MALI Public Expenditure Review March 2021 © 2021 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution—Please cite the work as follows: “World Bank. 2021. Mali Public Expenditure Review. © World Bank.” All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@ worldbank.org. MALI Public Expenditure Review March 2021 Document of the World Bank Macroeconomics, Trade and Investment Global Practice AWCW3 Country Management Unit, West Africa Region The World Bank Group This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. >>> Acknowledgments The Mali Public Expenditure Review was prepared by a team led by Xun Yan (TTL and Economist, EAWM1). The team included Fabienne Mroczka (Senior Financial Management Specialist, EAWG1), Tahirou Kalam (Senior Financial Management Specialist, EAWG1), Prosper Nindorera (Senior Procurement Specialist, EAWRU), Patrick Hoang- Vu Eozenou (Senior Economist, HAWH2), Jean Claude Taptue Fotso (Senior Health Specialist, HAWH2), Ernest Ruzindaza (Senior Agriculture Economist, SAWA4), Rhoda Rubaiza (Senior Agriculture Economist, SAWA4), Amadou Ba (Senior Agriculture Economist, SAWA4), Yemdaogo Tougma (Economist, HAWH3), Aly Sanoh (Senior Economist, EAWPV), Boulel Toure (Senior Economist, EAWM1), Eliakim Kakpo (Economist, EAWM1), Michael Evers (Consultant, EMFTX), Ariel Melamud (Consultant, EAWM1), Waewnet Sukkasem (Consultant, EMFTX), Sylke von Thadden- Kostopoulos (Consultant, EAWG2), Simbo Tounkara (Consultant, EAWG1), Pierre Roumegas (Consultant, EAWM1), Mathieu Meguhe (Consultant, EAWRU), Maurice Zowendbeime Taondyande (Consultant, EAWM1), Nelly Rakoto- Tiana (Consultant, EAWM1), Loredana Luisa Horezeanu (Consultant, HAWH2), Michel Tano Aka (Consultant, DECPM), Tenin Kadidia Berthe (Consultant, SAFS4). The report was prepared under the overall guidance of Soukeyna Kane (Country Director, AWCW3), Kofi Nouve (Operations Manager, AWCW3), Theo David Thomas (Practice Manager, EAWM1). Helpful advice and comments were received from Jean Pierre Chauffour (Program Leader, EAWDR), Pierre Bonneau (Program Leader, IAWT4) and Christophe Rockmore (Practice Leader, HADF2), Fulbert Tchana Tchana (Acting Lead Economist, EAWM1), Mehwish Ashraf (Economist, EAWM1), Leif Jensen (Senior Economist, EMFTX), Fernando Blanco (Principal Economist, CCER2), Sadia Afolabi (Public Sector Specialist, EAWG1), Kebede Feda (Senior Economist, HAFE1), Amina Debissa Denboba (Education Specialist, HAWE2), Adama Ouedraogo (Senior Education Specialist, HAFE2), Aliona Cebotari (Advisor, IMF), Irena Jankulov Suljagic (Senior Economist, IMF), Asel Isakova (Economist, IMF), David Bartolini (Economist, IMF), Anthony Ramarozatovo (Technical Assistance Advisor, IMF), Russell James Clark (Technical Assistance Advisor, IMF) and Charles Vellutini (Technical Assistance Advisor, IMF). The team appreciates valuable guidance and contribution from Lars Christian Moller (Practice Manager, EEAM2) and Olivier Beguy (Senior Economist, EAWM1) in their roles as Manager and TTL at the concept and mission stage. The peer reviewers are Rick Emery Tsouck Ibounde (Senior Economist, EMNM2), Fiseha Haile (Senior Economist, EAEM2), Igor Kheyfets (Senior Economist, HMNED), Reem Hafez (Senior Economist, Health, HEAHN). Micky O. Ananth (EAWM1), Maude Jean-Baptiste (EAWM1) and Denin Dite Dorcas Guirou (AFCW3) provided excellent administrative and operational assistance. Sally Hinchcliffe (Consultant, EAWM1) edited the report. The team gratefully acknowledges the collaboration with the Malian authorities. Regional Vice President: Ousmane Diagana Country Director: Clara de Sousa Global Practice Director: Marcello Estevao Practice Manager: Theo David Thomas Task Team Leader: Xun Yan 2 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Abbreviation and Acronyms ADARS Appui en matériel à l’enseignement fondamental AICE Application Intégré de la Comptabilité de l’Etat APCAM Assemblée Permanente des Chambres d’Agriculture du Mali APE Association de Parents d’Élèves ASACO Association Communautaires de Gestion des CSCom BCEAO Banque Centrale des États d’Afrique de l’Ouest (Central Bank of West African States) BVG Bureau du Vérificateur Général (General Auditor Office) CAM Convention d’Assistance Mutuelle CAISFF Cellule d’appui à l’informatisation des services financiers et fiscaux CARFIP Cellule d’appui à la réforme des finances publiques (PFM Support Unit) CEDEAO Communauté Économique des États d’Afrique de l’Ouest CFE Contribution Forfaitaire à la charge des Employeurs (Fixed employer contribution) CGS Comité de Gestion Scolaire (School Management Committee) CHW Community health worker CI Concentration Index CIT Corporate income tax CMDT Compagnie Malienne de Développement du Textile CPF Tax Policy Formulation, Proposal, and Analysis Unit CPS Cellule de Planification et des Statistiques CREDD Cadre Stratégique pour la Relance Economique et le Développement Durable CSCOM Centre de Santé Communautaire (Community health center) CSRéfs Centres de Santé de Référence DALY Disability-adjusted life years DD Droit de douane (Customs duty) DEA Data envelopment analysis DFM Direction des Finances et du Matériel DGB Direction Générale du Budget (General Directorate of Budget) DGD Direction Générale des Douanes DGE Direction des Grandes Entreprises DGI Direction Générale des Impôts DGMP-DSP Direction Générale du Marché Publique et des Délégations de Service Public DGTCP Direction Nationale du Trésor et de la Comptabilité Publique DID Direction des Impôts du District de Bamako DME Direction des Moyennes Entreprises DNA Direction Nationale de l’Agriculture DNDC Direction Nationale des Domaines et du Cadastre DNGM Direction Nationale de la Géologie et des Mines MALI PUBLIC EXPENDITURE REVIEW >>> 3 DR Direction Régionale (Regional Directorate) DRA Direction Régionale de l’Agriculture DRC Dispute Resolution Committee DSA Debt Sustainability Analysis EACI Enquête Agricole et Conjuncture Intégrée (Integrated Agriculture and Business Survey) ECF Extended Credit Facility ECOWAS Economic Community of West African States EDM_SA Énergie du Mali EHCVM Enquête Harmonisée sur les Conditions de Vie des Ménages EMOP Enquête Modulaire et Permanente Auprès des Ménages EPA Établissement Publique à caractère Administratif FAO Food and Agriculture Organization of the United Nations FCS Fragile and conflict-affected states FNAA Fonds National d’Appui à l’Agriculture GBR Gross borrowing requirement GDP Gross domestic product GER Gross enrollment rate GIE Groupement d’intérêt économique (business consortium) GNI Gross national income HIPC Heavily indebted poor country IBA Impôt sur les Bénéfices Agricoles (Tax on Agricultural Profits) IBIC Impôt sur les Bénéfices Industriels et Commerciaux (Tax on Industrial and Commercial Profits) INPS Institut National de Prévoyance Sociale IRF Impôt sur les Revenus Fonciers (Property Income Tax) IS Impôt sur les Societés (Corporate Income Tax) ISCP Impôt Spécial sur Certains Produits (Special Tax on Selected Products) ITS Impôt sur les Traitements et Salaires (Tax on Wages and Salaries) kWh Kilowatt hour LCU Local currency units LDF Loi de Finances (Budget Law) LG Local government LIC Low-income country LOA Loi d’Orientation Agricole (Agriculture Orientation Law) M&E Monitoring and evaluation MA Ministère de l’Agriculture (Ministry of Agriculture) MEF Ministère de l’Economie et des Finances (Ministry of Economy and Finance) MEFP Ministry of Employment and Vocational Training MEN Ministère de l’Éducation Nationale (Ministry of National Education) MEP Ministère de l’Elevage et de la Pêche (Ministry of Livestock and Fisheries) MESRS Ministry of Higher Education and Scientific Research MoH Ministère de la Santé et du Développement Social (Ministry of Health and Social Development) NEPAD Nouveau Partenariat pour le Développement de l’Afrique NER Net enrollment rate NGO Non-governmental organization OHVN Office de la Haute Vallée du Niger ON Office du Niger OOP Out-of-pocket PASRCF Plan d’Action Synthétique pour un Renforcement du Civisme Fiscal PDDAA Programme Détaillé de Développement de l’Agriculture Africaine PDSFC Programme de Développement Stratégique de la Filière Coton PEFA Public Expenditure and Financial Accountability PFM Public finance management 4 >>> MALI PUBLIC EXPENDITURE REVIEW PIM Public investment management PIMA Public Investment Management Assessment PIT Personal income tax PNISA Programme National d’Investissement du Secteur Agricole POA Performance Outcome Area ppts percentage points PPP Public-private partnership PREM Plan de Réforme de la Gestion des Finances Publiques au Mali PRODEC II Programme Décennal de Développement de l’Éducation Deuxième Génération PSDGI Plan Stratégique 2019-2021 de la Direction Générale des Impôts RCF Rapid Credit Facility RMTF Revenue Mobilization Thematic Fund SCI Service Coverage Index SDG Sustainable Development Goals SDLC Sous-Direction de la Législation Fiscale et du Contentieux (Tax Legislation and Litigation Department) SDOCS Sous-Direction Organisation et Contrôle des Services SIGMAP Système Intégré de Gestion des Marchés Publics SIGTAS Standard Integrated Government Tax Administration System SOE State-owned enterprise SSA Sub-Saharan Africa TADAT Tax Administration Diagnostic Assessment Tool TF Taxe Foncière (Property Tax) TIPP Taxe Intérieure sur les Produits Pétroliers TL Taxe de Logement (Housing tax) TOFE Tableau des Operations Financières de l’État UA Union Africaine UHC Universal health coverage UNSCPC Union Nationale des Sociétés Coopératives de Producteurs de Coton VAT Value-added tax WAEMU West African Economic and Monetary Union WHO World Health Organization MALI PUBLIC EXPENDITURE REVIEW >>> 5 >>> Table of Contents Executive Summary 12 Public Expenditure 13 Revenue Mobilization 14 Public Finance Management 15 Education 15 Health 16 Agriculture 17 Policy Recommendation Summary 18 Introduction 21 1. Public Expenditure 25 1.1. Macro-Fiscal Context 26 1.2. Expenditure Performance 32 1.3. Fiscal Sustainability Analysis in a Post COVID-19 Environment 42 1.4. Implication for Fiscal Policy Directions 48 2. Revenue Mobilization 50 2.1. Trends in Revenue Performance 51 2.2. Tax Administration 63 2.3. Policy Recommendations 68 3. Public Finance Management 71 3.1. Public Finance Management Reforms: Progress and Challenges 72 3.2. Public Investment Management 73 3.3. Procurement 82 4. Education 89 4.1. Context 90 4.2. Performance 93 4.3. Financing 101 4.4. Efficiency 110 4.5. Policy Recommendations 115 5. Health 119 5.1. Context 120 5.2. Performance 126 5.3. Financing 134 6 >>> MALI PUBLIC EXPENDITURE REVIEW 5.4. Efficiency 141 5.5. Policy Recommendations 145 6. Agriculture 147 6.1. Context 148 6.2. Performance 149 6.3. Financing 151 6.4. Efficiency: A Case Study on Input Subsidies 160 6.5. Policy Recommendations 165 References 167 Annexes 173 Annex I: Peer Country Selection 174 Annex II: BOOST Note and Expenditure Data 175 Annex III: Fiscal Sustainability Analysis Scenarios 181 Annex IV: Revenue Tables 183 Annex V: Wage Bill and Procurement 187 Annex VI: The Second Education Sector Plan (PRODEC II) 191 Annex VII Assessment of the Education Wage Bill 192 Annex VIII: Efficiency Estimates for Subsidized Fertilizers 198 List of Boxes Box 1.1: Key COVID-19 Fiscal Measures 28 Box 1.2: Fiscal Risks from State-Owned Enterprises in Mali 33 Box 1.3: Budget execution in Mali 36 Box 1.4: Key Assumptions on Gross Borrowing Requirements 43 Box 2.1: Key Features of Income Taxes in Mali 59 Box 2.2: Decentralization and Local Taxation in Mali 59 Box 2.3: Sources of Tax Expenditure 61 Box 2.4: Summary of Tax Administration Diagnostic Assessment Tool Performance Assessment 65 Box 3.1: Overview of Mali’s Recent PFM Reforms 74 Box 3.2: Mali’s Public Investment Management Assessment: Selected Key Findings 79 Box 4.1: Impact of the Country’s Insecurity and Conflict on the Education System 91 Box 6.1: Challenges in Monitoring and Evaluation of Agriculture Projects 149 Box 6.2: Public Expenditure for Animal Health 156 Box 6.3: Auditing the Management of Fertilizer Subsidies in the Cotton Sector 162 List of Figures Figure 1.1: Fiscal Deficit (2007–20) 29 Figure 1.2: Source of Financing (2007–20) 29 Figure 1.3: Tax, Revenue Collection, and Total Public Expenditure (2010–20) 29 Figure 1.4: Revenue Structure by Source (2010–20) 29 Figure 1.5: External and Domestic Debt (2005–20) 30 Figure 1.6: Public Debt Composition (end-2019) 30 Figure 1.7: Benchmarking General Government Gross Debt (2019) 30 Figure 1.8: GDP and Public Expenditure (2005–20) 34 Figure 1.9: Correlation Coefficient Between Cyclical Expenditure and GDP (2004–20) 34 Figure 1.10: Contributions to Real Expenditure Growth by Category (2006–20) 35 Figure 1.11: Current Transfers (2009–19) 35 Figure 1.12: Interest Payments by Debt Type (2009–20)* 35 Figure 1.13: Capital Expenditure by Source (2005–20) 35 Figure 1.14: General Government Expenditure by Function (2009–19) 37 MALI PUBLIC EXPENDITURE REVIEW >>> 7 Figure 1.15: Security Expenditure by Category and Total Priority Social Expenditure (2009–19) 38 Figure 1.16: Capital Expenditure by Function (2009–19) 38 Figure 1.17: Goods and Services Expenditure by Function (2005–19) 38 Figure 1.18: Benchmarking General Government Expenditure (2019) 40 Figure 1.19: Benchmarking Public Spending by Economic Classification (2019) 40 Figure 1.20: Benchmarking Public Spending in Key Social and Infrastructure Sectors (2017) 40 Figure 1.21: Baseline Scenario Projections 47 Figure 1.22: Scenario 1 Projections: Lower Growth 47 Figure 1.23: Scenario 2 Projections: SOE Risks 47 Figure 1.24: Scenario 3 Projections: Reform with Shocks 47 Figure 2.1: Revenue Structure by Source (2010–20) 52 Figure 2.2: Revenue Collection and Total Public Expenditure (2010–20) 52 Figure 2.3: Tax Mobilization in Sub-Saharan Africa (2017) 54 Figure 2.4: Benchmarking Tax-to-GDP Ratios (2017) 54 Figure 2.5: Composition of Tax Revenues (2005–19) 54 Figure 2.6: Revenue Collection by Tax Type (2010–19) 55 Figure 2.7: VAT Productivity and C-Efficiency (2010-19) 60 Figure 2.8: Benchmarking VAT Productivity and C-Efficiency (2017) 60 Figure 2.9: Tax Expenditures by Origin (2013–19) 62 Figure 2.10: Tax Expenditures by Regime (2013–18) 62 Figure 2.11: Benchmarking Non-Tax Revenue (2017) 62 Figure 2.12: Grants (2010–20) 62 Figure 2.13: Benchmarking Top Ten Business Environment Constraints 66 Figure 2.14: Benchmarking Expectations of Gift-Giving to Tax Officials 66 Figure 2.15: Informal Economy Share by Region (1991–2015) 67 Figure 2.16: Share of Informal Economy (1991–2015) 67 Figure 2.17: Benchmarking Informal Economy Share (2004–15) 67 Figure 2.18: Benchmarking Tax-to-GDP Ratio and Shadow-to-GDP Ratio (2015) 67 Figure 3.1: Key Features of Good Public Investment Management 76 Figure 3.2: Investment by Source (2007–18) 78 Figure 3.3: Benchmarking Total Investment (2017) 78 Figure 3.4: Benchmarking Total Investment (2007–18) 78 Figure 3.5: Total Investment and Growth (2007–18) 78 Figure 3.6: Composition of Public Investment by Key Sectors (2010–17) 79 Figure 3.7: Benchmarking Measures of Infrastructure Access (2017) 79 Figure 3.8: Benchmarking Infrastructure Quality (2007–17) 79 Figure 3.9: Approved, Revised and Executed Public Investment (2009–17) 81 Figure 3.10: Revised and Executed Public Investment by Source (2009–17) 81 Figure 3.11: Public Investment Budgets (2019–20) 82 Figure 3.12: Public Investment Budget by Selected Ministry (2019–20) 82 Figure 4.1: Gross Enrollment Rate By Education Level and Year (2010–18) 94 Figure 4.2: Benchmarking Net Enrollment in the First Cycle of Basic Education (Primary) 94 Figure 4.3: Basic Education Repetition Rates by Gender (2017/18) 96 Figure 4.4: Benchmarking Basic Education Repetition Rates 96 Figure 4.5: Basic Education Dropout Rates by Gender (2016/17–2017/18) 96 Figure 4.6: Benchmarking Basic Education Completion Rates (2014–17) 96 Figure 4.7: Out-of-School 6-14 Year-Olds (2019) 97 Figure 4.8: School Status of Boys by Age (2019) 98 Figure 4.9: School Status of Girls by Age (2019) 98 Figure 4.10: Performance of 6-14 Year-Olds in BEEKUNKO Evaluation (2016) 99 Figure 4.11: Performance in National Examinations (2013–19) 99 Figure 4.12: Benchmarking Human Capital Index Scores (2020) 99 Figure 4.13: Distribution of the Working Population by Level of Education, 2019 101 8 >>> MALI PUBLIC EXPENDITURE REVIEW Figure 4.14: Earnings by Gender and Educational Attainment (2019) 101 Figure 4.15: Mincerian Regression Results of Earning Increases by Level of Education (2019) 101 Figure 4.16: Numbers of Students and Teachers in Basic Education (2014/15 and 2017/18) 102 Figure 4.17: Student-Teacher Ratio in Basic Education (2014/15 and 2017/18) 102 Figure 4.18: Average Education Appropriations and Expenditure by Education Ministry (2010–20) 103 Figure 4.19: Public Education Spending by Source (2010–18) 103 Figure 4.20: Benchmarking Education Spending (2010–18) Average 103 Figure 4.21: Trends and Required Education Appropriations and Expenditure (2010–22) 104 Figure 4.22: Comparison of Budget Appropriations of Selected Sector Ministries (2019–20) 104 Figure 4.23: Recurrent Education Expenditure by Level (2015 and 2017) 105 Figure 4.24: Benchmarking Average Education Spending by Level (2010–18) 105 Figure 4.25: Expenditure by Economic Classification (2010–20) 107 Figure 4.26: Current Expenditure by Spending Category and Level (2015) 107 Figure 4.27: Total Salaries for MEN Civil Servants and Contract Workers (2010–17) 107 Figure 4.28: MEN Selected Educational Inputs (2014–16) 107 Figure 4.29: Public Investment Expenditure, by Ministry and Source (2010–18) 108 Figure 4.30: Distribution of Education Expenditure by Level (2010–17) 109 Figure 4.31: Distribution of Education Expenditure by Region (2010–17) 109 Figure 4.32: Enrollment Concentration Curves by Education Level (2018) 110 Figure 4.33: Distribution of Education Expenditure by Wealth Quintile Across All Education Levels (2017) 110 Figure 4.34: Benchmarking Public Unit Costs and Primary Outcomes, 2016 112 Figure 4.35: Efficiency Scores by County and Region 113 Figure 5.1: Benchmarking Health Personnel Density 123 Figure 