This Country Commercial Guide (CCG) presents a comprehensive look at Mali's commercial environment, using economic, political, and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government Agencies.
Overview of import market : opportunities for well-targeted, price-competitive U.S. exports to Mali's private sector may be found in agriculture, agro-industry, telecommunications, mineral exploitation (mining and processing, especially of gold), machinery, new and used clothing, computers, processed foods, vehicles, electronics, consumer goods, office equipment, and water resources. Malian government contracts for donor-supported development projects offer additional opportunities. Such projects might require equipment and technical services for hydroelectric power generation and distribution, irrigation, telecommunications, public health, and agricultural and agro-industrial development. France has traditionally supplied Mali with many imported goods, but imports from other countries have gained market share. Malian entrepreneurs are open to new competitive supply sources.
Brief synopsis of commercial environment : gold is the first source of export earnings for Mali with approximately 42 percent of total earnings in 2002. The 2002 gold production hit an unprecedented record of about 47,000 kg, compared to 28,500 kg in 2001 and 15,000kg in 1997. Mali ranks third in gold production in Africa, after South Africa and Ghana.
Eighty percent of the population engages in farming, livestock raising, or fishing. Cotton is Mali's second biggest export with 38 percent of total earnings collected in 2002. Expanding cotton production has increased Mali's foreign exchange receipts. The 2000-2001 boycott of cotton cultivation by farmers resulted in a 50 percent decreased in cotton earnings and showed how vulnerable the economy was. During the 2001-2002 planting season, the country recorded an unprecedented production of 570,000 tons of cotton. Domestically manufactured goods include textiles, agricultural implements, cosmetics, batteries, paint, plastics, processed foods and beverages, and cement. Construction materials (including cement), chemicals and pharmaceuticals (including fertilizers), vehicles and spare parts, machinery, electronics, telecommunications, mining equipment, and most other manufactured items are imported. French products dominate imports in several areas, but Asian and North American products continue to gain market share. U.S. trade with Mali has increased steadily between 1999 and 2001. Exports of U.S. goods to Mali totaled $32.7 million in 2001 versus $32 million in 2000 and $29 million in 1999. Although exports fell to $11.2 million in 2002, they reached $18.3 million for the first semester of 2003. Imports to the U.S. from Mali amounted to $9 million in 1999, $9.8 million in 2000, then decreased to $6.10 million in 2001 and $2.6 million in 2002. Exports declined in 2002, mainly because most government contracts were frozen before the presidential election. In addition, major imports of spare parts for U.S.-equipped cotton ginning plants and agricultural inputs for cotton farming were reduced because of the ongoing privatization of the parastatal cotton company "Compagnie malienne de Developpement Textiles - CMDT."
Host country business attitudes toward the U.S. : relations with the U.S. are excellent. Since 1992 the government has placed strong emphasis on free trade and private enterprise as evidenced by economic reform policies supported by the IMF, World Bank, the United States, and other donors. Mali welcomes foreign investment. The government promotes the privatization of public enterprises. Mali's investment, mining, and commercial codes offer duty-free importation of capital equipment and tax benefits for ventures in priority industries, and unhindered repatriation of capital and profits. Mali is eligible for OPIC loan guarantee and investment financing, and insurance programs. Since October 1997 Mali has been on-cover for EXIM Bank short and medium term financing programs for the private sector and since 1999 for short term financing programs for the public sector. The United States has provided substantial development and emergency aid to Mali for many years. Malians are well disposed towards the United States.
Major business opportunities : chemical/pharmaceutical products, construction materials (other than cement), mineral exploitation, especially gold mining and processing, water resources development, livestock and hides/leather, food and beverage processing, machinery, energy (turbine-generated and solar), and new and used clothing imports are among business growth areas. International tenders as part of donor-funded development projects offer prospects to sell agricultural, construction, irrigation, telecommunications, and computer equipment and services.
Major roadblocks to doing business : business is conducted in French and few Malians speak English. Marketing and technical literature must be produced in French. There is insufficient commercial bank credit and interest rates are high. Other business constraints include limited power, communications, and transport infrastructure; landlocked location distant from major markets; a small domestic market for consumer goods; and severe endemic poverty. The September 2002 political crisis in Cote d'Ivoire added further hurdles to the entry of imports and the exit of exports.
Nature of local and third country competition : French enterprises enjoy advantages over Americans in business relations with Malians, including a common business language, time-honored commercial links, greater Malian familiarity with French cultural and business traditions and product names, tied development aid programs requiring procurement from French suppliers, and generous French trade financing and export subsidies. South Asian imports dominate the textile market. Mali imports consumer goods, commodities, and petroleum products from Cote d'Ivoire, and Senegal, as well as South Africa, China, Japan, Belgium, UK, Brazil, and North America. In addition, the West-African Economic and Monetary Union (WAEMU) member countries (including Mali) implemented a common external tariff (TEC) which lifts barriers among member countries and harmonizes tariffs outside the WAEMU boundaries. The TEC aims to further increase trade among WAEMU countries.
