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Economy and business in Mali

Mali's economy and business are characterized by the country being one of the world's poorest. The country has limited natural resources, and its agricultural-based business is vulnerable to fluctuations in precipitation and international commodity prices. More than 80 per cent of the population is employed in agriculture.

Business of Mali

According to COUNTRYAAH, Mali is one of Africa's largest countries by far. Just over half of the country is desert and half desert. The Niger River cuts through this landscape and represents a rich resource in an otherwise scarce area.

In central Mali, in the Mopti region, the river extends over an area of ​​up to 30,000 km2. This is the Niger Delta's inland delta which is very important for Mali's economy and business. Here there are rich fishing resources. Rice is grown over large areas and during the dry season this delta represents a key resource for the hundreds of thousands of livestock grazing on the savannah during the rainy season. In November, the animals return to the delta from all directions to graze on a particularly nutritious plant called "burgu" and which grows in the flooded areas. This pasture plant lives on the animals until the next rainy season begins in June. The access to grazing in the delta is based on old custom and is finely organized where each flock receives their own number in the series. There are only a few "entrance gates" to the delta where all the flocks must pass. It is announced in advance, including through local radio, which dates the various entrance gates will be open.

In the 1970s and 1980s, Mali was hit hard by drought. This had a negative impact on economic and social development, and it led to increased migration to the cities - including the nomadic population. But part of this labor migration has been temporary. After the drought of the 1980s, rainfall has picked up again, formerly desert-like areas have turned green again, and many have moved back to the countryside to once again cultivate the land or farm animals. Several small towns in the north are dynamic trading centers in 2017 despite the political and economic crisis in Mali caused by Islamist militant groups taking control of half the country.

Mali's formal sector is small, and there are few jobs in the cities as well. A significant number of Malayans - usually around 3 million - therefore find employment in neighboring countries, where they are mostly employed in agriculture, often on a seasonal basis; many illegally. The unrest in the Ivory Coast from 1999 led many Malian guest workers to return home, with the consequences it had for the local economy. In other areas too, including transport of goods to and from ports, the war in Côte d'Ivoire has had a negative impact on Mali's economy.

Mali experienced significant economic growth from the 1990s until the crisis in 2012, but the country is vulnerable to drought. Agriculture has also for some years been hit by large swarms of grasshoppers eating the crops. Mali is also exposed to higher oil prices, and to competition from subsidized cotton, especially from the United States. For the small farmers in the southern part of the country, cotton is the most important cash crop. Cotton is the second most important export item from Mali. Only gold gives more income to the country.

Mali rejoined the West African-French Monetary Cooperation in Union Monetaire East Africa (UMOA), reintroducing CFA as its monetary unit in 1984. A 50 percent devaluation of CFA that took place in 1994 promoted agriculture, which is also prioritized by the country's authorities. In 1982, the Mali government signed an agreement on structural adjustment with the World Bank and the International Monetary Fund. By this agreement, the government undertook to implement economic liberalization, including the privatization of a business sector in which the state has had major ownership interests.

With its rich history and culture, tourism was also a growth industry until the current crisis made it unsafe for foreigners to travel to the central and northern parts of the country.

Agriculture, fishing

Mali is above all an agricultural country, with over 80 per cent of the population employed in agriculture, partly with arable farming especially along the rivers, and partly with animal husbandry, especially in the arid areas of the north. In the early 2000s, the sector responded to approx. 1/3 of the gross domestic product. Agricultural products accounted for approx. 40 percent of total export value at the end of the 1990s, but dropped to approx. 30 per cent in the early 2000s, mainly as a result of increased gold exports.

The most important product is cotton, which both employs approx. 3 million people and is by far the most valuable export item from agriculture. In the early 2000s, Mali challenged Egypt as Africa's largest cotton producer. Cotton is produced substantially in the south of the country and most of the crop is exported. Due to large subsidies to cotton producers in the US, countries such as Mali - even with their low production costs - find it difficult to compete with US cotton on the world market. Also peanuts (peanuts) are grown in the south, mostly for export.

For the people of the north, including nomadic people, animal husbandry has always had a prominent place. The export of live animals to neighboring countries in the south is of great economic importance, and ranks in value by gold and cotton. Animal husbandry represents approx. 1 / 3 of the agricultural sector's contribution to gross domestic product.

Mining, energy

Increased investment in several gold mines from the 1990s, strengthened the mining's economic importance to the country's economy. This sector represented 17 per cent of the gross domestic product in 2002. Mali has known deposits of several minerals, including bauxite, diamonds, phosphate, copper, iron, manganese, uranium and gold. Due to poorly developed infrastructure and the long distance to ports, there is still little recovery of these resources. Next to gold, some salt, marble and phosphate are extracted. There are unexploited deposits of iron ore, bauxite, uranium,zinc, copper and manganese.

Following the opening of the Morila field in 2000, Mali assumed the position of Africa's third largest producer of gold (after South Africa and Ghana). Most of Mali's gold comes from mining, which is a relatively inexpensive way of extraction and has made it attractive to invest in the country. In 2000, gold was Mali's most important source of export revenue for the first time.

A limiting factor for the mining sector, as well as for agriculture and industry, is the lack of energy. Large parts of the country are not electrified, and there is often a shortage of electrical energy. After the hydropower plants Manantali, Félou and Gouin along the river Senegal became operational respectively in 2001, 2014 and 2017, the electricity supply improved significantly. These are projects that supply Mali, Mauritania and Senegal with electrical energy, and where Mali has a contractual right to 55 per cent of production. More than half of the power produced in Mali now comes from hydropower plants.

Industry

Mali has a small industrial sector, with operations in the capital Bamako. The sector consists of food companies, which mainly process agricultural products, as well as some production of building materials and other consumables. The industry is weak, partly because of a lack of capital. Inadequate power supply and poor communication network have also helped to prevent industrial growth.

Foreign Trade

Mali normally has a large trade deficit abroad, which is largely covered by financial support from France. Mali has one of the world's most aid-dependent economies. France is the main aid provider, but the EU, Canada, Germany and Japan are also major contributors. Norway started its governmental public assistance commitment in Mali in 1984. The main export goods are gold, cotton and live animals. Imports are composed of foodstuffs (including cereals), oil products, machinery and vehicles. The main trading countries are France and the Ivory Coast.

Transport and Communications

The great distances are a problem for Mali's political and economic integration, as well as for foreign trade. Mali has no coastline, and until the Civil War in Ivory Coast, from 1999, most of the foreign trade went over the port of Abidjan. The main road between Bamako and Abidjan is the most important connection with abroad, but also the approximately 1300 km long railway from Bamako to Dakar in Senegal is important, and handles some foreign trade. Following the actual divide of the Ivory Coast in 2002, trade was also diverted to Tema in Ghana and Nouakchott in Mauritania - with the extra costs this entailed. Apart from the few main roads, the road network is poorly developed, consisting of approx. 20 000 km.The Niger River is an important transport year, but not passable outside the rainy season. Bamako has an international airport.

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