Mali Country Profile

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.

Even though governance has been significantly improved, several observers agree that corruption is still endemic at most levels of society in Mali. The general public and the international donor community are well aware of the situation, and the government has declared the eradication of corruption to be a priority. Despite improvements, the country continues to suffer from widespread clientelism and vote buying, weak management of public finances, an ineffective judicial system and impunity of corrupt officials. There is a significant lack of financial accountability at the local government level, with multiple accounting ledgers and systematic embezzlement of public funds. Moreover, observers have described the Malian democracy as a system in which political support and votes are purchased with high-level posts or with lucrative government contracts - many of which are not tendered.

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, an Office of the Auditor General was established in 2003, which published a highly incriminating 2006 report (in French) that exposed widespread customs duty fraud and tax evasion by private telecommunications companies, the Office of the Mayor of Bamako and corrupt fuel import officials. Likewise, in 2007 and 2008, the Auditor General conducted investigations in several departments, including the Tax and Customs Offices of the Department of Finance, several government-run hospitals, the gold mining sector and the cotton marketing parastatal company CMDT, revealing financial irregularities and instances of fraud that resulted in the loss of USD millions. The US Department of State 2009 reports that several officers and their private sector accomplices were accused of embezzlement and economic crimes, but that none of these cases have yet proceeded to trial. Several improvements have been made in regards to strengthening the public expenditure management (PEM) system as well as budget formulation and execution. The progress made in deepening democracy and improving governance at many government levels has received strong support from international donors. In fact, based on the economic strategy proposed by the government in its Second Poverty Reduction Strategy Paper (PRSP-II) from April 2008, Mali has received donation pledges worth USD 6.2 billion from its main international development partners for the 2008-2011 period. However, despite the 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. Moreover, 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.

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. According to African Economic Outlook 2009, the Malian economy grew by a rate of 3.6% in 2008, accompanied by a high inflation rate reaching 9.3% at the end of December 2008. The government tackled inflation by granting reductions in valued added tax and customs duties, increasing salaries and subsidies, and by reinforcing price monitoring. 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 (in French).

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, among the business leaders surveyed in the World Economic Forum Global Competitiveness Report 2008-2009, corruption to be is ranked 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 2.7 on a 7-point scale (1 being 'is common' and 7 'never occurs). Business leaders also indicate that the ethical behaviour of companies in Mali constitutes a competitive disadvantage. Also, in the World Bank Investment Climate Assessment 2004, almost half of the surveyed companies in Mali consider corruption as the most severe constraint to the investment climate and almost 3.5% of companies' annual turnover on average is sunk into informal payments. According to the World Bank & IFC Enterprise Surveys 2007, there are strong indications that petty corruption is very widespread in Mali, given that approximately 29% of companies pay facilitation payments to 'get things done', while 16% identify corruption as a major constraint.

According to several sources, public procurement is the area of business activity where foreign companies are most likely to encounter corruption. According to the World Bank & IFC Enterprise Surveys 2007, a little more than 80% of companies expect to give gifts to secure a government contract. Business leaders surveyed by the World Economic Forum Global Competitiveness Report 2008-2009 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 (in French) 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 2009 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 2009 indicates that Mali has facilitated trading across borders by making it possible to submit customs documents electronically. Business leaders surveyed in the World Economic Forum Global Competitiveness Report 2008-2009 indicate that the burden of government regulation is light enough and that the level of transparency in government policy-making is high enough to constitute competitive business advantages.

Despite positive developments in the regulatory framework, the African Economic Outlook 2009 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, according to the Bertelsmann Foundation 2008, the Malian regulatory environment holds several areas where investors may encounter corruption. Trade companies report that customs officials often make demands for facilitation payments when 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 Bertelsmann Foundation 2008, 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 2009 advises that companies take note that corruption in dispute settlement is particularly pervasive. According to the World Economic Forum Global Competitiveness Report 2008-2009, entrepreneurs 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 website of Conseil National du Patronat du Mali (in French), a private investment council based in Bamako, Mali. Access the Lexadin World Law Guide for a collection of legislation in Mali.