Country Commercial Guides (CCGs) are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-stat-usa or (202) 482-1986 for more information. CCG can be accessed via the World Wide Web at: http://www.stat-usa.gov; http://www.state.gov/; and http://www.mac.doc.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-usa-trade or by fax at (202) 482 4434. Additional information on exporting can be accessed through http://www.USAtrade.gov and http://www.stat-USA.gov.
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Major trends and outlook : four out of five Malians live off the land. Most depend on cash crops, cereals, livestock, and fish for their livelihood. Production of cotton, Mali's second biggest export and major contributor to GNP has been expanding in recent years. In 1997 and 1998, Mali produced 500,000 and 520,000 metric tons, respectively. After declining to 232,000 metric tons in 2001 due to a farmer's boycott of cotton cultivation, the government, assisted by the donor community, organized a meeting with all the actors of the cotton sector. The government and farmers agreed on an increase in the price of cotton, which led to a record production of 570,000 metric tons for the 2001/2002 campaign. The World Bank "strongly encouraged" the government of Mali to privatize the cotton industry and offered financial assistance. In June 2003, the government decided to break the parastatal cotton company CMDT in 3 or 4 entities to be privatized by 2005. The government selected the International Financial Corporation from the World Bank Group to conduct the privatization process of CMDT.
Buoyant world prices have pushed up foreign exchange earnings from cotton. Cotton, livestock, and produce sales, especially to Cote d'Ivoire, have increased steadily. Other exports include African clothing and artifacts, fruits and vegetables, and cosmetics derived from the domestically grown shea nut.
Investments in export and import substitution ventures have not been sufficient to displace high cost imports. The high cost of petroleum products, the fall in the world market price for cotton and gold, and the lifting of some tariff barriers since January 2000 and corresponding loss of customs revenues have put pressure on the economy and led the government to be very tight on cash disbursements for the past three years. In addition, the 2002-2003 political crisis in Cote d'Ivoire and the subsequent closure of the main import/export route to the port of Abidjan has increased the pressure on the fragile Malian economy.
Principal growth sectors : agriculture - cotton, sugar, rice, coarse cereals, fruit, and vegetable cultivation; animal husbandry - cattle, sheep, and goat raising and hide tanning; gold extraction and processing; diamond exploration and mining; telecommunications; consumer goods; and turbine-generated and hydroelectric power generation and distribution equipment hold the most promise as Mali's principal growth sectors.
Government role in the economy : since 1992 the government has placed strong emphasis on free trade and private enterprise as evidenced by economic reform policies supported by the IMF, World Bank, the United States, and other donors. Mali welcomes foreign private investment. The government continues to privatize public enterprises. After a successful privatization of the energy sector, the government has liberalized the telecommunication sector and is in the process of privatizing the state-owned Telecommunication Company SOTELMA. At the same time, it awarded a license to a private operator to supply both fixed and mobile telecommunication services. The investment, mining, and commercial codes offer duty-free importation of capital equipment and tax advantages for new ventures in priority industries. They also provide for liberal repatriation of profits and capital. The government seeks to encourage private sector growth through improved regulatory, administrative, and fiscal codes.
Balance of payments situation : Mali has chronic balance of trade deficits. The value of exports covered only 68 percent of imports in 1998, and only 60 percent in 1999. The situation deteriorated in 2000 as a consequence of lost revenues due not only to the fall of world cotton price and the 50 percent loss of cotton production, but also the increase in the petroleum price, and the power supply shortage. It is estimated that the value of exports covered about 75 percent of imports in 2000, 98 percent of imports in 2001 and generated a surplus of 31 percent in 2002. In April, Mali reached the HPIC completion point with the result that former debt payments will now be used to fund poverty alleviation programs. Total debt relief under the original and the enhanced HIPC initiative will amount to about $539 million, representing a 37 percent reduction. Mali's balance of payments suffers from a heavy dependence on a few commodity exports, a minimal industrial base, and a total dependence on imported machinery and petroleum.
Infrastructure situation regarding goods/services distribution : paved two-lane roads connect some of Mali's major urban centers. Local street networks are poor, and usually unpaved. The sole railway, connecting Bamako with Dakar, provides an alternative to freight shipment by truck from Abidjan or other transshipment centers such as Lome. Rail service, however, is slow and unpredictable. In 2003, a Canadian company, Transrail S.A., assumed management of and became the major shareholder in the railroad. Direct airfreight services exist between Bamako and Paris, Brussels, and African destinations, and within Mali. Schedules are subject to frequent change.
