Transparency of the Regulatory System
As reflected in agreements with the IMF and World Bank, the Government of Mali has adopted a generally transparent regulatory policy and laws to foster competition. The commerce, labor, and competition laws are designed to meet the requirements of fair competition, to ease bureaucratic procedures, and to facilitate the hiring and firing of employees. In practice, however, many international firms complain of lack of transparency in the regulatory system and challenges in enforcing regulatory requirements to the detriment of business prospects. The investment code simplifies the application process to establish a business, and favors investments that promote handicrafts, exports, and labor-intensive businesses. There is, however, no public comment period or opportunity for citizens or businesses to comment upon proposed laws. Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and implements the Accounting System of West African States (SYSCOA), which harmonizes business practices among several African countries consistent with international norms. There are no informal regulatory processes managed by nongovernmental organization or associations.
Mali is a member of the United Nations Conference on Trade and Development’s (UNCTAD) international network of transparent investment procedures. Foreign and national investors can find detailed information on administrative procedures applicable to investment and income generating operations including the number of steps to establish a business, types of companies to be created, required documents and conditions, costs, processing time, legal references, payment of taxes, access to lands and properties, getting a visa or a residence permit, subscribing to insurance, social protection, borrowing from microfinance institutions, and intellectual property-related issues.
The Regulatory Authority for Public Transactions (Autorité de Regulation des Marchés Publics et des Delegations des Services Publics or ARMDS) is tasked with ensuring transparency in public procurement projects and can hear complaints from businesses on public procurement related issues. It makes its decisions available on its website as well as the key laws relating to public procurement.
The Government of Mali regularly reviews regulations. The process of reviewing the mining code and the investment code is ongoing. The Government of Mali does not review regulations based on scientific studies or quantitative analysis. The regulations are reviewed in order to adapt them to the national context or to international standards or commitments.
International Regulatory Considerations
The investment code allows a foreign company that has a signed agreement with the government to refer to international arbitration any case that the local courts are unable to resolve.
Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and has ratified the 1993 treaty creating the Joint Arbitration Court. OHADA has a provision allowing litigation between foreign companies and domestic companies or with the government to be tried in an appellate court outside of Mali. Mali has been a member of the World Bank Multilateral Investment Guarantee Agency (MIGA) since 1990.
Mali has been a member of the World Trade Organization (WTO) since 1995. Mali has not notified the WTO of any measures concerning investments related to trade in goods that are inconsistent with the requirements of Trade Related Investment Measures (TRIMs).
Legal System and Judicial Independence
Mali’s legal system is based on French civil law. Mali uses its investment code, commerce code, labor code, and code on competition and price to govern disputes. Disputes occasionally arise between the government or state-owned enterprises and foreign companies. Some report that certain cases involve wrongdoing on the part of companies and/or corrupt government officials.
Although Mali’s judicial system is s independent, many companies have noted that it has been subject to political influence. Numerous business complaints are awaiting an outcome in the courts. Judges and prosecutors’ career paths depend on the Minister of Justice, and hence their independence is allegedly compromised. According to some reports, corruption in the judicial system is common, leading to what foreign investors have defined as flawed decisions.
An independent commercial court was established in 1991 with the encouragement of the U.S. government to expedite the handling of business litigation. Commercial courts, located in Bamako, Kayes, and Mopti, can hear intellectual property rights cases. In areas where there is no commercial court, the Local Courts of First Instance have the jurisdiction to hear business disputes. The Courts of First Instance decisions are appealable in the Court of Appeal and/or in the Supreme Court. Since its inception, the commercial court has handled cases involving foreign companies. The court is staffed by magistrates and is assisted by elected Malian Chamber of Commerce and Industry representatives. Teams composed of one magistrate and two Chamber of Commerce and Industry representatives conduct hearings. The magistrate’s role is to ensure that the court renders decisions in accordance with applicable commercial laws, including internationally recognized bankruptcy laws, and that court decisions are enforced under Malian law.
Laws and Regulations on Foreign Direct Investment
The investment code gives the same incentives to both domestic and foreign companies for licensing, procurement, tax, and customs duty deferrals, export and import policies, and export zone status if the firm exports at least 80 percent of production. Incentives include exemptions from duties on imported equipment and machinery. Investors may also receive tax exemptions on the use of local raw materials. In addition, foreign companies can negotiate specific incentives on a case-by-case basis. The government has reduced or eliminated many export taxes and import duties as part of ongoing economic reforms; however, export taxes remain for gold and cotton. The government applies price controls to petroleum products and cotton, and occasionally to other commodities, such as rice, on a case-by-case basis.
In most cases, foreign investors can own 100 percent of any business they create, except in the mining and media sectors. They can also purchase shares in parastatal companies. The state has privatized many local companies. Foreign companies may also start joint-venture operations with Malian enterprises. The repatriation of capital and profit is guaranteed.
Despite having a generally favorable investment regime on paper, foreign investors have complaint of facing a myriad of challenges in practice. The most important of these being reported include low access to financing, high level of corruption, poor infrastructure (including inconsistent electricity), a non-transparent judicial system, and the lack of an educated workforce.
