Jakartas on the Niger PROPELLING MALI ONTO A SUSTAINABLE GROWTH PATH

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1 THE BRENTHURST FOUNDATION Discussion Paper 2011/04 Jakartas on the Niger PROPELLING MALI ONTO A SUSTAINABLE GROWTH PATH Greg Mills and Terence McNamee Strengthening Africa s economic performance

2 Contents Executive Summary 3 Introduction 4 A Rich History 6 Harnessing the Youth Bulge Mali s Turning Point? 8 Decreasing Security 11 Coalitions for Growth 14 Identifying Areas of Actions for Growth 15 Agriculture 16 Tourism and Security 18 Mining 20 The Three Fronts 22 A Dialogue on Development 22 Private Sector 23 Youth and Unemployment 23 Conclusion 24 Endnotes 25 The authors of the Discussion Paper are Dr Greg Mills, Director of The Brenthurst Foundation, and Dr Terence McNamee, Deputy-Director. The authors wish to thank Her Excellency Tine Anbaek, Denmark s Ambassador to Mali, for her generous assistance in organising and facilitating the authors research trip to Mali and the numerous interviews and discussions which informed this Paper. The authors are also grateful for the assistance provided by Dr Oumar Bouare, Head of the CAP in Bamako. The views expressed in this Paper and any errors found therein are the authors own. Published in June 2011 by: The Brenthurst Foundation E Oppenheimer & Son (Pty) Ltd PO Box 61631, Johannesburg 2000, South Africa Tel +27 (0) Fax +27 (0) All rights reserved. The material in this publication may not be reproduced, stored, or transmitted without the prior permission of the publisher. Short extracts may be quoted, provided the source is fully acknowledged. Layout by Sheaf Publishing, Benoni

3 Executive Summary Mali is at a vital turning point, a crossroads in its history. The next 20 years will be very different from the two decades which have passed since its people courageously brought a brutal dictatorship to an end, a period characterised by gradual but steady progress, where the maintenance of stability and tradition was prioritised above all else. In colloquial terms, it can no longer be business as usual in Mali. The country will either reap the harvest of its enormous population boom a demographic dividend, if harnessed wisely and lift itself onto the next rungs of the development ladder; or slip backwards, becoming a nation increasingly reliant on foreign assistance and lurching from one socioeconomic crisis to the next. Against the backdrop of this all-important population growth, this paper considers three key sectors agriculture, mining and tourism where catalytic steps or actions for growth taken by the government could propel it onto a sustainable growth path. It identifies major factors which aid the government s growth prospects its democratic rule and relative openness, societal cohesiveness, and the tremendous untapped potential in these sectors; and the ones which hinder it the deteriorating security in Mali s northern provinces, Mali s inhibitive tradition of consensus-building, lack of technical and vocational skills, policies towards women and family planning, and its failure to create a shared national vision of growth to mobilise the population. The paper argues that the government must urgently engage with its population on three key fronts creating a national dialogue on development, prioritising private sector growth and tackling youth unemployment. 3

4 There is an earnestness in the Jakartas, a desire to get somewhere faster, even if their final destination is unclear Introduction The first thing you notice on arriving in Mali s bustling capital Bamako are the Jakartas. That is the brilliantly-apt moniker given to the inexpensive, typically 125cc Chinese-made motorbikes which dominate the city s streets. It is estimated that there are nearly half a million in use across the country. Officially, both motorcycles and their operators require a licence but these rules are largely ignored. They boast decent fuel efficiency but they are pretty light on safety features. Accidents involving Jakartas are all-too frequent. But there is something compelling, if not irresistible about Mali s Jakartas, especially when juxtaposed against the magnificent river the Niger which flows through and is the lifeline of this unique West African country. There is an earnestness in the Jakartas, a desire to get somewhere faster, even if their final destination is unclear. The recent 50th anniversary of Mali s independence (1960) and the upcoming Presidential elections in 2012 have prompted serious reflection on the acute human and economic development challenges facing the country. Mali has enjoyed two decades of political stability and is among Africa s most respected democracies. Its reform-minded government has continued an IMFrecommended structural adjustment programme that has seen improvements and new investment in Mali s main economic activities: mining which accounts for about 70 per cent of the country s exports; and agriculture, where preparations are under way for the privatisation of the cotton sector. There have also been some modest reductions in poverty. Mali is steadily moving up the World Bank s Doing Business Indicators, ranking 153rd (of 183 countries) in 2011 compared to 166th (of 181) in From 1996 to 2010, economic growth in Mali averaged 5 per cent. 1 Nevertheless, annual per capita income is still less than $700 and half of Mali s 14 million people live below the poverty line. Although unemployment is officially only 15 per cent in this West African country, nearly 80 per cent of Malians are employed in subsistence agriculture, where seasonality sees regular temporary unemployment. About 30 per cent of the population do not have access to safe drinking water, and more than one-quarter is malnourished. By some estimates just one-quarter to one-third of Malian young people and adults can read and write, among the lowest adult literacy rates in the world. Illiteracy is significantly higher among women than men. 4