Major infrastructure projects underway : the Manantali dam on the Senegal river, a Mali-Senegal-Mauritania undertaking with World Bank and other donor support (mainly Europeans) will develop the irrigation, water transport, and hydroelectric potential of the Senegal river. Irrigation works are complete, and trials for electric production started in August 2001 were completed early 2002. Fifty-one percent of the Manantalli electric production now serves Mali. The Mantalli project is now focused on developing its water transport component. Work on the Markala dam on the Niger River was completed in 2001. Hundreds of acres of irrigated land in the dam area are being cultivated. Major work on the renovation of two main irrigation canals is well advanced. Work on the modernization and extension of the Senou airport in Bamako and airports in Mopti, Sikasso and Kayes was completed in early 2002 for the African soccer championship Cocan that took place in Mali in March 2002. In addition, the construction of stadiums in Bamako, Sikasso, Kayes, Ségou and Mopti were completed in early 2002. The Ministry of Sport is planning a program to upgrade (in some cases to maintain) most of the sporting installations completed for the Cocan. Major road construction projects funded either by the World Bank or the European Community are underway in the western Kayes region and the southern border with Guinea.
Mali is a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU). Mali is also a member of the Senegal River authority (OMVS) including Senegal and Mauritania, the Inter State Committee for the Fight against Drought In the Sahel (CILSS), and the Niger River Basin Authority (ABN).
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Nature of relationship with the United States : Mali maintains excellent relations with the United States. Malians appreciate U.S. support for democracy and good governance, economic reform, sustainable economic development, and peacekeeping and conflict resolution.
Major political issues adversely affecting business climate : None. The Government of Mali is committed to strengthening private enterprise and free trade. Mali welcomes foreign investment.
Brief synopsis of political system, schedule for elections, and orientation of major political parties : Mali is a constitutional democracy with a tripartite system of government consisting of executive, judicial, and legislative branches.
The President and Prime Minister head the dominant executive branch. Mali has over 80 political parties, yet fewer than ten carry significant nationwide political weight. No political party or group of political parties was able to obtain a strong majority at the National Assembly after the legislative elections held in July and August 2002. The former majority party (ADEMA) and its allies within the ARD coalition hold 39% of the seats in the National Assembly while the Rally for Mali (RPM) and its allies within the Espoir 2002 coalition hold 44 percent of the seats in the National Assembly, as well as the majority of mayoral seats in the 701 communes. Mali enjoys a relatively independent judiciary as well as a free press. The rule of law is generally respected, although corruption is endemic, especially at the lower and middle levels of the government. Corruption is also a significant problem within the judiciary.
Presidential, legislative, and municipal elections are conducted every five years. Mali held its third multi-party democratic presidential election in 2002. A total of 24 candidates competed in the first round of the presidential elections in April. The top two candidates in the first round were retired General and former head of state Amadou Toumani Toure (ATT), an independent candidate, who won 29 percent of the vote, and the majority party (ADEMA) candidate, Soumaila Cisse, with 21 percent of the vote. The third-place candidate, former Prime Minister Ibrahim Boubacar Keita (IBK) of the RPM party, missed the second round by 4,000 votes. The participation rate for the first round was 38 percent.
ATT won a landslide victory in the second round of the presidential elections, held May 12, with 64 percent of the vote. Cisse received 36 percent. Voter turnout was 30 percent, somewhat lower than the first round turnout.
Both rounds of the presidential elections were extensively monitored. Although there were some administrative problems and irregularities, the process was transparent, free and fair. There were no indications of widespread, organized fraud.
President-elect Toure (ATT), who ran the country as head of an interim government in 1991-92 after the Moussa Traore dictatorship was overthrown, was inaugurated on June 8, 2002, after running Mali's first-ever transition between two freely elected leaders. On July 14, 2002, ATT named a new government led by Prime Minister Ahmed Mohamed Ag Hamani, former Ambassador to Brussels and the European Community. ATT defined two of his highest priorities as being the elimination of corruption and the promotion of education.
After winning the election on an independent platform, ATT pledged to let the political parties fight amongst themselves for the legislative elections. Two coalitions of parties emerged as the winners of the legislative elections. The Espoir 2002 led by the RPM party of Ibrahim Boubacar Keita won 65 seats and the ARD coalition lead by former majority party ADEMA won 51 seats. The ACC coalition, grouping parties that supported ATT during the two rounds of the presidential elections and independent candidates, won 17 seats whereas an independent party, SADI won 6 seats. Races in two districts for a total of 8 seats were rerun in September and were all won by the ADEMA party, increasing the total seats of the ARD coalition to 59 seats. The coalitions expressed their willingness to work with President Toure and support the government's action plan.
