Conditions for Doing Business in Mali

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Mali: flow of FDI in 2018 - 365,9 mln US Dollars (at current prices, UNCTAD)
FDI - Foreign Direct Invetsment

Africa Capacity Index (ACI) 2019
Since 2011, the African Capacity Building Foundation (ACBF – specialized agency of the AU, located in Harara, Zimbabwe https://www.acbf-pact.org/) publishes an annual Africa Capacity Report (ACR).
The ACR measures and examines the capacity of African countries to pursue their development agenda, focusing on key determinants and components of capacity for development. ACBF defines capacity as the “ability of people, organizations, and society as a whole to manage their affairs successfully” and capacity development as the process by which “people, organizations, and society as a whole unleash, strengthen, create, adapt, and maintain capacity over time.
Capacity of African countries, examined in ACR, is reflected by Africa Capacity Index (ACI). The ACI - is a composite index computed from a quantitative and qualitative assessment of four sub-indices or indicator “clusters” on a specially designed questionnaire. “The policy environment cluster” considers the conditions that must be in place to make transformational change and development possible. “The processes for implementation cluster” assesses the extent to which countries are prepared to deliver results and outcomes. “The development results at country level cluster” refers to tangible outputs that encourage development. And “the capacity development outcomes cluster” measures change in the human condition.
Mali ACI 2019 Rank 6 Score 64.1
Cluster 1 Policy environment for capacity development 92.1
Cluster 2 Processes for implementation 51.9
Cluster 3 Development results at country level 100.0
Cluster 4 Capacity development outcomes 44.8

Incentives and Guarantees for foreign investors
Mali generally encourages foreign investment. Foreign and domestic investments receive equal treatment. The structural adjustment facility agreements signed by the IMF/World Bank and Mali since 1992 encourage foreign investment. The government's national strategy to fight poverty presented to the IMF, World Bank, and other donors emphasizes the role of the private sector in developing the economy. Mali is a member of the Economic Community of West African States (ECOWAS) and the West African Economic and Monetary Union (WAEMU), which aim to reduce trade barriers, harmonize monetary policy, and create a common market.
The investment, mining, commerce, and labor codes have the stated intention to encourage investment and attract foreign investors. Mali has privatized a number of state-owned enterprises, and foreign companies have responded successfully to calls for bids in several cases.
The Malian government has instituted policies promoting direct investment and export-oriented businesses. Foreign investors go through the same screening process as domestic investors. Criteria for granting authorization under the 2005 investment code include the size of the proposed capital investment, the use of locally produced raw materials, and the level of job creation. Mali maintains a one-stop shop for prospective investors, the Agence pour la Promotion de l'Investissement (API-Mali). Mali continues to improve its ranking in the World Bank's Doing Business Report 2012 to 146 of 183 economies from 148 of 183 economies in 2011. On the regional level, Mali ranks 22 of 46 sub-Saharan economies. Mali has also created, with World Bank support, a Presidential Investment Council. The council is comprised of foreign and national businesspeople and is aimed at improving the business climate in Mali and identifying best prospects for investment.

Foreign investors can own 100 percent of any businesses they create. They can also purchase shares in parastatal companies being privatized or in other local companies. Foreign companies may also start joint-venture operations with Malian enterprises. The repatriation of capital and profit is guaranteed. Despite a generally favorable investment regime, foreign investors face challenges. Investors sometimes report that tax collectors interpret tax laws to discriminate against foreign companies or companies with foreign capital. The tax system remains complicated in spite of ongoing efforts to improve it. Foreign companies have also reported delays with clearing customs when importing machinery. A foreign mining company has complained of having to make under-the-table payments clear customs for machinery and petroleum product imports. Enforcement of contracts in Mali can be problematic. Corruption in the judiciary is pervasive, and companies can often find themselves at a disadvantage vis-à-vis Malian or third country investors.

