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Mali 2012 www.africaneconomicoutlook.org Mali Real economic growth ground down to 1.1% in 2011 following a fall in agricultural production and a series of external shocks (the post-election crisis in Côte d’Ivoire, the Libya war, and the rise in oil, gas and food prices). Despite the coup in March 2012, growth is expected to reach 6.9% in 2012 and 5.2% in 2013, provided that the crop year is good, gold and cotton prices rise and trade with Côte d’Ivoire increases. However, the strong rate of population growth combined with political instability could have a negative impact on the country’s socio-economic indicators. The results of the national employment policy and initiatives such as the youth-employment programme (YEP) are below expectations. Unemployment hits young people hardest, with the rate standing at 15.4% for 15‑39 year olds. Young job seekers represent 81.5% of all unemployed people. Overview Mali experienced a sharp decline in agricultural production in 2011 due to irregular rainfall and its unfavourable distribution in time and place. This was compounded by external shocks, including the post-election crisis in Côte d’Ivoire, the Libya war and rising oil and food prices. Real gross domestic product (GDP) growth stood at 1.1% in 2011. The poor performance was mainly due to the decline in food production (‑16%), which represents almost a quarter of GDP, and especially in rice production (‑25%). Growth is expected to reach 6.9% in 2012 and 5.2% in 2013, provided that the crop year is good, that gold and cotton prices rise and that trade with Côte d’Ivoire increases. But forecasts for 2012‑13 are overshadowed by uncertainty as a result of political upheaval following the coup and the violence that broke out at the start of 2012. In 2011, GDP growth was sustained primarily by cotton production and trade, but also by textiles, food processing, transport, telecommunications and livestock farming. On the demand side, consumption and exports of cotton and gold drove growth. Youth unemployment is a critical problem in Mali. Unemployment stood at 9.6% in 2011 but was as high as 15.4% for 15‑39 year olds. There are a number of causes of this, including low economic growth, rapid population increase (3.6% a year), the size of the young population, lack of suitable job training, the rural exodus, and the low absorption capacity of the formal sector. In 1998, Mali designated employment a central pillar of human development and an effective means of combating poverty. This policy is implemented through several projects and programmes, including a youth employment programme (PEJ) and a ten-year vocational training development programme (PRODEFPE). Despite these initiatives, the results achieved in terms of job creation are below expectations. The government’s long-term solution to the unemployment crisis involves addressing the structural causes of unemployment by implementing pro-active policies aimed at markedly increasing the growth rate of the economy, strongly reducing population growth and training young people in sectors that correspond to the needs of the economy. African Economic Outlook 2012 2 | © AfDB, OECD, UNDP, UNECA Figure 1: Real GDP growth (Western) 10% Real GDP Growth (%) 8% 6% 4% 2% 0% 2003 2004 2005 Real GDP growth (%) 2006 2007 2008 2009 Wes tern Africa - Real GDP growth (%) 2010 2011 2012 2013 Africa - Real GDP growth (%) Figures for 2010 are estimates; for 2011 and later are projections. http://dx.doi.org10.1787/888932619070 Table 1: Macroeconomic Indicators 2010 2011 2012 2013 Real GDP growth 5.8 2.7 3.5 5.1 Real GDP per capita growth 2.8 -0.3 0.5 2.1 CPI inflation 1.4 3 3.8 2.2 Budget balance % GDP -2.7 -1 -3.5 -3.4 Current account % GDP -7.5 -5.4 -3.1 -4.7 Figures for 2010 are estimates; for 2011 and later are projections. http://dx.doi.org/10.1787/888932602445 African Economic Outlook 2012 3 | © AfDB, OECD, UNDP, UNECA Recent Developments & Prospects Table 2: GDP by Sector (percentage of GDP) 2006 2011 Agriculture, forestry, fishing & hunting 36.7 41.1 Mining and quarrying 8.3 7.6 of which oil - - Manufacturing 9 5.4 Electricity, gas and water 2.1 2.2 Construction 5 5.7 Wholesale and retail trade, hotels and restaurants 14.5 15.6 of which hotels and restaurants - - Transport, storage and communication 5.4 5.9 Finance, real estate and business services 0.4 0.3 Financial intermediation, real estate services, business and other service activities - - General government services 11.2 9.2 Public administration & defence; social security, education, health & social work - - Public administration, education, health - - Public administration, education, health & other social & personal services - - Other community, social & personal service activities - - Other services 7.4 7.1 Gross domestic product at basic prices / factor cost 100 100 Figures for 2010 are estimates; for 2011 and later are projections. http://dx.doi.org10.1787/888932621046 Real GDP growth was estimated at 1.1% in 2011, boosted mainly by secondary and tertiary sector growth of 8.3% and 3.8% respectively, while the primary sector contracted 5.8%. Forecasts predict growth of 6.9% in 2012 and 5.2% in 2013, based on good agricultural yields and rising gold and cotton prices. But these projections could