Previous Quarterly Editions
Expropriation Risk: 57 57 64 65 ► Political Violence Risk: 74 74 74 74 ► Terrorism Risk: 75 75 77 77 ► Exchange Transfer and Trade Sanction Risk: 55 55 64 64 ► Sovereign Default Risk: 75 75 75 75 ►
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Government's commitment on climate policy Weakest 1 2 3 4 5 Strongest
According to the 2018 World Resources Institute Climate Analysis Indicators Tool (WRI CAIT), Mali contributes about 0.09% of global greenhouse gas (GHG) emissions. In October 2021, Mali submitted the updated version of its Nationally Determined Contribution (NDC), aiming to reduce GHG emissions by 40% by 2030. The country’s emission reduction commitments by sector are now 31% for energy, 25% for agriculture, 39% for land use change and forestry (LUCF), and 31% for waste sectors.
The new target is an overall increase on Mali’s first NDC (submitted in 2015) committing to reduce emissions by 27% by 2030. Notable changes in the updated NDC by sector include a four percentage-point reduction for agriculture (29%) but 18 percentage-point increase for LUCF (21%), while energy remains the same and the waste sector (31%) was introduced for the first time as a new commitment. The country ratified the Paris Agreement on climate in September 2016, to demonstrate its commitment to reducing its GHG emissions.
Nevertheless, Mali’s commitment to meeting NDC targets is largely contingent on receiving external aid, for which the overall cost is estimated at almost USD35 billion. With the current military government in place, Mali is highly unlikely to meet its NDC targets as the country is under harsh political and economic sanctions from France (its former colonial power), the European Union, the African Union, Economic Community of West African States (ECOWAS), and the West Africa Economic and Monetary Union (WAEMU), the bloc in charge of the common market of eight mostly French-speaking countries in the region.
The latest set of sanctions imposed in January 2022 by ECOWAS and WAEMU is already hurting public finances and the economy. These sanctions include trade embargo, freezing of Mali’s assets at the Central Bank of WAEMU countries, including the assets of public enterprises and parastatal organisations, together with the suspension of the country from all financial assistance from international institutions.
Mali is one of poorest countries in the world, and it is also vulnerable to the effects of climate change. While there are civil groups – based largely in the capital Bamako – that are campaigning to get environmental issues prioritised by the government, there are no political parties with environmental protection as their foremost agenda. The government and opposition parties are almost certain to be reminding donors for funds to help the country honour its NDC commitments.
The current military government, as the transitional administration, is likely to give less importance to climate/environmental concerns and will focus more on stabilising the economy and leading the country back to democratic rule. The government faces significant challenges in trying to attract substantial investment in renewable energies. The lack of enabling environment, including outdated policy, legal, regulatory and institutional frameworks, tends to impede the scaling-up of renewables investment in Mali.
The imposition of stringent financial, economic, and diplomatic sanctions on the military government has heightened the risk of expropriation in Mali. The military government described the sanctions as “illegal, illegitimate and inhumane” given the hardship the situation is almost certain to cause. At present, there are no reports of asset confiscation; however, this risk will increase in the event the sanctions are protracted.
As the financial situation worsens, the government is likely to pile pressure on individual and corporate entities for additional payments through new or increased tax to help run the public service and pay salaries. Individual and corporate entities that fail to meet government demands for additional payments are at risk of asset confiscation.
Mali’s political situation is polarised as political leaders remain divided over the timetable to return the country to democratic rule. The country’s 18-month political transition, set after the August 2020 military coup, was meant to have ended with the organisation of presidential elections in February 2022. However, the military government wants to prolong its stay in office, which had led to the sanctions. The National Transitional Council, the current legislative body, voted unanimously in February for a revised transition charter, proposed by the Council of Ministers, to allow for elections to be held at any time between six months to five years, meaning that the transition could last until 2027.
Furthermore, diplomatic relations between Paris and Bamako appear to have broken down irrevocably with French President Emmanuel Macron announcing in February his decision to pull out all French forces from the country. Macron’s decision is a culmination of the escalating bilateral tensions since the second coup in May 2021. The withdrawal of French and European forces will place heavy burden on Mali’s overstretched and under-resourced troops.
Mali’s conflict is proving intractable for several reasons, including deep-seated mistrust between Tuareg leaders aligned to the al-Qaida-affiliated Group for Supporting Islam and Muslims (JNIM) and the Malian government. Since July 2014, the operations of the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) have struggled to establish stability in the northern and central regions, where armed groups continue to stage attacks against civilian and military targets.
The security situation in Mali’s northern and central regions still remains dire. Attacks by jihadists and armed militias as well as intercommunal violence are ongoing mainly in Ségou and Mopti in the central region, with sporadic attacks also taking place in Koulikoro in the western region and Sikasso region, the hub of the country’s cotton industry. In the northern region, Gao, Menaka and Kidal remain high-risk areas for jihadist attacks including kidnapping, while mining sites located in the south are relatively protected from regular armed attacks.
The ongoing political turmoil is changing the country’s security dynamic as mercenaries from the Russian-owned Wagner group look set to replace French and European forces as close partners of the Malian military government. The full withdrawal of French and European forces from Mali will present an opportunity for jihadist groups to tighten their stranglehold on the northern and central parts of Mali as well as increase pressure on Malian troops and the peacekeeping MINUSMA mission.
MINUSMA forces will not be collaborating with Wagner Group’s mercenaries, raising the risk of a repeat of the antagonistic relations between Wagner and the UN mission in Central African Republic. Additionally, sharing of information between MINUSMA and Malian forces will be difficult, thereby limiting the operational capability of both entities in the fight against jihadists.
The sanctions imposed by ECOWAS and WAEMU have blocked imports and exports except for certain items, including food products, pharmaceutical and medical products including materials for managing COVID-19, petroleum products and electricity, as well as access to foreign exchanges. However, some businesses are using the seaport of neighbouring Guinea (where a military government is also in power) and Mauritania to circumvent the trade embargo. Even so, the trade sanctions are hurting the economy and are likely to be in force until the military government reaches a mutual agreement with ECOWAS regarding the timetable to organise elections for the country’s return to democratic rule.
The military government in February 2022 filed a lawsuit in the ECOWAS Court of Justice, to challenge the legality of the financial and economic sanctions by ECOWAS and WAEMU. However, the legal challenge is unprecedented as no military government has ever challenged sanctions in front of the court. Besides, it is unlikely that the court would rule in the favour of the military government, which came to power through unconstitutional means.
The freezing of Mali’s assets, including the assets of public enterprises and parastatal organisations, together with the suspension of the country from all financial assistance from international institutions, is putting tremendous pressure on the government to honour the country’s debt obligations. With the country excluded from the regional financial market due to the sanctions, the government can no longer raise funds or access the single account of the treasury, leading to the country’s debt default of more 80 million euros (USD87.8 million) within a month since the imposition of the sanctions In January. In the event the economic and financial sanctions stay longer, the debt default amount is almost certain to increase significantly.
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