Mali is a sparsely populated, predominantly desert country with a highly undiversified economy. It is vulnerable to commodity price fluctuations and to the consequences of climate change. Mali has a population of 15 million, 10% of which are living in the three northern regions of Gao, Kidal, and Timbuktu. High population growth rates and drought have fueled food insecurity, poverty, and instability. The delivery of services in this large, sparsely populated territory is challenging and affects geographic equity and social cohesion.
The political and security situation has been particularly volatile in recent years. In early 2012, there was a military coup and an occupation of the northern regions by rebel and criminal groups. These events were rapidly followed by the deployment of French-led military forces in January 2013, which were handed over to the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) mission in July 2013. In 2014, the French reorganized their anti-terrorist interventions in the Sahel, establishing the Barkhane operation headquartered in N’Djamena (Chad). Presidential elections were held peacefully in two rounds in July and August 2013, recording a high turnout of 49 and 46% of eligible voters. Local government elections scheduled for October 2015 were postponed to the fourth quarter of 2016.
Peace negotiations between government and two rebel coalitions (known as the “Platform” and “Coordination” groups) concluded with the signing of an agreement on May 15, 2015 by both the government and the Platform group, and the government and the Coordination group on June 20, 2015. While the new agreement does not envision an autonomous status for the northern regions, it gives a stronger impetus to decentralization, creating a critical role for these regions and a development zone consisting of the northern regions.
Its implementation, however, remains challenging. Security, which is critical to ensuring economic recovery and poverty reduction, remains fragile with continuing attacks on the UN force and the Malian army by jihadist groups mainly in the north but also on civilians in Bamako, the most recent of which targeted the Radisson Blu hotel in November 2015 and the Nord-Sud Azalai hotel in March 2016.
Since independence in 1960, Mali has experienced a dramatic transformation of its social landscape, confronting a number of political, social, and environmental challenges. While Mali experienced an overall drop in national poverty from 55.6% in 2001 to 43.6% in 2010, regional differences persist and in 2013, the poverty rate rebounded to 45%.
Mali ranks 179th out of 188 countries on the United Nations Human Development Index for 2015. Poverty is much lower in urban areas with 90% of all poor living in rural areas concentrated in the south where population density is highest. Drought and conflict have only increased the incidence of poverty. Given the lack of reliable estimates, there is a dire need to improve welfare measurements and data collection to better understand the livelihoods of poor households.
Over the past several years, Mali’s economic growth has been influenced by several exogenous shocks. The country’s steady state growth rate has hovered around 4.5% over the last decade, driven by rapid growth in labor supply, urbanization (along with informal sector and tertiary sector development), extensive agriculture, public investment, and gold mining activities. The structure of its GDP has remained relatively stable since 1990 with the primary (agriculture, gold) and tertiary sectors (trade, transport, and public administration) each contributing 35-40% to GDP with the secondary sector making up the balance. Mali’s industrial sector is limited (4% of GDP) and consists largely of privately owned small enterprises and a few large enterprises (cotton milling, electricity, and mining).
However, economic growth often deviated from this steady state trajectory as a result of climatic, political, and price shocks. Following the 2012 crisis, security and political instability generated ample domestic output fluctuations, in particular a sharp drop in GDP growth as a result of infrastructure destruction, population outflows, suspension of economic activities, and a collapse in aid and tourism. The mitigation of security tensions and the progressive restoration of constitutional order in 2013 allowed a rebound in aid after the Brussels donors’ conference.
Mali’s economy is projected to grow by around 5% annually over the next three years, reflecting a return to normalcy and a gradual tapering of the recent surge in international aid. All economic sectors are expected to contribute to growth, especially the tertiary sector, which is projected to grow faster from 5.6% in 2016 to 6.9% in 2018, thanks to the continued dynamism of telecommunications and transport activities, and at a lesser extent to the development of trade and financial services. Mali’s favorable economic outlook is subject to substantial and persistent downside risks, among which the most critical are the collapse of the peace agreement and the resurgence of insecurity throughout the country, recurrence of lapses in governance, climatic shocks, and any further decline in global gold or cotton prices, the major two export products of Mali.
Last Updated: May 03, 2016