On September 16, 2002, President Toure called the National Assembly into a special session. During the session, Ibrahim Boubacar Keita was elected President of the National Assembly. Because none of the coalition of parties had succeeded in building a majority, ATT reshuffled the government in September and named cabinet members (some of whom are new) led by Prime Minister Ag Hamani to reflect the strength of parties represented at the National Assembly.
Municipal elections for the 701 communes are scheduled for April 2004. Mouvement Citoyen, a coalition of associations that backed the presidential campaign of President Toure, has indicated that it will field candidates for the municipal elections, on behalf of the President. Although President Toure has repeatedly said that he won't create a political party, Mouvement Citoyen is seen as his political arm.
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Distribution and sales channels : largely informal, and not well developed for most products outside of Bamako.
Use of agents/distributors; finding a partner : U.S. exporters should identify a local agent or distributor to assist in market penetration. The Commercial/Economic Office of the U.S. Embassy can provide suggestions and make preliminary contacts.
Franchising : limited franchising exists in Mali such as soft drink bottling, courier service, and gasoline service stations.
Direct marketing : not feasible. U.S. firms should seek a local agent or distributor who speaks French and is familiar with local business practices and regulatory requirements. The Embassy Commercial Section can provide agent distributor service (ADS) to firms that make a request through U.S. Department of Commerce Export Centers.
Joint ventures/licensing : these types of business arrangements are employed in Mali by some manufacturing and importing concerns, although the law does not require local participation.
Steps to establishing an office : establishing a business in Mali has been simplified through the creation of the "guichet unique", or one-stop procedure, at the National Center for Investment Promotion (for manufacturing and services), and at the National Directorate of Commerce and Competition (for trade), where all applications can be obtained and required documents be submitted for approval. The Chamber of Commerce and Industry created an office tasked with helping the start-up of businesses called "Centre de Formalités des Entreprises". Most businesses can be set up within 30-45 days after submission of required documents.
Selling factors/techniques : French is the business language. Entrepreneurs or their local agents must be proficient in French. Sales and technical literature must be in French. Attractive payment/financing arrangements may be crucial since European competitors often provide such options. Competitive pricing often determines purchasing decisions in this low per capita income country.
Advertising and trade promotion : limited but increasing use in Mali. Six daily newspapers (l'Essor, les Echos, Nouvel Horizon, Soir de Bamako, Républicain and Info-Matin) and four weekly newspapers (Independent, Observateur, Reflet, Aurore) run advertisements. The weekly paper "Cauris" is devoted to business and economic issues. Radio and television advertisements in French and local languages are often more effective because most people are illiterate.
Pricing product : Price is the single most important factor in selling in Mali, followed closely by generous trade terms/financing packages.
Sales service/customer support : Important for vehicle or equipment/machine sales arrangements, given the harsh environmental conditions and lack of well-developed downstream service facilities.
Selling to the government : foreign donors support most major procurement needs financially. Promising sales opportunities may exist under open bidding procedures required by multilateral development institutions. There may be opportunities to bid on contracts funded by USAID and on contracts funded by untied aid provided by other bilateral donors.
Protecting your product from IPR infringement : pirating of U.S. products has never been a problem in Mali. Lack of English comprehension limits the appeal of U.S. printed or recorded materials and the low-level of copying technology further constrains the phenomenon.
Need for a local attorney : Highly recommended for establishing a business, and essential for resolving business disputes and litigation.
Performing due diligence/checking bona fides of banks/agents/customers : highly recommended for establishing a business. The Embassy Commercial Section can perform International Company Profile for a fee.
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Trade barriers including tariffs, non-tariff barriers and import taxes : export taxes were eliminated in 1990 except for a three percent fee on cotton and gold exports. Import taxes on many goods were reduced or eliminated in 1994 after the CFA franc devaluation. Some taxes have been reinstated on a case-by-case basis, depending on inventory levels in the country. The external common tariff (TEC) of the West-Africa Economic and Monetary Union (WAEMU) has been in effect since January 2000.
Customs valuation : a customs union among WAEMU states was established on January 2000 and customs duties are being harmonized with other members of the WAEMU. In early 2003, the government signed a decree authorizing customs valuation on the transactional value of goods as required by the WTO agreement.
Import licenses : required. Obtained normally within a month by individuals upon presentation of proof of citizenship and a certificate of good conduct. Companies must present proof of official business status.
Export controls : bulls under five years of age and cows of reproductive age cannot be exported except under special agreements for breeding purposes. Live animals, meat and plant exports require health certificates. Handicraft exports require authorization from the Ministries in charge of Culture and Tourism. Handicraft export authorizations are issued through the national museum. Mali concluded a cultural protection and a cultural property agreements with the United States in 1994 and 1997 respectively to discourage export of Malian antiquities.
Import/Export documentation : importers should submit a declaration of intent to import and present an import/export license to the National Directorate for Commerce and Competition. Exporters should present an import/export license.