5.2: Accessibility of Health Centers (2009–18) 124 Figure 5.3: Health Personnel Capacity Gaps by Region (2018) 124 Figure 5.4: Outpatient Service Utilization by Quintile and Region (2018) 125 Figure 5.5: Motives for Forgoing Care by Quintile and Region (2018) 125 Figure 5.6: Contacts with Health Service Providers by Quintile and Region (2018) 126 Figure 5.7: Reasons for Patient Dissatisfaction with Health Service Providers by Quintile and Region (2018) 126 Figure 5.8: Comparison and Evolution of the Burden of Disease in Mali (1990–2017) 127 Figure 5.9: Benchmarking Key Health Outcomes 128 Figure 5.10: Benchmarking Health Service Coverage (2000–17) 129 Figure 5.11: Evolution in Service Coverage and Inequality (1995–2018) 130 Figure 5.12: Composition of Out-of-Pocket Health Payments by Quintile (2018) 132 Figure 5.13: Impoverishing Health Expenditure (2018) 132 Figure 5.14: Impact and Incidence of COVID-19 134 Figure 5.15: Impact of COVID-19 on Essential Health Services 134 Figure 5.16: Health Financing Trends (2000–17) 135 Figure 5.17: Benchmarking Per Capita Health Expenditure Against Income 136 Figure 5.18: Health Financing Transition (2000–17) 137 Figure 5.19: Decomposition of Changes in Public Health Expenditure (2000–17) 137 Figure 5.20: Sources of Health Funding (2013–16) 138 Figure 5.21: Economic Composition of Health Expenditure (2010–18) 140 Figure 5.22: Personnel Spending by Budgeting Level and Main Personnel Types (2010–17) 140 Figure 5.23: Budget Execution Rates (2010–17) 141 Figure 5.24: Benchmarking Aggregate Efficiency Estimates 143 Figure 5.25: Technical Efficiency Estimates for District Hospitals (2017 and 2019) 144 Figure 6.1: Agriculture Output by Subsector (2008-19) 151 Figure 6.2: Cereal Production and Yield (2005–19) 151 Figure 6.3: Cotton Production and Yield (2009–18) 151 Figure 6.4: Budget Allocation (2010–20) 154 Figure 6.5: Agriculture Budget Breakdown (2010–20) 154 Figure 6.6: Maputo/Malabo Commitment (2010–19) 154 MALI PUBLIC EXPENDITURE REVIEW >>> 9 Figure 6.7: Budget Allocation by Source of Financing (2010–20) 155 Figure 6.8: Budget Implementation by Source of Financing (2010–19) 155 Figure 6.9: Budget Allocation to the Crop Subsector by Economic Classification (2010–18) 156 Figure 6.10: Budget Allocation to the Livestock Subsector by Economic Classification (2010–18) 156 Figure 6.11: Decentralized Budget (2010–18) 159 Figure 6.12: Decentralized Budget by Region and Economic Classification (2010–14) 159 Figure 6.13: Decentralized Budget by Region and Economic Classification (2015–18) 159 Figure 6.14: Deconcentrated Budget by Economic Classification: Total and Investment (2010–17) 159 Figure 6.15: Budget Implementation (2010–19) 160 Figure 6.16: Budget Execution for Domestic Resources by Administrative Classification (2010–18) 160 Figure 6.17: Cultivated Area by Region (2017/18) 162 Figure 6.18: Subsidized Fertilizer (2009–18) 162 Figure 6.19: Expenditure on Fertilizer Subsidies by Sector (2010–18) 162 Figure 6.20: Marginal Fertilizer Yield, by Region 165 Figure 6.21: Input Subsidy and Cultivated Area by Region 165 Figure A7.1: Wage Bill (2010–20) 192 Figure A7.2: Wage Bill and Government Expenditure (2010–20) 192 Figure A7.3: Benchmarking Wage Bill Expenditure Relative to GDP (2016–18) 193 Figure A7.4: Benchmarking Wage Bill Expenditure Relative to Tax Revenue (2016–18) 193 Figure A7.5: Wage Bill Trends by Key Sectors (2010–20) 193 Figure A7.6: Education Workforce by Employment Regime (2015) 194 Figure A7.7: Employment Composition of Key Education Sector Ministries, 2015 194 Figure A7.8: Teacher Recruitment Numbers (2010–18) 195 Figure A7.9: Number of Teachers (2016–17) and Administrative Staff (2015–16) by Level of Education and Type of School 195 Figure A7.10: Benchmarking Staff Compensation as a Share of Total Public Wage Bill (2010–18) 196 Figure A7.11: Trends in Education Wage Bill Spending by Ministry (2010–18) 196 Figure A7.12: Average Distribution of Education Wage Bill by Region (2010–18) 197 Figure A7.13: Number of Staff and Payroll (2015) 197 List of Tables Table 0.1: Summary of Selected Policy Actions, Implementation Timeframe, and Potential Fiscal Gains 18 Table 1.1: Mali: Macro-Fiscal Indicators (2010–20) 31 Table 1.2: Budget Rigidities (2009–19) 41 Table 1.3: Macro Fiscal Projections (2021–25) 46 Table 1.4: Description of Scenarios for Macro-Fiscal Projections 46 Table 1.5: Fiscal Policy Implications 49 Table 2.1: Responsiveness of Revenues to GDP Growth (2010–19) 55 Table 2.2: Tax Revenue (2010–20) 56 Table 2.3: Benchmarking General Government Revenues (2017) 57 Table 2.4: Benchmarking Statutory Tax Rates 58 Table 2.5: Recommended Policy Measures 69 Table 3.1: Selected PEFA Scores (2018 and 2019) 73 Table 3.2: Challenges Associated with the “Must-Have” Features of Public Investment Management 76 Table 3.3: Public Investment Management: Recommended Policy Measures 82 Table 3.4: Number of Tenders and Total Value by Procurement Method (2016–18) 84 Table 3.5: Selected Indicators from the Benchmarking Public Procurement Report (2017) 84 Table 3.6: Benchmarking Public Procurement: Indicators and Scores of selected WAEMU countries 85 Table 3.7: Length of Contract Approval Period 86 Table 3.8: Contracts Awarded by Type of Procurement (2017) 86 Table 3.9: Contracts Awarded by Type of Procurement (2018) 87 Table 3.10: Procurement: Recommended Policy Measures 88 Table 4.1: Education Budget Execution: Initial Budget versus Actual Spending (2010–18) 108 10 >>> MALI PUBLIC EXPENDITURE REVIEW Table 4.2: Input and Output Indicators by Quintile of County Efficiency Scores 112 Table 4.3: Reconstructed Cohort Analysis for the First Cycle of Basic Education (2017–18) 113 Table 4.4: Resource Loss due to Repetition and Dropping Out in Public Schools by Level (2017) 114 Table 4.5: Costs of Hours Lost by Education Level (2014–15) 114 Table 4.6: Costs of Teachers’ Strikes by Level (2018) 115 Table 4.7: Recommended Policy Measures 118 Table 5.1: Primary Health Care Infrastructure by Region (2014 and 2018) 121 Table 5.2: Health Personnel (2014 and 2018) 123 Table 5.3: Health Personnel by Region (2018) 123 Table 5.4: Health Expenditure as a Share of Household Budgets and Incidence of Catastrophic Health Expenditure (2011–18) 130 Table 5.5: Health Budget Shares Among the Poor and Incidence of Impoverishing Health Expenditure 130 Table 5.6: Benchmarking Health Expenditure and Coverage 135 Table 5.7: Public Health Budget (2018–20) 140 Table 5.8: Recommended Policy Measures 146 Table 6.1: Benchmarking Fiscal Transfers to Agriculture 152 Table 6.2: Share of Current Expenses in Major Domestically Financed Projects 157 Table 6.3: Recommended Policy Measures 166 Table A1.1: Mali’s Structural Peers, Selected Indicators (2017) 174 Table A2.1: Sequence of Expenditure Classification for Object-Based Budgeting 175 Table A2.2: Sequence of Expenditure Classification for Program-Based Budgeting 176 Table A2.3: Total Expenditure by Economic Classification as a Percentage of GDP (2010–19) 176 Table A2.4: Total Expenditure by Economic Classification as a Percentage of the Total (2010–19) 176 Table A2.5: Total Expenditure by Functional Classification Relative as a Percentage of GDP (2010–19) 177 Table A2.6: Total Expenditure by Functional Classification as a Percentage of the Total (2010–19) 178 Table A2.7: Total Expenditure by Administrative Classification as a Percentage of GDP (2010–19) 179 Table A2.8: Total Expenditure by Administrative Classification as a Percentage of the Total (2010–19) 180 Table A3.1: Baseline Scenario (2020–25) 181 Table A3.2: Reform Scenario (2020–25) 182 Table A4.1: Mali: General Government Revenues (2010–20) 183 Table A4.2: Tax Expenditure Breakdown (2013–19) 185 Table A4.3: Administrative Arrangements for Gold Mining Taxation 186 Table A5.1: Wage Bill Mapping by Sector and Ministry 187 Table A5.2: List of Contracts Awarded Under COVID-19 188 Table A5.3: Selected Contracts Managed as Part of the COVID-19 Emergency Response 190 Table A6.1: Key PRODEC II Objectives and Targets (2019–28) 191 Table A8.1: Determinants of Productivity by Administrative Level 198 Table A8.2: Determinants of Productivity by Farm Size 199 MALI PUBLIC EXPENDITURE REVIEW >>> 11 >>> Executive Summary Mali is a low-income, fragile country that has suffered extraordinary setbacks in recent years. It is a landlocked economy which is highly dependent on agriculture, and thus vulnerable to external shocks and adverse weather condition. With a per capita gross domestic product (GDP) of US$ 875 (current USD) in 2019, Mali is in the lower 15th percentile of the world’s income distribution. Around 42 percent of the population live in extreme poverty. It is also a fragile state that has witnessed persistent conflict with political coups, social tensions, insecurity, and violence. The coup in 2012 has led to continued violence and displacement, leaving 8.7 million people—more than 45 percent of the population—living in crisis- affected areas. It was followed by the military coup in August 2020 which has brought in a transitional civil government. The increasingly fragile security situation has also led to spikes in security expenditure, crowding out spending on public services and investment. The Government has managed to maintain macro-fiscal stability until recently, but this has not translated into physical and human capital accumulation. Growth quickly recovered after the 2012 crisis and has averaged 5.7 percent per year during 2014–19. Total revenues also recovered but have fluctuated due to unstable tax revenue collection. The overall fiscal deficit averaged 3.3 percent of GDP during 2016–19, broadly observing Mali’s commitment to the West African Economic and Monetary 12 >>> MALI PUBLIC EXPENDITURE REVIEW Union (WAEMU) convergence criterion of 3 percent. it examines Mali’s expenditure patterns and fiscal However this has been achieved by compromising sustainability and benchmarks its performance against expenditure, especially investment, to compensate for peer countries. It reviews the domestic revenue fluctuating domestic revenue. Fixed capital stock per needed to meet the Government’s significant financing capita declined by 17 percent between 2000 and 2015. requirements and how the public finances are managed. Mali ranks near the bottom of the Human Development It then investigates public spending efficiency in three Index (HDI) and the Human Capital Index (HCI). The sectors: education, health, and agriculture. These were provision of health services remains limited and of poor chosen for their economic and social importance as well quality while the average amount of schooling has even as their considerable share of public expenditure (over decreased among the adult population in recent years. 30 percent). The PER provides some context for each sector, then analyzes financing and efficiency using a set The COVID-19 crisis and the 2020 military coup of methodologies based on granular spending data and ended a period of relatively good economic surveys, and concludes with suggested policy actions. growth and pushed the fiscal deficit to a high not seen since 2000. Real GDP is estimated to have Public Expenditure contracted by 2 percent in 2020 (-4.9 percent in per capita terms), following reduced global demand and Public expenditure has remained relatively stable, domestic containment measures due to COVID-19, and but its composition has shifted towards security and aggravated by economic sanctions and delayed external national defense in recent years. Total expenditure support related to the coup. Assuming a smooth political ranged between 15.5 percent and 23.1 percent of transition, growth is expected to gradually return to pre- GDP in the past decade. The greatest volatility was COVID levels over the medium term as the pandemic driven by collapses in revenue in 2012 and 2018, wanes and private consumption and public investment while the underlying spending trend is relatively stable. recover. However, increased social spending and lower Meanwhile, the composition of public spending has revenues mean the fiscal deficit rose from 1.7 percent significantly changed due to changing state priorities. of GDP in 2019 to 5.5 percent in 2020, and is likely to Security and national defense have absorbed a large remain high in the medium term. part of expenditure since the 2012 coup. Spending in these sectors surged from 8.6 percent of total The Government faces the challenge of balancing expenditure in 2011 to 20 percent in 2018, narrowing the growing need for social and investment spending fiscal space and crowding out social and infrastructure with maintaining fiscal sustainability. Continued high spending. Security and national defense expenditure fertility rates with on average 5.9 children per woman was 36 percent higher than education expenditure in (as of 2018) will keep the dependency ratio high in the 2019 and almost 3.5 times health spending. Overall, forthcoming years and increase the difficulty of providing Mali’s expenditure is higher than its structural peers and health and education services to a rapidly growing but less than its aspirational ones. school-age population. To build resilience and to secure a better future for its people, Mali needs to put more Current expenditure in general has grown steadily, and better-targeted resources into the delivery of social while wage bills and transfers are becoming drivers services and basic infrastructure investment. Given the of growth. The size of current expenditure as a share of difficult fiscal circumstances, the emphasis needs to be GDP has remained broadly stable at 12 percent during on “better” spending if it is to achieve its development the 2010s (from 11.4 in 2010 to 12.6 percent in 2019) goals while maintaining fiscal sustainability, developing and had remained unaffected by changes in revenue, a credible track record of value for money in public especially the revenue contractions in in 2012 and 2018. spending, and convincing development partners to The Government’s response to recent teachers’ strikes continue their support. has resulted in structural increases to the wage bill from an average of 39 percent of current expenditure (2010– This Public Expenditure Review (PER) proposes 19) to 45 percent in the medium term according to the options to address this challenge, including 2021 budget law. The wage bill risks growing even larger improving spending efficiency and identifying ways with possible future demand from other public sector to equitably increase domestic revenue. The policy workers. Transfers (27 percent of current expenditure) actions and reforms it proposes will create the fiscal encompass a wide range of types of spending, 70 space to promote inclusive and sustainable growth. percent of which go to parastatals (EPAs) and state- Starting with an overview of macro-fiscal developments, owned enterprises (SOEs). This funding is inefficiently MALI PUBLIC EXPENDITURE REVIEW >>> 13 used for operational subsidies or quasi-fiscal activities existing expenditure framework, while raising domestic with very little going to social protection. Interest tax revenue and reducing expenditure, in part through payments make up a small share (6 percent of current public finance management (PFM) reforms. expenditure) but this is increasing as debt servicing costs are driven up by an increasing reliance on domestic debt Revenue Mobilization with higher interest rates. Tax revenue performance has improved in recent Capital expenditure has been highly volatile, years but still falls short of the WAEMU regional playing the role of shock absorber when revenue target. Tax revenue increased by 2 percentage points decreases or recurrent expenditure increases, during the 2010s to reach 14.8 percent of GDP in 2019 making it inefficient. The volatility of public investment (from 12.8 in 2010). This is broadly in line with the average can be explained by the country’s vulnerability to of 15 percent recorded by WAEMU countries but short macroeconomic and geopolitical shocks and its effects of the WAEMU target of 20 percent of GDP. Mali’s non- on external financing. Public investment also partly relied tax revenue amounted to only 0.7 percent of GDP in on donor funding, but the correlation has waned since 2019 – the second lowest rate among the WAEMU 2012. Many countries use investment expenditure as countries. This is mostly related to limited income from the adjustment variable of last resort, and Mali is no royalties on mining. External grants averaged 2 percent exception. The volatility and unpredictability of capital of GDP in the 2010s but have been quite volatile with expenditure has adversely impacted the efficiency of the the political instability. Overall, total revenue and grants investment portfolio. The Public Investment Efficiency averaged 17.8 percent of GDP during 2010–19, with tax Index rates Mali at 0.57 on a scale of 0 to 1, well below revenue accounting for three-quarters of revenue. the Sub-Saharan Africa (SSA) average of 0.64 and the emerging countries average of 0.73, reflecting the As with most WAEMU countries, Mali relies heavily low quality and coverage of its public investment. This on indirect taxes. These averaged 68.3 percent of has an adverse impact on output growth and poverty tax revenue and 9.0 percent of GDP over 2010–19, reduction. The stock of fixed capital per capita has compared to 4.2 percent of GDP for direct taxes. Value- declined by 17 percent between 2000 and 2015, and added tax (VAT) provided nearly 40 percent of total fixed capital accumulation has lagged behind economic revenue during that period and its efficiency is in line and demographic growth for the last 15 years. with the WAEMU average and higher than all structural peers. Personal and corporate income tax rates are Several fiscal risks loom over the next five years. relatively high and all employers are required to pay Without a strong recovery once the current COVID-19 the fixed employer contribution (CFE), a payroll tax on crisis abates, Mali’s gross borrowing requirements