sustainable energy under its national energy programme, with a target in 2010 of 28.3% electricity coverage of the country (25.2% in 2009).
Access to safe water increased to 73.1% in 2009 (71.4% rural, 77.4% urban and semi-urban), but adequate sanitation was available to only 24% of the population. At the present rate, Mali could achieve MDG goal 7 on access to safe water, but it will have to make a great effort to provide access to adequate sanitation.
The government increased socio-economic infrastructure investment in connection with the 50th anniversary of independence celebrations in 2010 and also continued with the PST2 transport sector plan and WAEMU road programmes. The main construction projects were a multiple highway interchange, a third bridge in Bamako with two interchanges, improving road access to the capital, extending and modernising Bamako-SÃƒÂ©nou airport, Sopam power stations in Sirakoro and BalinguÃƒÂ©, and the start of the Taoussa dam. Public investment rose from 7% in 2009Ã‚Â to 10.5% of GDP in 2010.
Natural resource management and environmental protection
The government has signed and ratified all international treaties about natural resource management and environmental protection, including the African Convention on the Conservation of Nature and Natural Resources, the Convention on Wetlands of International Importance especially as Waterfowl Habitat, the Ramsar Convention, the Convention on Biological Diversity, the UN Convention to Combat Desertification and the Framework Convention on Climate Change. Mali has also created a sustainable development office (Agence pour le dÃƒÂ©veloppement durable) and drafted national programmes to protect the environment, manage national resources and combat desertification, as well as an investment strategy for sustainable land management (Cadre stratÃƒÂ©gique dÃ¢â‚¬â„¢investissement en matiÃƒÂ¨re de gestion durable des terres).
Mali faces enormous environmental challenges: desertification, disappearing plant cover, silting up of the Niger River, water shortages, loss of biodiversity and deterioration of living conditions. It will have to take steps to meet them and ensure sustainable development, including improving the operation of environmental bodies, giving more weight to the environmental aspects of its strategies and policies (such as the new SFGPR and sectoral programmes), raising public awareness, especially about the international conventions signed by Mali, ensuring their implementation and finding the necessary funding.
As a mineral-rich country, Mali joined the Extractive Industries Transparency Initiative (EITI) in 2006 and is preparing its second report, which should make it eligible for entering the approval process as a country complying with EITI rules by 2012.
The government has made agriculture a priority in its 2008-12 accelerated growth strategy and wants to make the country a sub-regional agro-pastoral centre through the agricultural guidelines law, which governs the drafting and implementation of sector laws. Agricultural development policy and the national agricultural investment programme in turn ensure application of the guidelines law. These measures are fully in step with the detailed agricultural development programme of the New Partnership for AfricaÃ¢â‚¬â„¢s Development. The government wants the country to be producing 10Ã‚Â million tonnes of cereals by 2012 and to improve 103Ã‚Â 356Ã‚Â hectares of land, rendering 61Ã‚Â 910 fit for cultivation.
Agriculture got 16% of the budget in 2010 (up from 11.5% in 2009). The Rice Initiative was expanded to other cereals (maize and wheat), and reform of the cotton sector continued. Other achievements in 2010 were improving 11Ã‚Â 882 hectares of valley swamp-land and 965 hectares of flood plains, increasing subsidies for farm inputs (XOFÃ‚Â 21.661Ã‚Â billion,Ã‚Â from 13.861Ã‚Â billion in 2009) and raising support for the cotton sector (XOFÃ‚Â 26.444Ã‚Â billion, fromÃ‚Â 10.344Ã‚Â billion in 2009). Privatisation of the state cotton firm CMDT should be complete by May 2011, in time for the start of the 2011/12 farming season.