President Ibrahim Boubacar Keïta’s re-election in August 2018 will support policy continuity but has provoked opposition protests. Mining sector output is expected to remain robust as a number of large projects come online, but Islamist militants pose a significant security threat.
President Ibrahim Boubacar Keïta was re-elected following a second round run-off on 16 August 2018. However, the opposition claimed the victory was fraudulent, and anti-government demonstrations have taken place in Bamako during August and September 2018. Further protests in major cities are likely and will pose a risk of cargo disruption and property damage. In June 2018, dozens of people were injured after police reportedly used rubber bullets and live ammunition to disperse opposition protesters in Bamako.
Commercial assets and personnel in northern and central Mali are exposed to a high risk of suicide attacks and kidnap for ransom. France has maintained a military force in Mali since 2013, but insurgents linked to al-Qaeda and Islamic State continue to launch attacks against well-defended targets. In June 2018, 6 people were killed during a raid by Islamist militants on a regional anti-terrorism headquarters in the central town of Sevaré. The gold-rich areas of southern Mali are less exposed to the threat of militant attacks but risks remain.
In Bamako, Western personnel and assets face a risk of small-arms and improvised explosive device attacks by Islamist groups. The probability of cross-border attacks is also rising as Islamist militants strengthen their foothold in neighbouring Burkina Faso, and groups linked to al-Qaeda have strengthened their capacity along the Malian border.
The weak security environment poses a significant downside risk to the economy. However, real GDP is forecasted at a relatively healthy 4.9% in 2018 and 4.7% in 2019, driven by domestic demand and rising agricultural and mining output. As Africa’s largest producer of cotton and third-largest producer of gold, Mali’s economy has significant export potential. Cotton prices have risen by around 18% since October 2017, and gold output will rise this year as the Fekola and Yanfolila mines have started production. Mali’s external current account deficit will remain high but is forecasted to decrease to 6.7% of GDP in 2018.
However, Mali remains dependent on a narrow range of exports, and balance of payments pressures would rise significantly in the event of a sharp downturn in commodity prices. Mali has been supported by an International Monetary Fund (IMF) Extended Credit Facility since 2013, and has made gradual progress towards fiscal consolidation. Public debt was estimated at a relatively low 35.6% in 2017, and the country’s credit profile benefits from the concessional nature of much of its debt. In addition, Mali’s membership of the Union Economique et Monétaire Ouest Africaine, which pegs its currency to the euro, mitigates inflation and exchange rate risks.
As revenue collection improves, Mali’s fiscal deficit is forecasted to meet the West African Economic and Monetary Union target of 3.0% of GDP in 2019. The volume of aid received by Mali will decline this year as a number of external support packages providing concessional grants expired in 2017. However, external financing is expected to increase in the medium-term as the government makes progress with policy reforms.
There is significant growth potential in Mali’s mining sector, and the government estimated in February 2017 that the country holds over 800 tonnes of gold reserves. Keïta’s re-election will provide policy continuity in the extractives sector, and the risk of expropriation is low due to Mali’s need to attract external financing.
However, the performance of Mali’s judiciary is hampered by corruption and inefficiency. The World Bank reports that it takes an average of 620 days to resolve commercial disputes, at a cost of 52% of the claim. The government is prone to interfere in judicial proceedings, but companies with government contracts have the right to international arbitration if a case cannot be settled domestically. In order to maintain high levels of defence spending, Mali is likely to increase taxes on firms in the mining sector.
In this month's Risk Outlook, we also provide a detailed forward looking assessment of developments within the security, trading and investment environments for Lebanon. Philippines, Bangladesh and Mali all of which have been the subject of recent enquiries from JLT's client base.
The monthly Risk Outlook is supported by JLT’s proprietary country risk rating tool, World Risk Review (WRR) which provides risk ratings across nine insurable perils for 197 countries. The country risk ratings are generated by a proprietary, algorithm-based modelling system incorporating over 200 international sources of data.
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For further information, please contact Eleanor Smith, Senior Political Risk Analyst on +44 (0)121 626 7837 or email email@example.com.
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