The third review of the Poverty Reduction Growth and Strategy Paper (PRGSP), chaired by Mr. Sanoussi Toure, Minister of Economy and Finance, was conducted on June 7, 2010 at the Balla Moussa Keita room of the International Conference Center in Bamako. The third review took on special significance: while focused on 2009, it served as the midterm review of a five-year program. It would also serve as the basis for preparation of the 2012-2016 Poverty Reduction Strategy Paper (PRSP) over the following six months.
The participants in the review included:
- The members of government: the Minister of Territorial Administration and Local Communities; the Minister of Livestock and Fisheries; the Minister of Mines; the Minister of Women’s Promotion, Children, and Family; the Minister of Economy and Finance; the Minister of Social Development, Solidarity, and the Elderly; the Minister of Housing, Land Issues, and Urban Planning; the Minister of Secondary and Higher Education and Scientific Research; the Minister of Basic Education, Literacy, and National Languages; the Minister Delegate in charge of the Budget (under the Minister of Economy and Finance); the Minister of Agriculture, represented by the secretariat general; and the Minister of Energy and Water, represented by the secretariat general;
- Representatives of national institutions;
- Representatives of civil society;
- Representatives of the private sector;
- Representatives of trade unions;
- Regional governors;
- Presidents of the regional assemblies;
- Representatives of national and regional technical agencies; and
- Technical and financial partners (TFPs).
The review, programmed for one day, was organized around three major unifying and interdependent themes:
- accelerated growth and the issue of population growth;
- poverty trends and the achievement of the Millennium Development Goals (MDGs); and
- the issue of aid financing and effectiveness.
II. PRINCIPAL RESULTS OF THE REVIEW
The findings of the review are summarized below:
1. Economic and demographic growth
Real GDP growth remained relatively high (4.3 percent in 2007, 5.0 percent in 2008, and 4.5 percent in 2009) despite the global recession, surpassing that of the West African Economic and Monetary Union (WAEMU) (3.3 percent in 2007, 3.7 percent in 2008, and 2.9 percent in 2009). Inflation declined from 9.2 percent in 2008 to 2.2 percent in 2009, compared to 7.4 percent in 2008 and 1.1 percent in 2009 for the WAEMU region.
Primary sector: In 2009, the added value contributed by primary sector activities increased by 5.6 percent compared to 2008, the result of a satisfactory harvest produced by good rainfall and government efforts, particularly in regard to input subsidies for food crops. Rice production was a key driver of primary sector performance: efforts under the Rice Initiative in recent years boosted the share of rice in total grain production from 27.8 percent in 2007 to 33.5 percent in 2009. Primary sector performance also reflected a recovery in cotton production, which increased by 16.8 percent after posting successive declines in 2007 and 2008. The “other industrial crops” segment, which includes wheat and groundnut, also posted positive growth, the result of authorities’ efforts to diversify agriculture. Finally, the added value of the “livestock” and “fishing and forestry” segments posted higher rates of growth than in 2008 through the continued execution of support projects initiated in these areas. In regard to implementation of the accelerated growth strategy (AGS), most activities relating to infrastructure and productive sectors, particularly agriculture, are still in progress and have yet to produce their full impact on economic growth.
Secondary sector: The contribution from the secondary sector was modest (0.5 percent). The “construction and public works” segment provided the largest contribution to growth at 0.3 percent, supported by the continuation of major projects undertaken by the government.
The value of mining production, aided by improved international gold prices (up 4.7 percent), increased 1.5 percent in 2009. Gold production, in decline since 2007 after reaching a high of 62 tons in 2006, averaged 54.6 tons during 2005-2009. Artisanal production of gold was an estimated 4 tons/year. Gold production in 2009 totaled 53.7 tons compared to 52.8 tons in 2008, representing an increase of 1.7 percent.
Tertiary sector: During the past three years, a key component of economic growth has been a buoyant tertiary sector, driven by rapid expansion of mobile phone service. The tertiary sector contributed 2.4 percent of average growth of 4.6 percent over the period 2007-2009. The contribution remained relatively stable from year to year, and was largely attributable to 1.0 percent and 0.8 percent contributions from the “commerce” and “transportation and telecommunication” segments, respectively.