5 Implementation of such a wideranging programme of reforms is prohibitively difficult In sum: for all the notable progress in recent years, Mali remains one of the ten poorest countries in the world. The government receives about $1billion annually from a range of multilateral and bilateral donors and receives about the same in remittances from Malians living outside the country as well as various forms of technical assistance and policy advice. The recent IMF Poverty Reduction and Growth Strategy Paper (PRGSP), for instance, made no less than 54 recommendations to stimulate sustainable equitable growth, accelerate poverty reduction and increase the volume and effectiveness of financing. They comprise the usual menu of sound ideas: strengthen the capacity of small- and medium-size enterprises, fight corruption, establish a simplified tax system, strengthen regulation, control population growth, bolster skills training and so on. 2 Doubtless most, if not all, of these recommendations align with the government s stated commitment to create the conditions for prosperity, rather than merely fight poverty. But implementation of such a wide-ranging programme of reforms is prohibitively difficult. The government faces not only acute human capacity shortages which cannot be fixed in the short-term but also a deteriorating security situation in the northern part of the country. At present this prevents the rolling-out of key development programmes and initiatives, such as the government s Special Programme for Peace, Security and Development in Northern Mali (PSPSDN). Mali is similar to other highly under-developed countries attempting to get onto the next rungs of the development ladder. When everything is a priority, often the greatest challenge for governments is deciding how to focus its limited capacity and resources to maximum effect now, and therefore build the foundations for sustainable growth for the medium- to long-term. Although Mali s government has identified the major obstacles to growth, it is grasping to implement deeper reforms and prioritise actions effectively. This Discussion Paper is based primarily on the authors research and interviews in Mali in February It is not a comprehensive account of the multi-faceted and multi-sectoral constraints to economic growth in Mali. Its aim, rather, is to identify key catalytic steps or actions for growth that are realistic, which the government might consider now and in the short-term to propel it onto a sustainable growth path. While the precise details of these actions would be for the government to decide, what is certain is that they will involve hard political choices. To achieve 5

6 How might the government focus its limited capacity and resources to maximum effect now? the government of Mali s stated objective of increased prosperity, Mali s economy must grow significantly; indeed it is imperative that it exceed the forecasted levels around 7 per cent suggested by the IMF in order to reduce income poverty levels. The main reason for urgency in this regard is Mali s much-commented upon population time bomb, examined following the brief historical sketch below. MALI National capital Regional capital Town, village Major airport International boundary Regional boundary Main road Other road Track Railroad km mi M A U R I TA N I A A L G E R I A Taoudenni Poste Maurice Cortier Bordj Mokhtar Timéiaouîne Tessalit Ti-n-Zaouâtene In Guezaam Aguelhok Assamakka TOMBOUCTOU K I D A L Tidjikdja Kidal Vallée du Tilemsî Edjéri MALI Aleg Tombouctou Lac Bourem Rosso Faguibine (Timbuktu) G A O Kiffa 'Ayoûn el 'Atroûs Néma Râs el Mâ Gourma- Kaédi Rharous Goundam Gao Ménaka Lac Niangay Ansongo Andéramboukane Sélibabi Nara Aourou Nioro Nampala Douentza Tahoua du Sahel Nayé Kayes Mourdiah M O P T I Diéma Mopti Oullam N I G E R SENEGAL Bandiagara Birnin Madaoua Tambacounda Niono Djibo KAYES KOULIKORO Dori Tillabéri Konni Djenné Tera Bafoulabé SEGOU Ouahigouya Niamey Ségou Kita San Tougan Dosso Sokoto Lac de Koulikoro Kaya Bogandé Manantali Kati Birnin Kebbi Koundara Bamako B U R K I N A F A S O CAPITAL Koutiala Dédougou Gummi Balaki Ouagadougou DISTRICT Diapaga Koudougou Fada- Gaoual Kamba Kombissiri N'gourma Labé Dinguiraye Siguiri L. de Bougouni Sikasso Bobo- Tenkodogo Koko Sélingué SIKASSO Dioulasso Diébougou Léo Pô G U I N E A N I G E R I A Yanfolila Kolondiéba B E N I N The boundaries and names shown and the designations Banfora Navrongo Kontagora used on this map do not imply official endorsement or Djougou Kainji acceptance by the United Nations. Kankan Reservoir Gaoua G H A N A Wawa CÔTE D'IVOIRE Senegal Bafing Bakoy Tinkisso Babulé Niger Baoulé Bagoé Bani Volta Noire Niger Volta Noire Volta Blanche T O G O Niger Vallée de l'azaouak Map No UNITED NATIONS October 2004 Department of Peacekeeping Operations Cartographic Section A Rich History Mali s population is the inheritor of a tremendously rich cultural and historical legacy. The recorded history of the area now called Mali dates from the 4th century AD. A succession of ancient African empires Ghana, Malink and Songhai occupied the West African savannah and controlled the trade routes across the Sahara, where they intermingled with traders from the Mediterranean and Middle East. The Mali Empire, from which the Republic takes its name, reached its peak in the 14th century under Mansa Musa. He captured the city of Timbuktu and helped make Mali a world centre of Islamic study. During Timbuktu s golden age it was a global hub of scholarship in religion, arts and science. By the 17th century, however, the Mali Empire crumbled and the nomadic Tuaregs took over much of the northern part of the country. 6

