Mali is a vast country with a population of almost 18 million (2016) and a highly undiversified economy. As such, it is vulnerable to commodity price fluctuations and (mostly desert with the Niger River bisecting it) the consequences of climate change. Although sparsely populated, with only 10% of its people living in the north, high population growth rates and drought have fueled food insecurity, poverty, and instability. The provision of public services in the country is challenging, affecting social cohesion and creating geographical disparities.
Mali borders Algeria, Burkina Faso, Côte d'Ivoire, Guinea, Mauritania, Niger, and Senegal.
The political and security situation in Mali has been particularly volatile in recent years. In early 2012, there was a military coup and an occupation of the northern regions by armed groups. These events were followed by the deployment of French-led military forces in January 2013, which handed over to the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) in July 2014.
Presidential elections, held in the summer of 2013, were followed by local government elections in November 2016. Peace negotiations between the Government and two rebel coalitions, the “Platform” and the “Coordination,” concluded with the signing of agreements in May and June 2015. While the agreement does not envision autonomous status for Mali’s northern regions, it gives stronger impetus to decentralization, creating a role for these regions, as well as a development zone and program of accelerated development (Programme de développement accéléré du Nord). However, its implementation is not without challenges. Security, critical to economic recovery and poverty reduction, is fragile, in the face of continued attacks by armed groups on UN peacekeepers, the Malian army and civilians, mainly in the north and central regions.
To present a united front in the face of the shared challenges, Mali, along with Mauritania, Niger, Burkina Faso, and Chad, created the G5 Sahel, in 2014.
In July 2017, the Sahel Alliance was established by the EU, France, Germany, UNDP, the African Development Bank, and the World Bank, to assist with regional stabilization and the accelerated development of the G5 Sahel countries. Spain, Italy, and the United Kingdom have since become members, while other partners are expected to join.
The aim of the Alliance is to support the development priorities articulated in the National Development Plans of G5 Sahel countries, building on the strengths of the Sahel, to turn challenges into opportunities.
While Mali experienced an overall drop in national poverty from 55.6% in 2001 to 43.6% in 2010, regional differences persist.
Mali ranks 175th out of 188 countries on the United Nations Human Development Index for 2016. Poverty is much lower in urban areas, with 90% of all poor living in rural areas, and concentrated in the south, where population density is highest. Drought and conflict have only increased the incidence of poverty.
Despite deteriorating security, economic performance is strong, with robust growth. Robust performance in the agriculture and services sectors led to a projected growth rate of 5.8% in 2016 (down from 6.0% in 2015) despite volatile security conditions.
Primary sector growth fell from 7.6% to 4.8% between 2016 and 2017, due to decreased rainfall, while tertiary sector growth has been robust (around 6% since 2014) following renewed dynamism in the ICT sector. On the demand side, investment has grown sharply by 8%, partly as a result of the increase in private investments for the first time since 2012, and partly as a result of the Government’s efforts to reduce infrastructure gaps.
Inflation jumped from -1.8%, in 2016 to 1.6% in 2017, due to higher food prices and increased international oil prices.
Notwithstanding a slight deterioration in the terms of trade, (due to increased oil prices and lower gold prices) the current external deficit (grants included) fell to 6.2% of GDP in 2017 compared to 7.2% in 2016, in line with fiscal consolidation.
Despite pressure on public expenditure, the authorities have managed to contain the budget deficit, which narrowed from 3.9% of GDP in 2016 to 2.9% in 2017, due to the rationalization of current expenditure and significant improvement in domestic revenue. Mali is a member of the West African Economic and Monetary Union (WAEMU). Monetary policy is managed by the Central Bank of West African States (BCEAO), which keeps a peg between the CFA Franc and the Euro, a policy supported by the French Treasury.
Growth is projected to stay robust at about 5% over the medium term. Agricultural growth is underpinned by favorable weather and positive effects from input subsidy reform. Services growth will continue in telecoms, transport, and trade.
On the demand side, investments may increase through the entry into force of the PPP law and the Sustainable Development Fund for regional development projects, especially in Mali’s north. Sustained efforts on fiscal consolidation—through the rationalization of current expenditure and improved tax revenue—would lower the fiscal balance from 3.3% of GDP in 2018 to 3.0% in 2019. However, debt sustainability is vulnerable to a tightening of financial conditions, such as lower remittances, lower foreign direct investment, or lower commodity prices.
Last Updated: Jun 01, 2018