To summarize, the Malian economy posted 4.6 percent growth over the period 2007-2009 despite the international crises it faced during that period. This reflects stability of growth and the positive impact of the government’s actions to cope with these crises. Economic growth was led by the tertiary sector (2.4 percent of the 4.6 percent posted during the period under review). The tertiary sector contribution is all the more remarkable in that it remained relatively stable from year to year. The primary sector contribution was more modest (1.6 percent) and less stable. The contribution from the secondary sector was also modest (0.5 percent).
Most of the actions identified in the AGS were launched (of the 93 actions identified, 14 were completed and 17 are in progress). Close to half of the 93 AGS actions concerning development of infrastructure and productive sectors; of those 46 actions, 39 are in progress.
Mali’s resident population increased from 3.5 million inhabitants in 1960 to 14.5 million in 2009. It could increase by a factor of three or four by 2050, reaching 45 to 60 million inhabitants. According to preliminary results of the 2009 General Population and Housing Census, annual population growth was 3.6 percent (compared to 2.5 percent, 3.7 percent, and 2.2 percent respectively in 1976, 1987, and 1998). This rapid growth may be accounted for by declining emigration and increasing immigration in recent years. Measures to contain population growth are included in the Malian National Population Policy and third implementation program for 2010-2014.
Population growth presents the economic problem of slower growth in per-capita income unless GDP grows more rapidly than the population. It also raises issues in regard to the universal values of freedom to procreate and the rights of children.
2. Poverty trends and achievement of Millennium Development Goals (MDGs)
Despite strong economic performance in recent years compared to sub-Saharan African and WAEMU countries, Mali’s average annual growth rate of 4.6 percent is below the target of 7 percent provided in the PRGSP. Results in terms of poverty reduction were therefore modest. Poverty remains a major problem, with nearly half the population living below the poverty line in 2009. Poverty is primarily a rural phenomenon, and significant regional disparities remain.
MDG 1: Reduce poverty and hunger by half
The incidence of income poverty was an estimated 43.7 percent in 2009, representing a decline of 3.7 percentage points with respect to 2006 (47.4 percent). According to the same estimates, poverty declined in rural areas (from 57.6 percent to 53.5 percent) as well as urban areas (from 25.5 percent to 23.5 percent). The significant decline in rural poverty reflects substantial public investment, particularly in basic infrastructure. The more modest decline in urban poverty is largely attributable to the exodus of rural populations pushed toward urban centers in search of better living conditions.
The analysis of living conditions confirms that poverty is essentially rural. The 2008 Communal Poverty Index (IPC) indicates that all of the extremely poor communes are rural. In contrast, all the urban communes except one are “non-poor,” as are 103 rural communes. The target poverty rate is 35 percent by 2015.
Chronic malnutrition (growth retardation) remained stable at 38 percent between 2001 (Demographic and Health Survey (EDSM) III) and 2006 (EDSM IV). The target malnutrition rate is 17 percent by 2015. Over the same period, acute malnutrition (emaciation) increased (from 11 percent in 2001 to 15 percent in 2006), while the proportion of underweight persons continued to fall (from 33 percent in 2001 to 27 percent in 2006).
Also of note is the implementation of “Initiative 166” under the National Food Security Program, targeting the 166 most vulnerable communes in terms of food security. This initiative is intended to speed the achievement of MDGs in those communes, thereby improving the country’s overall situation.
Mali may be on its way to achieving MDG 1. Stable macroeconomic performance and control of population growth are some of the conditions necessary to reducing extreme poverty and hunger by 2015.
MDG 2: Achieve universal primary education (100%): The gross elementary school enrollment rate increased from 64 percent in 2002 (54 percent for girls) to 82 percent in 2009 (73 percent for girls). The enrollment rate, then, is somewhat lower for girls than for boys. Mali has a chance of achieving this MDG.
MDG 3: Promote gender equality and empower women: Considerable progress has been made in regard to the status of women, particularly in terms of a sustained political commitment to consolidate their rights. However, certain socio-cultural practices continue to present serious obstacles. The National Gender Equality Policy (PNEFH) was drawn up and three-year action plans were prepared. The government and the United Nations system established the Joint United Nations Program to Promote Human and Gender Rights (PCDHG), which focuses primarily on mass communication relating to women’s rights.