Conversion and Transfer Policies
The investment code allows the transfer of funds associated with investments, including profits. As a WAEMU member, Mali uses the Francophone Africa Common Franc (FCFA) currency. Linked to the Euro, the FCFA is fully convertible at a rate of Euro 1 = FCFA 655.957. No parallel conversion market exists because the FCFA is a fully convertible currency supported by the French treasury, which ensures a fixed rate of exchange.
The FCFA has not been devalued since January 1994. There are no limits on the inflow or outflow of funds for repatriation of profits, debt service, capital, or capital gains. In the FCFA zone there is no restriction on the export of capital provided that adequate documentation to support a transaction is presented. Most commercial banks have direct investments in western capital markets. No physical transfer of funds is authorized outside the borders of the FCFA zone. It takes less than one week to transfer funds abroad.

Dispute Settlement
Disputes occasionally arise between the government or state-owned enterprises and foreign companies. Some cases involve wrongdoing on the part of companies and/or corrupt government officials.
Despite efforts to improve, the judicial system is slow and inefficient, and is widely reputed to be corrupt.
The investment code allows a foreign company that has a signed agreement with the government to refer to international arbitration any case that the local courts are unable to resolve. Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and has ratified the 1993 Treaty creating the Joint Arbitration Court. OHADA has a provision for allowing litigation between foreign companies and domestic companies or the government to be tried in an appellate court outside of Mali. Mali is a member of the International Center for the Settlement of Investment Disputes (ICSID - also known as the Washington Convention). Mali is a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitrage Awards. Mali has been a member of the World Bank Multilateral Investment Guarantee Agency (MIGA) since 1990.

Performance Requirements/Incentives
The investment code offers incentives to companies that reinvest profits to expand existing businesses or diversify into another relevant sector. The code also encourages the use of locally sourced inputs, which can offer tax exemptions. Companies that use at least 65 percent of locally produced raw materials are eligible for certain tax exonerations. Companies that invest at least five percent of their turnover in supporting local research and development are eligible for a reduction of payroll taxes for Malian employees.
There is no requirement that Malian nationals own shares in a foreign investment or that foreign equity be reduced over time. In the case of joint ventures with the government, the government share may not exceed 20 percent ownership. OHADA regulations specify that a company with less than 35 percent government equity is legally considered a private company.

Most businesses are located in the capital, and the investment code encourages the establishment of new businesses in other areas. Incentives include income tax exemptions for five to eight year periods, reduced-energy prices, and the installation of water supply, electric power, and telecommunication lines to areas lacking public utility services.

The government has identified priority sectors for furthering economic development. Special incentives are offered for investment in the following areas:
--Agribusiness
--Fishing and fish processing
--Livestock and forestry
--Mining and metallurgical industries
--Water and energy production industries
--Tourism and hotel industries
--Communication
--Housing development
--Transportation
--Human and animal health promotion enterprises
--Vocational and technical training enterprises
--Cultural promotion enterprises

Right to Private Ownership and Establishment
The government has price controls on petroleum products and locally produced cotton, and occasionally controls the price of basic commodities, such as rice. The free market determines prices of other goods. Domestic and foreign companies compete on an equal basis with public enterprises and they share equal rights to private ownership and establishment. The government's privatization program for state enterprises holds investment opportunities through a process of open international bidding. In the past several years, the government has privatized parastatal enterprises including the cotton processing company, Huilerie cotonnière du Mali (HUICOMA); the International Bank of Mali (BIM); and the telecommunications company, Societé des Telecommunications du Mali (SOTELMA).
The government is in the process of privatizing the cotton marketing parastatal, Compagnie malienne pour le développement des textiles (CMDT). The process has reached its final stage where out of the three companies (including two foreign) that have submitted technical and financial offers, only one of the foreign companies has remained in the process (the two others withdrew their offers with no public explanation). The remaining company is awaiting the government final award decision. Local media has questioned the transparency of the bidding and contracts award process, though no concrete evidence of corruption has been presented.

Protection of Property Rights
Property rights are nominally protected in Mali. The government established the Malian Center for the Promotion of Industrial Property and charged it with implementing the legal regime of property rights protection, including the World Trade Organization (WTO) TRIPS agreements. This agency is a member of the African Property Rights Organization (IAPO) and works with international agencies recognized by the United Nations Industrial Development Organization (UNIDO). Patents, copyrights, and trademarks are covered.

These structures notwithstanding, property rights are not always adequately protected in practice.