Temporary entry : goods and equipment may be granted temporary entry for display at trade shows, use on construction projects, or for other temporary purposes.
Labeling/marking requirements : none.
Prohibited imports : narcotics and foreign products labeled as originating in Mali. The following products require prior approval from the concerned ministry:
Medicines, veterinary products, vehicles larger than sedans, arms and ammunition, tobacco products, and fishing nets with holes less than 50 millimeters in diameter.
Free trade zones/warehouses : none except for bonded customs warehouses for goods in transit.
Membership in free trade arrangements : the West African Economic and Monetary Union (WAEMU) replaced the West African Monetary Union (WAMU) in April 1994. WAEMU's eight member states include Benin, Burkina Faso, Cote D'Ivoire, Mali, Niger, Senegal, Togo and, most recently, Guinea-Bissau. WAEMU seeks to harmonize Member State macroeconomic and trade policies. A common market based on the free circulation of goods, labor, capital, and services lies at the heart of WAEMU's goals.
Trade and investment barriers : there are no legal or regulatory barriers to investment and trade by foreign companies. There is no discriminatory treatment against non-national firms. Business registration procedures have recently been simplified. There are no restrictions on the repatriation of capital or profits.
Major local and third country competitors in ajor sectors : France is the major third-country competitor. The French are prominent in cotton and food processing, and petroleum retailing. French vehicle and equipment sales are brisk. South Africans and Canadians have a strong hold on the mining sector. Japan exports four-wheel drive vehicles as well as computer and office equipment. Nigeria furnishes automobile spare parts. Cote d'ivoire and Senegal furnish many consumer goods.
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A. COUNTRY INVESTEMENT POLICIES AND PRACTICES
A.1. Openness to Foreign Investment
The Malian government encourages foreign investment. It treats domestic and foreign direct investment equally. The series of enhanced structural adjustment facility (ESAF) signed between the IMF/World Bank and Mali since 1992 encourages the mobilization of external resources to boost investment. The government national strategy to fight poverty presented to the IMF and the World Bank and other donors emphasizes the role of the private sector to develop the economy.
In the framework of past structural adjustment programs, the investment, mining, commerce and labor codes encourage investment and seek to attract foreign investors in particular. The Malian government has instituted policies promoting direct investment and export-oriented businesses. Mali guarantees the repatriation of capital and profit.
Foreign investors can own 100 percent of any businesses they create. They can also purchase shares in parastatal companies being privatized or in other local companies. Foreign companies may also start joint-venture operations with Malian enterprises.
Foreign investors go through the same screening process as domestic investors. All investors go through the "guichet unique" (one-stop procedure) to have a business application processed. Criteria for granting authorization under the investment code include the size of capital investment, the potential for value-added, and the level of job creation. Environmental concerns are also considered.
The public has, at times, associated foreign companies (including American) with the government, and accused them of paying bribes to government officials for backing in business and labor disputes.
Foreign investors sometimes report that tax collectors interpret tax laws to discriminate against foreign companies or companies with foreign capital. The tax system remains complicated in spite of ongoing efforts to improve it.
The investment code gives the same incentives to both domestic and foreign companies for licensing, procurement, tax and customs duty deferrals, export and import policies, and export zone status if all production is to be exported. Export taxes, import duties, and price controls have been reduced or eliminated as part of ongoing economic reforms. Work is proceeding to harmonize the investment for all WAEMU member countries.
A.2. Conversion and Transfer Policies
The investment code allows the transfer of funds associated with investments, including profits.
As a WAEMU member, Mali uses the CFA franc currency. Linked to the Euro, the CFA is fully convertible at a rate of Euro 1 = CFA franc 655.957. No parallel conversion market exists because the CFA franc is a fully convertible currency supported by the French treasury, which ensures a fixed rate of exchange.
As of September 2003 the U.S. Embassy purchased local currency at a rate of approximately CFA franc 570 per one U.S. dollar. The U.S. Embassy obtains currency through the Regional Administrative Management Center in Charleston, North Carolina, and a local bank.
The CFA franc was devalued in January 1994 and, according to officials from the central bank BCEAO, another devaluation in the short term is unlikely. In the medium and long term however, the political situation in Cote d'Ivoire and its impact on the economy of the WAEMU countries will affect the stability of the CFA.
There are no limits on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, etc. In the CFA zone there is no restriction on the export of capital provided that adequate documentation to support a transaction is presented. Most commercial banks have direct investments in western capital markets.
Central bank rules require that all remittances go through its channels, with supporting commercial documents required. Exceptions are occasionally made, as in one case where the government allowed a foreign mining company to have an offshore bank account. No physical transfer of funds is authorized outside the borders of the CFA zone. It takes less than a week (usually 3 working days) to remit funds abroad. Several foreign companies interviewed noted that they had encountered no problems in processing remittances.