7 Actions for growth that are realistic and do-able Pre-colonial Mali enjoyed relatively harmonious relations between its various ethnic groups, most of whom shared similar traditions, in part due to the sparseness of the population and the easy mobility afforded by the mighty Niger River. Ethnic groups worked in relatively close proximity but avoided conflict, as traditionally they were linked to distinct occupations the Bambara and Dogon were farmers; the Fulani and Tuareg were herders; and the Soninkes were traders. During the last two decades of the 19th century France s military began to penetrate the area, which the French called Soudan. Eventually France gained control of the region through a series of French-appointed chiefs, bypassing Mali s traditional authorities. As the colony of French Soudan, Mali was administered with other French colonial territories as the Federation of French West Africa. The most significant achievements of French rule were the Dakar Bamako railway and the Office du Niger, an autonomous public enterprise established in 1932 to build the irrigation system on the Niger River and recruit and settle farm families in the region. On 22 September 1960, following Senegal s secession from the Federation of Mali, Soudan proclaimed itself the Republic of Mali. Led by Modibo Keita, Mali s one-party dictatorship evolved into a socialist regime modelled on the People s Republic of China. Popular discontent and economic stagnation led to a bloodless coup in 1968 under then Lieutenant Moussa Traoré. He promised a swift return to civilian rule, but instead a police state was established. The regime s attempt to improve the country s economic situation was severely hampered by a prolonged period of drought, which peaked in the early 1970s and rendered about one-third of the population destitute. Student unrest in the late 1980s culminated in a bloody crackdown on anti-government protests in March 1991, which left as many as 300 dead. The regime s violent oppression triggered another military coup, which deposed Traoré and led to a transitional government and a new constitution that provided for multi-party democracy. Since 1990 Rebel Tuareg groups seeking greater autonomy and a fairer share of government resources had clashed frequently with Mali s military. But in April 1992, the new government signed a pact with opposing factions in the impoverished North, which prompted up to Tuareg refugees to return from abroad. The peace agreement was celebrated in 1996 in Timbuktu during an official and highly publicised ceremony. The current President of Mali, retired general Amadou Toumani Toure, was the former head of state during Mali s transition. He became the country s second democratically-elected president as an independent candidate in 2002, and was 7

8 re-elected to a second five-year term in The constitution restricts Presidents from serving more than two terms. What is certain is that these initiatives will involve hard political choices Harnessing the Youth Bulge Mali s Turning Point? With around 200 million people between the ages of 15 and 24 a number that has more than quadrupled since the 1950s, and which continues to rise sub-saharan Africa hosts the youngest population of any region in the world. Youth represent around 28 per cent of sub-saharan Africa s total population, and the absolute number is expected to climb to meet that of East Asia by 2030 (around 460 million); and to exceed the youth population of South Asia (around 615 million) by The rate of population increase in Mali ranks among the highest in the world. With just 5 million Malians at independence in 1960, the population has grown on average by 2.4 per cent annually and estimates put the current rate at 3.5 per cent. Marriage, especially in rural areas, is common at just 15, and each woman gives birth on average to over six children, in part due to cultural and religious norms encouraging large families. As a result, Mali has a very young population. Some 49 per cent of Malians are under 15 today, and a further 22 per cent are between years old. Mali s Population Tsunami % 8% 6% 4% 2% 0% 2% 4% 6% Males Females Percent of population Adult Population Youth Population Child Population 8% 10% The capital, Bamako, where the population has doubled to 2 million inhabitants in less than two decades, is currently believed to be the fastest growing city in Africa, 8

9 Mali s economy must grow significantly; indeed it is imperative that it exceed the forecasted levels and increasingly one of the most expensive (ranking 37th in the world) with soaring food costs as a main driver. Although only one-third of Malians are considered urban, this is changing at a rate touching 5 per cent per annum. Not only is there a veritable tsunami of young people arriving on the job market an estimated annually but there is very low primary school attendance (little over two-thirds of males and half of females) and an acute shortage of basic skills. And much of this is taking place in a rapidly growing urban environment, gradually being stressed to breaking point by Mali s burgeoning masses. This is a worrying picture by any standards, but in the case of Mali it is exacerbated by factors largely beyond its control: extensive climate variability droughts, desertification and so on which can severely disrupt crop production; price volatility of its import and export products; the trickle-down effects of the global financial crisis; its status as a landlocked country, surrounded by mostly poor countries with weak infrastructure; and regional insecurity which spills over its porous northern frontiers. Added to this is the threat of contagion from the popular revolts which have swept across North Africa in early Mali s democratic leaders bear no comparison to the embattled Arab dictators to their north, but it would be foolish to think masses of jobless Malian youth will never rise up in protest at their lack of opportunities and no one can safely predict what forces such a movement might unleash. This prospect was no doubt on the mind of one senior official who privately decried the minor reforms currently being undertaken by Mali s government as merely postponing chaos. Yet as noted above, this outcome is by no means inevitable. In the context of an economically fragile state like Mali, where the government faces various institutional and resource constraints, there is still tremendous potential for capitalising on the country s demographic dividend through a focused, partnership-based approach, which is driven by the demonstrable capacity of the private sector. Leaving aside factors beyond the government s control, Mali s ability to produce inclusive economic growth and sustainable job creation on the back of its demographic dividend is aided by: Mali s demonstrated commitment to democratic rule. Research overwhelmingly suggests that democracies are the most effective systems of governance for promoting sustained economic growth. Only China and a few East Asian countries out of roughly 120 autocratic cases have managed to have sustained growth without democracy. 4 Of the 17 countries in Africa which have grown at 2 per cent or more over the past two decades, 14 are democracies. 5 9