could the gross salary of every employee. Revenues from widen to an average of 10 percent of GDP over the next personal income tax and the CFE have been buoyant, few years and public debt could surpass 50 percent of growing more than twice as fast as the economy, which GDP. The country’s reliance on domestic debt, which has could reflect excessive taxes on labor. Property taxes, already increased from 3.8 percent of GDP in 2010 to 14 in contrast, have proved the least buoyant of all taxes, percent of GDP in 2019, exposes it to interest-rate and perhaps because market land and property prices may rollover risks in the coming years. Fiscal shocks arising not be up to date. Continued fiscal decentralization from SOE contingent liabilities could also lead to liquidity could enhance the equity and efficiency of public service pressure in the short term that could affect its domestic delivery. Local taxation, especially property taxes, could financial markets and debt repayment capacity. help raise revenue for local governments. The broad direction for fiscal policy changes points Mobilizing more revenue and closing the tax gap will to the need to mobilize more domestic revenue and mean continuing to reform Mali’s tax administration reform public spending to increase the fiscal space and increase its transparency. The authorities have for higher quality services and investments, while introduced major organizational reforms to the tax reducing the overall deficit. Achieving a small primary administration with technical assistance from the IMF. surplus over the medium term would ease the country’s Efforts have been made to strengthen risk mitigation, borrowing requirements and improve its debt repayment tax collection, dispute resolution, and revenue capacity. This would give Mali the resilience to face forecasting. A strategic development plan for 2019– future shocks more easily. However, to achieve this, the 21 provides a framework for action but may be too Government would need to strengthen the quality of its ambitious for the country’s current capabilities, going 14 >>> MALI PUBLIC EXPENDITURE REVIEW beyond simply promoting tax compliance. A recent investment levels are below the WAEMU average, and assessment found inefficiencies in the core functions of Mali has the lowest gross fixed capital formation and one the tax administration, including taxpayer identification, of the highest efficiency gaps among its peers. Inefficient payment processing, and arrears management. These processes cost it about 43 percent of the potential deficiencies are compounded by perceived high level of benefits of its investments. Despite a fairly comprehensive corruption, undermining the business environment and institutional public investment framework on paper, in encouraging informality, thereby creating a vicious circle practice there are weaknesses throughout the cycle. that jeopardizes tax performance. For instance, weak appraisal capacity may lead to poor decision making and the selection of projects with low Reducing tax expenditures should be the short-term returns. Limited transparency in procurement processes, focus of tax policy, while comprehensive reforms in and off-budget externally funded investments can delay tax policy and tax administration are still needed in implementation and make it hard to identify overlaps the long run. Reducing exemptions will help increase and maximize synergies. Addressing the investment domestic revenue in the most equitable and efficient efficiency gap could secure a fiscal gain of up to 2.6 way, and also reduce distortion with less adverse impact percent of GDP. Stronger governance, improved on growth. Tax expenditures, such as those built into the investment appraisals and coordination, and planning for investment code, mining code, and public procurement maintenance will help to maximize the socio-economic acts, have cost an average of 2.5–3 percent of GDP returns on public investment. per year. Eliminating or reducing them in line with IMF policy recommendations would increase revenue by While the public procurement framework is well an estimated 0.6 percent of GDP in the medium term. aligned with the WAEMU directives, weak capacity However, the most urgent reforms should focus on and implementation undermine efficiency. In 2018, increasing voluntary tax compliance and enhancing the 95 percent of procurement in Mali was processed transparency and capacity of the tax administration. The through competitive methods, meeting the WAEMU aim should be a progressive tax system that protects target. Mali also performs well compared to peers in the poor while minimizing its impact on growth. This will procurement preparation, but lags in bid submission, involve systematic reform efforts across a number of bid opening and evaluation processes, and the payment areas for decades to come. of suppliers. These failings undermine transparency and inflate costs. An analysis of procurement processes Public Finance Management in education, health, and agriculture suggests that reducing payment delays and addressing contracting Significant reforms have been made to public inefficiencies could yield savings of 1.3 percent of finance management in recent years, but serious GDP. Better access to procurement information, the challenges remain. The Government’s current Public introduction of a risk-based approach to controls, the Finance Management Reform Plan (2017–21) builds transition to e-procurement, and enhanced institutional on previous strategies, and implementation is overseen and capacity building, especially at decentralized levels, by a PFM support unit. Recent efforts have focused on should increase transparency and reduce costs to both core reforms such as the move to program budgeting the Government and suppliers. and strengthening financial information systems and control structures. Fiscal administration has also been Education significantly modernized through digitalization and simplified procedures. However, the reforms will need Mali’s education system is characterized by to be fully implemented to maximize value for money stagnating access at all levels of education and high and have the desired impact. For instance, program repetition and completion rates, contributing to low budgeting needs to be fully operationalized by giving learning outcomes. Universal primary education has not program managers the authority to reallocate spending been achieved as the primary net enrolment rate stood at within their programs according to their priorities and only 59 percent in 2018. Late entry, high repetition rates, expected results. Further digitalization of procedures and one-fifth of students dropping out on average during coupled with staff training and auditing will be another the first cycle of basic education (Grades 1-6) contribute key means to enhance revenue mobilization. to a completion rate of only 48 percent. More than one- third of school-age children have never attended school. Strengthening public investment management (PIM) Learning outcomes remain very low, with 56 percent of could generate significant additional benefits. Public Grade 2 students lacking competency in mathematics MALI PUBLIC EXPENDITURE REVIEW >>> 15 and 66 percent in French. Weak governance of the out or repeating grades in basic education—only 15 sector, poor teacher performance, a shortage of trained percent of children who start basic education complete teachers, and a lack of textbooks have all contributed to the first cycle in the expected time of six years—mean these results. 16 percent of government expenditure on education is effectively wasted, amounting to 0.6 percent of GDP. Mali spends a smaller share of its GDP on education Low actual teaching hours and the underuse of basic than its peers and education expenditure faces and secondary teachers cost an estimated 0.1 percent large implementation challenges. The Government of GDP and 4 percent of government expenditure on spent 3.8 percent of GDP on education in 2018, slightly education. Teaching unions play an important role below the WAEMU average (4.2 percent) and most in demanding better working conditions and have peer countries. Basic education (primary and lower organized strikes that incurred costs amounting to 11 secondary level) accounts for 85 percent of students percent of Mali’s expenditure on education in recent but receives only half of the funding. The Government years. The absence of an effective human resource has comprehensively decentralized the sector since database also raises the risk of payroll-related abuse in 2003, with three-quarters of the Ministry of National higher education. Education’s budget now managed at subnational level. However, the regional distribution of resources As budgets tighten, improvements are most likely is regressive: Bamako has above-average spending to come from reprioritizing the education budget per student, but the lowest student-teacher ratio and and by making better use of available resources. poverty levels. Other regions, such as Sikasso and Recent salary adjustments for the sector are expected Koulikoro, which are less well-off and have a higher to increase spending on the education wage bill by 0.6 student-teacher ratio, spend below the national average. percent of GDP annually, putting additional strain on the Moreover, a lack of controls over subsidies to private education budget. In a tight fiscal context, policy makers secondary schools has led to a misuse of resources. should focus on addressing repetition and dropouts, Weaknesses in the management of the budget and prioritizing basic education, and making better use of the information systems adversely affect the budget cycle, existing teaching workforce and assets through stronger from planning to execution and monitoring. management processes. Improving the management of external aid could Health yield additional gains. The sector depends heavily on domestic funding, which accounted for 95 percent Despite improvements in key health outcomes in of public spending on average during 2010–20. More recent years, progress towards universal health than half of recurrent expenditure is spent on salaries, coverage remains slow. The maternal mortality ratio rising to more than 80 percent for primary education. dropped from 1,010 per 100,000 live births in 1990 to This does not leave enough space to devote the 587 in 2015 (against an SDG target of 70 for 2030), recommended one-third of recurrent spending to non- while the under-five mortality rate fell from 254 per 1,000 salary expenditures at the primary level. The sector live births in 1990 to 114 in 2015 (the SDG target is 25 relies on donors and NGOs to provide critical classroom by 2030). Mali had the sixth highest under-five mortality inputs, especially at basic education level, mostly off rate in the world in 2017 and is also one of the five budget and subject to the volatility of aid. Even though countries with the heaviest burden of disease globally. budget allocations for investment have increased since About 65,000 disability-adjusted life years per 100,000 2014, on average one-third of these resources have population are lost every year. Communicable, neonatal, not been spent. Operational inefficiencies hamper the maternal, and nutritional disease still account for about management of externally funded projects, with lengthy 73 percent of the overall burden, although the share due review and non-objection processes between the to non-communicable disease has been rising since the Government and development partners. 1990s. On average, there are a total of 160,000 deaths of women in childbirth and children under the age of five Increasing actual teaching time and reducing every year. dropout and repetition rates could improve outcomes and yield efficiency gains. Despite high Health expenditure is extremely low and remains costs per student for public education, Mali has the dominated by private out-of-pocket (OOP) payments lowest rates of primary net enrollment and completion which are neither equitable nor efficient. Health among its peers. Large numbers of students dropping spending from all sources in Mali has fallen from 5.6 16 >>> MALI PUBLIC EXPENDITURE REVIEW percent of GDP in 2000 to 3.8 percent in 2018, which Agriculture equates to US$ 32 per capita, one of the lowest levels in the world. While the share of OOP payments has fallen, The agriculture sector remains a key contributor to they remain the main source of health funding, at 35 the economy, but growth has followed an extensive percent of the total. These mean the poorest Malians are rather than intensive model. It contributes 32 percent more likely to forgo necessary health care, while those of GDP and employs over two-thirds of the population. who can pay risk being pushed into poverty. Combined Growth in the agriculture sector averaged 5.2 percent with a preference for self-medication, these barriers to during 2010–19, driven mainly by subsistence farming health care increase the risk of antimicrobial resistance, and livestock. However, productivity growth in the crop reducing effectiveness of treatment and posing serious sector remains low, at 1.4 percent per year. Yields for public health risks for the future. cotton, the country’s second most important export, averaged 982 kg/ha, below the threshold of 1,200 kg/ha Although the country has devolved responsibility for which would protect the sector from falling international the provision of health services, the funding needed prices. Major factors behind poor crop productivity has not followed. Since 2004, Mali’s health system has include limited investment in irrigation and modernization increasingly been the responsibility of local government of subsistence agriculture, very low use of modern but, although transfers from central government are agricultural inputs despite fertilizer subsidies, insufficient increasing, they are not enough to bridge the gap adoption of sustainable agricultural practices, and weak between basic health financing needs and the revenue- coordination of public interventions. Development of the raising capacity of local governments. As a result, livestock sector has been hampered by suboptimal feed frontline health facilities rely extensively on cost recovery availability, instability of pasture supply, and significant through user fees which often represent up to half of animal health problems that limit exports. their revenues. In the past decade, agriculture has benefited from The health system has scope for efficiency gains a high and growing budget allocation, reflecting which could improve performance for the same a strong political will for the development of the level of public expenditure. For example, although sector. The Government has respected the Maputo district hospitals have become more efficient between Commitment to devote at least 10 percent of public 2017 and 2019, it is estimated that significant potential resources to agriculture and provides some of the efficiency gains remain. At the aggregate level, if Mali’s strongest fiscal support to the agriculture sector existing public health expenditure was as efficient as among peer countries. However, the implementation the most efficient country in SSA, it could improve its of this spending remains inefficient. Spending has been health service coverage by around 18.5 percent. This heavily skewed towards current expenditure and input represents a saving of 0.25 percent of GDP while subsidies, which account for more than half of the total achieving the same results, which could be reinvested agricultural budget, crowding out structural investments. within the sector to further improve outcomes. Budget allocations to different subsectors are highly disproportionate to their importance to the economy, to The ongoing socio-economic crisis is threatening the detriment of the livestock subsector. The resources to set back the fragile progress Mali has made in transferred to decentralized and deconcentrated services health over recent years. It needs to spend more on remain marginal, hampering their ability to carry out their health but, as with other sectors, it also needs to spend missions. Problems with local service delivery are further better. Improving its essential health service delivery for a exacerbated by public resources being spread thin fast-growing population and strengthening the system’s due to fragmented local services and a proliferation of preparedness to respond to current and future health parastatals for developing irrigated agriculture. crises will require additional investment. In particular, it needs to increase the number of health workers per Improvements in agricultural performance are partly 1,000 inhabitants, which is currently among the lowest due to input subsidies, but mainly due to the expansion in the world. It will need to make better use of existing of cultivated land. Current input subsidies are inefficient, spending and rebalance spending towards primary and especially in the cotton sector, which absorbs over half secondary health care. Finally, it will need to improve of the total state subsidy. Significant inefficiencies arise its health financing mechanisms to reduce the share of from the lack of control over spending on subsidies and OOP payments. ineffective management of the procurement market. In MALI PUBLIC EXPENDITURE REVIEW >>> 17 the non-cotton sector, the cumbersome and complex Policy Recommendation Summary administrative chain for implementing fertilizer subsidies could lead to misappropriation. Subsidized fertilizer Table 0.1 highlights selected policy actions arising has had a positive impact on crop yields, although from the analysis in each chapter to improve the this varies widely across regions. This suggest that the performance of public services and achieve fiscal positive effect of such subsidies depends heavily on the sustainability. The recommended policy actions have accompanying physical and institutional infrastructure, been designed