be affected by the uncertainty regarding the country's political future created by events in early 2012. Negative growth in the primary sector in 2011 was the result of a fall in agricultural production (‑11.6%), and especially in rice production (‑25%). Strong cotton sector growth (66%) helped to limit the shortfall, however. The 2011/12 agro-pastoral season saw rainfall arrive late and end early, reducing crop production and causing a food crisis to start in December 2011. Livestock farming, which employs around 30% of the working population, showed 4% growth in 2011 and accounted for 9.0% of GDP. Having shown strong growth in 2011, cotton production is expected to stabilise in 2012/13, while food production is expected to grow by 20% in 2012. As a result, the primary sector as a whole is expected to record growth of around 12% in 2012/13, while agricultural production alone is expected to grow by around 18%. The secondary sector grew by 8.3% in 2011 thanks to growth in the textile (+31%) and food-processing (+18.6%) industries. The upward trend in international gold prices combined with the opening of new gold mines (most notably in Kodiéran and Tabakoroni) during the second half of 2011 make the outlook good for 2012/13, with growth projected at 10% for the extraction industries and 8% for the secondary sector as a African Economic Outlook 2012 4 | © AfDB, OECD, UNDP, UNECA whole. The 3.8% growth recorded in 2011 in the service sector was based mainly on trading, which is one of the largest sub-sectors of the economy and accounted for 15% of GDP, followed by transport and telecommunications. The vitality of these activities has been bolstered by the increase in the private consumption of households but has been held back by social upheaval affecting the Bamako-Abidjan road corridor. In 2012/13, growth should reach 6.5% in the trading sub-sector and 7% in transport and telecommunications will remain at 7% thanks to an expected increase in trade with Côte d’Ivoire. On the demand side, consumption is the main driver of growth, followed by exports. Spurred by private consumption by households, overall consumption rose by 2.8% in 2011 thanks mainly to civil service pay rises and recruitment in education, health, the army and security activities. However, private consumption has been less dynamic than initially expected because of a fall in remittances from Malians abroad, which are a major source of household income. Gross investment contracted by 6.2% in 2011 to around 21.1% of GDP. This decrease is not related to fixed capital, which rose 7%, but to a reduction in stocks resulting from a decline in production. Infrastructure attracted most investment in 2011, taking a 33% share of all financing. Investment went to major road projects aimed at opening up the country internally and externally, to human resources projects in education, health and employment, and to water and energy supply and the rural economy. African Economic Outlook 2012 5 | © AfDB, OECD, UNDP, UNECA Macroeconomic Policy Fiscal Policy In December 2011, the Malian government adopted a new growth and poverty reduction strategy framework (GPRSF) for 2012‑17. The medium and long term goal is to “make Mali an emerging country and an agricultural power with a good quality of life for its people, both men and women”. 1 Overall, the implementation of macroeconomic policy in 2011 was satisfactory. In December 2011, the executive board of the International Monetary Fund (IMF) completed its seventh review of the Mali programme and the extended credit facility (ECF) supporting it. This resulted in the release of 6 million special drawing rights (SDRs) and the adoption of a new three-year ECF agreement. In 2011, Mali met four of the eight criteria set out in the West African Economic and Monetary Union (WAEMU) economic convergence programme, including three of the top-level criteria. The four criteria met were those relating to average annual inflation, public debt as a percentage of GDP, internalm and external payment arrears and investment financed by domestic resources as compared to fiscal revenue. The 2011 budget was passed in a difficult macroeconomic environment, and subsequently a series of external shocks forced the government to pass a law adjusting the budget. Overall, the key budget goals were achieved. The underlying primary balance, excluding expenditure on state telecommunications company SOTELMA (Société des télécommunications du Mali), showed a deficit of 0.3% of GDP in 2011, even though the amended budget had provided for a 1.4% deficit. The budget deficit improved in 2011 to 1.0% of GDP thanks to good tax revenue, good control of expenditure on salaries, and underspending on other current expenditure and internally financed capital expenditure. The deficit is expected to worsen in 2012 due to the cost of holding elections and managing the crisis in the north of the country. The deficit is forecast to reach 3.7% of GDP in 2012 and 3.5% in 2013. At the same time, the tax burden (14.8% of GDP in 2011) has increased a mere 0.2% and remains below the 17% WAEMU threshold. General budget support disbursed by technical and financial partners amounted to XOF 86.9 billion (CFA Franc BCEAO) in 2011. Total expenditure and net lending increased by 11.1% to reach XOF 1.424 