10 The demographic dividend represents an opportunity for rapid economic growth The spirit of openness and transparency in government. Senior ministers and officials are impressively candid about the extent of the challenges facing the country, they recognise the urgency to tackle the major constraints to economic growth and are open to new solutions (externally derived or not). Mali s peaceful and socially cohesive society. A moderate Muslim country with good relations throughout the international community. The capital and major hub Bamako is generally well run and one of the continent s safest cities, presenting a welcoming face to visitors and investors. Marriage across Mali s tribes is quite common and except in the northern three desert provinces, civil strife is extremely rare. The country s tremendous untapped potential in agriculture, mining and tourism. The Office du Niger has 1 million hectares available for cultivation, yet less than a fifth is currently being utilised; little mining exploration has been conducted in the past two decades, but there is scope for expansion beyond gold to uranium, diamonds and other gems and minerals; and Mali possesses some of Africa s most culturally and historically significant tourist attractions and, in Timbuktu, a priceless brand with global renown, as yet vastly under-exploited. But it is hindered by: The worsening security situation in northern Mali. The three provinces of northern Mali are effectively off-limits to tourists due to terrorist activity. Mali has suffered on account of regional counter-terrorism failings more than its own, yet corruption and the suspected collusion of some local officials has contributed to serious governance problems in the north. The end result is that the terrorist foothold in the region is strengthening. Mali s tradition of consensus-building. Stability and comity in Mali has been achieved in part through a strong tradition of inclusiveness and building broad consensuses, ensuring that no groups are excluded and left to fester. Yet this otherwise positive characteristic of Malian politics has made it virtually impossible for the government to make tough decisions in the national interest, the kind of decisions which inevitably are to the short-term detriment of certain constituencies but in the long-run help to propel the country onto a sustainable and equitable growth path. Lack of technical and vocational skills. A culture which has historically privileged people of commerce and trade, the government has placed grossly insufficient emphasis on developing technical and vocational skills among its young people, which are essential to driving a modern economy. 10

11 Are the minor reforms currently being undertaken by Mali s government merely postponing chaos? Attitude towards women and family planning. The government s attempt to introduce a new Family Law in 2009, granting greater rights to women and a new minimum age requirement for marriage, was abandoned for the sake of stability and national unity when it faced a popular backlash led by Muslim groups. Yet the continued effective exclusion of women from full participation in Mali s economic development is a major impediment to growth. Lack of a shared national vision of growth to mobilise the population. To date the government has not articulated a clear and compelling national vision which convinces ordinary Malians why rapid economic growth is necessary and explains their part in achieving it. Mali is at a vital turning point, a crossroads in its history. The next 20 years will be very different than the two decades since its people courageously brought a brutal dictatorship to an end, a period characterised by gradual but steady progress, where the maintenance of tradition and stability was prioritised above all else. In colloquial terms, it can no longer be business as usual in Mali. The country will either reap the harvest of its demographic dividend and lift itself onto the next rungs of the development ladder or slip backwards, becoming a nation increasingly reliant on foreign assistance and lurching from one socioeconomic crisis to the next. One telling reason why the status quo cannot be maintained is health care spending as a percentage of GDP. Currently Mali devotes around 7 per cent yet based on current population growth forecasts, just to maintain its poor (albeit improving) health care provision across the country Mali will need to raise this spending as a percentage of GDP to as much as 18 per cent within 10 years. If you extrapolate that alarming prospect across other sectors, it is clear that sustained economic growth in Mali cannot be just an aspiration: it is a necessity. Decreasing Security One of the sharpest thorns in the side of Mali s growth plans is the worsening security situation in its northern three provinces. On 5 January 2011, a Tunisian terrorist linked to Al-Qa ida in the Maghreb (AQIM) attacked the French embassy in Bamako using a homemade bomb. Although it resulted in just two minor injuries, the attack raised fears that AQIM was bent on taking its campaign of terror and kidnappings in the Sahel to Mali s capital. 11