to be compatible with Mali’s capacity such as procurement procedures or irrigation systems. to implement them, drawing on the analysis within the report and experience gained from projects in Mali As budgets tighten over the foreseeable future, and the countries it is benchmarked against. Each the focus should be on improving the efficiency of chapter provides detailed actions and implementation spending. A careful assessment and rebalancing of time frames. The highlighted measures were chosen budget allocation will be needed across all categories for their fiscal impact, urgency, cost effectiveness, of spending: between current and capital expenditure, and likelihood of implementation with the capacity, between sectors, and between central and regional tenure, and mandate of the transition government services. Efficiency could be further improved by (given elections, security, governance, and COVID-19). streamlining services and ensuring that subsidized Implementing these measures would start to free up inputs are efficiently used in all sectors. Any deepening fiscal space for stable investment, social spending, and of decentralization should avoid the current proliferation the fiscal consolidation required for a sustainable fiscal of offices and personnel. The management and position. Greater efficiency in public spending could monitoring and evaluation of the input subsidy system potentially lead to fiscal savings of 0.24 percent of GDP should be strengthened. Varietal research could be used for the first year after policy implementation, and 5.24 to improve the effect of cotton subsidies. Immediate percent of GDP per year from the third year onwards. fiscal gains of 0.24 percent of GDP per year could be Enhancing revenue collection could add a further 0.6 achieved by controlling the excessive use of inefficient percent of GDP without unduly compromising growth fertilizer subsidies in the cotton sector, and expanding or equity. the e-voucher system for the distribution of inputs which is currently being piloted. >>> Table 0.1: Summary of Selected Policy Actions, Implementation Timeframe, and Potential Fiscal Gains Potential fiscal Time No. Policy actions gains (+)/uses (-) horizon % GDP 1. General public spending R1.3 [Fiscal sustainability] To achieve fiscal sustainability, the Government should set out a fiscal consolidation commitment in the medium-term fiscal strategy to MT achieve a primary budget surplus of 0.4% of GDP. 2. Revenue mobilization R2.1 [Tax policy] To increase tax payment incentives and encourage formal employment, the Government should rationalize mandatory levies on wages ST and ensure taxes on wages and social contributions paid by employees and employers are progressive. R2.2 [Tax policy] To expand the tax base and increase revenue in an equitable manner and to reduce market distortion, the Government can: (i) eliminate excessive tax expenditures and strengthen collaboration between the DGI and DGD to control and report on tax expenditures; (ii) abolish certain property tax MT 0.6 exemptions and rebase the tax on indexed property values; and (iii) enhance excise tax by improving the collection and disclosure of excise collection information. >>> 18 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 0.1: Continued Potential fiscal Time No. Policy actions gains (+)/uses (-) horizon % GDP 2. Revenue mobilization R2.5 [Tax administration] To enhance debt management, the Government should establish a dedicated unit, and re-engineer the tax audit process to focus on MT high-risk and high-value taxpayers. R2.6 [Tax administration] To enhance taxpayment procedures and reduce the cost of voluntary compliance, the Government should continue investment in IT ST including developing the intranet platform and the SIGTAS 3.0 system. 3. Public finance management R3.1 [PIM] To strengthen management and accountability for public investment, the Government should (i) improve PIM capacity development including professionalizing the project selection processes with transparent criteria and MT 2.6 strengthening ex ante and ex post evaluations; and (ii) encourage greater inclusion of civil society and local governments in PIM selection, evaluation, and monitoring. R3.3 [PIM] To improve the sustainability of public investment, the DGB should strengthen the regular budget for maintenance and other recurring costs ST (rehabilitation and repair, etc.) in medium- to long-term budget planning, to make it explicit and transparent. R3.5 [Procurement] To strengthen the procurement process, the DGMP-DSP should introduce a risk-based approach to controls, using agriculture as the pilot MT sector. R3.6 [Procurement] To foster efficiency and transparency, the DGMP should move towards e-procurement, starting with a readiness assessment and a roadmap MT 1.3 on the reforms and their timing. 4. Education spending R4.1 [Technical efficiency] To reduce repetition and dropout rates, the MEN should organize parental awareness campaigns about the importance of schooling, MT 0.6 ensuring the effective transfer of ADARS, and improving the availability of textbooks. R4.2a [Technical efficiency] To close the gap between actual and recommended teaching hours, the MEN should improve supervision and introduce ST 0.1 performance contracts between teachers and school management committees. R4.1 [Technical efficiency] To reduce repetition and dropout rates, the MEN should organize parental awareness campaigns about the importance of schooling, MT 0.6 ensuring the effective transfer of ADARS, and improving the availability of textbooks. R4.2a [Technical efficiency] To close the gap between actual and recommended teaching hours, the MEN should improve supervision and introduce ST 0.1 performance contracts between teachers and school management committees. R4.2b [Technical efficiency] To reduce labor disputes and advance pay reforms, the MEN, together with the MEF, should set up an independent commission to guide pay and HRM reform processes and adjudicate disputes, and introduce MT 0.4 a monitoring system on pay and employment performance to track reform progress. >>> MALI PUBLIC EXPENDITURE REVIEW >>> 19 >>> Table 0.1: Continued No. Policy actions Time Potential fiscal horizon gains (+)/uses (-) % GDP 5. Health spending R5.1 [Technical efficiency] To promote equity and quality of healthcare services, the ST/MT -0.25 MoH should introduce workforce plans and incentives for health personnel to be deployed to priority, remote, and conflict-affected locations. R5.2 [Technical efficiency] To enhance transparency and efficiency in medical ST/MT 0.25 resource management, the MoH can strengthen the central provision and pricing of medical products and equipment and reinforcing private pharmaceutical sector regulation. 6. Agriculture spending R6.1 [Allocative efficiency] To improve decentralized service delivery, the Ministry of MT Agriculture and MEP should streamline fragmented regional directorates and local offices, consistent with producer demands, and introduce a performance- informed funding mechanism. R6.3 [Technical efficiency] To improve transparency of fertilizer subsidies and ST/MT 0.24 mitigate costs due to weather and security, the Government should: (i) conduct regular audits and put a ceiling on subsidies in the cotton sector; and (ii) enhance e-voucher systems in the non-cotton sector. Note: ST: short term (within 12 months); MT: medium term (12–36 months). 20 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Introduction A landlocked country with a vast and sparsely inhabited territory, Mali is one of the poorest countries in the world. It has the eighth-largest land mass in Africa and a population of 19.7 million and is surrounded by Algeria, Burkina Faso, Côte d’Ivoire, Guinea, Mauritania, Niger, and Senegal (World Bank 2019d). Mali was included in the list of the least developed countries (LDCs) by the United Nations (UN) in 1975. Per capita gross domestic product (GDP) is US$ 875 (2019, current USD), which is within the lower 15th percentile of the world’s income distribution. Fueled by drought and war, the extreme poverty rate is around 42 percent (2020). Ninety percent of the poor live in the rural areas of the south, where the population density is higher. Highly dependent on agriculture, Mali is vulnerable to external shocks and adverse weather conditions. The economy is essentially driven by the primary and tertiary sectors, while manufacturing contributes only 9 percent of GDP. Gold and cotton represent 70 and 15 percent, respectively, of total exports, which leaves its balance of payments exposed to international commodity price fluctuations. The main constraints on economic diversification include the quality of the production factors, the state of its infrastructure, and the size of the market, as well as the small size of the financial system.1 Despite 1  Transport infrastructure gaps are an important challenge, taking into account the geographical position of the country. MALI PUBLIC EXPENDITURE REVIEW >>> 21 the existence of considerable mineral deposits and demographic pressure and vulnerabilities including the potential of mining to catalyze the development of security risks. Spending on education remains lower value chains for manufacturing and services, the mining than peer countries like Niger and Burkina Faso which sector is not well integrated into the national economy. have a lower GDP per capita. According to the 2019 Global Competitiveness Index of the World Economic Forum, Mali ranks 129th out of 141 Fragile growth, budget reprioritization, and spending countries. inefficiencies have resulted in unsatisfactory human capital development. During 2010–19, the It is also a fragile state caught up in a persistent Government spent on average 19 percent of total security crisis in recent years. Since its independence expenditure on education, 10 percent on agriculture, in 1960, Mali has experienced recurrent conflicts, and 6 percent on health.3 Yet food security still heavily particularly in the north. Recent events and geopolitical relies on imports (the main staple, rice, is exposed to developments, mostly associated with the situation in market price and exchange rate risks; N’krumah et al., the north, sparked a coup d’état in 2012. Despite the 2013). The provision of health services remains limited 2015 peace agreement, the northern regions are still and of poor quality. Average years of schooling have marked by recurrent episodes of violence, amidst the even decreased after the coup of 2012.4 Mali ranked continued presence of violent extremist groups. Since 183rd out of 188 countries according to the Human 2017, the conflict situation has deteriorated in the center Development Index (HDI) in 2018 and remains at the (Mopti and Ségou in particular) and violence is slowly bottom (170th out of 174 economies) of the Human moving southwards. The continued violence has led Capital Index (HCI) in 2020. On a scale of 0 to 1, Mali to the displacement of up to 750,000 people to the scored 0.318 on the HCI, only slightly above Niger south and neighboring countries. The availability and (0.316), South Sudan (0.307), Chad (0.3) and Central quality of basic social services (education, health, water African Republic (0.292). and sanitation, etc.) in the center and north have been drastically reduced. In particular, the closure of health The profound multidimensional crisis of 2020 has centers and schools in these areas greatly limited access its roots in a cumulative deficit of governance in to healthcare and led to a drop in the gross enrolment the main areas of socio-political, economic, and rate particularly in primary education (from 84.2 percent security life. Mali has seen a succession of armed in 2011 to 75.6 percent in 20182). As conflicts proliferate rebellions, drug trafficking, terrorism and coups, which and spread into the central regions, about 8.7 million seriously threatened its fundamental principles as a people—more than 45 percent of the population—now unitary, democratic, and secular (laïc) state. In August live in crisis-affected areas. 2020, a military coup took place, following months of mass demonstrations against corruption and the The insecurity situation triggered a gradual budget results of parliamentary elections. Following the coup, reprioritization in favor of military and security the National Committee for the Salvation of the People spending, at the expense of public investment and (CNSP) has managed to maintain law and order. Intense already frail social service delivery. Military spending consultations with the political class and civil society was 8.4 percent of public expenditure (2.1 percent of were carried out and a transitional civil government GDP) a year before the 2012 crisis, and rose to 11.4 was swiftly established in early October. A consensus percent in 2013. This trend has continued and by 2018 it was reached between the authorities and Economic accounted for 20 percent of total expenditure (4 percent Community of West African States (ECOWAS) leaders of GDP). Meanwhile public investment became irregular on a transitional period of 18 months, within which and never fully recovered to the pre-2012 level. Fixed elections should resume. Establishing the presence of capital stock has lagged behind economic growth due the state and mending the social contract through public to reduced capital expenditure, and public investment services deliveries remain critical. performance also deteriorated. Agriculture spending bounced back to pre-2012 levels although within-sector The COVID-19 crisis and the 2020 military coup allocations show capacity building has been neglected. ended the good economic performance experienced Per capita public health expenditure lags behind the since the ending of the 2012 coup, and has pushed Sub-Saharan African (SSA) average and faces heavy the fiscal deficit to a historic high. Growth in 2020 2  WDI (2019) estimates. 3  Calculation based on budget execution information from BOOST (“budgets engagés” for 2010-18 and “budgets liquidés” for 2019). 4  The average length of formal education for the adult population was 2.4 years in 2013, compared with 2.9 years in 2009. 22 >>> MALI PUBLIC EXPENDITURE REVIEW contracted by 2 percent (-4.9 percent in per capita as well as identifying options to increase revenues, terms), due to the impact of COVID-19 on global particularly taxes, from existing and new sources. This demand, domestic containment measures, and the focus is determined by the current situation: the limited effects of the coup and related economic sanctions. fiscal space available to the authorities and the urgent Assuming a smooth political transition, growth is need for social development, and hence the importance projected to gradually return to trend over the medium of ensuring value-for-money in key sectors. Various term as the pandemic wanes and private consumption efficiency analyses are carried out and built upon the and public investment recover. However, the fiscal BOOST budget database (Annex II),5 recent household deficit will spike in 2020 and is likely to remain high in and sectoral surveys,6 and benchmarked against the medium term. The 2020 fiscal deficit leaped to 5.5 regional, structural and aspirational peer countries percent of GDP (from 1.7 percent of GDP in 2019), as a (Annex I). result of increased social spending and underperforming tax revenues due to lower economic activity, collection The scope of this report is based on a combination of difficulties, tax expenditures to mitigate COVID-19, and knowledge gaps, budget structures, and government security policies. development priorities. The previous similar exercise for Mali dates back to 1995, so it provides a detailed Looking ahead, tough challenges await as the analysis of the overall fiscal position over the last decade, Government needs to find a delicate trade-off with discussions on both domestic revenue mobilization between more spending to heal the social wounds and public expenditure. The main period of investigation and an unsustainable fiscal situation. With a slow, is 2010–19, which is long enough to cover periods (such U-shaped economic recovery, the deficit will remain as 2012 coup) with major structural changes in budget high (around 4 percent of GDP) in 2021–22, which is allocation, and not too long to lose focus. Tackling the way above West African Economic and Monetary Union myriad of fiscal pressures that Mali is going to face (WAEMU) convergence criteria and puts fiscal and debt also requires addressing weaknesses in public financial sustainability at risk. Previously, total expenditure has management (PFM). This report therefore also includes always been adjusted in response to domestic revenue a PFM chapter that covers areas with clear scope for and external support shortfalls. In past few years, security efficiency gains: public investment and procurement. and defense expenditure has absorbed an increasingly This PER reviews public spending, at central as well as large share of expenditure, thereby narrowing fiscal at regional level (decentralized and deconcentrated), in space and crowding out priority social and investment the education, health, and agriculture sectors, which spending (health care, education, and social protection). together accounted for around two-fifths of central Capital expenditure and public investment, already government spending (2010–19 average). highly volatile from one year to another, are likely to be subject to further squeezes. This may affect both the This PER contributes to the existing literature in three efficiency of the investment portfolio and its impact on ways: long-term trend analysis, scrutiny of granular potential output growth and poverty reduction. data for policy discussion, and data compilation for further investigation and future operations. First, this The objective of the Mali PER is to support social review fills a long-standing knowledge gap due to the development by identifying fiscal savings through lack of any general public expenditure review since 1995. improvements in the efficiency and effectiveness Its general budget analysis offers a holistic view of the of the spending. World Bank PERs generally evaluate spending structure while the long period of investigation multiple dimensions of public spending including its allows the investigation of spending patterns under effectiveness, equity, and efficiency, as well as its fiscal different scenarios with changing government priorities. sustainability. This PER has a strong emphasis on It also highlights the budget adjustment following the improving the technical, and to some extent, allocative 2012 coup. Second, the report also drills into specific efficiency of public spending within the sectors analyzed sectors by analyzing detailed spending information 5  Considerable efforts have been made for updating 2019 and 2020 in hoping to reflect the changing fiscal outlook, while the progress has been hampered by reduced government capacities due to COVID-19 and socio-political events. The revised 2020 budget law is reflected in the BOOST but does not provide as disaggregated level of details as we were usually able to obtain. 