trillion in 2011. This was mainly a result of a 1.7% increase in current spending as a percentage of GDP, itself caused by additional transfers to energy company Énergie du Mali, spending on the repatriation and settlement of migrants from Côte d’Ivoire and Libya, an increase in lending to agriculture and spending on preparations for the 2012 elections. Spending on social sectors (especially education and health), which remain a priority, represented 32.4% of 2011 budget spending and 33.5% of spending in 2012. Capital spending, 53% of which is financed from abroad, represented 7.0% of GDP in 2011 and is expected to fall to 6.8% in 2012 before curving back up to 7.2% in 2013. The current spending structure does not sufficiently support economic growth and results suggest it is not very effective in the social sectors. African Economic Outlook 2012 6 | © AfDB, OECD, UNDP, UNECA Table 3: Public Finances (percentage of GDP) 2003 2006 2007 2008 2009 2010 2011 2012 2013 Total revenue and grants 20.2 54.4 19.5 19 21.7 20.2 22.2 19.4 19.5 Tax revenue 14.2 14.7 14.2 13.3 14.7 14.6 14.5 14 14.1 Oil revenue - - - - - - - - - Grants 4.6 38.9 4.6 3.4 4.6 2.9 5 2.8 2.8 Total expenditure and net lending (a) 22.5 24.0 24.7 21.2 25.9 22.9 23.1 22.9 23 Current expenditure 14.4 13.9 14.5 13.4 14.7 14.6 16.3 16.6 16.1 Excluding interest 13.7 13.4 14.1 13.1 14.3 14.2 15.8 16 15.6 Wages and salaries 4.3 4.6 4.8 4.8 5 5 5.3 5.7 5.7 Interest 0.8 0.5 0.4 0.4 0.4 0.4 0.5 0.6 0.5 Primary balance -1.5 30.8 -4.8 -1.9 -3.9 -2.3 -0.5 -2.9 -2.9 Overall balance -2.2 30.4 -5.2 -2.2 -4.2 -2.7 -1 -3.5 -3.4 Figures for 2010 are estimates; for 2011 and later are projections. http://dx.doi.org10.1787/888932622034 Monetary Policy Mali belongs to the WAEMU, and its monetary policy is conducted by the Central Bank of West African States (CBWAS). The central bank adopts a prudent monetary policy in the region to control inflationary pressures, stabilise the real exchange rate of the CFA franc vis-à-vis the euro and keep exports competitive. The money supply grew by 11% in 2011 thanks to lending to the economy and to the State. In addition, the government is continuing to reduce the use of loans from commercial banks, which amounted to 1.3% of GDP in 2011. Credit to the private sector, meanwhile, grew to 8.5% of GDP. Lending rates have remained relatively high over the past few years, reaching 9.58% in 2010, compared with a WAEMU regional average of 8.11%. Deposit rates, meanwhile, have remained almost stable since 2008, falling only slightly from 5% in 2008 to 4.86% in 2010, just below the WAEMU average of 5.12%. Inflation reached 3% in 2011 due to rising cereal prices following a drop in production, an increase in transport costs due to the Côte d’Ivoire crisis and higher prices for petroleum products. Inflation is forecast to stay close to 3% in 2012. Economic Cooperation, Regional Integration & Trade Exports rose by 19.7% in 2011 as cotton-fibre sales shot up by 113.3% and gold sales expanded by 16.5%. Gold exports were boosted by greater production at several existing mines and the opening of new mines, as well as higher international prices. Imports of goods increased 15.3% in 2011 because of higher prices for imported petroleum and food products. Remittances from Malians living abroad fell back slightly in 2011 due to crises in their countries of residence, including, notably, the developed world and Libya. The current account deficit, including grants, was estimated at 5.2% of GDP in 2011. This deficit was financed by net capital inflows, mainly in the form of foreign aid and foreign direct investment. The deficit is projected to fall to 4.0% in 2012 before expanding to 5.7% in 2013. As regards financial transactions, net capital flows fell in 2011 to XOF 198.2 billion due to the scant increase in public capital. Inflows of net direct investment rose to XOF 232.3 billion in 2011 under the impact of planned investments at the Diamond Cement works, the Sukala sugar plant and on Millennium Challenge Account projects. There was a slight upturn in the balance of the capital and financial transactions account, which rose 11.53% in 2011. The balance is projected to reach XOF 467.7 billion in 2012 and XOF 492.1 billion in 2013. The overall balance of payments showed a deficit equivalent to 1% of GDP in 2011. Mali is an active participant in the regional integration initiatives led by the Economic Community of West African States (ECOWAS) and the WAEMU. The government has signed and ratified almost all agreements and African Economic Outlook 2012 7 | © AfDB, OECD, UNDP, UNECA protocols on regional organisation, integration and co‑operation. Mali is a stakeholder in the negotiations of the World Trade Organization (WTO) as part of the Doha Development Round. Mali’s main demands in the negotiations remain: i) the elimination of cotton subsidies by developed countries as part of the Cotton Initiative (C4 group), ii) access to developed countries’ markets, iii) special and differential treatment for the least developed countries, and iv) trade aid. Negotiations for an economic partnership agreement (EPA) with the European Union are led by ECOWAS with the support of the WAEMU. The Malian authorities support the regional position, which calls for assistance, financial and otherwise, to