Economy of Mali

Mali's per capita gross domestic product (GDP) of $270 (1998) places it among the world's 10 poorest nations. Its potential wealth lies in mining and the production of agricultural commodities, livestock, and fish. Agricultural activities occupy 70% of Mali's labor force and provide 42% of the GDP. Cotton and livestock make up 75%-80% of Mali's annual exports. Small-scale traditional farming dominates the agricultural sector, with subsistence farming (of cereals, primarily sorghum, millet, and maize) on about 90% of the 1.4 million hectares (3.4 million acres) under cultivation.

The most productive agricultural area lies along the banks of the Niger River between Bamako and Mopti[?] and extends south to the borders of Guinea, Côte d'Ivoire, and Burkina Faso. Average rainfall varies in this region from 50 centimeters per year (20 in.) around Mopti to 140 centimeters (55 in.) in the south near Sikasso. This area is most important for the production of cotton, rice, millet, maize, vegetables, tobacco, and tree crops.

Rice is grown extensively along the banks of the Niger between Segou and Mopti, with the most important rice-producing area at the Office du Niger, located north of Segou toward the Mauritanian border. Using water diverted from the Niger, the Office du Niger irrigates about 60,000 hectares of land for rice and sugarcane production. About one-third of Mali's paddy rice is produced at the Office du Niger.

The Niger River also is an important source of fish, providing food for riverside communities; the surplus--smoked, salted, and dried--is exported. Due to drought and diversion of river water for agriculture, fish production has steadily declined since the early 1980s.

Sorghum is planted extensively in the drier parts of the country and along the banks of the Niger in eastern Mali, as well as in the lake beds in the Niger delta region. During the dry season, farmers near the town of Dire have cultivated wheat on irrigated fields for hundreds of years. Peanuts are grown throughout the country but are concentrated in the area around Kita, west of Bamako.

Mali's resource in livestock consists of millions of cattle, sheep, and goats. Approximately 40% of Mali's herds were lost during the great drought in 1972-74. The level was gradually restored, but the herds were again decimated in the 1983-85 drought. The overall size of Mali's herds is not expected to reach predrought levels in the north of the country, where encroachment of the desert has forced many nomadic herders to abandon pastoral activities and turn instead to farming. The largest concentrations of cattle are in the areas north of Bamako and Ségou extending into the Niger delta, but herding activity is gradually shifting southward, due to the effects of previous droughts. Sheep, goats, and camels are raised to the exclusion of cattle in the dry areas north and east of Timbuktu.

Until the mid-1960s, Mali was self-sufficient in grains--millet, sorghum, rice, and maize. Diminished harvests during bad years, a growing population, changing dietary habits, and, most importantly, policy constraints on agricultural production resulted in grain deficits almost every year from 1965 to 1986. Production has rebounded since 1987, however, thanks to agricultural policy reforms undertaken by the government and supported by the Western donor nations. Liberalization of producer prices and an open cereals market have created incentives to production. These reforms, combined with adequate rainfall, successful integrated rural agriculture programs in the south, and improved management of the Office du Niger, have led to surplus cereal production over the past 5 years.

Annual rainfall, critical for Mali's agriculture, has been at or above average since 1993. Cereal production, including rice, has grown annually, and the 1997-98 cotton harvest reached a record 500,000 tons.

Mining is a rapidly growing industry in Mali, with gold accounting for some 80% of mining activity. There are considerable proven reserves of other minerals not currently exploited. Gold has become Mali's third-largest export, after cotton and livestock. There are two large private investments in gold mining: Anglo-American ($250 million) and Randgold ($140 million), both multinational South African companies located respectively in the western and southern part of the country.

During the colonial period, private capital investment was virtually nonexistent, and public investment was devoted largely to the Office du Niger irrigation scheme and to administrative expenses. Following independence, Mali built some light industries with the help of various donors. Manufacturing, consisting principally of processed agricultural products, accounted for about 8% of the GDP in 1990.

Economic Reform
With the encouragement of the major donors and international financial institutions, the Government of Mali initiated a series of adjustment and stabilization programs beginning in 1982. Measures were introduced to reduce budgetary deficits, public enterprise operating losses, and public sector arrears. Substantial progress was made in the first few years of the adjustment program, but the pace of reform slowed considerably in 1987 and required the intervention of donors to avert a financial crisis.

