Mali - Economy

Economic activity in Mali centers on domestic agricultural and livestock production. Vast stretches of Sahara desert limit Mali's agricultural potential and subject the country to severe, prolonged, recurrent drought. In periods of adequate rainfall, Mali approaches food self-sufficiency. The GDP growth rates are affected by the rainfall as well. GDP has gone to a high of 12.5% in 1989 when rainfall was good to negative growth in dry years. The growth rate of GDP in 2001 was estimated to be -1.2%.

About 80% of the population was engaged in agriculture as of 2001. Irrigated lands along the Niger River have been the focus of infrastructure development loans designed to increase the production of rice. Historically, livestock production was a mainstay of the Malian economy. About 10% of the population is nomadic. The dry savannah plains are tsetse free, and production has been oriented to serve the growing market in Côte d'Ivoire to the south. Unfortunately, the severe droughts in the 1980s reportedly wiped out upwards of 80% of Malian herds.

State-centered policies pursued in the years following independence were largely unsuccessful and led to a reintegration of the Malian economy into the CFA franc zone. Subsequent economic plans imposed on Mali, first by the French and then by the IMF, sought to dismantle the parastatals, privatize industry, and disengage the government from manipulative agriculture policies and price controls. These measures were hindered by the influential Malian civil service, the drought in the early 1980s and, in 1986, the fall in cotton prices, which led the government to suspend its debt-servicing obligations and to a suspension of IMF and World Bank credits. However, deficits fell sharply in 1990 and 1991 as a result of higher taxes and reduced civil service and parastatal demands. Unfortunately, the political repercussions of the government's austerity measures led to its downfall in 1991. The new government, however, continued the structural adjustment process, and the effort to reduce the budget deficits was intensified.

In January 1994 France devalued the CFA franc, cutting its value in half. The devaluation was designed to encourage new investment, particularly in the export sectors of the economy, and discourage the use of hard currency reserves to buy products that could be grow domestically. Unlike exporting countries, however, Mali imported most of its food, had little to export, and therefore, benefited little from the devaluation. A period of inflation, where the rate approached 35%, followed devaluation in 1994, but by 2001 it had moderated to a level of approximately 5%.

The country remains heavily dependent upon foreign aid, which amounted to 20% of GNP in 2002, mostly from France. Key sectors of economic growth in recent years have been in cotton production and gold: Mali as of 2003 was the leading producer and exporter of cotton in sub-Saharan Africa, and the second-largest producer of gold in West Africa.

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