offset the effects of the liberalisation which an EPA would engender before any agreement is signed. In the public development aid (PDA) field, progress was made in 2011 on implementing the Paris Declaration on Aid Effectiveness. However, no progress has been made in terms of co‑ordination and harmonisation with “non-traditional” donor countries, particularly China, India and Brazil, which are co‑operating increasingly with Mali. Table 4: Current Account (percentage of GDP) 2003 2006 2007 2008 2009 2010 2011 2012 2013 Trade balance -1.4 1.2 -4.1 -7.3 -2.4 -3.3 0.2 3 2.2 Exports of goods (f.o.b.) 22 25.3 21.8 24 19.8 20.8 24.7 26.7 25.8 Imports of goods (f.o.b.) 23.4 24.1 25.8 31.3 22.2 24.2 24.5 23.6 23.7 Services -6.1 -5.9 -5.6 -6.5 -5.3 -5.3 -5.6 -5.4 -5.7 Factor income -3.8 -4.2 -4.1 -3.6 -5.1 -3.7 -4.3 -4.9 -5.1 Current transfers 4.9 2.6 3.9 5.2 5.4 4.9 4.3 4.1 3.9 Current account balance -6.4 -6.3 -9.8 -12.2 -7.3 -7.5 -5.4 -3.1 -4.8 Figures for 2010 are estimates; for 2011 and later are projections. http://dx.doi.org10.1787/888932623022 Debt Policy Public debt stock increased from 26.8% of GDP in 2010 to 27.5% in 2011, and is expected to progress to 28.1% in 2012. External debt represented 86.5% of public debt in 2011. The ratio of external debt service to exports of goods and services fell to 4.5% in 2011. To maintain debt sustainability, Mali is set to continue with its prudent fiscal policy, and external financing will continue to be in the form of grants and loans with a concessionality rate of at least 35%. However, the government intends to use the forthcoming debt sustainability analysis to determine an envelope of non-concessional loans for infrastructure investments that would be compatible with debt sustainability. In 2011, the government made an inventory of all the agreements under which the government has contracted domestic debt or given a commitment to guarantee domestic debt so that this information can be recorded in public debt data and budgets. This has already enabled the government to identify direct and indirect commitments to the banking sector amounting to XOF 183 billion (3.6% of GDP), including XOF 41 billion (0.8% of GDP) in amounts due and unpaid. In 2011, XOF 2.3 billion of this was paid off and a further XOF 7.5 million allocation has been included in the 2012 budget. African Economic Outlook 2012 8 | © AfDB, OECD, UNDP, UNECA Figure 2: Stock of total external debt (percentage of GDP) and debt service (percentage of exports of goods and services) 125% Percentage 100% 75% 50% 25% 0% 2003 2004 2005 2006 2007 Debt/GDP 2008 2009 2010 2011 2012 2013 Debt s ervice/Exports Figures for 2010 are estimates; for 2011 and later are projections. http://dx.doi.org10.1787/888932619070 African Economic Outlook 2012 9 | © AfDB, OECD, UNDP, UNECA Economic & Political Governance Private Sector Most economic activity in Mali is centred around self-employment and is limited to subsistence activities. Such activities rely on social relations and informal networks. Private companies are small, with few permanent staff and large variations in cash flows. These companies face various obstacles, including limited access to finance, products that do not meet international standards, restrictive taxation, corruption, lack of dialogue between public and private stakeholders and technical and financial partners, high transaction costs and basic infrastructure that is well below the necessary standard. The World Bank’s Doing Business 2012 report ranks Mali 146th out of 183 economies. For labour market legislation, the World Economic Forum ranks Mali 82nd out of 139 economies in its employment rigidity index and 100th for wage determination flexibility. These rankings reflect the difficulties and high cost of hiring and firing in Mali. Private land ownership is permitted with few restrictions but the relative freedom of access to land is limited by poor management of the land register and the land registration procedure. Nevertheless, improvements were made in 2011. The Doing Business report classifies Mali as the WAEMU member countrywith the best record for business climate reform. As regards commercial and industrial law, Mali’s ranking has improved greatly, according to the report. It has climbed, notably, from 152nd to 126th place in the rankings for ease of obtainment of credit. Mali has also improved by making it easier to start up a business. The process now requires four procedures and takes eight days, although both these figures remain high compared to those of Senegal, where setting up a company involves three procedures and takes just five days. In 2011, the government adopted a new investment code that should make the private sector more viable and better able to contribute to economic growth. The technical and financial partners who are providing support for the Malian financial sector, who are being headed in 2012 by the African Development Bank (AfDB), also plan to carry out a study profiling the country's private sector with the aim of remedying the current deficit of information about it. Financial Sector Financial stability is underpinned by the prudential surveillance of the WAEMU Banking Commission, which conducts regular, on-the-spot checks of the country’s financial institutions. Mali shares an exchange-rate