Mali is a vast, landlocked country with a semi-arid climate. It is also a low-income country with an undiversified economy that is vulnerable to raw material price fluctuations. High population growth rates (with a fertility rate of 6 children per woman in 2017) and climate change pose major risks for the country’s agriculture sector and food security.
Mali has been experiencing instability and conflict since the military coup of 2012 and the 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.
President Ibrahim Boubacar Keïta, first elected in 2013, was re-elected for a second term in August 2018. Parliamentary elections scheduled for the fall of 2018 were postponed until the first half of 2019, and members’ terms of office scheduled to end on December 31, 2018, were extended for six months by the Constitutional Court.
Peace negotiations between the Government and two rebel coalitions, the “Platform” and the “Coordination,” concluded with the signing of an agreement in May and June 2015. This agreement provides an impetus for greater decentralization, creating a special development zone for Mali’s northern regions and setting up several projects, including a program of accelerated development in the north (Programme de développement accéléré du Nord) and an emergency program for the revival of development in the northern regions (Programme d’urgence pour la relance du développement des régions du Nord). However, implementation of the peace agreement has run into problems. Security, which is critical for economic recovery and poverty reduction, remains fragile in the face of continued attacks by armed groups on UN peacekeepers, the Malian army, and civilians, chiefly in the north and central regions.
In the face of these security challenges, Mali, along with Burkina Faso, Chad, Mauritania, and Niger, created the G5 Sahel, in 2014.
In July 2017, the Sahel Alliance was established by the European Union, France, Germany, the UNDP, the African Development Bank, and the World Bank, to help stabilize the region and accelerate development of the G5 Sahel countries. Spain, Italy, the United Kingdom, and Luxembourg have since joined the Alliance, the aim of which is to provide financial support and coordinate the development and stabilization efforts of the G5 Sahel countries.
In 2018, Mali ranked 182nd out of 188 countries on the United Nations Human Development Index. 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.
After rising between 2011 and 2013 as a result of the security crisis, the extreme poverty rate fell significantly to 42.7% in 2017 on the strength of exceptional agricultural production over the previous three years.
Economic growth fell for the third year in a row, standing at 4.9% in 2018. The slowdown can be attributed to spreading insecurity in the central and southern regions of the country, and uncertainty about the presidential elections. On the demand side, public investment shrank by more than 2% of GDP, following a big drop in government revenue, whereas private domestic demand showed more resilience.
Despite the rise in international oil prices, which were up by 23.2%, inflation showed little change, rising from 1.8% in 2017 to 2.0% in 2018. Mali is a member of the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO), which manage monetary policy.
The external deficit deepened from 5.0% to 7.4% of GDP in 2018. Strong cotton and gold exports failed to offset the increase in oil imports. It is estimated that gold production rose by 21% and that the country had a record-breaking cotton harvest of 705,000 metric tons, up by 25%. The current account deficit was financed through a combination of direct foreign investment (60%) and external borrowing (40%).
The budget deficit increased from 2.9% of GDP in 2017 to 4.8% in 2018 as a result of an unexpected shortfall in tax revenue, which shrank from 15.2% of GDP in 2017 to 11.9% in 2018 and an increase in budget subsidies to offset the rise in retail oil prices. In response, the Government moved to reduce expenditure by more than 2% of GDP. This mainly involved reductions in public investment in all sectors, including health and education.
Growth is projected to hold steady at about 5% over the medium term.
Last Updated: Jun 06, 2019