MDG 4 and 5: Tremendous efforts were made in the area of health care with the construction of community health centers (CSCOMs) to bring health care services to local communities. As a result, the proportion of the population living within 5 kilometers of a health center increased from 46 percent in 2003 to 57 percent in 2009.
MDG 4: Reduce the under-five mortality rate by two-thirds: The infant and child mortality rate increased from 238 per thousand in 1996 to 229 per thousand in 2001 and 191 per thousand in 2006, against an objective of 150 per thousand in 2011. The mortality rate for infants under age one decreased from 123 per thousand in 1996 to 113 per thousand in 2001 and 96 per thousand in 2006. The objective under the second Ten-Year Health and Social Development Program (PRODESS II) is 56 per thousand. Despite genuine progress, then, it does not appear likely that this MDG will be attained by 2015.
MDG 5: Reduce maternal mortality by three-quarters: The rate of use of family planning remained flat, despite its critical role not only in reducing the number of undesired pregnancies and controlling population growth but also in reducing maternal mortality. Ten percent of maternal deaths result from abortion, which is still illegal in Mali except for health reasons or in case of rape or incest. The objective of 10 percent usage by 2011 is realistic, provided innovative strategies are implemented to address unmet needs. The availability of cesarean sections free of charge, introduced in 2005, has failed to produce perceptible change: from 1.9 percent in 2006, the rate of cesarean sections increased to 2.3 percent in 2009 against an established objective of 5 percent.
The maternal mortality rate remains quite high (464 deaths per 100,000 live births in 2006), although it saw its first decline in 10 years. The established objectives are 344 deaths in 2011 and 146 deaths per 100,000 live births by 2015. Despite real progress, then, the challenge of achieving this MDG remains considerable.
MDG 6: Combat HIV/AIDS, malaria, and other diseases: The HIV/AIDS prevalence rate among all population groups declined by 0.4 percentage points, to 1.3 percent in 2006, compared to 1.7 percent in 2001. Much work remains to be done among high-risk groups, particularly sex workers.
The incidence of malaria in children under five was estimated at 132.3 per thousand for uncomplicated malaria and 39 per thousand for severe malaria in 2009. Despite efforts made, malaria remains the leading reason for juvenile consultations. It is also serious in pregnant women. Mali is on its way to achieving this MDG provided it continues the efforts undertaken.
MDG 7: Ensure environmental sustainability: With respect to the environment, Mali must face major environmental challenges, in particular, degradation of soil and plant cover, desertification, silting in the Niger River, water shortages, loss of biodiversity, and climate change. While rural development policies address these challenges, they are too often neglected by other sector policies that have a major environmental impact (especially energy and industrial policies). In this context, the ongoing review of Order 08-346/P-RM of June 26, 2006 regarding environmental impact studies and the study to prepare the national environmental assessment strategy are raising high expectations. For the time being, efforts are focused on preserving soils and plant cover and controlling desertification with the preparation of a Strategic Framework for Sustainable Land Management (CSI/GDT). The adoption of the Agricultural Framework Law (LOA) may also contribute to sustainable land management.
In the drinking water sector, the national rate of access to water was 73.1 percent in 2009 compared to 71.7 percent in 2008, 70.1 percent in 2007, and 67.4 percent in 2006. The objective of 75 percent may be achieved by 2010. In 2009, rates of access to drinking water improved for both rural and urban areas. However, drinking water continued to be more accessible in urban areas than rural (a difference of roughly 7 percentage points in 2008 and in 2009). The chances of achieving this MDG by 2015 are very good.
In regard to energy, the national rate of access to electricity increased from 14.1 percent in 2003 to 25.2 percent in 2009. Access to electricity in rural areas increased from 11.2 percent in 2008 to 13.3 percent in 2009, indicating a specific effort of the department through the Malian Agency for Domestic Energy and Rural Electrification (AMADER).
In the area of urban development and housing, the government initiated a social housing construction program (2003-2007). The objective of 3,500 homes by 2007 was exceeded with 4,066 homes provided, representing an execution rate of 116.2 percent. On average, 40 percent of the program beneficiaries were women. The National Conferences on Land held in December 2009 will provide direction for future efforts.