6  Major survey data used in the PER include: Living Standards Measurement Survey “Enquete harmonisée sur les conditions de vie des ménages 2017/2018”(ECHVM), Annual Household Survey “Enquête Modulaire et Permanente Aupres des Menages (EMOP)” from 2011/12 to 2018/19, Demographic and Health Survey (DHS), Enquête Agricole de Conjoncture Intégrée aux Conditions de Vie des Ménages (Agriculture and Household Living Conditions Survey, EACI), Education Management Information System (EMIS) from 2010/11 to 2017/18, and Education Country Status Reports (CSR/RESEN: Rapport d’Etat du Système Educatif National). MALI PUBLIC EXPENDITURE REVIEW >>> 23 matched with frequent waves of surveys, with findings the country faces. Chapter 2 examines tax policy and which can be directly used to facilitate policy discussion tax administration performance; it also considers the and budget design. Finally, the data compiled for the tax revenue potential. Chapter 3 outlines the recent PER go way beyond the scope of this project: the PFM reforms, concentrating on attempts to strengthen BOOST, in particular, have been updated and enriched its public investment management and procurement with greater details, and can be used for further research practices. Chapters 4, 5, and 6 examine the use such as fiscal incidence analysis and serve as a basis for of public expenditure in the education, health, and future operations. agriculture sectors. Each chapter provides (i) a brief sector context; (ii) sector performance; (ii) assessment The rest of the report is organized as follows: of public expenditure including trends, composition Chapter 1 briefly reviews recent macroeconomic by different classifications, and implementation status; developments, before analyzing trends in public (iv) efficiency aspects with an emphasis on drivers of expenditure by economic and functional classifications, inefficiencies; and (v) concluding remarks with policy and expenditure rigidity; it also explores the fiscal risks recommendations. 24 >>> MALI PUBLIC EXPENDITURE REVIEW 1. >>> Public Expenditure Security and national defense have come to absorb a large share of Mali’s expenditure in recent years, thereby narrowing fiscal space and crowding out priority social and investment spending. Capital expenditure drives the growth of total expenditure, but its volatility may affect its efficiency and reduce its impact on output growth and poverty reduction. Improving the efficiency of public expenditure, in combination with increased domestic revenue mobilization will help to create fiscal space. Wages and transfers continue to comprise almost 70 percent of recurrent spending. This increases the rigidity of Government expenditure. Education, agriculture and health sectors make up one-third of the public expenditure and offer room for efficiency gains. Fiscal sustainability analysis suggests that to preserve macro-fiscal stability, Mali should (i) rebalance the allocation of resources to prioritize social and investment spending; (ii) assess levels of transfers to subsidies to state-owned enterprises and parastatals; and (iii) undertake medium-term fiscal consolidation to build buffers against future risks. MALI PUBLIC EXPENDITURE REVIEW >>> 25 This chapter is organized as follows. It starts criteria (limiting public debt to 70 percent of GDP and with a brief overview of the fiscal outlook and recent inflation to 3 percent).7 developments. It then analyses Mali’s public expenditure performance over the last decade according to different Fiscal deficits grew gradually but steadily after the classifications, sectors and rigidity and benchmarks political and security crisis of 2012, and only started it against its structural and aspirational peers. It then to decline in 2019. The primary deficit reached 0.6 analyzes the country’s fiscal and debt sustainability, percent of GDP in 2019 and is expected to reach 4.3 considering the impact of likely external shocks and a percent of GDP in 2020 owing to the effects of the reform scenario. Finally it makes recommendations on COVID-19 crisis. Indeed, Mali has not achieved a primary government expenditure and improving the country’s surplus in the last two decades. The overall deficit was fiscal sustainability. 1.7 percent of GDP in 2019 and is expected to reach 5.5 percent of GDP in 2020 (Figure 1.1). The continuous Macro-Fiscal Context fiscal deficit observed between 2016 and 2019 has not generated a high public debt burden. The fact that Until 2020, macroeconomic stability has been the deficit is close to the primary deficit reflects the low maintained in recent years. The economic impact of burden of public debt on fiscal outcomes, even though the security situation remains limited as most economic interest payments have doubled in the last decade. activity is in the south of the country where business Public debt is projected to reach close to 44 percent of continues as usual. The authorities have built a track GDP by the end of 2020 and has increased almost 20 record of sound macroeconomic management, even percentage points since 2014. under volatile circumstances. Growth has been robust in the last decade, apart from the crisis year of 2012 The main drivers of fiscal imbalance are low (Table 1.1). Gross domestic product (GDP) growth mobilization of domestic revenue, the fiscal risks of has been slowing down since 2015 but has not fallen state-owned enterprises (SOEs), and the resource below 5 percent owing to the strong performance of the needs of the parastatal and security sector. agriculture, mining, construction, and tertiary sectors. Government revenue is systematically lower than Inflation remained subdued at below 2 percent and total expenditure. In 2019 revenue amounted to 21.4 policy interest rates stayed constant at 2.5 percent. percent of GDP, while public expenditure was over 23 With recent population growth of 3 percent, however, percent. Changes in revenue are essentially driven by economic growth is still not enough to create the jobs tax collection. In 2019, efforts to strengthen the revenue that will reduce poverty. administration helped tax collection levels recover from the 2018 shortfall, but structural reforms are still pending. Mali has partially met the fiscal targets set by On the expenditure side, security spending reduces the the West African Economic and Monetary Union fiscal space to reallocate resources towards growth- (WAEMU). Although the Government is committed to enhancing categories. SOEs remain the main source of observing the WAEMU criterion of an overall ceiling for the contingent liabilities to the Government (Box 1.2). Given fiscal deficit of 3 percent of GDP during the convergence the low level of capital expenditure, and the fact that phase, which ended in 2019, its overall fiscal deficit has spending on goods and services has been controlled averaged 3.3 percent of GDP in the period 2016–19. It over last years, the challenge now is to curb subsidies missed the target in 2016 (with a deficit of 3.9 percent) to SOEs and parastatals, improve public investment and 2018 (4.8 percent) but its deficit was only 1.7 efficiency, and contain the wage bill. percent in 2019. Its revenues net of grants amounted to only 15.5 percent of GDP in 2019, compared with Total revenue and grants were about 18 percent of the WAEMU target of 20 percent, suggesting that the GDP over 2010–20 except in 2012 (14.6 percent of security crisis is affecting the mobilization of domestic GDP) and 2018 (15.7 percent of GDP). Tax revenue revenues and that tax reforms are still pending. Grants is the main source of finance for Mali’s development amounted to only 1.9 percent of GDP in 2019. The and investment needs. It accounted for three-quarters wage-bill-to-tax-revenue ratio target of 35 percent was of total revenue including grants—or 83 percent nearly achieved in 2019 (34.5 percent). However, Mali excluding grants—during 2010–20. A tax collection and complies with the two other “first order” convergence public expenditure comparison shows the unfavorable 7  The WAEMU suspended the fiscal rule in end-April 2020 in particular the key criterion on the budget deficit, and will pursue a gradual transition towards 3 percent of GDP regional anchor by 2023, with some flexibility to countries affected by security shocks. 26 >>> MALI PUBLIC EXPENDITURE REVIEW developments since 2010 when public expenditure Temporary suspensions of debt service payments dramatically rose above total revenue from all sources and external and regional financing were lifted on (Figure 1.3). The amount collected in tax was relatively October 6th. International transactions were suspended stable from 2010 to 2014 and then grew from 12.6 in August and September 2020, affecting Mali’s external percent of GDP in 2014 to 15.2 percent in 2017, mostly and domestic debt service payments. Access to the on account of tax administration reforms under the regional market was also affected as Mali postponed Revenue Mobilization Thematic Fund (RMTF). Despite the bond issuances it had scheduled for end-August these reforms, tax and customs revenue declined by 3.2 and September on the regional market. However, the percentage points in 2018 to 11.9 percent of GDP, but transitional government has cleared all debt service swiftly recovered to 14.8 percent of GDP in 2019. It is arrears which arose during the sanctions and returned projected to fall by 0.7 percentage points in 2020 due to to the regional market since early October. the COVID-19 pandemic (Figure 1.4). It is estimated that in 2020 the public debt-to-GDP Mali’s tax-to-GDP ratio reached the WAEMU average ratio will almost reach the level it was before the debt of 15 percent of GDP in 2016, although it remains relief of 2006. Domestic debt as a share of GDP rose below the WAEMU’s target of 20 percent of GDP in the past three years, while external debt remained (World Bank, 2019a).8 This has contributed to keeping practically constant. Total debt has increased from 36 the country’s fiscal deficit low. Unless the Government percent of GDP in 2017 to 40.5 percent in 2019 (Figure can get grants to meet its crisis-related fiscal needs, 1.5). However, the debt-to-GDP ratio increased to 44.1 the revisions to the initial 2020 budget to accommodate percent in 2020, due to the effects of the COVID-19 measures to deal with the COVID-19 pandemic will crisis (see Box 1.1). Domestic bonds jumped from 1.5 increase the fiscal deficit from 3.5 percent of GDP to percent of GDP in 2014 to 12.8 percent in 2019 and 5.5 percent in 2020. Tax revenues are also expected are largely held by domestic financial institutions. The to decline to 14.1 percent of GDP in 2020. Non-tax remaining domestic debt takes the form of treasury bills revenues are expected to be only 0.6 percent of GDP, (T-Bills). The composition of external debt has changed short of the projected 1.3 percent of GDP for 2020, due slightly, with the share owed to multilateral creditors to a delay in the sale of a telecommunications license in increasing from 16.6 percent to 21.2 percent of GDP the current economic environment. in the same period, while bilateral official creditors grew from 4 percent to 5.2 percent of GDP (Figure 1.6).9 Domestic financing (especially bonds) has replaced external debt as the main source of public Capital expenditure is highly volatile and is the main borrowing, changing the dynamics of various risks. driver of changes in expenditure. The Government Domestic borrowing has covered more than 60 percent has tended to adjust its expenditure to reflect changes of Mali’s total borrowing needs in recent years. This in both domestic revenue and external support. The source of finance is mainly employed during crises when volatility of public investment from year to year can be external inflows decline, as in 2012, 2018, and 2020 explained by the volatility of external financing and the (Figure 1.2). Increased reliance on domestic funding country’s vulnerability to macroeconomic and geopolitical exacerbates liquidity pressures on the domestic financial shocks, which impact domestic revenue. This volatility market and creates crowding-out effects on private may affect both the efficiency of the investment portfolio sector investment, which negatively affects economic and its impact on potential output growth and poverty growth. As domestic debt maturity is much shorter reduction. than concessional external debt, it also increases roll- over risks. To counter this, the Government should consolidate its use of external borrowing and extend the maturity of its domestic debt. 8  WAEMU revised its tax revenue-to-GDP ratio target up from 17 percent to 20 percent by 2019. The WAEMU average is the average of eight WAEMU member states including Mali. 9  The consolidated debt of EDM-SA (Énergie du Mali), N-SUKALA (Nouveau Complexe Sucrier du Kala Supérieur), SOGEM (Société de Gestion de l’Energie de Manantali) and BNDA (Banque Nationale de Développement Agricole) reached 1.7 percent of GDP at end-2019. MALI PUBLIC EXPENDITURE REVIEW >>> 27 >>> Box 1.1: Key COVID-19 Fiscal Measures To contain the social and economic fallout of the pandemic, a package of supportive fiscal measures was announced on April 10 and was reflected in the revised budget law (proposed in May and adopted in September). The package, amounting to about 2.3 percent of GDP, included temporary tax relief and spending measures targeted to vulnerable households and firms, and support for key public utility companies (Table B1.1A) 1. Tax relief • Import duty exemptions on rice (160,000 tons) and milk (6,000 tons). • VAT exemption on water and electricity bills during April–June 2020. • Exemptions from the flat-rate contribution of fixed employer contributions (CFEs) and housing tax (TL), and reduction in the synthetic tax (tax syntètique) during April–December 2020. • Reduction in penalties accruing on tax arrears for audited firms. 2. Spending increases • Cash transfers to vulnerable households. • Free distribution of cereals and livestock feed to vulnerable populations (about 700,000 people) between May and September. • Free water and electricity provisions for families covered by the social tranche for April and May 2020. • Endowment to the private sector guarantee fund to guarantee the financial needs of small and medium enterprises, decentralized financial systems, industries and certain large companies affected by COVID-19. • Subsidies to water and electricity companies (EDM and SOMAGEP) for investment purpose. >>> Table B1.1A: Key Fiscal Measures in 2020 and 2021 2020 Budget 2020 Execution 2021 Budget CFAF (bn) % GDP CFAF (bn) % GDP CFAF (bn) % GDP 1. Household support measures 137.3 1.4 21.6 0.2 115.0 1.1 1.1 Special fund for the most vulnerable 100.0 1.0 0.0 0.0 100.0 1.0 households1 1.2 Free distribution of cereals and feeds 15.0 0.1 12.9 0.1 8.0 0.1 1.3 Import duties exemptions on rice and milk* 6.5 0.1 / / / / 1.4 Free water and electricity bills 7.0 0.1 / / / / 1.5 VAT exemption on water and electricity bills* 8.7 0.1 8.7 0.1 0.0 0.0 1.6 Social Safety Net 0.0 0.0 0.0 0.0 7.0 0.1 2. Business support measures 43.6 0.4 0.0 0.0 0.0 0.0 2.1 Exemptions of employ contribution and housing 11.8 0.1 / / / / tax and reduction of synthetic tax* 2.2 Reduction in penalties accruing on tax arrears* 31.9 0.3 / / / / 3. Measures to support the economy 52.0 0.5 42.0 0.4 47.5 0.5 3.1 Endowment to the private sector guarantee fund 20.0 0.2 10.0 0.1 0.0 0.0 3.2 Support for the Electricity Sector (EDM) 17.0 0.2 17.0 0.2 0.0 0.0 3.3 Support for the water sector (SOMAGEP) 15.0 0.1 15.0 0.1 7.5 0.1 3.4 Support for the cotton sector (CMDT) 40.0 0.4 4. Healthcare 40.0 0.4 30.4 0.1 25.0 0.2 Total 272.9 2.7 63.6 0.6 162.5 1.5 Total expenditure 214.0 2.1 54.9 0.5 162.5 1.5 Total tax relief (estimates) 58.9 0.6 8.7 0.1 0.0 0.0 Source: Staff calculation based on information from MEF. Note: 1/ the measure includes a one-time cash transfer to poor households, of which 30 percent is expected to be disbursed in the first round to households registered in the unified social registry (RSU). The exact modality for providing the remaining 70 percent of the social support is still under consideration and in consultations with local authorities and civil groups. * Amounts on tax relief measures are estimates. 