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Mali: Economy
Country Study > Economy

ECONOMY


Overview: Mali is a developing nation with a fledgling market-based economy that is dominated by subsistence farming and herding. Most (80 percent) of the labor force is engaged in agriculture and fishing. Industrial activity is centered on food processing as well as some textile manufacturing and mining of gold and phosphates. The economy remains vulnerable to price fluctuations in its two main exports—gold and cotton. Most economic activity is focused along the Niger because more than 65 percent of the country’s land area is desert or semi-desert. Economic development has been hampered by the state-led development strategy adopted at independence, which resulted in the proliferation of unwieldy and inefficient parastatals in key economic sectors, as well as the country’s deficient economic infrastructure, administrative inefficiency, corruption, and poor social conditions, including a low literacy rate and high population growth rate.

Mali remains heavily dependent on foreign aid, but the government appears committed to implementing economic reforms, privatization, and free-market policies in order to meet the expectations of international donors and investors. It has had some success with structural adjustments designed to help the economy grow, privatize, diversify, and attract foreign investment and is working to control government spending and consolidate the tax base. Economic growth averaged 5 percent in the 1996–2002 period. The International Monetary Fund (IMF) is working with Mali to undertake structural reforms. In June 2004, the IMF approved a new poverty reduction and growth facility (PRGF) arrangement for Mali. The old PRGF expired in August 2003. The PRGF focused on a three-year plan aimed at fiscal consolidation, privatization, and reforms in the cotton sector.

Gross Domestic Product: Mali’s gross domestic product (GDP) was estimated to be US$3.4 billion in 2002 and US$4.4 billion in 2003. Real GDP grew by an estimated 11.8 percent in 2001, 4.3 percent in 2002, and 6 percent in 2003, the latter largely as a result of record harvests and high cotton prices. A slightly lower growth rate (5 percent) was forecast for 2004, but the growth rate was projected to reach 6.1 percent in 2005 as a result of anticipated mining and manufacturing gains. GDP per capita was estimated at US$269 in 2001. The primary sector accounted for 46.1 percent of GDP in 2002, the secondary sector for 20.1 percent, and the tertiary sector for 33.8 percent.

Government Budget: Government revenues were estimated at US$764 million in 2002 and expenditures at US$828 million. The deficit represented about 7 percent of gross domestic product (GDP) in 2000, 2001, and 2002 but dropped to about 5 percent in 2003 as a result of better tax collection. The deficit was expected to remain at about 5 percent of GDP in 2004 and 2005. Deficits are largely financed by external aid sources.

Inflation: Consumer price inflation in Mali has been relatively low in the 2000s, averaging about 5 percent in 2001 and 2002, dropping to 1.3 percent in 2003, and projected to run about 3 percent in both 2004 and 2005. Public-sector wages are adjusted for inflation.

Agriculture, Forestry, and Fishing: Agricultural activity (mostly traditional small-scale farming and herding) produced about 46 percent of the gross domestic product (GDP) and occupied about 80 percent of the labor force in the early 2000s. Livestock accounts for about 20 percent of GDP on average each year. About 90 percent of the 1.4 million hectares under cultivation are devoted to subsistence farming, primarily of cereals such as corn, millet, and sorghum. The main agricultural products are corn, cotton, millet, peanuts, rice, sorghum, sugarcane, and vegetables, as well as livestock (cattle, goats, and sheep). Cotton and livestock are the primary agricultural exports. Mali, Sub-Saharan Africa’s leading producer of cotton, produced an estimated 419,000 tons of raw cotton in 2002 and 612,000 tons in 2003, a record harvest, but in 2004 the country’s agricultural sector was threatened by the prospect of a locust plague. Cotton production is mostly artisanal, with village co-operatives run by a government parastatal. Liberalization and reform of the cotton industry are key components of the government’s economic reform program.

Mali’s primary sector also includes some forestry and fishing activity. Most of Mali’s forest products are used for fuelwood, on which the populace is heavily dependent for its energy needs. Artisanal fishing, mostly on the Niger River, also is an important economic activity, but it is vulnerable to drought, pollution, and changes resulting from the construction of dams and has been in decline since the early 1980s. Mali’s rivers produce about 100,000 tons of fish annually, 20 percent of which is exported, mostly to Côte d’Ivoire.