mechanism with the other WAEMU member states that imposes no restrictions on payments and transfers connected with current international transactions. Malian banks comply with WAEMU directives on increasing the minimum capital requirement for banks and other financial institutions, which stood at XOF 10 billion on 31 December 2012. The financial system has sufficient liquidity but most local banks only have short-term resources, which is not conducive to long-term financing for major projects. Credits to the economy stand at around 13% of GDP, while deposits stand at around 21%. Lending rates have fallen in recent years but are slightly above the WAEMU average of 8%. The quality of banks’ portfolios has improved but remains unsatisfactory. Bad debt makes up 10% of outstanding loans but is only 52% covered by provisions. Access to financial services remains limited, with only 10% of Malian companies having obtained credit to finance their activities. This limited access to credit is generally justified by the incapacity of companies to offer the banks adequate guarantees, the complexity of the loan process, the absence of a real need for financing among businesses and the high cost of credit. In May 2011, however, the government responded by approving the feasibility studies carried out into the creation of a private-sector guarantee fund (FGSP) and a capital-stock investment company (SICR). The FGSP aims to provide banks with guarantees for medium and long term loans (2‑7 years) contracted by small and medium-sized enterprises (SMEs), while the SICR aims to take shareholdings in companies. In addition, the African Development Bank (AfDB) approved a credit line for the Malian Solidarity Bank (BMS) to contribute to promoting SMEs and small and medium-sized industries (SMIs). Finally, in 2011 the government issued a tender call for an investment bank and a law firm to advise it on the privatisation of the Malian housing bank BHM, which is to be carried out in 2012. Public Sector Management, Institutions & Reform Mali continued to implement its reform policies to modernise the public administration, decentralise government and modernise the management of public finances. In particular it has created an institutional development programme (PDI), a national decentralisation policy, and an action plan to improve and modernise public finances (PAGAM/GFP). The PDI programme has gradually made public services more effective by using modern management methods and procedures and strengthening communication and relations between users and the administration. However, the process of preparing and validating the results-based national management policy fell behind African Economic Outlook 2012 10 | © AfDB, OECD, UNDP, UNECA schedule in 2011. With regard to competition and privatisation, the BHM, national railway company CTF and national textiles company CMDT have all been restructured. A third mobile-phone licence has also been awarded. On the railways, the percentage of freight carried by rail in the Bamako-Dakar corridoor fell to less than 20% in 2011. The receivership plan devised by the Malian and Senegalese governments after operator Transrail filed for bankruptcy in 2009 was approved in December 2011. The plan envisages a lease arrangement and the creation of a joint-assets company between the two countries. The rapid implementation of this plan in 2012 will enable rail traffic to continue uninterrupted and open up funding for rail infrastructure. In the cotton sector, there was no significant progress in 2011 in the restructuring of state cotton company CMDT and the government appears to be reconsidering its earlier plans to privatise the company. In the mobile telephony sector, a consortium formed by Planor and Monaco Telecom won the third licence with an EUR 84 million bid. The government continued with its devolution and decentralisation plans in 2011, drawing up and implementing three-year plans to transfer resources and devolve powers and setting up support cells in several ministerial departments to provide assistance with the decentralisation and devolution process. Also, the distribution of income and expenditure between the state and local and regional authorities has been clearly defined. A law passed on 15 July 2011 determines the rules for distributing tax revenue collected by each municipality, cercle(sub-region) and region. However, the level of decentralisation of budget allocations (the share of the state budget spent by regional authorities) remains low at about 14% in 2011, and only two ministries, education and health, have begun to transfer resources to local and regional authorities. The government is pursuing its three-year action plan set out in the tax-reform strategy it adopted in December 2010. The plan aims to modernise and simplify tax laws and move them into line them with WAEMU directives. The government is not making sufficient progress in rolling out the PNTF national fiscal-transition programme. Mali’s tax burden stood at around 14.3% of GDP in 2011 and the IMF is projecting this to increase by half a percentage point per year. This means the country will not achieve the 17% target set by the WAEMU for 2013. Progress has been made in connecting expenditure services at central and decentralised level, thus