28 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 1.1: Fisc l D ficit (2007–20) Fi ur 1.2: Sourc of Fin ncin (2007–20) % of GDP % of GDP 6 30 6 5 25 4 4 20 3 15 2 2 10 0 1 5 0 0 -2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 Prim r d ficit (l ft xis) Adj to c sh b sis nd fin ncin p Ov r ll fisc l d ficit (l ft xis) N t Dom stic Fin ncin * R v nu N t For i n Fin ncin Ep nditur Ov r ll Fisc l B l nc Sourc : INSTAT, WEO, nd IMF nd WBG st ff stim t s for 2020. Sourc : WDI, IMF, nd World B nk st ff c lcul tions. Not : = stim t . Not : = stim t . >>> >>> Fi ur 1.3: T x, R v nu Coll ction, nd Fi ur 1.4: R v nu Structur b Tot l Public Exp nditur (2010–20) Sourc (2010–20) % of GDP % of GDP 30 25 20 25 15 20 10 15 5 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2019 2020 Exp nditur Tot l r v nu Gr nts Sp ci l funds nd nn x d bud ts T x r v nu Tot l r v nu & r nts C pit l r c ipts Non-T x Tx Tot l r v nu nd r nts Sourc : M li MEF, IMF, nd World B nk st ff c lcul tions. Sourc : WDI, IMF, nd World B nk st ff c lcul tions. Not : = stim t . Not : = stim t . MALI PUBLIC EXPENDITURE REVIEW >>> 29 >>> >>> Fi ur 1.5: Ext rn l nd Dom stic D bt Fi ur 1.6: Public D bt Composition (2005–20) ( nd-2019) % of GDP % of tot l d bt 50 45 40 35 30 25 20 15 10 5 0 2005 2006* 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Offici l Bil t r ls 13% 2020 Multil t r ls 50% T-Bills 3% Dom stic d bt Bonds 34% Ext rn l d bt Tot l d bt Sourc : World B nk nd IMF (2020) M li: Joint B nk-Fund St ff D bt Sust in bilit An l sis. Not : * D bt r li f of 28.3 p rc nt of GDP und r th HIPC pro r m. = stim t . >>> Fi ur 1.7: B nchm rkin G n r l Gov rnm nt Gross D bt (2019) % of GDP 70 60 59.0 58.5 57.2 50 47.8 44.6 45.3 44.2 40.5 40 37.3 29.3 30 20 10 6.3 0 C nt. Af. R p. Zimb w * Ch d Af h. L os* U b kist n Tajikistan nd Rw nd U M li SSA Structur l P rs Aspir tion l P rs Tot l D bt Av r Sourc : IMF (2020b). Not : * L st v il bl ctu l d t r for 2018 (2019 Articl IV Consult tion, IMF). 30 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 1.1: Mali: Macro-Fiscal Indicators (2010–20) % of GDP 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020e Revenue 17.7 7.1 14.6 17.4 17.1 19.1 18.3 20.1 15.7 21.4 20.0 Tax revenue 12.8 11.9 11.9 12.3 12.6 14.0 14.9 15.2 11.9 14.8 14.1 Taxes on income 3.9 3.6 4.1 3.9 4.6 4.3 4.4 4.7 3.6 4.7 4.9 Taxes on goods and 7.2 6.4 6.2 6.6 6.4 7.9 8.6 6.8 5.3 6.0 6.4 services Taxes on international 1.8 1.8 1.6 1.7 1.6 1.8 1.9 2.0 1.6 1.9 1.9 trade Other indirect taxes 1.6 1.4 2.3 0.8 Grants 2.5 3.2 0.2 2.8 2.2 2.7 1.6 1.6 1.2 1.9 1.4 Non-tax revenue 0.9 0.5 0.9 0.6 0.7 0.7 0.5 1.4 0.6 0.7 0.6 Special funds & annexed 1.5 1.6 1.6 1.7 1.6 1.8 1.3 1.9 1.9 4.1 3.9 budgets Expenditure 20.3 20.6 15.5 19.8 20.0 20.9 22.3 22.9 20.4 23.1 25.5 Wages and compensation 4.4 4.3 4.6 4.4 4.4 4.6 4.8 4.8 5.0 5.1 6.1 Goods and services 4.1 3.8 3.3 3.7 3.4 3.4 3.2 3.3 2.9 2.9 3.2 Interests 0.4 0.6 0.5 0.5 0.6 0.6 0.7 0.8 0.9 1.0 1.2 Current transfers and 2.6 3.0 2.9 3.6 3.6 3.3 3.5 3.4 3.3 3.6 5.1 subsidies Capital expenditure 7.0 7.2 2.7 6.0 6.5 7.3 8.9 8.8 6.5 6.5 6.1 Special funds & annexed 1.8 1.7 1.5 1.6 1.6 1.7 1.2 1.7 1.8 4.0 3.9 budgets Overall fiscal balance (2.6) (3.4) (1.0) (2.4) (2.9) (1.8) (3.9) (2.9) (4.8) (1.7) (5.5) (including grants) Overall fiscal balance (5.1) (6.6) (1.2) (5.2) (5.1) (4.5) (5.5) (4.5) (6.0) (3.5) (6.9) (excluding grants) Primary balance (2.2) (2.8) (0.4) (1.9) (2.3) (1.2) (3.3) (2.0) (3.9) (0.6) (4.3) Gross debt (% of GDP) 25.3 24.0 25.4 26.4 26.9 30.7 36.0 36.0 37.7 40.5 44.1 GDP (%, real growth) 5.4 3.2 (0.8) 2.3 7.1 6.2 5.9 5.3 4.7 5.0 (2.0) Inflation (%, annual 1.1 3.0 5.3 (0.6) 0.9 1.5 (1.8) 1.8 1.7 (2.9) 0.7 average) Policy interest rate (%) 3.3 3.3 3.0 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5 Exchange rate (CFAF/ 494.8 471.3 510.6 493.9 493.8 591.2 592.6 580.7 555.5 585.9 572.0 US$, annual average) Current account balance (11.1) (5.1) (2.2) (2.8) (4.7) (5.3) (7.2) (7.3) (4.9) (5.3) (2.0) (% of GDP) Source: INSTAT and IMF, World Economic Outlook database, October 2019, and IMF and World Bank staff estimates for 2020 (as of January 2021). MALI PUBLIC EXPENDITURE REVIEW >>> 31 Expenditure Performance explained by expenditure rising more than revenue—and thus fiscal deficit/borrowing requirements increasing— During the past two decades the size of Mali’s when GDP rises. The negative correlation of wages and government has stayed stable. Public expenditure salaries and goods and services suggests that they may averaged 20.7 percent of gross domestic product (GDP) act, at least partially, as a kind of automatic stabilizer, between 2000 and 2019, with peaks of 23 percent (in particularly the purchase of health inputs or basic goods. 2017 and 2019) and a low of 15.5 percent (2012). After Subsidies and transfers are also negatively correlated the 2012 political and security crisis, public expenditure with real GDP, mainly due to rises in the deficits and was fueled by an increase in capital expenditure social subsidies of state-owned enterprises (SOEs, Box (especially that allocated since 2015 to the security and 1.2), parastatals or autonomous public entities (EPAs; national defense sector). Increasing spending mainly on établissement publique à caractère administratif), and security reduces the fiscal space for spending in other local governments rise when GDP falls. priority areas. Government expenditure will reach 25.5 percent of GDP in 2020 due to the effect of the COVID-19 Economic Composition crisis on health, economic support, and social aid. Mali’s expenditure is higher than its structural peers and lower Capital expenditure drives the growth rate of total than its aspirational ones. expenditure. Accelerations in public expenditure are largely explained by the dynamics of capital expenditure At the aggregate level, changes in public expenditure (Figure 1.10). In 2007–08, 2010, and 2018, capital have historically not been correlated with changes in expenditure varied 60 percent more on average than GDP. Over the last 15 years, accelerations in the growth of the entire variation in public spending. This suggests public expenditure have not been related to the observed that capital expenditure is highly volatile, allowing it trend of GDP growth. For instance, while real GDP grew to compensate for changes in spending in the other at an annual rate of 5.4 percent on average during direction among the other components of public 2014–19, real public expenditure grew 11.1 percent per expenditure. In 2006 and 2009 and between 2012 year over the same period. This lack of correlation may and 2016 capital expenditure explained on average 71 arise from components of public spending that operate percentage points of the variation of public spending.12 in the opposite direction to economic growth and from Although most of the other categories grew steadily the divergent short-term and long-term effects of each over the analyzed period, their contribution to the rate category of public expenditure on GDP growth. Indeed, of growth of public spending was minor. Wages and over 2005–19, public expenditure was significantly more salaries grew on average 7.9 percent per year in real volatile than growth (Figure 1.8).10 terms and current transfers 9.5 percent per year while goods and services averaged 3.8 percent and interest Capital expenditure drives the pro-cyclical behavior 13.1 percent per year.13 of Mali’s public expenditure. The cyclical component of public expenditure is positively correlated with real Parastatal public agencies and SOEs get almost GDP. This co-movement is mainly explained by the 70 percent of total transfers. Transfers grew from 2.7 positive correlation between capital expenditure and percent of GDP in 2009 to 3.6 percent of GDP in 2013 aggregate output, which means that short-term output and then stayed stable (Figure 1.11). Transfers to EPAs growth is driven by public investment.11 All the other were the main component and remained stable at 40 components, except interest and goods and services, percent of the total.14 Transfers to local government behave counter-cyclically (Figure 1.9). Interest payments significantly increased from zero in 2009 to 20 percent move positively with the business cycle, which may be is 2019, as education and health were decentralized to regional and local governments.15 Transfers to SOEs and 10  The greater volatility of public expenditure is demonstrated by the fact that its standard deviation was 15.09 percentage points for the analyzed period, practically double the GDP standard deviation (1.95 percentage points). 11  Public investment reached 51.7 percent of total investment and 10.7 percent of the GDP in 2018. 12  In the aftermath of the Algiers peace agreements, public investment to rebuild war-damaged infrastructure and reduce infrastructure gaps has become a leading objective. 13  Personnel expenditure is dominated by wages and salaries, accounting for 93 percent in 2018. The remainder was allocated to bonuses (3 percent), social contributions (1 percent), and other personnel-related expenditures (3 percent). 14  EPAs have social objectives or a combination of commercial and social objectives. They are characterized as legal entities separate from the state, with their own assets and financial autonomy. These entities are distinct from budget entities that are part of the state. 15  The 2015 peace agreement suggested the allocation of 30 percent of public revenue to subnational governments. The Code of Subnational Governments (2017) states that the mission of local authorities shall be the design, planning and implementation of economic, social and cultural development activities of regional or local interest. Education and health are the most decentralized services. 32 >>> MALI PUBLIC EXPENDITURE REVIEW other entities were volatile, averaging 30 percent of the Interest payments still absorb a small share of total, due to the variable nature of SOE operations. In domestic revenue, although the proportion has been 2019, subsidies to Energie Du Mali SA (EDM-SA; the growing in recent years, thereby narrowing the fiscal electricity company) and Compagnie Malienne pour le space. Debt servicing costs are mainly driven by the Développement du Textile (CMDT; Malian Cotton Textile burden of domestic debt, which is more expensive than Company) amounted to 1.3 percent of GDP. Currently, external debt. In effect, 70 percent of interest payments energy policy is oriented towards subsidizing the supply are paid to local debt holders (Figure 1.13). Interest of energy, rather than the demand. The Government spending is estimated to reach a record high of 13.6 transfers the difference between the cost of energy and percent of domestic revenue net of grants in 2020 as tax the tariff paid by the users to EDM-SA. Poor targeting of collection will have declined in 2020. energy subsidies limits the redistributive effects of these transfers (Hounsa et al., 2019).16 >>> Box 1.2: Fiscal Risks from State-Owned Enterprises in Mali SOEs play a crucial role for service delivery, but the scope and quality of their services are limited. Mali currently has 45 commercial SOEs (39 non-financial and 6 financial). They operate in nearly all sectors, including utilities (electricity, telecommunications and water), industry, mining, manufacturing, transport and finance.1 The five biggest SOEs (by assets) are EDM-SA, Office des Produits Agricoles du Mali (OPAM), Societé Malienne de Transmission et de Diffusion (SMTD), Société Sucrière du Kala Supérieur (N-SUKALA) and the CMDT. Indicative statistics on goods and services provided by SOEs show they perform slightly above the average for low-income Sub Saharan African countries, especially in the case of access to electricity (43.5 percent of the population) and basic sanitation (31.3 percent of the population) (World Bank, 2019). Due to their poor financial performance and lack of financial oversight data, SOEs impose significant fiscal risks. Several SOEs receive resources from the budget in the form of operational subsidies or carry out quasi-fiscal activities, by offering goods and services at below market prices—often below cost recovery. SOEs are also a source of contingent liabilities, because their debt may be explicitly or implicitly guaranteed by the State. The electricity company (EDM-SA) is the largest SOE and is facing insolvency, due to insufficient investment, poor management, and the long-standing practice of charging less for electricity than it costs to generate.2 In 2019 subsidies for EDM reached 0.7 percent of GDP because of insufficient revenues. EDM-SA’s debt (including arrears) was CFAF 319 billion (3.1 percent of GDP) at end-June 2019, almost similar to the education spending and four times health spending. The corporate governance of Mali’s SOEs should be strengthened, particularly the state ownership and oversight function which is currently fragmented. SOEs are subject to a dual monitoring system with separate technical and financial oversight. Technical oversight falls under the purview of the relevant line ministries, although responsibilities are not always clearly defined. Financial oversight, on the other hand, is the responsibility of the Ministry of Finance’s monitoring units. However, the SOE monitoring units are constrained by limited authority, capacity, resources, and tools. They were only set up in 2017 and do not yet have enough staff with specialized experience and and/or the tools required to systematically and effectively monitor the financial performance of the SOE portfolio. Moreover, despite their mandates, the monitoring units effectively still lack authority over the entities they supervise, which often maintain a much closer relationship with their technical oversight ministries. The absence of systematic portfolio data and tools critically undermines the state’s oversight capacity.3 Source: World Bank staff. Note: 1/ The main SOE sectors (by assets) are industry (40 percent), banking (27 percent), electricity (11 percent), transport and information and communications technology (9 percent), and mining (9 percent). 2/ In 2015, EDM generated 1,712 Gigawatt hours of electricity at an average production cost of CFAF 114.8 per kilowatt hour (kWh), while the average sales price was CFAF 97.8/kWh. During 2015–17, budget transfers and tax expenditure to close EDM treasury shortfalls averaged CFAF 65 billion per year (43 percent of total electricity sales). 3/ The Government is developing an SOE Excel database with the support of the World Bank Group’s “SOE Oversight in Chad, Mali, Niger (ASA)”. 16  To really help the poorest individuals benefit from subsidies, the first step should be to provide access to gas and electricity services. MALI PUBLIC EXPENDITURE REVIEW >>> 33 Capital expenditure is highly volatile and has fallen short of economic and demographic growth during depended heavily on domestic financing since 2012. the past 15 years. The stock of fixed capital represented The volatility of public investment can be explained by the 110 percent of GDP in 2000 but less than 70 percent country’s vulnerability to macroeconomic and geopolitical in 2015. Fixed capital stock per capita declined by shocks and their effects on external financing.17 Capital approximately 17 percent between 2000 and 2015, expenditure amounted to 6.5 percent of GDP and 28.1 below the levels observed in other WAEMU countries. percent of total expenditure in 2019 (Figure 1.13). Almost Mali scored 0.57 on a scale of 0 to 1 in the Public 75 percent has been internally financed since the political Investment Efficiency Index (PIE-X),18 which is below the crisis of 2012, while external funding averaged more average of 0.64 for Sub-Saharan African countries and than 50 percent between 2005 and 2011. While long- of 0.73 for emerging countries. The score reflects the term investments in least-developed African countries insufficient volume and coverage of Mali’s infrastructure. are normally financed by external borrowing and grants It scored 0.32 for access to infrastructure, against given the lack of a long-term domestic debt market, the the world average of 0.59, and 0.46 for SSA. Only 57 volatile nature of external funds is a source of risk that no percent of Mali’s capital expenditure translates into fixed funds will be available to boost public investment. capital stock, compared with an average of 73 percent in the rest of the world (IMF 2018e). This may affect Public investment has been insufficient and the efficiency of the investment portfolio and reduce its inefficient. Trends in fixed capital accumulation have impact on output growth and poverty reduction.19 >>> >>> Fi ur 1.8: GDP nd Public Exp nditur Fi ur 1.9: Corr l tion Co ffici nt B tw n (2005–20) C clic l Exp nditur nd GDP (2004–20) % nnu l r l rowth r t s 40 0.6 0.51 30 0.4 0.37 0.24 20 0.2 0.12 0.01 10 (0.05) (0.47) 0.0 0 Goods & s rvic s Int r st CAPEX Oth rs Tot l Exp nditur s nd s l ri s (0.2) -10 (0.4) -20 Subsidi s nd tr nsf rs -30 (0.6) W 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 GDP Public xp nditur Sourc : INSTAT, IMF, WEO d t b s , IMF (2019) nd IMF (2020). Sourc : World B nk st ff stim t s b s d on d t from INSTAT, Not : B s r: 2018=100. WEO d t b s , IMF (2019 nd 2020). Not : A positiv (n tiv ) corr l tion indic t s pro-c clic l (count rc clic l) fisc l polic b h vior. 17  The share of project support of foreign financial-aid in public investment has varied in the range of 20–50 percent. Its volatility from year to year has been largely due to cases of noncompliance with disbursement criteria and to procedural issues (IMF, 2018e). 18  The PIE-X is based on an aggregate measurement of infrastructure coverage and the perception of its quality (IMF 2018e). 19  The scope to improve the efficiency of capital spending is analyzed more deeply in Chapter 3. 34 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 1.10: Contributions to R l Fi ur 1.11: Curr nt Tr nsf rs Exp nditur Growth b C t or (2006–20) (2009–19) % of tot l nd GDP 22.4% 100 4.0 30% 18.1% 2.5% 20% 11.6% 80 3.5 9.5% 5.2% 6.9% 5.2% 1.7% 10% 5.4% 60 3.0 0% -1.3% 40 -10% -8.2% -8.8% 2.5 20 -20% -14.2% -30% -21.9% 0 2.