12 In Timbuktu, Mali has a priceless brand with global renown, as yet vastly under-exploited Since 2009 AQIM operating directly or through criminal gangs in the Sahel has carried out numerous kidnappings of Westerners, NGO workers and foreign contractors, on several occasions resulting in the murder of the hostages. The high threat of kidnapping has decimated Mali s tourist industry, which the government had targeted as one of its potential high-growth sectors. Timbuktu, Djenne, Mopti centres of regional if not global cultural significance are now strictly off-limits to Western tourists. In late 2010 a key French tour operator, Point Afrique, suspended flights to Sahelian cities due to the terrorist threat. What galls Malian officials is that this security crisis is not, they argue, home grown. They are largely correct, even if that makes little difference to the ways the crisis might be addressed. 6 Professor Modibo Goïta, a Malian security expert at the Alioune Blondin Beye Peacekeeping School in Bamako, has traced the evolution of the security challenge posed by AQIM. Although experts differ on the Jihadi group s precise aims and relationship with Al-Qa ida central, Goïta paints a worrying picture of an organisation that, in recent years, has successfully cultivated partnerships with ex-rebel groups, criminal networks and even government and security officials in the remotest parts of the Sahel. They have done this, in part, by integrating with local communities, sometimes through marriage, and also by portraying themselves as their guardians and ensuring not to inadvertently target them during operations. There is no clear sign yet of a major shift in loyalty among indigenous Tuaregs, who are the majority in the sparsely-populated north, since there are significant historic and cultural differences which divide them from the Salafists of AQIM. However, should they continue to grow in numbers and influence, AQIM could destroy the still-fragile compact between the Turaegs and government. 7 The largely ungoverned desert expanse of northern Mali is now a central staging post for AQIM. Although estimated to comprise just active members, AQIM operates over an area stretching hundreds of thousands of square kilometres across several countries in the Sahel. None of the region s security forces is able to deploy in anywhere near the numbers required to exercise effective control over a territory that is as inhospitable as it is vast. 12

13 French Ministry of Foreign Affairs, Travel Advisory mid 2010 Mali s tradition of consensus-building has made it virtually impossible for the government to make tough decisions in the national interest Kidnapping has earned AQIM handsome profits, but it is marginal compared to the potential resources it can derive from drug trafficking and northern Mali has become a storage point from much of the cocaine that transits the region. The fear, Goïta warns, is that in the absence of a concerted transnational effort to combat AQIM, a number of sanctuaries, mini Waziristans, could eventually be established in northern Mali and other parts of the Sahel. According to some local leaders, this has already happened. (T)he Salafists control the area better than anyone, bemoaned the council of local leaders in the Kidal region. AQIM emerged out of the Salafist groups which fought in Algeria s brutal civil war in the 1990s. Mali s government is keen to stress that AQIM remains a foreign import that has no roots in Malian society. To their credit, Mali s leaders have been more candid than other regional statesmen in acknowledging AQIM s expanding influence. (I)n our country President Toure remarked in January 2010, the problems of insecurity, particularly due to drugs, terrorism and cross-border banditry, in all their complexity, have generated a profound need to identify their causes and 13

14 The continued effective exclusion of women from full participation in Mali s economic development is a major impediment to growth strategies to curb their perverse effects. 8 Toure is right to emphasise the urgency. The more AQIM impairs legitimate economic activity in the north and forces the state into retreat, the more likely the region s disillusioned and jobless youth are to heed the Jihadi call, if only for the fact that no other livelihood options exist. The government in Bamako can take heart, however, in the example set by numerous countries that have put similar, if not more formidable security problems behind them on the road to sustainable development and growth. Vietnam, now a manufacturing hub and the world s second largest exporter of rice and producer of coffee, is perhaps the most potent case in point, although lesser-known success stories, such as once war-ravaged El Salvador, are also instructive. 9 The prevailing circumstances in these and other cases of successful economic reform varied widely. Needless to say, there is no reform template that can be transferred directly to the case of Mali. Reform solutions in each country must be locally owned and tailored to the needs of their particular societies, even where specific technical expertise needs to be brought in (in many cases nationals living abroad). What Mali can learn, above all, from successes elsewhere is that even the most formidable hurdles be they rooted in geography, size, conflict or other factors can be overcome with strong political will and the right set of policies. But to achieve maximum impact, the political environment in Mali needs to be invigorated with a new impetus to create coalitions for growth. Coalitions for Growth During the past decade, growth in Mali as in the rest of Africa has, to a significant extent, been driven by high commodity prices. It is a long way from being an autonomous force based on the development and application of human capital to production for world markets the driver of sustainable, long-term successes elsewhere in the world. 10 With growth as a priority, resources can be mobilised, policies written and novel solutions brought to bear to assist implementation. Often a governing coalition is held together by other things in the case of Mali, a strong tradition of consensus building and inclusiveness but not by a growth agenda. Only where a country has a sufficiently strong domestic coalition for growth is it likely that growth-oriented public policy will be pursued with vigour and determination. 14