Transparency of the Regulatory System
As reflected in agreements with the International Monetary Fund (IMF) and World Bank, the government of Mali has adopted a transparent regulatory policy and laws to foster competition. The commerce and labor codes adopted in 1992 are designed to meet the requirements of fair competition, to ease bureaucratic procedures, and to facilitate the hiring and firing of employees. The investment code simplifies the application process to establish a business, and favors investments that promote handicrafts, exports, and labor-intensive businesses. The 2012 Doing Business Report notes that it takes an average of four procedures and eight days in order to establish a business in Mali, an improvement over the previous report. The Mining Code encourages investments in small and medium mining enterprises, awards two-year exploration permits free of charge, and does not require a commitment from the exploring firm to lease the area explored thereafter. Mali is a member of OHADA and implements the Accounting System of West African States (SYSCOA), which harmonizes business practices among several African countries consistent with international norms.

Efficient Capital Markets and Portfolio Investment
WAEMU statutes and the BCEAO determine the banking system and monetary policy in Mali. BCEAO headquarters are located in Dakar, Senegal. Commercial banks enjoy considerable liquidity. Banks' deposit funds are split 75/25 between demand deposits and time deposits, respectively. The majority of banks' loanable funds, however, do not come from deposits, but rather from other liabilities, e.g. lines of credit from the BCEAO and North African and European banks. In spite of having sufficient loanable funds, commercial banks in Mali tend to have highly conservative lending practices.

Portfolio investment is not a current practice, although the legal and accounting systems are now transparent enough and are similar to the French system. In 1994 the government instituted a system of treasury bonds available for purchase by individuals or companies. The payment of dividends or the repurchase of the bonds may be done through a compensation procedure offsetting corporate income taxes or other sums due to the government.
The WAEMU stock exchange program based in Abidjan has a branch in each WAEMU country, including Mali. To date, no Malian company is listed on the stock exchange. The privatization programs of the electric company, EDM, the telecommunications entity, SOTELMA, and cotton ginning company, CMDT, and the forthcoming privatization of Bamako-Senou Airport offer prospects for some companies to be listed on the WAEMU stock exchange.

Competition from State-Owned Enterprises
Private and public enterprises compete under the same terms and conditions. No preferential treatment is awarded to State-Owned Enterprises (SOEs), although they can be at a competitive disadvantage due to the limited flexibility they have in their management decision-making process.

Mali is in the process of privatizing its SOEs, but a number of SOEs still exist. The government is active in the agricultural sector: the Niger River Authority (Office du Niger) controls much of the irrigated rice fields and vegetable production in the Niger River inland delta, although more private operators were granted plots of land to develop. Mali will also grant titles to small private farmers, including women, through an MCC-funded irrigation project; an adjacent tranche developed with MCC will be open to large scale private investment through a public tender process. The national cotton production company, CMDT, which is at the final stage of privatization, provides financing for fertilizers and inputs to cotton farmers, sets cotton prices, purchases cotton from producers and exports cotton fiber via ports in neighboring countries. The government is still active in the banking sector. While it no longer has a majority stake in the Malian Development Bank (BDM), it has significant influence over operations, as the Minister of Finance serves as head of the Board of Directors. The Malian government also owns the Agricultural Development Bank (BNDA), the Malian Solidarity Bank (BMS), and the Housing Bank (BHM). In addition, the electricity and water company, Energie du Mali, or EDM, is owned by the government after a failed privatization attempt.

SOEs are required by law to publish an annual report. They hold a mandatory annual Board of Directors meeting to discuss the financial statements prepared by a certified public accountant and certified by an outside auditor in accordance with domestic standards (which are comparable to international financial reporting standards). Mali's independent auditor general conducts an annual review of public spending, which may result in the prosecution of specific cases of corruption. Mali has no sovereign wealth fund.

Foreign Trade Zones/Free Ports
By law, there is no discrimination between foreign-owned firms and host country entities in terms of investment opportunities. Companies (domestic or foreign) that export at least 80 percent of their production are entitled to the status of tax-free status. As such, they benefit from duty free-status on all equipment and other inputs they need for their operations. To date, there are no dedicated free trade zones in Mali.
http://www.state.gov/e/eb/rls/othr/ics/2012/191193.htm