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, which, in addition to having one of the highest population growth rates in the world, have fueled food insecurity, poverty and instability in the country. The delivery of services to this large, sparsely populated territory face severe challenges in these conditions, and has a negative impact on geographic equity and social cohesion. Mali has a population of 15 million, 10% of which are living in the three northern regions of Gao, Kidal, and Timbuktu - areas that represent two-thirds of the entire country.
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 followed rapidly 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.
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 of the northern regions.
Its implementation, however, remains challenging. Security, which is critical to ensuring economic recovery and poverty reduction, remains volatile with continuing attacks on the UN force and the Malian army by jihadist groups mainly in the north but also in the south of the country near the border with Cote d’Ivoire.
Since independence in 1960, Mali has experienced a dramatic transformation of its social landscape, confronting a number of key political, social and environmental challenges. While Mali experienced an overall drop in national poverty (2001-2010), regional differences persist. According to national data, poverty declined from 55.6% in 2001 to 43.6% in 2010, before rebounding to 45% in 2013.
Mali’s HDI (the United Nations Human Development Index) value for 2014 is 0.407— which is in the low human development category—positioning the country at 176 out of 187 countries and territories
In 2010, more than half the population (51%) lived below the poverty line of $1.25 a day. Since then, drought and conflict have increased the incidence of poverty. Poverty is much lower in urban areas (14%) with 90% of all poor living in rural areas concentrated in the south where population density is highest. 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.
Since 2011, Mali’s economic growth has been influenced by several exogenous shocks. The country’s steady state growth rate has been revolving around 4.5% in 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 and the secondary sector making up the balance. Mali’s industrial sector is tiny (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 deviates from this steady state trajectory as a result of climatic, political, and price shocks. Economic activity has been significantly affected by the low rainfall recorded in 2011 and 2013, while it benefited from exceptionally favorable climatic conditions in 2012 and a return to average rainfall in 2014. The 2012 crisis (security and political instability) has 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 that helped the country recover from the crisis by fueling public investment. The country’s growth path is affected by terms of trade variations, which have been positive over the past few years, owing to higher prices of gold from 2011 to 2013 and lower prices of oil in 2014. All in all, the GDP growth rate dropped from 2.7% in 2011 to 0.0 percent in 2012, then slightly resumed an upward trend of 1.7% in 2013 before accelerating in 2014 to 7.2% mainly on account of catch-up effects.
The macroeconomic outlook appears positive. Favorable external factors such as a low CFA exchange rate and declining oil prices are expected to be conducive to growth. After peaking at 7.2% in 2014, GDP growth should progressively return to steady state. The main drivers of domestic activity over the next three years are expected to be the primary and tertiary sectors. However, Mali will continue to be exposed to security and climatic shocks, with limited space to mitigate them, except through cuts in public investments in the context of the WAEMU monetary union
Last Updated: Nov 04, 2015