15 The government has not articulated a clear and compelling national vision which convinces ordinary Malians why rapid economic growth is necessary Resources, policies, and implementation capacity are the instruments through which growth can be achieved. But if Mali s leaders have other priorities, these inputs will still not produce results. That is the missing dimension: the priorities of leadership groups. With growth as a priority, resources can be mobilised, policies written, and novel solutions brought to bear to assist with implementation. When other priorities hold sway, growth is stymied in ways that can be difficult for outsiders to understand. Multilateral and bilateral organisations rarely, if ever, succeed at building coalitions for growth. These organisations are fundamentally technocratic, and constrained by the etiquette of sovereignty. Yet coalition-building is a fundamentally political exercise. So, senior officials in Bamako must ask themselves: What will it take to develop a growth partnership between business, government and civil society in Mali? That is a question that no one but the Malians can answer, but there are some key actions for growth that the government might consider. Although short on detail, they could form the basis of more specific policy measures, supported by the appropriate technical research and advice. Identifying Areas of Actions for Growth India is the world s largest producer of mangoes, totalling about 13 million tons of mangoes every year, over half the world s total mango supply. 11 But except for some very specialist varieties, mangoes are not available year-round in India. It is estimated that there is an off-season demand for as much as 3 million tons of mangoes in India. What, if anything, has Mali done to try to meet that demand? If nothing has been done, it is a great pity, since Mali s mango story is a good one. Mango exports increased more than tenfold from 1993 and 2008, from to metric tons. Sea freighted exports, which were zero in 1993, rose to metric tons. Transit time for mangoes from the major mango-producing area of Sikasso to northern Europe has decreased from 25 days to 12 days over the same period. Mali was able to achieve this export growth, overcoming problems of poor infrastructure, low finance and high costs, by marshalling a number of different elements public private investment, technical expertise, national capacities, and innovation towards a specific goal

16 10 8 The next 20 years will be very different than the two decades Thousands of metric tons since its people courageously brought a brutal dictatorship Courtesy of The World Bank Mango export quality (MT) Mango export value ($1 000) to an end Notwithstanding whether Mali is pursuing the Indian mango shortfall, this is an excellent example of specific actions for growth. Within the key sectors which represent Mali s comparative advantage agriculture and agro-industry, tourism and mining it is worth considering what other actions for growth could be undertaken. In each, the government must be ever-mindful of prioritising to assist the private sector and align the donor support it receives which will probably decrease over time to private sector needs. Agriculture The liberalisation of agriculture prices in Mali has incentivised production, leading to surpluses despite irregular rainfall patterns and vagaries in regional demand, most notably as a result of the crisis in neighbouring Ivory Coast. Food security in the long-term is a major concern, however. To address Mali s food security concerns in a sustainable manner, the Rice Initiative was launched in With assistance from donors, the government aims to increase local rice production substantially via better access to credit, input subsidies, equipment, and support for producers. Thus far it has delivered some impressive results, currently producing , rising to a projected 1 million tons in Although Mali imports some rice, the country is not, in most years, a net food importer, unlike (currently) 37 of sub-saharan Africa s 48 economies. But otherwise, Mali has also lagged behind, at least when compared to East Asian countries which have tripled agricultural yields in the last four decades. 16

17 Mali needs to be invigorated with a new impetus to create coalitions for growth There are many reasons for low productivity in Mali which are common to other African countries, such as poor infrastructure and weak domestic markets, making it more difficult to export surpluses to the cities. The Office du Niger, for example, comprises largely pre-second World War infrastructure. To date the focus has not been on large-scale investment, as a consequence the canal system is poorly maintained. Coupled with sharply rising food prices, the potential for serious tension in the future is very real. But much is known today about how to create the conditions for a Green Revolution, in Mali as elsewhere in Africa. First articulated by the Rockefeller Foundation in the 1960s, a Green Revolution requires the following elements: More productive crops and fertilisers developed through applied research; Local talent in plant science, farming, agricultural policy, and business; Commitment from national governments; Public private collaboration on infrastructure, water, irrigation and the environment; and Building markets. The direct relationship between agriculture performance and trade should be emphasised. For almost half of sub-saharan countries, transport payments absorb over 20 per cent of foreign earnings from exports. For some landlocked nations, these costs absorb over 50 per cent. Particularly significant is the negative impact of poor transport infrastructure on rural development, making it difficult for farmers to specialise in high value crops for export. These are not only transportation charges due to poor infrastructure, but trade costs caused by inefficient customs and clearance procedures, themselves the product of an overbearing and inefficient bureaucracy, as well as an uncompetitive mindset. Mali has extremely ambitious plans for its agriculture: some 30 per cent increase in cereals production in just the next three years. The rise in food prices, part of which is unlikely to be reversed, presents Mali with a paradoxical combination of potential political crisis and, if agriculture is reinvigorated and bolstered, economic opportunity for its farmers. And not just in the Office du Niger: the fertile Sikasso region in the south is perhaps the promising region for future agricultural development and diversification. Agriculture in Mali is deeply entwined with culture and tradition. Access to land is a high social priority. Among farmers, there is an expectation that they will always be able to get a certain price for their crop; that the government will always provide them with land. One consequence is that most farmers not only 17