MDG 8: Global partnership: The results are encouraging, as reflected by the measures taken in implementing the Paris Declaration:
- the development of the National Action Plan on Aid Effectiveness;
- the creation of a Secretariat for Aid Harmonization;
- coordination of the TFPs (lead agency, technical pool, troika, etc.);
- the Gleneagles scenario;
- the Joint Country Assistance Strategy (JCAS).
In the area of solidarity and social development, the efforts deployed have resulted in expanded coverage of population groups by mutual health associations. The coverage rate for mutual health associations increased from 2.6 percent to 3.5 percent between 2008 and 2009, thereby achieving the objective of 2.1 percent. Also of note is the government’s adoption of significant laws, including laws establishing the mandatory health insurance (AMO) and medical assistance insurance (RAMED) systems and creating the National Health Insurance Fund (CNAM) and the National Medical Assistance Agency (ANAM).
In the area of employment and vocational training, job promotion activities served to create 33,623 jobs in 2009 compared to 28,764 in 2008. However, the workforce potential remains constrained by underemployment and unemployment. Prospects in this area will depend on accelerated implementation of the National Vocational Training Policy adopted in 2009.
Going forward, reducing the incidence of income poverty by 2 percent per year will require annual per-capita GDP growth of 3.5 percent. At that rate of per capita growth, the objective of reducing the incidence of income poverty to 35 percent by 2015 could be achieved.
To summarize, the improved coverage of basic social services conceals enormous disparities across regions and between urban and rural areas. In view of low purchasing power, the poor quality of public services and cost of basic social infrastructure (education, health, drinking water, electricity) hampers access to the minimum package of services.
3. Optimization of financing
Ninety-seven percent of the resources provided in the PRGSP financing plan were mobilized in 2009, compared to 84 percent in 2008.
State budget, domestic financing: Actual budget receipts represented 92.2 percent of the projected total. This result reflects greater mobilization of direct taxes (144.6 percent of the forecast) and taxes on imports (106.6 percent of the forecast) than projected. At the same time, VAT receipts and taxes on petroleum products were below expected levels (88.4 percent and 75.7 percent of the forecasts, respectively).
State budget, external financing: Grants received in 2009 were above the PRGSP projections (102.6 percent), and represented 19 percent of total receipts. General budget support (ABG) and budget stabilization support (ABS) were relatively higher in 2009 than in 2007: CFAF 52 and 45.5 billion, respectively, in 2009 compared to CFAF 49 and 40 billion in 2007.
State budget, expenditures: Expenditures totaled CFAF 1,016 billion in 2009 compared to 1,048 billion provided in the PRGSP, representing an execution rate of 96.9 percent. The current expenditure execution rate was 106.5 percent compared to 79 percent for capital expenditures.
State budget, expenditures by PRGSP pillar (excluding the Special Investment Budget (BSI)): The share accounted for by Pillar 1 of the PRGSP, “Developing Infrastructure and Productive Sectors” stood at 20 percent in 2009 compared to 18.6 percent in 2008 and 17.5 percent in 2007. In contrast, the share allocated to Pillar 2 “Pursuing and Consolidating Structural Reforms” declined from 27.2 percent in 2007 to 26.6 percent in 2008 and 25.5 percent in 2009. The share represented by Pillar 3, “Strengthening the Social Sector” remained nearly constant at 35.5 percent in 2007, followed by 35.2 percent in 2008 and 36.0 percent in 2009.
Budget balance and debt: The budget deficit was smaller than projected for each of the three years under review (1 billion in 2007, 57 in 2008, 12 in 2009). However, if receipts and expenditures against special funds and annexed budgets are taken into consideration in 2009, the overall budget balance stands at 291 billion compared to the forecast of 279 billion.
Other sources of financing: It is difficult to gather information concerning the finances of local governments, public entities, and NGOs, despite the major role these institutions play in stimulating growth and reducing poverty. It is important that the government look for better ways to monitor this financing in order to better orient it toward the PRGSP objectives.
Transfers from Malians abroad: Official transfers from the Malian diaspora stood at CFAF 174 billion in 2009 (BCEAO). These transfers are socially useful insofar as they reduce economic vulnerability by covering urgent needs in regard to health, educational expense, food, etc. They also maintain social cohesion and family ties. However, they have little impact on growth.