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAPEX Subsidi s nd tr nsf rs Scholl rships P nsions Oth rs Goods & s rvic s Public nci s (EPA) Loc l ov rnm nts* Int r st W s nd s l ri s SOEs nd oth rs Curr nt tr nsf rs TOTAL Sourc : World B nk b s d on INSTAT, WEO d t b s , IMF (2019 nd 2020). Sourc : INSTAT, BOOST, World B nk nd IMF (2020). Not : Contribution to r l xp nditur rowth is m sur d throu h th Not : * Includ s l'A nc N tion l d'Inv stiss m nt d s Coll ctivités product of th w i ht of ch c t or in tot l xp nditur in th pr vious rritori l s nd sp cific ntiti s of th duc tion, h lth nd l bor ministri s. r nd th r l rowth in th curr nt r. >>> >>> Fi ur 1.12: Int r st P m nts b D bt Fi ur 1.13: C pit l Exp nditur b Sourc T p (2009–20)* (2005–20) % bud t r v nu % of GDP 16 12 13.6 14 10.0 9.4 9.5 11.6 8.9 12 8.8 9 8.1 6.8 7.0 10.1 7.3 6.5 10 7.2 6.5 6.5 8.1 6.0 6.1 8 7.1 6 6.4 6.8 6.2 5.6 6 5.1 4.4 4.6 4 3 5.7 4.2 2.7 3.23.6 3.64.2 3.6 2 3.0 2.4 2.52.4 2.7 1.4 1.8 0 0 0.0 0.2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 Ext rn l d bt Dom stic d bt Ext rn ll Fin nc d Int rn ll Fin nc d Int r st p m nts C pit l xp nditur s Sourc : IMF World Economic Outlook d t b s , Octob r 2019, Sourc : INSTAT, WEO d t b s , IMF (2019), IMF (2020b) nd BOOST, IMF (2020) nd MoF. World B nk. Not : * Exclud s r nts nd Sp ci l Funds nd Ann x d Bud ts. MALI PUBLIC EXPENDITURE REVIEW >>> 35 >>> Box 1.3: Budget execution in Mali Total budget execution has ranged between 82 and 96 percent between 2013 and 2018, with strong execution in wages, goods and services, and government transfers, and lower execution rates for capital expenditure (Figure B1.3A). Over the period 2013–18, execution of expenditure in wages and salaries averaged 98 percent, goods and services 96 percent, and transfers 97 percent. Capital expenditure execution reached highs of 94 percent in 2013 and 93 percent in 2017 but averaged only 69 percent in 2014–16 and 2018. Execution of expenditure in priority sectors has remained strong over the period 2013–18, but rates in economic affairs (including agriculture, communication, mining, hydroelectric and industry, transport, and urban planning) lag behind (Figure B1.3B). Over this period, execution rates for education expenditure averaged 96 percent, health 93 percent, and security 98 percent, while the average for economic affairs was only 75 percent. Lower execution rates in economic affairs are mostly due to the weight of lower execution in agriculture and mining and industry. Over 2013–17, agriculture accounted for 44 percent of the budget and spending on economic affairs and averaged 74 percent execution. Mining and industry accounted for 23 percent and likewise averaged 74 percent execution. >>> >>> Fi ur B1.3A: Bud t Ex cution b Fi ur B1.3B: Bud t Ex cution b Economic C t or (2013–18) Function l Cl ssific tion (2013–18) 120% 100% 96% 90% 96% 82% 86% 85% 86% 100% 80% 70% 80% 60% 60% 50% 40% 40% 30% 20% 20% 10% 0% 0% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Int r st Tr nsf rs Economic ff irs Public d bt* W s nd S l ri s Goods nd S rvic s Educ tion Oth r soci l xp nditur CAPEX Oth r H lth S curit nd n tion l d f ns Gr nd Tot l G n r l s rvic s of public dministr tion*** Sourc : World B nk, BOOST. Sourc : World B nk, BOOST. Not : Ex cution c lcul t d Committ d/R vis d Bud t. Not : Ex cution c lcul t d Committ d/R vis d Bud t. Functional Composition and national defense spending was 36 percent higher than education spending and almost 3.5 times health The composition of public expenditure has changed spending. The share of general services of the public significantly due to the security and political crisis administration grew 6.2pp and was the most important of 2012 and the decentralization process. Between public expenditure category in 2019 (Figure 1.14). The 2009 and 2019, the share of expenditure on security and shares of other social spending stayed stable over the national defense increased by 8.6 percentage points (pp), period. Although public debt payments still absorb only while expenditure on education fell 6.8 pp, economic a small portion of total spending, they amounted to over affairs fell 5.2pp, and health fell 3pp. By 2019, security 20 percent of health spending in 2019. 36 >>> MALI PUBLIC EXPENDITURE REVIEW High levels of security and defense spending narrow expenditure on energy and health declined significantly: the Government’s fiscal space and crowd out social investment in energy fell from 1 percent of GDP to 0.4 and investment spending. The security situation has percent, while health investment fell from 0.7 percent to been volatile in northern Mali and deteriorated in central 0.2 percent.21 Security and national defense investment Mali, causing significant population displacement; thus jumped from 3.1 percent of total capital expenditure undermining the delivery of health care, education, and in 2012 to 17.6 percent in 2019, three times the capital social services; and giving rise to rampant banditry, spend on education and five times the capital spend on including drug and human trafficking. The increase in health. These reductions in investment in economic and military and other security-related spending in response social sectors may affect output growth in the medium to the situation has taken up an increasing share of and long term, as well as social development indicators. public spending (Figure 1.15), at the cost of much- needed social spending.20 The growth in security and Public sector wage expenditures are distributed national defense spending is mainly driven by equipment across all sectors, with education and security and investment spending, as spending on wages and demanding the highest share of resources. Wages salaries and goods and service increased more slowly. in education accounted for 41 percent of all public sector wages in 2018. The allocation of public sector Capital expenditure for security and national defense wages to the security sector increased significantly is rising, while it is falling for health and energy. Capital between 2013 and 2018, commanding 31 percent of expenditure allocations by function changed sharply public sector personnel expenditures in 2018 up from after the political and security crisis of 2012 (Figure 24 percent in 2013, nearly doubling in real terms over 1.16). Public investment in security and national defense the 6-year period. Similarly, the share of public sector grew sixfold, from 0.2 percent of GDP in 2012 to 1.1 wages dedicated to the health sector increased from 4 percent of GDP in 2019. Over the same period, capital percent in 2013 to 7 percent in 2018. >>> Fi ur 1.14: G n r l Gov rnm nt Exp nditur b Function (2009–19) . Sh r of Tot l Exp nditur b. Ch n in Exp nditur Composition % 20 % 10 8.6 18 8 16 6.2 6 14 4 12 2 1.1 10 0 8 -0.6 6 -2 -0.8 -1.7 -4 -3.1 -3.0 4 2 -6 0 -8 -6.8 Public d bt* Public d bt* Educ tion Public dministr tion Oth r xp nditur ** Educ tion Public dministr tion Oth r xp nditur ** Tr nsport Tr nsport lth lth A ricultur A ricultur nd d f nc nd d f nc nd En r nd En r H H Minin Minin S curit S curit 2009 2014 2019 Sourc : Boost, World B nk. Exp nditur st corr spond to "En " for 2009–19. Not : * Includ s morti tion p m nts. ** Includ s cultur , outh nd sports, mplo m nt, soci l s ctor, nd communic tions. 20  In 2014 the Government prepared a military spending program with support from the European Union Training Mission in Mali. It signed memoranda of understanding with Chinese firms for investment projects amounting to CFAF 5,500 billion (US$ 11 billion, or 93 percent of GDP). It presented regional integration projects amounting to CFAF 1,750 billion (US$ 3.5 billion, or 30 percent of GDP) to donors. 21  The quality of and access to health infrastructure is noticeably poor (IMF, 2018). MALI PUBLIC EXPENDITURE REVIEW >>> 37 >>> Fi ur 1.15: S curit Exp nditur b C t or nd Tot l Priorit Soci l Exp nditur (2009–19) % of tot l xp nditur 30 27 24 21 18 7.9 15 6.7 8.8 12 7.9 6.4 1.2 4.7 6.2 4.0 9 1.1 1.3 3.5 4.1 1.1 2.9 3.2 6 2.6 2.7 2.3 2.2 3.0 2.2 7.2 8.1 6.7 3 5.3 5.4 5.0 5.1 4.9 5.3 6.2 5.9 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 W s nd s l ri s Goods nd s rvic s Equip m nt & inv stm nt Curr nt tr nsf rs Priorit soci l sp ndin * Tot l s curit Sourc : INSTAT, WEO d t b s , IMF (2019), IMF (2020) nd BOOST, World B nk. Not : * Includ s sp ndin on prim r nd s cond r duc tion, h lth, nd oth r soci l s ctors. >>> >>> Fi ur 1.16: C pit l Exp nditur b Fi ur 1.17: Goods nd S rvic s Function (2009–19) Exp nditur b Function (2005–19) % of GDP % of GDP 12 4 4.0 4.1 3.8 10.0 9.4 3.7 9.5 8.9 3.4 3.4 3.3 9 8.1 8.8 3.2 3.3 6.8 7.0 7.3 2.9 2.9 6.5 3 7.2 6.5 6.5 6.0 6 2 2.7 3 1 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Oth r s ctors* S curit nd n tion l d f ns A ricultur G n r l public dministr tion Educ tion Tr nsport.urb nism nd Economic ff irs D f ns nd s curit H lth public works Educ tion Oth r soci l s ctors A ricultur C pit l xp nditur s H lth Goods nd s rvic s Sourc : INSTAT, WEO d t b s , IMF (2019), nd IMF (2020) nd Sourc : IMF World Economic Outlook d t b s , Octob r 2019 nd BOOST, World B nk. IMF (2020) nd World B nk, BOOST. Not : * Includ s n r , communic tion, n r l s rvic s or public dministr tion nd oth r soci l s ctors. 38 >>> MALI PUBLIC EXPENDITURE REVIEW Expenditure on goods and services has declined Mali allocates relatively more resources to agriculture continuously in the last 10 years owing to the than comparator countries, while the shares for decentralization of the education and health water and sanitation and transport are significantly functions. Goods and services accounted for 4.1 lower. 22 In 2017 the agriculture sector received 34.7 percent of GDP in 2010, falling to 2.9 percent in 2019 percent of the resources allocated to six key social (Figure 1.17). Almost 50 percent of the total goods and and infrastructure sectors, while health received 12.6 services procured were allocated to general services percent and education 41.1 percent (Figure 1.20). In of public administration. The decentralization process contrast, the comparator countries allocated on average meant the procurement of goods and services for 8.5 percent of spending to the agriculture sector, 17.2 education fell from 24.5 of the total in 2010 to 11.1 percent to health and 53 percent to education. For percent in 2019, while for health the share fell from 6.8 water and sanitation (0.1 percent of expenditure) and percent to 4 percent. In contrast the share for defense transport (2.4 percent) the difference between Mali and and security rose from 13.3 percent to 24.5 percent over its comparators is even greater. the same period. Goods and services for agriculture declined from 2.1 percent in 2010 to 1.2 percent in Fiscal Rigidities 2019, but remained stable at 5 percent for other areas (such as transport, energy, and industry). Public expenditure in Mali is currently moderately rigid, as it has been for the past decade. About 55 International Comparisons percent of its total expenditure can be classified as highly rigid. This includes spending on wages (22.1 The size of Mali’s Government is intermediate percent), interest payments (4.4 percent), the special between its aspirational and structural peers. Public funds and annexes budget (17.3 percent), transfers expenditure amounted to 23.1 percent of GDP in 2019, to local government (3.0 percent), pensions (0.3 compared to an average of 27.7 percent of GDP for percent), and externally financed capital expenditure its aspirational peers and 19.6 percent of GDP for its (7.6 percent). The latter declined from 25.2 percent of structural peers (Figure 1.18). This places Mali closer to total expenditure in 2009 to 7.6 percent in 2019, while its structural peers, except for Lao PDR. Mali’s public the share of the other components—except pensions— expenditure is slightly above the average for Sub- increased 17.3 percentage points. Other spending that Saharan African (SSA) countries. It is worth noting that can be considered partially rigid, such as subsidies revenues declined significantly during the insecurity to public enterprises, transfers to public entities, and spiral of 2012 and the presidential election of 2018. scholarships, represent 12.3 percent of the total (Table The former was due to a fall in grants and the latter due 1.2). Since there is little margin to reallocate resources to a fall in tax collection. During these two periods the among categories, improving efficiency within each size of the Government (measured by the size of public component is of paramount importance. expenditures) contracted substantially. Mali’s budget rigidity is moderate in comparison to The composition of Mali’s public expenditure differs other peer countries. Based on the categorization of in two main ways from its peer countries. First, expenditure rigidities conducted for Mali, an updated the share of capital expenditure, at 28.1 percent of analysis of Lao PDR and Zimbabwe suggests that Mali’s total spending, is much lower than both its structural budget rigidity is moderate, partly because of its low (37.9 percent) and aspirational peers (44.9 percent). levels of interest payments and foreign-funded capital This trend holds in terms of GDP as well, with capital expenditure. Analysis of expenditure in Lao PDR in expenditure accounting for 6.5 percent of GDP in Mali 2019 found 64.3 percent of it was highly rigid while in compared to 11.5 percent for aspirational peers and Zimbabwe (2020) the figure was 50.2 percent. However, 7.6 for structural peers. This reflects the decreased comparing the degree of budget rigidity across countries external funds assigned to investment in recent years. is not a straightforward exercise. There is no commonly Second, subsidies and transfers absorb around 33 accepted methodology, and the sources of rigidity, or percent of total spending, much higher than its peers. what constitutes rigidity, are ill-defined in the literature. Mali’s spending on wages and salaries is similar to its Mali cannot be benchmarked on rigidity as no such aspirational peers and lower than its structural ones, analysis has been conducted for other countries in the while goods and services and interest payments are region. similar to its peers (Figure 1.19). 22  The comparator countries are Afghanistan, Benin, Senegal, and Togo. These are the only comparator countries with available information in the BOOST. MALI PUBLIC EXPENDITURE REVIEW >>> 39 >>> Fi ur 1.18: B nchm rkin G n r l Gov rnm nt Exp nditur (2019) % of GDP 35 31.2 29.5 30.0 30 27.1 25 23.1 21.9 19.9 16.9 18.0 18.9 16.9 20 15 10 5 0 L os* T jikist n Af h nist n C ntr l Afric n R public Ch d U b kist n Zimb w Rw nd nd U M li Aspir tion l p rs Structur l p rs SSA* Sourc : R pid Cr dit F cilit -IMF (2020), xc pt L o PDR nd Zimb bw (2019 Articl IV Consult tion, IMF). Not : *L st v il bl d t r for 2018. >>> >>> Fi ur 1.19: B nchm rkin Public Fi ur 1.20: B nchm rkin Public Sp ndin Sp ndin b Economic Cl ssific tion (2019) in K Soci l nd Infr structur S ctors (2017) % of tot l xp nditur % of th s l ct d s ctors 50 100 44.9 90 45 40 37.9 80 35 32.9 70 32.4 30 28.1 60 25 22.8 50 22.1 20 40 12.5 14.9 15 12.5 12.2 11.9 30 10 20 4.4 4.9 5.7 5 10 0 0 W s Goods Int r sts Tr nsf rs C pit l M li Af h nist n B nin S n l To o nd nd nd xp nditur s s l ri s s rvic s subsidi s* M li Tr nsport A ricultur Aspir tion l p rs W t r nd s nit tion H lth Structur l p rs En r Educ tion Sourc : R pid Cr dit F cilit -IMF (2020). No v il bl d t of U b kist n for xp nditur b conomic cl ssific tion. For Rw nd l st v il bl d t r for 2018. Not : * Includ s oth r xp nditur . 40 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 1.2: Budget Rigidities (2009–19) % of total expenditure 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 High Rigidity 55.7 55.2 56.0 49.6 50.0 50.3 49.8 35.1 47.0 50.5 54.7 Wages 19.5 21.6 21.0 29.5 22.5 22.1 22.1 21.7 21.2 24.5 22.1 Interest 1.4 2.0 2.8 3.3 2.5 2.9 2.8 3.0 3.6 4.4 4.4 Capital expenditure - 25.2 18.0 20.2 0.2 12.0 12.3 11.6 1.0 12.0 6.9 7.6 financed by External Grants and Loans" Pensions 1.1 0.9 0.9 1.7 1.2 2.4 2.3 1.2 1.0 2.7 0.3 Local governments 0.1 3.7 2.8 5.0 3.9 2.8 2.7 3.0 1.5 3.2 3.0 Special funds and 8.5 9.0 8.3 9.8 7.9 7.8 8.3 5.2 7.6 8.8 17.3 annexed budgets Medium Rigidity 10.6 8.2 10.7 12.3 13.3 12.6 10.8 11.4 12.1 10.4 12.3 Transfers and subsidies 3.6 4.3 5.7 8.1 6.5 6.7 5.8 6.1 6.4 5.5 5.1 to EPA SOEs and others 6.0 2.9 3.8 2.6 5.6 5.0 4.2 4.5 5.0 4.1 6.4 Schollarships 1.0 1.0 1.1 1.6 1.1 0.8 0.9 0.8 0.7 0.8 0.8 Low Rigidity 33.7 36.6 33.3 38.2 36.7 37.1 39.4 53.5 40.9 39.2 33.0 Goods and Services 17.3 20.1 18.7 21.1 18.5 16.9 16.1 14.5 14.6 14.1 12.5 Capital expenditure - 16.3 16.5 14.6 17.0 18.2 20.1 23.3 39.0 26.4 25.0 20.4 financed by Domestic Sources TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: INSTAT, WEO database, IMF (2019) and IMF (2020a). Fiscal Decentralization are (i) transfers through the budget, by means of subsidies and special allocations; and (ii) fiscal transfers. Budget Mali’s fiscal decentralization is rooted in the transfers do not enable regional financial autonomy, as political consensus over local autonomy and equal local authorities do not have control over the amount development. The 1960 Constitution converted or purpose of the budget allocation. In contrast, fiscal all villages and fractions into communes, the local transfers promote financial autonomy as communes governments (collectivité territoriale). The 1992 have control over these resources. As in most WAEMU Constitution (Articles 97 and 98) of the Third Republic countries, these are used to different degrees. granted greater autonomy to locally elected authorities. The implementation of the Agreement for Peace and Budget transfers are carried out through budget Reconciliation further accelerated decentralization allocations in the Budget Law and the National through the adoption of several new laws in 2017,23 Support Fund for Local Authorities (FNACT; Fonds including decentralized services, direct local elections, National d’Appui aux Collectivités Territoriales). The the fundamental principles of the budgetary and FNACT is run by the National Agency for the Investment accounting law applicable to the communes, and the of Local Authorities. All resources are granted on the attributions and responsibilities of the main actors of the basis of criteria specific to the FNACT and to each budget execution. ministerial department. They can be conditional (transfers from ministerial departments and technical and financial Mali uses two mechanisms to transfer financial partners) and unconditional (transfers from the FNACT resources from the state to local communities. These with national funding). 