Mali is also a member of the larger Economic Community of West African States (ECOWAS). ECOWAS encourages investment between and among member countries to promote economic integration. ECOWAS seeks to eliminate most trade barriers to facilitate such investment. Fair competition, profitability and economic benefits are criteria used to assess eligibility investment incentives.
A.3. Expropriation and Compensation
Expropriation of private property for public purposes is very rare. The only known expropriation against a foreign company occurred in the early 1960's. When it occurs, it is done according to Malian law, which is in accord with established principles in international law. The expropriation process is public and transparent, and compensation based on market value is awarded by court decision. The Malian constitution calls for an independent judiciary, substantially reducing the risk of "creeping expropriation".
The government may expropriate property for public projects (major road or dam construction), or in cases of bankrupt companies that have had a government guarantee for their financing, or in certain cases when a company has not complied with the requirements of an investment agreement with the government. In July 2000 for instance, the government expropriated land in the vicinity of the capital city Bamako airport for air safety reasons. Notifications of the expropriation were made by direct mail to the people involved but also published in public and private media. In 1994, an American company, which had submitted a bid on a government tender, had its deposit confiscated because it allegedly failed to comply with certain agreed terms.
A.4. Dispute Settlement
Disputes occasionally arise between the government and foreign companies. Some cases involve wrongdoing on the part of companies; some involve corrupt government officials.
In 1997, a foreign company lost a case at the commercial court for allegedly illegally hiring an engineer who used to work for a domestic company. After various rulings in lower courts, the Supreme Court decided there was no case against the foreign company.
Low salaries and inadequate resources impact negatively on the quality of judicial decisions. In November 1991, an independent commercial court was established with the active participation of the U.S. Government to expedite the handling of business litigation. Since its inception, the commercial court has handled many cases involving foreign companies. Professional magistrates assisted by elected Malian Chamber of Commerce and Industry representatives staff it. Teams composed of one magistrate and two Chamber of Commerce and Industry representatives conduct hearings. The magistrate's role is to ensure that decisions are rendered in accordance with applicable commercial laws, including internationally recognized bankruptcy laws, and that court decisions are enforceable under the law.
The Investment Code allows a foreign company that has signed an agreement with the government to refer to international arbitration any case that the local courts are unable to resolve.
Mali is a member of the African Organization for the Harmonization of Business Law (OHADA). OHADA has a provision for allowing litigation between foreign companies and domestic companies or the government to be tried in an appeal court outside of Mali. Mali is a member of the International Center for the Settlement of Investment Disputes (ICSID - also known as the Washington Convention). Mali is a member of the New York Convention of 1958 on the recognition and enforcement of foreign arbitrage awards. Mali is also member of the World Bank Multilateral Investment Guarantee Agency (MIGA).
A.5. Performance Requirements/Incentives
The investment code offers incentives to companies that reinvest profits to expand business. The code also encourages the use of locally sourced inputs. Local value added is one criteria used for approving investment projects and in calculating a tax exemption period.
There is no requirement that Malians own shares in a foreign investment or that foreign equity be reduced over time. In the case of joint ventures with the government, the government share may not exceed 20 percent ownership.
Because most businesses are located in the capital city, the investment code encourages the establishment of new businesses in other areas. Incentives include income tax exemptions for 5-8 year periods, reduced-energy prices, and the installation of electric power lines to areas lacking energy.
Title V of the investment code relates to foreign-trade zones. Any company, domestic or foreign that plans to export at least 80 percent of its production is entitled to tax-free status. Production that is not exported would be subject to taxation.
The government has identified priority sectors for furthering economic development. Special incentives are offered for investment in the following areas:
Agribusiness
Fishing and fish processing
Livestock and forestry
Mining and metallurgical industries
Water and energy production industries
Tourism and hotel industries
Communication
Housing development
Transportation
Human and animal health promotion enterprises
Vocational and technical training enterprises
Cultural promotion enterprises
Job creation is an important criteria used in determining tax exemptions and other incentives. Employers who hire young graduates can pay reduced rates of social security taxes.
A.6. Right to Private Ownership and Establishment
Domestic and foreign investors share equal rights to private ownership and establishment as long as they go through the approval process and abide by relevant regulations.
The government allows the free market to determine prices. Domestic and foreign companies compete on an equal basis with public enterprises. The government's privatization program for state enterprises creates opportunities for both domestic and foreign private firms to acquire those entities through open international bidding.
In one instance, the government awarded a contract to private telecommunication operators in the mobile telephone business without doing it through the appropriate tender call. Workers of the rival state-owned Telecommunication Company SOTELMA protested vigorously and went on strike to force the Ministry of Communication officials to launch an open bid. In addition to pressure from SOTELMA workers, the World Bank threatened to freeze its assistance to the reform program of the Telecommunication sector in Mali if the government failed to take necessary steps to ensure transparency and fairness in the bidding process. In the end, the government terminated the agreement it had awarded earlier and engaged in a competitive bidding process, which was later completed successfully according to World Bank officials.