18 What will it take to develop a growth partnership between business, government and civil society in Mali? fail to invest beyond the survival threshold, but they also do not possess the mindset to invest and commercialise. Farmers need about five hectares to be economically viable, but at present households are only managing about 1.8 hectares. Another issue is the not infrequent clashes between cereals and seeds farmers and cattle farmers. Exacerbating the problems further is the fact that most farmers are illiterate. The type of irrigated agriculture in Office du Niger required to increase yields is complex and demands at the very least a modicum of skills and training; illiterate people cannot do it. Furthermore, there has not been adequate consideration to date on what institutions can and should be delivering those skills. In thinking about a different path for Mali s agriculture sector, it might be useful to engage in a thought experiment: what might the sector look like in ten years, if farmers were able to loosen the chains of tradition? It is a constant the world over that populations engaged in farming are resistant to change; the desire to perform the oldest economic activity in the traditional way is very powerful and resilient. But it has been demonstrated from Vietnam to Costa Rica that prosperous agriculture requires letting go with tradition and embracing change. This is politically difficult and painful, but must be accepted. 13 In the case of Mali, there will undoubtedly be a social cost of transition which means that reforms will have to be gradual, and government must provide support where necessary. But the costs of not tinkering with tradition are immense. The case of Costa Rica s transition from self-production to commercial farming is instructive. It illustrates that even small farmers can respond to market incentives and price messages when these are communicated clearly. Conversely, however, a farming family engaged in growing its own food, without a relationship with a market, is not only by definition engaged in production following demand, rather than supply, but also very unlikely to understand and follow price signals, and to tap opportunities if and when these are created. 14 Tourism and Security In 2009 the global travel and tourism industry supported 77.2 million jobs on a direct basis and generated $1.87 trillion in direct global revenues. In the past decade the industry has enjoyed spectacular growth, despite the world financial crisis. While traditional destinations in Europe and North America still tend to dominate tourist arrivals, some developing countries have implemented highly successful tourism strategies that have lured foreign visitors in large numbers and made tourism an important part of the overall growth and development of these countries. Vietnam is one such example. In 2000 it attracted 2.1 million tourist arrivals. Ten years later it increased that number 2½ times and by 2016 Vietnam is 18

19 Prosperous agriculture requires letting go with tradition and embracing change predicted to be one of the top ten tourist destinations in the world not bad for a socialist country that suffered the longest and most devastating war of the second half of the 20th century. Vietnam s tourist planners saw an enormous opportunity in tourism to generate jobs, increase incomes, and contribute to overall economic growth. It also understood that businesses in a wide range of sectors would also expect to benefit from rising international tourist arrivals. There is no scope for detailing here how it achieved these gains, but to take just one measure: Vietnam identified its major tourism markets China, Japan, South Korea and Southeast Asian countries and waived visa requirements for visitors from these markets, as well as a number of European countries. Clearly, it will take more than dropping Mali s visa requirements for visitors especially from Europe and North America to re-invigorate the country s beleaguered tourism industry. The threat of AQIM-related terrorism and kidnapping in Mali s northern provinces has put paid to the significant gains the sector enjoyed in recent years a doubling of tourist numbers from Only an estimated tourists arrived in Mali in 2010, which puts the country in 122nd place worldwide, in between Guyana and Palau an incredibly low figure when you consider that Mali is home to no less than four UNESCO World Heritage sites, a captivating river (the Niger) that is Africa s third longest, and internationally renowned music and culture. Tourists will not visit Mali s great historical sites in meaningful numbers until the security situation improves. For that to happen, the patchy and uncoordinated tactics used by each regional state need to be replaced by a highly-cooperative regional strategy that seeks to dislodge AQIM from the communities in which they are nested. Currently, for instance, Mali permits Mauritanian forces from pursuing terrorists across their borders; Algeria, however, does not allow neighbouring states the right of cross-border pursuit. Since resource constraints limits Sahelian states capacity to monitor and thwart terrorist movements across their territories, it is unavoidable in the short-term that the military assets and assistance currently provided by foreign (US and other NATO) countries will need to be increased. But, as President Toure observed, a strict focus on security is not sufficient; regional partners must engage in efforts to enhance the quality of development in the region. This means addressing the basic needs of local communities. It also demands renewed commitment to stamping out corruption, which blights governance and counter-terrorism efforts in northern Mali

