Previous Quarterly Editions
Expropriation Risk: 78 57 57 64 ▲ Political Violence Risk: 74 74 74 74 ► Terrorism Risk: 75 75 75 77 ▲ Exchange Transfer and Trade Sanction Risk: 55 55 55 64 ▲ Sovereign Default Risk: 75 75 75 75 ►
TREND ▲
Mali suffered its second coup in less than a year when the military ousted the interim President Bah Ndaw and his Prime Minister Moctar Ouane in May 2021. The new transition government is headed by Colonel Assimi Goïta, who was sworn into office in June. The new cabinet led by Prime Minister Choguel Maïga
was unveiled in June, with the military maintaining key portfolios including the ministry of defence, the ministry of national reconciliation and the ministry of interior.
Elections are tentatively scheduled to take place on October 31 for the constitutional referendum, and on February 27, 2022 for the presidency and legislature. International pressure is likely to intensify, including with the threat of trade embargo from the regional bloc the Economic Community of West African States (ECOWAS), if the military seeks to prolong its stay in office.
The junta has yet to announce whether it is continuing with the policy of the short-lived civilian-led transition government to review mining contracts signed by the government ousted in August 2020. Mali’s parliament approved in April 2020 a new mining code that eliminates mining companies’ value-added tax exemptions during production and shortens the period during which they are protected from fiscal changes.
However, the transitional government is under pressure from Mali’s opposition parties, trade unions and civil groups, who feel that existing mining contracts benefit disproportionately foreign mining companies at Malians’ expense. They claim mining contracts which give 80% stakes to foreign companies and 20% to Mali’s government should be changed. The persistent calls for reform in the mining sector will put pressure on the junta to take actions including reviewing mining contracts.
On the economic front, COVID-19 drove the economy from 5.1% growth in 2019 to a 2% contraction in 2020. The budget deficit widened further from 1.8% of gross domestic product (GDP) in 2019 to 6.1% of GDP in 2020, mainly because of lower tax revenue. GDP is expected to grow 4% in 2021 and 5.7% in 2022, in the event that COVID-19 is brought under control and political stability is maintained.
Overall, expropriation action is limited and often used against opponents of the government. Nonetheless, the risk is elevated mainly in the mining sector, especially against small and medium-sized companies that are accused of withholding taxes and not abiding to environmental measures.
Persistent calls to reform the mining sector, starting by reviewing mining contracts, could lead to creeping if not outright expropriation of some mining assets. In Mali, incoming governments are disposed to making arbitrary demands for contract review and unpaid taxes. However, most mining contracts with foreign companies are protected by stabilisation clauses that will render any enforced changes illegal, with the government liable to pay compensation.
A disruption to mining operations is not in the government’s best interest. Consequently, the transitional government is more likely to engage in dialogue with mining firms for more financial support for its post-COVID-19 recovery efforts. Nevertheless, mining firms found to have broken environmental regulations are more likely to face heavy fines than expropriation of assets.
TREND ►
Goïta reportedly escaped an assassination attempt in July inside Mali’s national mosque, in the presence of other cabinet members. The motive of the attacker remains unknown. The attacker died in custody less than a week after the assassination attempt. There are concerns as to whether the whole episode was stage-managed by the military junta to justify an increased spending to beef up the president's security, which had been very thin before the attack, as well as to use the incident to accuse some of its opponents of being behind the plot.
The conflict between the Malian government and the Tuaregs, seeking to carve out northern Mali for their independent state, appears interminable. Peace negotiations between the government and two largely recognised rebel coalitions, the ‘Platform’ and the ‘Coordination’, concluded with an agreement in June 2015 in Algiers. Since then, there has been a conference of national accord (2017) and an inclusive national dialogue (2019). Thus far, attempts at reaching a negotiated settlement have seen little progress.
The conflict is proving intractable for several reasons including deep-seated mistrust between Tuareg leaders aligned to the Al-Qaeda 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 stage attacks against civilian and military targets.
The security situation in Mali’s northern and central regions remains dire. Attacks by jihadists and armed militias as well as intercommunal violence have intensified mainly in Ségou and Mopti in the central region, with sporadic attacks also increasing 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.
Amid political instability, the limited capacity of regional military forces and overstretch among international forces, counterterrorism efforts in the Sahel are struggling to gain the upper hand against jihadists, who are demonstrating increasing capacity and ambition. In June 2021, jihadists staged a car bomb attack against French troops in Gossi, central Mali, leaving several soldiers injured. The attack came a day after the release of the first audio message from Abu Ubaidah Youssef al-Annabi , the new leader of Al-Qaeda in the Islamic Maghreb (AQIM), who urged militants to oust French troops from Mali.
The audio may have been recorded before French President Emmanuel Macron’s June 10 announcement of plans to end Operation Barkhane in its current form. Moreover, the national reconciliation drive is yet to gain significant momentum. On August 19, an armed group attacked a Malian military convoy, killing over 15 soldiers and with scores injured, underlining the country’s precarious security outlook.
Although ECOWAS and the African Union have suspended Mali’s membership following the May 2021 military coup, the regional bloc stopped short this time from imposing trade and financial sanctions on Mali, as was seen after the August 2020 coup. Businesses can therefore conduct imports and exports as well as access foreign exchanges. Nonetheless, the risk of trade sanctions will increase should the military junta want to significantly extend the timetable, or if the president tries to run for office in the presidential election.
Mali’s public debt is expected to increase to 46.2% of gross domestic product (GDP) in 2021 and 47.2% of GDP in 2022, as the transitional government moves to implement the action plan of the 2020–22 Transition Roadmap. Due to the high concentration of domestic debt maturity, a debt restructuring programme was initiated in 2019. This restructuring programme will be completed to reduce the financial pressures on the public purse.
The International Monetary Fund granted an additional six-month debt repayment moratorium until 2021, following a USD200mn loan in April 2020 under the Rapid Credit Facility, in addition to a USD193mn loan under the Extended Credit Facility, to enable the transitional government to deal with COVID-19’s socio-economic impacts while pursuing economic recovery.
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