enabling information to travel more easily and more reliably, reducing the time it takes to complete administrative procedures, improving the quality, presentation and timeliness of budget documents, and providing real-time information regarding execution of the State budget. Similarly, there have been continued efforts to extend the medium-term expenditure frameworks (MTEFs) to all ministerial departments to translate medium-term sectoral strategies into budgetary terms in a way that is consistent with the Growth and Poverty Reduction Strategy Paper (GPRSP). The number of MTEFs rose from 24 to 28 in 2011. Regarding internal budget control, a-priori financial control of public spending has improved, reaching a level of 96% in 2011, while the effectiveness of services provided began being monitored at the various reception committees in April 2011, with the support of the national financial control directorate. Furthermore, the government devised and approved a national internal budget control strategy in 2011. As regards external budget control, in 2011 the government passed a law validating public accounts for the period from 1960 to 1991. Work is under way to expedite approval of state accounts for the period from 1992 to 2008. Moreover, throughout 2011, the government hired additional staff for the accounts section of the Supreme Court pending the opening of the Court of Auditors. Natural Resource Management & Environment Mali still faces enormous environmental challenges: desertification, deteriorating vegetation and soil cover, silting up of the River Niger, lack of rainfall, loss of biodiversity and deterioration of living conditions. These challenges will be exacerbated in the coming years by climate change and the pressure of human activity from a, population growing at a rate of 3.6% a year. In 2011, efforts were made to better manage environmental and climate problems and the situation should improve significantly in 2012/13 thanks to international funding to help combat climate change. With the support of technical and financial partners, especially the African Development Bank (AfDB), the government has drawn up a large-scale renewable energies development programme (SREP) and an investment plan based on the national renewable energies strategy. As part of its preparations for the new 2012‑17 Growth and Poverty Reduction Strategy, environmental and climate problems have been mainstreamed so they are afforded better consideration. The environment and sanitation ministry has drawn up a national policy and strategy for climate change and an action plan. The agency for the environment and sustainable development was created in 2011 to support implementation of national policies and programmes. Strategic environmental assessments were also made mandatory for new sectoral programmes. In collaboration with partners including Sweden and the World Bank, several programmes and projects are planned in 2012 to manage and monitor the use of natural resources. Norway and Germany set up a technical-assistance project in 2011 to support Mali in defining a portfolio of projects eligible for the Clean Development Mechanism (CDM). African Economic Outlook 2012 11 | © AfDB, OECD, UNDP, UNECA Political Context After ten years under President Amadou Toumani Touré, just a few months before the end of his final term of office, a military junta attempted a coup on 22 March 2012. The internal situation in 2011 was marked by preparations for the referendum on constitutional reform and the presidential and legislative elections planned for April 2012, but now Mali has been thrust back into political instability. The stated purpose of the junta was to end the “incompetence” of the regime in its fight against armed Islamist groups that are prevalent in the north. The security situation in the region became particularly worrying in 2011 as a result of the return of Malians who had been in the Libyan army and the presence of terrorist groups affiliated to the Al-Qaeda Organisation in the Islamic Maghreb. A resurgence of insecurity was observed in January 2012, with armed attacks against Malian army camps which resulted in heavy casualties, the displacement of local populations and demonstrations against Tuareg peoples in cities across the country. More than 126 000 people have taken refuge abroad. However, the army does not seem to have the resources and capacity to cope with the size of the country and the mobility of the rebels. Continued political stability depends on factors such as the security situation in the north of the country, political transition and the organisation of new presidential elections. African Economic Outlook 2012 12 | © AfDB, OECD, UNDP, UNECA Social Context & Human Development Building Human Resources One of the major social challenges for Mali is the growing population. The current growth rate is 3.6%, and the fertility rate is 6.6 children per woman. In addition, the population is young, with 60% aged under 25. The contraceptive prevalence rate (6.2% in 2006) is the lowest in West Africa. This could result in unsustainable levels of social spending in the medium and long term. Mali should begin its demographic transition by reducing the fertility rate and addressing population issues in its development policies and programmes. The