The following websites provide additional information relating to investments in Mali:
Competition and Anti-Trust Laws
The Ministry of Commerce and Competition is in charge of reviewing free competition in the Malian market place. Order 2007, Decree 2008, and the WAEMU 2002 anti-trust rules are the primary judicial documents that govern competition. The Tribunal of Commerce and ARMDS are the primary judicial bodies that oversee competition-related concerns. Some report that Mali struggles to limit illegal imports of products such as sodas, juices, tobacco, medicines, and textiles (including fabrics). The General Directorate of Customs, the National Directorate for Commerce and Competition, and the Agency for Sanitary Security of Foods occasionally intervene to limit the import and commercialization of smuggled goods. The Organization of Industrial Entrepreneurs (Organisation Patronal des Industriels or OPI) has criticized corruption and smuggling as significant hurdles to fair competition.
Expropriation and Compensation
Expropriation of private property other than land for public purposes is rare. The Malian government has not unfairly targeted U.S. firms for expropriation. By Malian law, the expropriation process should be public and transparent and follow the principles of international law. Compensation based on market value is awarded by court decision.
The government may exercise eminent domain in various situations including: undertaking large-scale public projects; in cases of bankrupt companies that have had a government guarantee for their financing; or when a company has not complied with the requirements of an investment agreement with the government. In 2000 and 2012, the government expropriated land near the Bamako city airport for air safety reasons. Notifications of the expropriation were sent via direct mail and published in public and private media, and prior owners were compensated according to Malian law. In 2010 and 2011, the government expropriated private land on the outskirts of Bamako for the construction of low -and medium-income housing. The prior owners have initiated a legal case against the government, arguing that housing projects should not be considered large-scale public works projects. The government settled the case by compensating previous owners. In cases of illegal expropriations, Malian law affords claimants due process in principle. However, given the reported vast corruption in the land administration sector, investors claim that fair court cases are rare.
ICSID Convention and New York Convention
Mali is a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). Mali also signed and ratified the Convention of the Recognition and Enforcement of Foreign Arbitrage Awards (1958 New York Convention).
Investor-State Dispute Settlement
Mali has ratified the 1993 treaty creating OHADA’s Joint Arbitration Court. OHADA has a provision allowing litigation between foreign companies and domestic companies or with the government to be tried in an appellate court outside of Mali. Mali has been a member of the World Bank Multilateral Investment Guarantee Agency (MIGA) since 1990. It has concluded numerous bilateral investments treaties and investment protection guarantee agreements. The U.S. government concluded an agreement with the Government of Mali on Private Investments Guaranty in 1964. Despite the official agreements, U.S. investors have complained about unfair practices. The dispute resolution process can take multiple years and is often fraught with corruption, political influence, and demands for payments to facilitate the legal process.
For example, the Tax Office and a mining company transferred several cases relating to six fiscal years (2008-2013) to the ICSID. The ICSID ruled in the mining company’s favor. However, it has been reported that the Government of Mali then started reassessing the company’s tax bill for other years; investors claim that it is not clear whether this was done in retaliation or as part of a government-wide tightening of tax collection. In October 2016, the Government of Mali closed the mining company’s office in Bamako after the company protested the new tax bills. Under pressure from the Tax Office, the mining company eventually agreed to pay a part of the assessments claimed by the Tax Office in order to reopen its office, but continues to contest the legality of the decision.
In 2013, an American company that was contracted to complete the Millennium Challenge Corporation (MCC)-funded airport renovation filed a case against the Government of Mali at the Paris Arbitration Court regarding an alleged breach of contract. The case is pending.
After five months of negotiations regarding a contract for a 30-megawatt (MW) power project initially awarded to a U.S. company, the Malian state-owned utility company cancelled the contract in January 2017 without justification and without the authorization of the Malian Public Procurement Regulatory Office.
In 2015, a U.S. company’s bid for an engineering oversight project related to the renovation of the Bamako airport was unjustly disqualified. ARMDS rejected the U.S. company’s complaint, stating the company did not wait the requisite 72 hours before contacting the authority. The company elevated the complaint to the Administrative Chamber of the Malian Supreme Court, where the case now rests indefinitely.
Another U.S. energy company spent three years trying to negotiate a power purchasing agreement with the Government of Mali regarding a 15 MW hydroelectric plant in Markala. When the government changed, the new Minister involved with the project requested a new impact study which was deemed to be redundant, costly, and unnecessary by foreign investors. The Government of Mali has since reissued the tender which the U.S. company had believed it had won and the U.S. company gave up on the project. Reports of such delays are common. Many companies have spent considerable time developing relationships with high-level government officials, time that felt wasted once the government reshuffled itself, as it does frequently.
International Commercial Arbitration and Foreign Courts
Companies are supposed to undertake amicable negotiations before engaging ARMDS or the courts. Failure to reach an out-of-court agreement will lead to the case being transferred to the court of first instance, the commerce court, or international arbitration. The decisions of foreign courts are enforced as long as specified and recognized by Malian law. In 2016, the Government of Mali paid USD 26 million to a foreign mining company pursuant to ICSID’s decision.
Mali’s bankruptcy law is found in its commerce code, which does not criminalize bankruptcy. According to data collected by the World Bank’s 2019 Doing Business Report, resolving insolvency takes 3.6 years on average and costs 18 percent of the debtor’s estate. Generally, the company will be sold piecemeal. The average recovery rate is 28.5 cents on the dollar. Mali adopted a credit bureau law in order to comply with a WAEMU requirement aimed at improving the business environment by reducing information asymmetry between banks and borrowers, based on voluntary adherence of individuals and companies.