Mining and Minerals: Mining is a growth industry in Mali, accounting for about 16.9 percent of gross domestic product (GDP) in 2002. Gold mining accounts for 80 percent of mining activity, and in the early 2000s gold surpassed cotton as Mali’s most significant export. Mali is Sub-Saharan Africa’s third largest gold producer, behind South Africa and Ghana, and is reported to have 600–800 tons of gold reserves. Mali produced about 66 tons of gold in 2002 and 73 tons in 2003. Phosphates, silver, gypsum, and salt also are mined.

Industry and Manufacturing: The main industries are food processing (especially raw sugar), construction, and mining (gold and phosphates). As part of its economic reform program, the government is placing increasing emphasis on producing more clothing and textiles. Industry as a whole accounted for about 17 percent of gross domestic product (GDP) in 2001, but the manufacturing subsector is relatively insignificant, accounting for only 3 percent of GDP in the 1980s and 7.7 percent in 2002. Manufacturing, concentrated in Bamako, consists primarily of food processing, construction materials, and basic consumer goods. Development of the manufacturing subsector is hampered by energy shortages, smuggling, and competition from neighbors with more developed economies.

Energy: Energy provision in Mali has been rated as poor and costly, and energy shortages hamper economic development. Primary sources such as fuelwood and charcoal provide about 90 percent of energy needs. Hydropower generates most of Mali’s electricity, but in the dry season power cuts are regular occurrences. However, privatization of the power and water parastatal and the construction of a dam on the Senegal River in the early 2000s were expected to increase energy production, even allowing Mali to export electricity to Senegal and Mauritania. Mali produced about 480.2 million kWh of electricity in 2001 and consumed about 446.6 million kWh. Fossil fuels provided 41.7 percent of electricity and hydropower sources, 58.3 percent. Mali does not produce any oil or gas of its own, but some exploration was underway in the mid- 2000s.

Services: The services sector as a whole accounted for 38 percent of gross domestic product (GDP) in 2001. Retail activities and trade accounted for 16 percent of GDP in 2000, but much of this activity occurs in the informal sector and is not included in official statistics. In addition, significant smuggling across the nation’s porous borders goes unrecorded.

Banking and Finance: Mali’s banking sector and monetary policy are controlled by a regional central bank, the Central Bank of the West African States (Banque Centrale des États de l’Afrique de l’Ouest—BCEAO), based in Dakar, Senegal. Mali has seven commercial banks, one agricultural bank, and one housing bank. The sector has long been characterized by heavy government ownership, but privatization efforts are underway and are expected to enhance financial services. Financial services remain heavily concentrated in urban areas.

Tourism: Mali has potential as a tourist destination, with its rich cultural heritage, ancient cities and archaeological sites, and the government has launched programs to develop tourism. Nevertheless, tourism remains a very small subsector of the economy, and tourist facilities are limited. In 2000 some 91,000 tourists visited Mali, generating income of about US$50 million.

Labor: Estimates of the total labor force range from 3.9 million (U.S. Government, 2001) to 5.9 million (Food and Agriculture Organization of the United Nations, mid-2002). About 80 percent of the labor force is engaged in agriculture and fishing. Unemployment in the early 2000s was estimated at 14.6 percent in urban areas and 5.3 percent in rural areas. Underemployment is also a significant problem. Salaried employment is quite low and is centered primarily in the state sector and in businesses in the formal sector in Bamako.

The constitution and the Labor Code guarantee laborers the right to form and join unions (except for military and paramilitary forces), and most salaried employees (about 28 percent of the work force) are organized into labor unions. The main train union federation called a two-day general strike in October 2003, the nation’s first such general strike. Both miners and teachers engaged in strike actions in 2004, seeking better working conditions and higher pay.

The Labor Code establishes standards and regulates conditions of employment, such as hours, wages, health care, and social security. Nevertheless, the minimum wage (raised in 2004) and benefits are inadequate, especially for families, and most salaried employees are forced to supplement their income with subsistence farming or employment in the informal sector. Child labor is common, especially in agriculture and domestic services.