country remains on track to achieve the Millennium Development Goal (MDG) for primary-school enrolment by 2015. The gross enrolment rate (GER) for lower secondary education was 80.4% in 2011 (87.8% for boys and 73.2% for girls). The gross admission rate was estimated at 69.5% in 2011 (74.9% for boys and 64.3% for girls). The gross completion rate for the first cycle of secondary school was estimated at 57.1% in 2011 (63.8% for boys and 50.4% for girls). However, there are still huge regional disparities. Literacy is much higher in urban areas (53.2%) than in rural areas (21.6%). Education was allocated 35.61% of the 2011 budget. Mali could also achieve the MDG in the fight against HIV/AIDS by 2015, but the other health objectives seem out of reach despite the significant improvements recorded. Access to treatment has improved, with 31 000 patients (87% of the goal set) receiving anti-retroviral drugs in 2010, up from just 9 750 in 2007. Regarding the MDG for infant and child mortality, between 2001 and 2006 vaccination coverage for children aged 12 to 23 months rose from 61.9% to 72%, infant mortality fell from 113.4 per thousand to 95.8 per thousand, and child mortality fell from 229.1 per thousand to 190 per thousand. During the same period, the maternal mortality rate fell from 582 to 464 deaths per 100 000 births. The 2011 budget allocated 12.03% of its resources to health. Poverty Reduction, Social Protection & Labour The ELIM household survey conducted in 2010 improved knowledge of the poor, their socio-economic characteristics and the access they have to services. The survey has provided useful data for defining and monitoring progress made towards achieving the MDGs and has enabled targets to be set in national strategies and programmes such as the PRODESS and PRODEC health and education programmes. The 2012‑17 Growth and Poverty Reduction Strategy adopted in December 2011 envisages clearly defined action to help poor people and vulnerable groups. Poverty persists, especially in rural areas, despite the country’s good economic performance. The proportion affected by income poverty, defined using a poverty threshold in real terms of XOF 165 431 in 2010, dropped from 47.4% in 2006 to 43.6% in 2010. But income poverty remains high in rural areas at 51%. It therefore seems unlikely that Mali will achieve the MDG of reducing poverty by half by 2015. Analysis of the incidence of income poverty by socio-economic group shows that farmers – who make up 62% of the population – are worst affected, with a poverty rate of 57%. The other poorest members of society are unemployed households (29% poverty incidence), self-employed people (23%) and private-sector employees (19%). Gender Equality Inequality and gender discrimination still abound in Mali. Women remain grossly under-represented in decisionmaking bodies: only 10% of Malian members of parliament are women and there is only one woman among the country’s 49 district prefects. In total, only 8.66% of people elected for office are female and only 6 of the 703 municipalities have a mayoress. The literacy rate also varies by gender and by the standard of living of the household, and is twice as high among women (41.6%) than among men (18.8%). Mali has spent many years producing a personal and family code. The first document was adopted by the National Assembly in August 2009, but, following opposition from the Islamic High Council and the Association of Young Muslims, the President of the Republic returned the document to the National Assembly for a second reading. All sectors of society were consulted, including religious leaders, civil society organisations, women’s groups, and representatives of the National Assembly and the government. After two years of discussions, a new document was submitted to parliament and adopted in December 2011. The new code paves the way for better protection of women and children by: raising the marriageable age for girls from 15 to 16 and allowing appeals where the age requirement has been waived; improving the protection of women in certain cases where the husband is not fulfilling his duties, in which case he may lose his status as head of the household; enhancing the protection of women in the countryside by recognising religious marriage; and making it illegal to violate somebody’s physical integrity, even if it is through a religious or customary act such as female circumcision, if it is harmful to their health. However, the text adopted in late 2011 is a step backwards from the version passed by the National Assembly in August 2009, which, although it was never applied, gave women greater protection and abolished many gender inequalities. African Economic Outlook 2012 13 | © AfDB, OECD, UNDP, UNECA Thematic analysis: Promoting Youth Employment Youth unemployment is a critical problem in Mali. Almost 300 000 young people join the job market every year. According to official estimates, unemployment affects 9.6% of the overall population. However, this rate masks disparities by age, gender and place of residence. Unemployment is higher among 15‑39 year olds (between 7.6% and 15.4%) than among 40‑64 year olds (between 1.7% and 6.9%). Unemployment affects women (58.8%) more than men. It is also higher in Bamako (27.3%) than in smaller towns and cities (14%) and rural areas (6.6%). The main problem in rural areas is underemployment during the dry season. On average, unemployment lasts five years and most unemployed people (81.5%) are young people looking for their first job. The scale of unemployment has many causes, including: Poor economic growth: with average growth between 2005 and 2011 of just 5%, the Malian economy creates very few jobs per year. Rapid population growth: the rate of population growth is among the highest in the world, resulting in an ever-expanding workforce. A very young population: 49% of the population are under 15 and 30% are aged 15‑35. Training that is not adapted to the employment available: the education system churns out too many graduates in disciplines in which jobs are limited or non-existent (office management, accounting, management and law, for example) but not enough suitably trained graduates in sectors offering more employment and self-employment opportunities (such agriculture and forestry, industry and agro-industry, mining , core construction professions and information and communication technologies). The rural exodus: many young people from rural areas move to towns and cities temporarily or permanently, inflating the number of jobseekers. The poor absorptive capacity of the formal sector: private companies and the public administration employ only 5% of the workforce, so that the overwhelming majority of the workforce have precarious, poorly paid jobs in agriculture and the informal sector, which dominate the country’s economy. The urban informal sector offers most jobs but these are often insecure and poorly paid. With the support of the International Labour Office, the authorities adopted a national employment policy in 1998. This policy treats employment as an essential part of human development and an effective means to combat poverty. It prioritises jobs for young people and has as its objectives: (i) to reduce unemployment and underemployment by development activity, notably that which is labour intensive; (ii) to improve the supply of labour by making training more suited to market needs; (iii) to increase demand for labour in urban and rural areas through private-sector development; and (iv) to promote employment locally by taking regional characteristics into account. The national employment policy adopts a holistic approach that does not limit itself to using the benefits of economic growth to promote employment but also proposes a series of innovative measures to facilitate the integration of young people into production. These initiatives include: The youth-employment programme (YEP), which is financed by the government with ILO technical assistance. The two-phase programme (2004‑08 and 2011‑16) has enabled 4 000 young graduates to benefit from professional-qualification courses between May 2005 and October 2009. The national employment action programme for poverty reduction (PNA/ERP), which is also funded and supported by the International Labour Office. Launched in 2003 for a seven-year period, the programme has trained 300 home helpers and 91 young people through 21 workshops. The PEJHIMO programme, funded by State resources generated by Heavily Indebted Poor Countries initiative (HIPC) and the Grand Duchy of Luxembourg with technical assistance from the International Labour Office, aims to integrate young people into employment by investing in labour-intensive work in rural areas. Launched in 2005, it has created around 33 000 days of work through initiatives involving small and medium-sized companies, as well as 150 new permanent posts. The PAPESPRIM programme to promote private-sector employment, which is a five-year programme initiated in 2008 and funded by the State and by Denmark. This programme has funded 14 studies by national offices and provided 50 vocational-training scholarships. The PAJE-Nieta project, funded by the state and the United States Agency for International Development (USAID), which supports young entrepreneurs. This five-year project aims to enable the training of 12 000 young entrepreneurs. African Economic Outlook 2012 14 | © AfDB, OECD, UNDP, UNECA The ten-year PRODEFPE programme for the development of vocational training for employment, prepared in 2011 for 2012‑21. Costing around XOF 1.660 trillion, the programme aims to strengthen the institutional capacity to steer and manage vocational training, create and implement a national engineering capacity, develop training in promising sectors, train human resources in promising sectors and facilitate the socioeconomic integration of young people and women. Despite these initiatives, the results achieved in terms of youth employment are below expectations. The government’s long-term solution to the unemployment crisis involves addressing the structural causes of unemployment. The government must go beyond palliative measures and implement proactive policies aimed at accelerating economic growth, sharply reducing population growth and training young people in sectors that meet the needs of the economy. Notes 1 Growth and Poverty Reduction Strategy Framework, CSCRP 2012-2017, 28 December 2011. http://www.mali- apd.org/IMG/file/pdf/DOCUMENTS_CLES/1_CSCRP/2012_MALI_CSCRP_2012_2017_VF.pdf African Economic Outlook 2012 15 | © AfDB, OECD, UNDP, UNECA