Under the economic reform program signed with the World Bank and the IMF in 1988, the government has taken a number of steps to liberalize the regulatory environment and thereby attract private investment. For example, applications for the establishment of business enterprises now enjoy "one window" (guichet unique ) processing through a single ministry, allowing a business to be established in a matter of days. In addition, price controls on consumer goods have been progressively eliminated; the last price control, on petroleum products, was removed on July 1, 1992. Import quotas were eliminated in 1988, and export taxes were dropped in 1991. The Commerce Code was revised in 1991 to remove impediments to commercial activity. The investment and the mining codes also were revised in the early 1990s in order to present a good investment climate. Also in 1991, a system of commercial and administrative courts was established to handle private trade complaints and claims against the government.

During the period 1988-96, the government implemented a large reform program of the public enterprise sector, including the privatization of 16 enterprises, the partial privatization of 12, and the liquidation of 20; others were restructured. Among the 20 enterprises left, five recently were proposed for privatization, and two large companies--Energie du Mali, electricity and water and Societe de Telecommunications du Mali, telecommunications--plan partial privatization.

Foreign Aid
Mali is a major recipient of foreign aid from many sources, including multilateral organizations (most significantly the World Bank, African Development Bank, and Arab Funds[?]), and bilateral programs funded by the European Union, France, United States, Canada, Netherlands, and Germany. Before 1991, the former Soviet Union had been a major source of economic and military aid, including construction of a cement plant and the Kalana gold mine. Currently, aid from Russia is restricted mainly to training and provision of spare parts. Chinese aid remains high, and Chinese-Malian joint venture companies have become more numerous in the last 3 years, leading to the opening of a Chinese investment center. The Chinese are major participants in the textile industry and in largescale construction projects, including a bridge across the Niger, a conference center, an expressway in Bamako, and a new national stadium scheduled to be completed for the Africa Cup competition in 2002.

In 1998, U.S. assistance reached over $40 million. This included $39 million in sector support through United States Agency for International Development (USAID) programs, largely channeled to local communities through private voluntary agencies; Peace Corps program budget of $2.2 million for more than 160 Volunteers serving in Mali; Self Help[?] and the Democracy Funds[?] of $170,500; and $650,000 designated for electoral support. Military assistance includes $275,000 for the International Military Education Training[?] (IMET) program, $1.6 million for the African Crisis Response Initiative[?] (ACRI), $60,000 for Joint Combined Exercise Training[?] (JCET), and $100,000 for Humanitarian Assistance.

GDP: purchasing power parity - $8.5 billion (1999 est.)

GDP - real growth rate: 5% (1999 est.)

GDP - per capita: purchasing power parity - $820 (1999 est.)

GDP - composition by sector:
agriculture: 46%
industry: 21%
services: 33% (1998)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 3% (1999 est.)

Labor force: NA

Labor force - by occupation: agriculture and fishing 80% (1998 est.)

Unemployment rate: NA%

Budget:
revenues: $730 million
expenditures: $770 million, including capital expenditures of $320 million (1997 est.)

Industries: minor local consumer goods production and food processing; construction; phosphate and gold mining

Industrial production growth rate: 0.6% (1995 est.)

Electricity - production: 310 million kWh (1998)

Electricity - production by source:
fossil fuel: 38.71%
hydro: 61.29%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 288 million kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: cotton, millet, rice, maize, vegetables, peanuts; cattle, sheep, goats

Exports: $640 million (f.o.b., 1999 est.)

Exports - commodities: cotton 50%, gold, livestock (1998 est.)

Exports - partners: Thailand 20%, Italy 20%, China 9%, Brazil 5%, Franc Zone (1997)

Imports: $650 million (f.o.b., 1999 est.)

Imports - commodities: machinery and equipment, construction materials, petroleum, foodstuffs, textiles

Imports - partners: Cote d'Ivoire 19%, France 17%, other Franc Zone and EU countries (1997)

Debt - external: $3.1 billion (1998)

Economic aid - recipient: $596.4 million (1995)

Currency: 1 Communaute Financiere Africaine franc (CFAF) = 100 centimes

Exchange rates: Communaute Financiere Africaine francs (CFAF) per US$1 - 647.25 (January 2000), 615.70 (1999), 589.95 (1998), 583.67 (1997), 511.55 (1996), 499.15 (1995)
note: since 1 January 1999, the CFAF is pegged to the euro at a rate of 655.957 CFA francs per euro

Fiscal year: calendar year

See also : Mali