20 Government policy in Mali needs to urgently facilitate private sector investment Improved security could unleash a tourist windfall the likes of which the region has never experienced. Mali s rich historical and cultural endowments represent a potentially massive source of future income and development. This will require Government policy in Mali to facilitate private sector investment, respond to and make timely investments in infrastructure, and identify its target markets backpackers or high end? Europeans, Americans or Asians? It also needs to identify the key vocational skills and a method to realise these needs. A hotel school would be a good place to start. The foundational investments in these and other vital areas need not wait until the AQIM threat is completely eliminated. To return to Timbuktu, it is striking that more attention has not been given to capitalising on this global icon. Perhaps most telling is the percentage of people worldwide who actually know that Timbuktu is in Mali; even among seasoned travellers, it is unlikely to be very high. Moreover, the efficacy of Timbuktu as a brand is not restricted to the tourism industry. An ancient centre of scholarship in religion, arts and science, Timbuktu can surely be utilised more effectively to generate greater popular interest in a revitalised education and skills campaign. A return to Mali s Golden Age might sound faintly ridiculous, but the catalytic power of brands and slogans that resonate should never be underestimated. Mining A recent study by one of the world s foremost development economists argued that oil, gas and mineral ores extraction will in the coming decade constitute by far the most important economic opportunity that Africa has ever had. Africa is the last frontier for resource discovery, having been relatively neglected by resource extraction companies that were reluctant to prospect there because of difficult political conditions. But with rising commodity prices, this reluctance is being overcome and prospecting is generating a multitude of new discoveries. As resource extraction in Africa increases to the OECD average per square kilometer it currently stands at one-fifth of the average the total volume of extraction can be expected to grow fivefold. High prices combined with future discoveries will generate money flows so vast that if properly managed they can transform many parts of Africa from poverty towards prosperity. Certainly, they will dwarf all other financial flows there. 16 If this scenario is accurate, Mali needs to take decisive steps to capitalise on this golden moment. 20

21 How the government responds in the next three to five years to Mali s exploding youth population will determine the country s growth path for at least a generation Mali is now Africa s third largest gold producer after South Africa and Ghana. With the relaxation of mining codes in the early 1990s production has increased dramatically. Nearly 60 tons are produced from less than half a ton in the late 1980s. New investment in this sector includes Anglogold-Ashanti (some $250 million) and Randgold Resources. Gold represents 15 per cent of GDP but 70 per cent of exports (the remainder comprising mostly livestock and cotton). As a result, mining revenue increased from less than 1 per cent of state income in 1989 to around one-fifth today. Progress has also been bolstered by the generally improving co-operation between government and the mining companies, through regular engagements like the Tax Forum, and the country s political stability. Mali is also considered to have significant untapped mineral potential. But the obstacles to exploration, as with further growth of the sector in general, are as well-known as they are formidable: skills, energy and roads. And it is these same obstacles that limit the mining industry s trickle-down effect poverty reduction, regional development and so on too. In 2006 the visionary mining boss and former CEO of Anglo Gold Ashanti, Bobby Godsell, captured the potential of a mining boom in Mali succinctly when he spoke of roads for gold, power for gold. Mali, Godsell suggested then, should consider building development corridors such as the Johannesburg Maputo corridor; an existing chain of gold mines would make both an effective road and a power grid possible. But it was believed at the time that the government s approach lacked the necessary focus and integration to turn the upward trend into a boom. Consequently, roads have not been built or maintained to the necessary standards, and thus the supply chains are not effective. There has also not been adequate attention placed on a mining skills programme linked to investment. Mining companies, moreover, have to come to where the goods are, but the terms of their investment have not always been set on that basis. And power generation continues to be a major impediment to growth: the mining companies are forced to use on-site diesel generators rather than linking to power grids currently incapable of supplying the necessary energy and connections resulting in high operating costs. Encouragingly, however, some mining companies are currently in negotiations with the Malian power authority to assess the feasibility of linking to grid power from Sikasso. In the mining sector, as in agriculture and tourism, there is tremendous scope for progress through specifically-targeted actions for growth. To support these actions 21

22 for growth, however, the government must urgently engage with its population on three key fronts. There is too little business and arguably too much aid relative to the size of business The Three Fronts A Dialogue on Development Mali needs to identify growth opportunities and create a country-wide growth agenda and encourage a domestic dialogue on development. Its citizens have to know that they are competing against the rest of the world. It is not easy to construct a domestic political consensus around reform and private-sector growth because the important reforms are politically painful: they require the state to surrender power to the market and to the private sector, and they challenge the protected status of elites and politically-connected monopolies. In the past, Mali s politics have focused too much on personality and prattle. The government must attempt to change that and put its growth agenda at the heart of the country s politics. Making Mali s economy grow and become more competitive regionally and internationally should be a key political goal and it should be identified as such to voters now and duelled over by its various political parties in the run-up to the 2012 election. A simple step would be articulating the objective of climbing into the top 100 in the World Bank s Doing Business Index. But it can and should be so much more. A vital pillar in Costa Rica s continuing transformation from a largely agrarian society to a dynamic high-tech, services-based economy has been the government s active encouragement of business and civil society to engage in a national dialogue on raising the country s competitiveness and improving its business climate. This is not only evident in Costa Rica but in several Central American countries, where the discussion of competitiveness issues has not only raised the level of the national policy debates but also led to concrete examples of policy initiatives. Ten years on from the initiation of this dialogue, which is built around the annual Global Competitiveness Report, the region s politics and media are permeated by debates on the future direction of individual countries and in some cases has resulted in concrete policies and actions. 17 This kind of transformative dialogue cannot be achieved without a change of mindset, from focussing on aid and donors to investment and business. But the mindset change will need to run deeper still in Mali, to difficult choices between culture, tradition and consensus-seeking to decisive leadership and strong political will. 22