Private investment: Private investment increased by 8 percent in 2009 compared to 3 percent in 2008. The share of private investment in GDP remained relatively stable (between 7 and 8 percent) from 1998 to 2009, and represented between 55 and 58 percent of total investment.
Business climate: The reforms adopted in 2009 boosted Mali’s Doing Business ranking (156th out of 183 countries in 2009 compared to 166th out of 181 in 2008). The reforms included, in particular, the creation of the Agency to Promote Investments (API), which simplified the process of establishing an enterprise (from 26 days to three days); reduction of the number of documents required for cross-border trade; improvement of the system supporting automated exchange of information (EDI) between tax administrations; enhancement of shareholder rights under the Code of Civil Procedure; and reduction of case processing times for the Commercial Court. Much work remains in the areas of access to credit, combating corruption, and simplifying procedures. The review under way of the Investment Code and the adoption of the private-sector framework law (LOSP) planned for 2010 are expected to improve the institutional environment for enterprises.
Banking system: Credits to the economy stood at CFAF 745 billion at end-2009 compared to 671 billion in 2008, representing an increase of 10.9 percent. This increase is remarkable in light of the restrictions on credits to the economy seen in most countries in 2009 in response to the global recession. However, most credits to the economy represented cash advances and facilities to enterprises; access to credit for investment remains very difficult for the private sector. Banks lend only at short or medium terms (generally from 6 months to a maximum of 5 years) and high interest rates, and demand collateral that is often difficult to provide.
3. Major constraints to reducing poverty
Mali continues to face exogenous constraints: the vagaries of the climate, price volatility of import and export products, and international and sub-regional crises.
The constraints that remain critical and require more sustained action include the lack of skilled workers in most sectors, a weak financial system, inadequate diversification of production, and low utilization of surface water.
III. Principal recommendations (and key stakeholders)
After discussion, the following recommendations were made to correct weaknesses and deficiencies in implementation of the PRGSP.
Recommendations for future reviews
Recommendations for organization
- Begin preparatory work for the review at an earlier point in time (Government);
- Encourage decentralized agencies, local offices of central government agencies, civil society, and the private sector to become more involved in preparation of the review (Government, civil society, private sector);
- Ensure that the findings of the review are taken into consideration in preparing the State budget (Government);
- Monitor the implementation of recommendations from reviews of the PRGSP (PSRP technical unit);
- Establish a harmonized timetable for reviews in order to facilitate better planning, particularly for sector reviews, and to ensure that sufficient reliable data are available (Government);
- In cooperation with the institutions responsible for producing statistics, establish a timetable for the major surveys to be conducted in the coming years in the context of the Statistics Master Plan (SDS) (Government).
Recommendations for analyses
- Address the major themes of governance and regional integration in greater depth in the report (PRSP Technical Unit);
- Clarify Mali’s comparative advantages with respect to the sources of growth identified, and define the approaches that might be contemplated to support the various sectors in question (PRSP Technical Unit);
- Delineate more clearly the linkages between the accelerated growth strategy (AGS) and the sources of growth to be strengthened (PRSP Technical Unit);
- Analyze the institutional environment more thoroughly in the section addressing constraints to Mali’s growth (PRSP Technical Unit);
- Clarify the recommendations to reduce poverty, in particular, the recommendations for the most vulnerable groups and the recommendations to reduce regional and gender disparities (PRSP Technical Unit);
- Provide for the implementation of social safety nets to reduce poverty, given their significant, proven impact on reducing extreme poverty (PRSP Technical Unit);
- Emphasize the importance of protecting the environment (PRSP Technical Unit);
- Explain the HIPC Initiative and the associated financing more thoroughly (PRSP Technical Unit);
- Emphasize the effectiveness of financing rather than the volume (PRSP Technical Unit).
Recommendations for stronger, more equitable growth
Implementation of the AGS
- Improve the ranking of AGS priorities, prepare a timetable and precise sequence of activities provided in the strategy, and institute a better management policy (Government, TFPs);
- Improve the distribution of responsibilities for implementation of the AGS (Government);
- Accelerate implementation of the Agricultural Framework Law (Government).
