Mali - Industry

Industry is becoming a significant sector of the economy consisting of mostly minor consumer goods production for local use and food processing, construction, and phosphate and gold mining. Natural resources also include kaolin, salt, limestone, uranium, and hydropower. There are known, but not exploited, deposits of bauxite, iron ore, manganese, tin, and copper. Industry contributed about 21 percent of the GDP in 1998. Artisanal mining and panning for gold and diamonds has been practiced in the south-west of the country for hundreds of years.

Before 1992, infrastructural weaknesses and corruption discouraged foreign investment in the sector. With the demise of the military Traore administration in 1991, a new mining code was adopted to encourage investment. Under the current tax regime, government reserves the right to take a stake of up to 20 percent in enterprises, tax profits at 35 percent, and levy royalties at 6 percent. Nevertheless, Mali's gold production has increased at one of the world's fastest rates, with output increasing almost 4-fold between 1994 and 1998.

Manufacturing remains comparatively unimportant, having declined throughout the 1980s and accounting for an average 3 percent of the GDP towards the end of the century. From the 1960s, inefficient parastatals produced basic consumer goods, and the private sector preferred to invest in trade. The sector was further handicapped by intensified competition from Côte d'Ivoire and by a flood of cheap smuggled consumer goods from Guinea and Nigeria in the years preceding the 1994 devaluation of the CFA franc.

Since the devaluation, efforts to attract manufacturing investment have had little success, although there have been signs of a move towards manufacturing among the leading local commercial families. The textiles sector has shown signs of revival, but it still faces stiff competition from industries in neighboring countries. A significant drawback to investment in the manufacturing sector is the higher production costs in Mali than in neighboring countries, owing to antiquated equipment and underdeveloped infrastructure.