Why Set Up Your Business in Mali?

To invest or not to invest in Mali?

Nestled between the harsh Sahara and the rolling savannah, Mali has long relied on mining and tourism to complement its large but inefficient agricultural sector. It is the third-largest gold producer on the continent and for the past several years, the Government of Mali has implemented strong policies to promote FDI, encourage competition and private participation in almost all sectors. However, the volatility of the country’s security situation, in particular the military occupation by Islamist and Tuareg rebel groups in the North of the country, is a significant deterrent for investors. In fact, after reaching the all-time high level of USD 748 million in 2009, FDI inflows fell to USD 125 million in 2016, the lowest since 2001. The current FDI stock is at USD 3 billion. What bodes worse for the sector is the high number of expat workers typically employed in gold mining on isolated concessions, which makes them a prime target for armed groups.

Instituted Policies Promoting Direct Investment and Export-Oriented Businesses

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 authorisation 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. The Agency for Investment Promotion (API) is Mali’s one-stop shop to make business registration easier and to promote foreign and local investments. Serving both Malian and foreign enterprises of all sizes, API has become a strong source of support for US investors. The API website gives numerous information ranging from business registration, tax payment, access to social security, trade regulations, land ownership procedures, visa and residence permit regulations, as well as information on taxes exemptions, special economic zones (free zone), recruitment of personnel, and connecting to water and electricity utilities. In general, the law treats foreign and domestic investment equally, but state-owned enterprises distort the economy.

In June 2015, Mali signed an agreement with Eranove, an African company, to finance and develop a hydroelectric damn, while in June 2017,Denmark-based Burmeister & Wain Scandinavian Contractor (BWSC) was awarded a USD 100 million contract to build a high-efficiency power plant which will increase the power capacity in the country by 25%. The judicial system is inefficient and prone to corruption. State authority in parts of the North is still tenuous, and corruption remains a problem throughout the government, public procurement, and both public and private contracting, where demands for bribes are frequently reported. The main sectors that attract foreign investors are the exploitation of gold and oil and the textile industry. Mali’s leading investors are France, China, Thailand and South Africa. Morocco has also been a significant investor (banking and telecommunications) since 2010.

International Labor Organisation agreement

Labour is widely available, though skilled labor is in short supply. Workers have the right to unionize. Relations between labor and management are often contentious. Although a warning notice for strikes is not required in the private sector, mediation procedures are generally followed before resorting to a strike. The government has signed the International Labor Organisation agreement protecting the rights of workers. The main sectors that attract foreign investors are the exploitation of gold and oil and the textile industry. Mali’s leading investors are France, China, Thailand and South Africa. Morocco has also been a significant investor (banking and telecommunications) since 2010.