A.7. Protection of Property Rights
Property rights are protected. The "Direction Nationale des Industries" through its "Division Protection de la Propriété Intellectuelle" is the government agency which implements the legal system of protection, including the World Trade Organization (WTO) trips agreement. This division works with international agencies recognized by UNIDO, which are concerned with these issues. Patents, copyrights, trademarks, etc. are covered.
A.8. Transparency of the Regulatory System
As reflected in agreements with the IMF and World Bank, the government of Mali has adopted a transparent regulatory policy and effective laws to foster competition. The commerce and labor codes adopted in 1992 are designed to meet the requirements of fair competition, to ease bureaucratic procedures, and to facilitate the hiring and firing of employees. The investment code shortens the application process to establish a business (maximum 30/45 days turnaround time), and it favors investments that promote handicrafts, exports, and labor-intensive businesses. The mining code encourages investments in medium and small mining enterprises, awards two-year exploration permits free of charge, and does not require a commitment from the exploring firm to lease the area explored thereafter.
A.9. Efficient Capital Markets and Portfolio Investment
The statutes of the West-African Economic and Monetary Union (WAEMU) determine the banking system in Mali. The WAEMU central bank, Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO), is located in Dakar, Senegal. Commercial banks enjoy considerable liquidity. They tend to prefer investing funds in western capital markets, thereby reducing credit available to local entrepreneurs. The government and WAEMU have engaged in restructuring the banking system to increase the capital available to local investors. The government's privatization efforts should make more credit available to the private sector. External financing and guarantee programs are alternatives to local bank credit.
Portfolio investment is not a current practice, although the legal and accounting systems are now transparent enough and are similar to the French system. In 1994 the government instituted a system of treasury bonds available for purchase by individuals or companies. The payment of dividends or the repurchase of the bonds may be done through a compensation procedure offsetting corporate income taxes or other sums due to the government.
The WAEMU stock exchange program based in Abidjan opened a branch in each WAEMU country, including Mali. To date, Malian company is listed on the stock exchange. The privatization program (done for the electric company EDM and ongoing for the telecommunication state-owned entity SOTELMA) offers a good prospect for some state-owned companies to be listed on the WAEMU stock exchange.
The Bamako-based office of the Société de Gestion et d'Intermediation (SGI) has conducted awareness campaigns to educate the business community. Domestic companies are now looking into the possibility of applying to be on the list of stock exchange.
The government of Mali has agreed to participate in the Sovereign Credit rating Program sponsored by the State Department. The U.S. Treasury Department plans to provide technical assistance to the Malian Ministry of Economy in this endeavor with the support of the U.S. State Department.
A.10. Political Violence
Mali's multi-party democracy, now eleven years old, has consistently encouraged private enterprise and investment. Occasional student and labor strikes and small-scale political demonstrations have sometimes resulted in political vandalism and violence, but not enough to substantially impact the investment climate. President Touré named a government in September 2002 dominated by his close allies and technocrats and also representatives of political parties that hold seats at the National Assembly. For the first time since 1997, all parties participated in the general elections that took place in the first half of 2002. The 2002 elections were considered by many observers as an important test for the Malian democracy as the first democratically elected President Konare kept his word and turned power over to newly elected President Toure.
Northern Mali has traditionally encountered friction between pastoral and sedentary populations. The Malian government has effectively consolidated the peace following the 1990-1995 Tuareg rebellion in the northern regions. The government, along with international donors and United Nations organizations, supports the socioeconomic reintegration of refugees and former combatants. There is little infrastructure and business in the northern desert regions. Past troubles there have had little direct impact on business activities in the rest of the country. There are no elements of insurrection in Mali, and the country maintains good relations with each of its several neighbors.
A.11. Corruption
Corruption is considered a crime, and as such is punished by criminal law (penal code). Despite reports in local papers of bribery cases on large contracts and investment projects, corruption is not a significant obstacle to foreign direct investment. A foreign company reported in 1998 cases of government officials (at the lower and middle management level) requesting bribes to facilitate paperwork. The bribes were refused without significant consequence to the company.
In 1996, a foreign construction company videotaped government agents seeking and obtaining bribes in the company's offices. Shortly afterwards, the information was made public and the agents and their supervisors were suspended from their jobs. When found guilty after their trial, some of them were fired.
Corruption seems most pervasive in government procurement and dispute settlement. Paying government procurement agents a five to ten percent commission is common practice. To fight this, the government requires any procurement contract to be inspected by the "Direction Generale des Marchés Publics" that has to determine whether the procedure meets requirements of fairness, price competitiveness, and quality standards. During his swearing in ceremony in June 2002, and in subsequent meetings with the donor community later on, President Toure defined one of his highest priorities as being the elimination of corruption.