Foreign Economic Relations: Mali has strong relations with bilateral and multilateral donors and is committed to the concept of regional economic integration. Since 1975, Mali has been a member of the Economic Community of West African States (ECOWAS), based in Nigeria, whose objective is to establish a customs union and a common market for West African States. In 1994 Mali joined seven other mainly francophone members of ECOWAS in forming the West African Economic and Monetary Union (Union Économique et Monétaire Ouest-Africaine— UEMOA), whose members have a common currency.

Imports: Mali imported an estimated US$707 million (free on board) of goods in 2002 and US$867 million in 2003. Imports were projected to increase to US$1,030 in 2004 and to US$1,150 in 2005. In 2003 the main imports were capital goods (36.8 percent), petroleum products (17.4), and foodstuffs (13 percent). The main sources of imports in 2002 were Côte d’Ivoire (18 percent), France (14.3 percent), Germany (4 percent) and South Africa (2.5 percent). Working with international investors, Mali is seeking to achieve self-sufficiency in cement and sugar, two commodities it currently acquires largely through imports (98 percent of cement and 80 percent of sugar are imported).

Exports: Mali’s exports are estimated to have totaled US$896 million (free on board) in 2002 and US$967 million in 2003, with projected increases to US$1,140 million in 2004 and US$1,300 million in 2005. The main commodities exported in 2002 were gold, cotton, and livestock, which together account for about 90 percent of exports. In 2002 gold accounted for 64.4 percent of exports, cotton 22.8 percent, and livestock and livestock products 4.3 percent. The primary destinations of exports that year were Thailand (14.3 percent), Italy (10.1 percent), India (7.9 percent), and Germany (5.1 percent).

Trade Balance: Mali had a trade surplus of about US$100 million in 2003. Both imports and exports were expected to increase in the mid-2000s, but exports were expected to continue to exceed imports in value. This prognosis was based, among other factors, on projected increases in cotton production and cotton prices as well as the resumption of livestock exports to Côte d’Ivoire following the resolution of unrest in that country.

Balance of Payments: Although Mali has a trade surplus, its deficit in the services account (due in large part to high transport costs, high insurance premiums, and high interest payments on the external debt) resulted in a current account deficit of US$99 million in 2002 and US$176 million in 2003, or about 4 percent of gross domestic product (GDP) in 2003. The current account deficit was projected to equal 4.2 percent of GDP in 2004 and 5.4 percent of GDP in 2005. However, inflows of foreign aid and foreign remittances generally result in an overall balance of payments surplus, as was the case in 2003, when the balance of payments showed a surplus of US$94 million (up from US$83 million in 2002).

External Debt: The total external debt was reported to equal US$2.9 billion in 2001 and US$2.8 billion in 2002. Mali receives debt relief under the heavily indebted poor countries (HIPC) initiative of the International Money Fund and World Bank.

Foreign Investment: Mali has very limited foreign investment. According to the World Bank, foreign direct investment totaled US$102.2 million in 2002. China established some joint business ventures with Mali in 1999–2002 and opened a Chinese investment center in Mali. Attracting foreign investment is one of the key components of Mali’s economic reform program.

Foreign Aid: Mali is heavily dependent on foreign aid and is a major recipient of both multilateral and bilateral aid. Multilateral donors include the International Monetary Fund, World Bank, African Development Bank, Arab Funds, and European Union. Bilateral donors include France, the United States, Canada, the Netherlands, China, and Germany. Foreign aid was estimated at US$596.4 million in 2001. In 2003 U.S. aid totaled US$44.2 million. As economic reforms progress, the government is hoping to move from budgetary and balance of payments assistance to social development aid.

Currency and Exchange Rate: Mali uses the Communauté Financière Africaine franc (CFA franc—CFAfr), which had an average value of CFAfr581.20 per US$1 in 2003, compared with an average value of CFAfr697.0 per US$1 in 2002. In late December 2004, the exchange rate was CFAfr482 per US$1, and in early January 2005 the exchange rate was about CFAfr500 to US$1. The CFA franc has a fixed exchange rate with the euro of CFAfr656 per euro. The currency was devalued by 50 percent in January 1994. Fiscal Year: Calendar year.




Last Updated: January 2005


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Mali was first published in 2005. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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