Options to remove constraints on the private sector
- Strengthen the capacities of small and medium-sized enterprises and industries (Government, private sector);
- Accelerate implementation of the National Vocational Training Policy (Government);
- Strengthen the monitoring of the action plan to fight corruption and financial crime (Government);
- In the review of the Investment Code and finalization of the private sector framework law (LOSP), provide for the establishment of a simple, transparent tax system with moderate rates for all economic transactors; eliminate tax and customs exemptions for certain categories of companies; and expand the tax base (Government);
- Develop a national quality policy that provides for strengthening of standard-setting institutions and infrastructures in regard to quality, application of and compliance with existing standards, and support for companies in the certification process (Government, TFPs);
- Continued efforts to improve the business climate (Government);
- Support private sector regulatory bodies (Government).
Recommendations to reduce poverty
To control population growth
- Accelerate implementation of the National Population Policy and the 2010-2014 Program of Priority Population Actions and Investments (Government);
- Conduct an advocacy campaign to promote a population policy (Government);
To reduce regional disparities
- Continue to improve the supply of social services to communes to reduce regional disparities (Government, TFPs);
- Accelerate the implementation of the Program to Develop Northern Mali (Government, TFPs).
To reduce gender disparities
- Accelerate the adoption and implementation of the national gender equality policy (Government);
- Develop and implement a national policy to protect children’s rights (Government);
To promote access to training and jobs
- Accelerate the implementation of the National Vocational Training Program (Government);
- Focus attention on the content of public investments (in terms of jobs) by incorporating the employment-intensive approach defined by the ILO as a criterion in decisions to allocate public financing (Government);
- Take special measures to provide youths with access to stable, decent work (Government, TFPs);
To stimulate income-producing activities for the poorest segments of society
- Improve the efficiency of food production (Government, TFPs);
- Continue the actions undertaken to develop microfinance (Government, TFPs, private sector);
Recommendations to optimize financing
Policy governing allocation of public resources
- Continue efforts to align annual budgets with the PRGSP pillars (Government);
- Increase the share of capital expenditures in the government budget (Government);
- Take measures to finance current government expenditures from domestic resources in 2013 (Government);
- Increase the share of poverty-related spending relative to the total government budget (Government);
- Increase the share of spending allocated to gender, environmental protection, and the fight against HIV (Government).
Government financing mechanisms
- Continue efforts under way to expand the tax base (proposed land tax, program to develop local taxation arrangements in the Government Action Plan for Improvement and Modernization of Public Finance Management (PAGAM/GFP II), revision of the Investment Code, etc.) to achieve the target tax rate of 17 percent established by the WAEMU (Government);
- Accelerate the preparation and adoption of the PAGAM/GFP II (Government);
- Improve coordination of financial support with sector policies in order to adhere to financing plans defined in national sector strategies (Government, TFPs).
Public financial management
- Ensure optimal efficiency of expenditures (Government);
- Strengthen governance and transparency by improving control functions (Government).
Aid effectiveness and alignment with national procedures
- Ask the TFPs to fulfill the obligations adopted under the Joint Country Assistance Strategy (JCAS) and encourage them to simplify their procedures and align them with national procedures (Government/TFPs);
- Continue efforts to improve aid effectiveness, particularly through improvement of the public financial management and procurement system (Government, TFPs).
Financing and organization of local governments
- Provide real autonomy to local governments (Government);
- Ensure the effective implementation of resource transfers to local governments (Government);
- Compensate local governments when the central government grants private-sector tax exemptions that result in losses or foregone earnings for local governments (Government);
- Further decentralize human resources (Government, local governments, civil society).
- Strengthen capacities of elected local government officials in PFM (Government).
Transfers from Malians abroad
- Design and implement a consistent set of measures to channel transfers from Malians abroad to productive investments (Government and private sector)
The 2009 review serves as the midterm review of the Poverty Reduction and Growth Strategy Paper (2007-2011 PRGSP). It draws on retrospective and forward-looking analyses to provide a critical evaluation of implementation of the PRGSP as the unifying framework for policies and strategies, identify the principal constraints to its execution, and propose the necessary measures to improve its performance.