In April 1999, the Council of Ministers passed a decree allowing legal action against any government official and his accomplices when there is evidence of bribery in the course of government procurement. In August 1999, President Konaré fired several high-ranking officers from the Ministry of Finance and state-owned companies, thus launching an anti-corruption crusade. Furthermore, during the swearing in ceremony of the President of the Supreme Court in October 1999, he stated that all investigations done for the past 7 years would be reviewed by an independent committee and passed on to the judiciary when evidence of corruption or mismanagement were found. On October 15 1999, President Konaré appointed a seven-member committee to review all investigations. The committee released its interim report in July 2000 and recommended that several cases be brought to court. Seventeen high-ranking government and private sector officials were arrested. Some of them have been charged and tried or are awaiting trial after being released on bail. Others were released as the judges concluded there was no case.
Questionable judgments in commercial cases have occasionally been successfully overturned at the court of appeals. Yet there continue to be complaints from the domestic and foreign business community about the judiciary, including both judges and lawyers. During a televised debate in March 2001, the mayor of Bamako criticized harshly the judiciary, and concluded by saying that: "everybody knows that magistrates are corrupted and one can literally pay-off for a trial when he is rich". As a consequence of his public statement, the magistrate's union brought an action for libel against the Mayor and the public television Director who allowed the debate to be broadcast publicly. The Mayor and the Director were convicted and sentenced to pay a symbolic 1 CFA franc. The Mayor and the Director appealed this decision and eventually the case was settled out of court. In 2002, the Bar Association President stated publicly that: "the judges are independent from everything but dirty money". In 1998, the executive decided to tackle the problem by creating a national commission in charge of reorganizing the judicial system. In February 1999, a national forum on the judiciary made recommendations as to ways of modernizing the judiciary. In December 2001, the National Assembly passed amendments to the penal code criminalizing corruption.
B. BILATERAL INVESTMENT AGREEMENTS
Mali has signed the CIRDI Treaty sponsored by the World Bank group. During the past three years, Mali has signed investment protection agreements with South Africa, Algeria, Senegal, and Libya.
C. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
Since October 1997, Mali has been on-cover with the U.S. Exim Bank program for short and medium term financing for the private sector extended to the public sector since 1999 for short term financing. Mali is eligible for certain OPIC programs. Mali has been a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA) since 1990.
D. LABOR
Labor is widely available, albeit at varying skill levels. Many skilled workers have been laid off from state-owned companies and are unemployed or hold jobs well below their skill level. Many recent college and high school graduates seek work.
Workers have the right to unionize. Relations between labor and management have been difficult for the past four years, especially in new industry sectors such as gold mining. Although a warning notice for strikes is not required in the private sector, mediation procedures are generally followed before resorting to a strike. The government has signed the ILO agreement protecting the rights of workers. Although the labor code adopted in 1992 improved hiring and firing procedures, it still requires simplification. Labor has constituted one of the major difficulties encountered recently by employers, both national and foreign. Although not a requirement, it is advisable to have regular contacts with the labor inspectors, especially when concluding new hiring contracts or drafting firing decisions.
E. FOREIGN TRADE ZONES/FREE PORTS
There is no discrimination between foreign-owned firms and host country entities in terms of investment opportunities. Companies (domestic or foreign) that export at least 80 percent of their production are entitled to the status of "zone franche" (tax-free status). As such, they benefit from duty free status on all equipment and other input they need for their operations.
F. FOREIGN DIRECT INVESTMENT STATISTICS
Companies from Japan, Australia, Canada, and South Africa have made significant investments in the mining sector. France, Germany, and China have made significant investments in the manufacturing and food processing sectors. Foreign direct investment in Mali in the manufacturing industry sector was estimated at $2.3 million in 1994, $5 millions in 1995, $8 million in 1996, and $15 million in 1997. Investment slowed down in 1998, 1999 and 2000 because of legislative and municipal elections and the shortage of electric power and the high cost of energy in 2000. Investment picked up again in 2001, mostly in relation to the African soccer championship that took place in Mali in February/March 2002. In 2002/2003, more investment was made, especially in the textile, housing and agro-business sectors.
Major foreign investors:
- Mobil Oil (American)
- IPS from the Agha Khan Group (American)
- IAM-Gold (Canadian)
- Barrick Gold (Canadian)
- Mink Minerals (Canadian)
- Anglo-American (South African)
- Anmercosa (South African)
- Randgold (South African)
- Krupp, Mercedes (German)
- Air liquide, CFAO, SDV, Renault (French)
- Covec, CSCEC (Chinese)
- Maerskline (Danish)
- Yoong-poong (South Korean)
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