23  New legislations in 2017 included notably law no.2017-051 on the code of local authorities, law no. 2017-052 determining the conditions of the free administration of local authorities and law no. 2017-053 on the special status of the district of Bamako. MALI PUBLIC EXPENDITURE REVIEW >>> 41 The fiscal transfer mechanism is based on a law Fiscal Sustainability Analysis in a determining the fiscal resources of municipalities, Post COVID-19 Environment cercles, and regions, which established the criteria for distributing resources. This mechanism, however, Mali has not succeeded in strengthening its public currently remains dependent on the political will of finances in recent years. The latest joint World Bank- those in charge of tax matters. It suffers from the lack IMF Debt Sustainability Analysis (2021) found it to be in of a principle of fiscal specialization, political interference moderate debt distress. This leaves the country without from local elected officials for electoral reasons, and the defenses it needs to withstand macroeconomic weak rationale for the allocation of local fiscal resources and other fiscal risks. Mali’s main challenge continues caused by the weakness of the system for equalizing to be ensuring macroeconomic stability while protecting funding among local authorities with high fiscal potential social and investment spending and providing resources and those with low fiscal potential. for growing security spending. It also needs to meet its substantial development needs, especially given The decentralization of the budget remains limited, additional vulnerabilities arising from the COVID-19 suggesting the need for further institutional reforms. pandemic and the political crisis. To maintain sustainable As part of the implementation of the 2015 Peace debt levels and contain its liquidity risk, it will be essential Agreement, the country is committed to transferring to expand its tax base, reduce the fiscal risks of its SOEs, 30 percent of state revenue to the communities on the undertake various fiscal savings measures, lengthen basis of an equalization system by 2018. This has not the maturity of its domestic debt, and obtain grants for yet been fully achieved: the rate increased from 19.8 budget support. percent in 2018 to 23 percent in 2019 and the aim is to reach 28.8 percent in 2020. Even so, transfers remain This section analyzes fiscal and debt sustainability the major source of revenue for local governments. Data over the medium term under a variety of scenarios: from the General Directorate of Territorial Communities baseline, shocks, and reform. In particular, it explores (DGCT; Direction Générales de Collectivités Territoriale) a range of policy options to preserve fiscal sustainability, for 2016–17 suggest that transfers account for over once the impact of COVID-19 and the political crisis 84 percent of local revenue, with subsidies accounting abates, and create fiscal space to mitigate a number for over 54 percent and special allocation 26 percent. of major fiscal risks.26 The baseline scenario represents Local tax revenue accounted for only about 12 percent a likely path for the key macro and fiscal variables that of local government income, with the remainder (around determine the future path of public debt. The shocks 4 percent) from sales and investment.24 scenarios represent risks to the baseline, based on actual events which have occurred in the recent past. Existing decentralization measures will not be They are intended to help develop a sustainable fiscal sufficient. These include the strengthening of the policy to plan for these known risks. The reform scenario FNACT, the creation of the Sustainable Development then considers how additional reforms to strengthen Fund, the identification by the sectoral departments fiscal consolidation would better enable Mali to manage of budget lines and the decentralized services. fiscal shocks and maintain fiscal sustainability. Table 1.3 Achieving decentralization will require building local and Table 1.4 summarize each scenario. taxation capacity (the establishment of real property taxation, sharing of VAT between the central state and Baseline Scenario local authorities, strengthening of synthetic tax, and innovations in certain taxes and fees). There will also In the baseline scenario, the fiscal outlook improves need to be legislation on the discretional use of fiscal but not enough to create the necessary fiscal resources by the local authorities.25 space. The baseline reflects the revenue and primary expenditure projections based on the IMF post-coup macro framework, while the gross borrowing requirement assumptions are detailed in Box 1.4.27 Rapid economic 24  The DGCT collects communal level revenue and expenditure information (economic classification). Systematic study of the DGTC data remains a challenge due to incomplete data coverage both in area (many communes do not or cannot report as being outside the direct control of the central government) and years. The information system broke down in 2019 with many records permanently lost. 25  Chapter 2 provides further discussion on decentralized tax policy (Box 2.2). 26  Fiscal space is defined as the percentage of revenue available to the central government after most rigid components of expenditures have been covered. 27  In line with the last World Economic Outlook, October 2020 and based on the revised budget. 42 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Box 1.4: Key Assumptions on Gross Borrowing Requirements The gross borrowing requirement (GBR) results from four elements: budget deficits, amortizations of old and new debts, other funding needs (e.g., contingent liabilities), and accumulation of financial assets (e.g., government deposits). Interest payments are endogenously calculated using a fiscal sustainability analysis tool. Based on the February 2020 Medium-Term Debt Strategy, the borrowing requirements for 2020–25 are assumed to be met through the following mix of debt: • Short-term domestic debt (1-year securities carrying an interest rate of 5 percent and denominated in CFAF) covering 15 percent of GBR. This assumption reflects a permanent rollover of the nominal amount of short-term liabilities). • Medium-term domestic debt (5-year securities carrying an interest rate of 6 percent and denominated in CFAF) covering 45 percent of GBR. This assumption reflects use of this debt instrument to fund the budget deficit—excluding the 50 percent of capital expenditure that is assumed to be funded with external loans—and the amortizations of old and new medium-term domestic debts. • Long-term external loans (30-year loans with 5-year grace periods, carrying a 1 percent interest rate and denominated in US dollars) covering 40 percent of GBR. This assumes continued use of foreign loans to fund 50 percent of capital spending and implies a positive net flow of external financing (i.e., new disbursements exceed the amortizations of old and new foreign loans). Source: World Bank staff. recovery after the COVID-19 and political crises means of current policies and public debt.29 To assess the revenue rises by 1.3 percentage points to 21.6 percent potential impact of these, the shocks scenarios impose of GDP in 2021 and stays stable in the medium term. two alternative shocks on the baseline scenario. These Public expenditure increases by 3.4 percentage points are: (i) lower economic growth after the healthcare and to 26.5 percent of GDP owing to the healthcare and socio-political crisis; and (ii) the impacts of contingent economic crisis, and then falls to 24.8 percent of GDP liability due to SOE risks. Examining these deviations by 2025. No tax policy reform is implemented to mobilize from the baseline scenario helps in assessing how revenue collection. The overall fiscal deficit reaches 5.5 sound and sustainable the baseline scenario is and percent of GDP in 2020 and declines gradually to 3 identifies what could happen to fiscal space, public debt percent over the medium term, in line with the WAEMU sustainability, and potential mitigation measures. target (Figure 1.21 and Table A3.1). Shocks Scenarios Under the baseline scenario, debt will remain stable at 45 percent of GDP over the projected period. Scenario 1 (lower growth) assesses the effect Interest payments will continue to absorb 10 percent of lower growth than expected on revenues and of tax revenues. Gross borrowing requirements28 will budget imbalances, particularly in light of spending grow by 5.3 percent of GDP in 2020 to 9.3 percent and rigidities. The scenario assumes a conservative outlook then stay stable at an average of 9 percent per year for economic growth and revenues. Specifically, it during 2021–25, which will place considerable liquidity assumes the real GDP growth rate over 2021–25 is 4 pressures on the domestic debt market, as the average percent per year, 1 percentage point lower than the was 5.4 percent of GDP over 2015–19. average growth assumed in the baseline for 2021–25, due to a slower recovery after the COVID-19 and political There are substantial fiscal risks to the baseline that crisis abates. This would result in a relatively slower would have a detrimental effect on debt sustainability. fiscal adjustment, particularly in the context of tight fiscal The scenario reflects a relatively weak fiscal and debt space and spending needs for post COVID-19 economic outlook for the next few years. Any shocks associated recovery. The lower growth scenario also acknowledges with the many fiscal risks Mali is facing could further the rigidities of expenditure policy due to political and worsen these prospects, undermining the sustainability institutional factors opposing downward adjustments, 28  It is worth mentioning that the Government has returned to the regional markets after its access was temporary suspended in August and September 2020. It also cleared its debt service arrears. 29  Based on IMF-World Bank 2020 DSA, a longer and deeper impact of the pandemic, requiring more extensive fiscal measures to address the crisis, will result in a further deterioration of the fiscal outlook, with a delayed or partial recovery of the tax base. Furthermore, potential realization of the contingent liabilities related to SOEs and loan guarantees by the government represent a downside risk for the fiscal outlook (World Bank-IMF, 2020). MALI PUBLIC EXPENDITURE REVIEW >>> 43 preventing the rationalization of expenditure even if there Reform Scenario are sizable revenue shortfalls. Thus, primary (i.e., non- interest) expenditure is unchanged in nominal terms The baseline scenario shows that just meeting the relative to the baseline scenario, despite lower revenue. WAEMU deficit convergence criteria over the medium term would not generate enough fiscal space to As a result, Mali’s public debt will surpass 50 mitigate fiscal risks. Under the baseline scenario, fiscal percent of GDP and liquidity risks will rise in the imbalances continue at similar levels to the average for medium term. While a combined slowdown in GDP and 2015–19, albeit at lower levels than in 2020 and 2021 revenues keeps the revenue-to-GDP ratio unchanged, mainly due to capital expenditure adjustments. Public expenditure rigidities lead to an increase in the primary debt remains higher than in recent years (by 10 percent expenditure-to-GDP ratio. Thus, in this scenario, fiscal of GDP), without generating fiscal space for public deficits reach 4.1 percent of GDP over the medium investment. This suggests that additional measures to term, compared to 3 percent in the baseline scenario generate revenue and strengthen debt management (Figure 1.22). Gross borrowing requirements widen to an must be introduced to increase fiscal space and reduce average of 10 percent of GDP over the projected period, liquidity risk over the domestic debt once the healthcare worsening exposure to rollover risks. In turn, public debt and socio-political crisis abates. is projected to surpass 50 percent of GDP by 2025. Lower than anticipated real GDP growth combined with Scenario 3 (reform scenario) enables Mali to build expenditures would therefore undermine fiscal space fiscal buffers against fiscal risks. This scenario and debt sustainability relative to the baseline scenario. assumes the Government undertakes an ambitious fiscal consolidation effort to achieve a primary surplus of 0.4 Scenario 2 (SOE risks) introduces the effect of loss- percent of GDP by 2024–25, compared to a deficit of making SOEs and parastatal entities on explicit 1.8 percent of GDP in the baseline scenario (Table 1.3). public debt and higher deficits (Figure 1.23). This This means the average fiscal deficit in 2022–25 falling scenario introduces the effect of guarantees and other to 1.1 percent of GDP and public debt falling to 37.6 financial support provided by the Government to SOEs percent of GDP by 2025 (Figure 1.24 and Table A3.2). if they are unable to absorb losses or to repay their Additional revenue enhancement measures to improve own liabilities. It assumes financial support of this type expected fiscal and debt outcomes after the COVID-19 is required in 2021 and 2022 and leads to additional crisis could help mitigate the impact of shocks if and subsidies and funding needs (recorded above and below when they occur. In other words, fiscal consolidation the line as subsidies and funding needs, respectively). may serve not only to generate fiscal space for public The cost of the corresponding shocks amounts to CFAF investment, but also to help build resilience to manage 85 billion (or about 0.75 percent of GDP) per year in fiscal risks. annual subsidies transferred to finance SOEs’ operating deficits and CFAF 110 billion (1 percent of GDP) per While the fiscal consolidation required under the year in financial assistance. These figures reflect a fairly reform scenario is challenging, it is not unachievable. conservative estimate of the Government’s exposure to There are various potential expenditure rationalization major contingent liabilities (SOEs’ insolvency risk). measures the Government could consider in order to create fiscal space. These include reducing expenditures The crystallization of contingent liabilities would lead through improving the transparency, efficiency, and to liquidity pressure in the short term that affects the competitiveness of government procurement, and domestic financial markets and the debt repayment improved wage bill and public investment management. capacity. Funding support to SOEs would increase These measures are discussed in detail in the next fiscal deficits by 0.8 percent of GDP during 2021 and chapters which show that, cumulatively, they could yield 2022 due to higher transfers and the interest payments approximately 1 percent of GDP in expenditure savings. associated with the additional levels of debt. Gross In addition, a review of the removal of tax exemptions borrowing also increases because of higher deficits and recent tax measures introduced to confront and below-the-line payments, exceeding the baseline COVID-19, could raise domestic tax revenue by at least scenario by 2 percent of GDP in 2021 and 2022. Public 1.5 percentage points to 16 percent of GDP, surpassing debt averages 48.5 percent of GDP in the medium term. by 1 percentage point the level achieved in 2016–17 and The result suggests that contingent liabilities may cause 2019. significant liquidity pressure in the domestic market and weaken Mali’s debt position. 44 >>> MALI PUBLIC EXPENDITURE REVIEW Fiscal consolidation would also support debt GDP by 2025 (Figure 1.24). In the event of a contingent sustainability even if large shocks hit the economy, liability shock, the reform agenda would help avoid thereby enabling the Government to mitigate fiscal placing the country on a highly unsustainable fiscal path. risks. For instance, if the additional fiscal consolidation If the fiscal consolidation is achieved and the SOE shock is achieved and a shock to real GDP growth materializes materializes, the average annual fiscal deficit in 2022–25 (as in the lower growth scenario), public debt would would be maintained at 1.4 percent of percent of GDP. In stabilize at a lower level than it would have under the addition, public debt would only increase to 40.7 percent baseline scenario, decreasing slightly to 42.4 percent of of GDP by 2025, which is a lower level than the baseline. MALI PUBLIC EXPENDITURE REVIEW >>> 45 >>> Table 1.3: Macro Fiscal Projections (2021–25) Baseline Scenario 1 Scenario 2 Scenario 3 2020 2021 2025 2021 2025 2021 2025 2021 2025 Est. % of GDP Primary Balance -4.3 -4.2 -1.4 -4.4 -2.5 -4.9 -1.4 -4.2 0.9 Fiscal Balance -5.5 -5.3 -2.6 -5.5 -3.8 -6.0 -2.7 -5.3 -0.1 Debt Stock 44.1 46.6 45.9 47.3 51.1 48.4 49.0 46.6 38.1 External 26.3 27.6 30.8 28.8 33.7 29.2 32.6 28.5 27.1 Domestic 17.8 18.2 15.1 18.5 17.4 19.2 16.4 18.2 11.0 Gross Borrowing Requirements as % of GDP 9.7 9.4 9.1 9.7 10.9 11.2 9.7 9.4 5.8 Interest as % of Tax Revenues 8.3 7.5 7.6 7.5 8.4 7.5 8.3 7.5 5.8 Tax Revenues as % GDP 14.1 14.6 15.1 14.6 15.1 14.6 15.1 14.6 16.4 Source: IMF (2021b); World Bank projections (2021–25). >>> Table 1.4: Description of Scenarios for Macro-Fiscal Projections Key drivers for the Key drivers for the projections projections Baseline Revenue Macroeconomic assumptions: real GDP growth of -2% in 2020, 4% in 2021, 6% in 2022 and primary and 5% in 2023-2025) and GDP deflator of 1.9% in 2020, 1.5% in 2021 and 2% in 2022- expenditure 2025. projections of Revenue: tax revenue movilization improves from 2021 onwards, after a decline of 0.7 the second and percent of GDP in 2020, and reaches 15 percent of GDP in the medium-term. This target third reviews of is the approximately the same level of tax collected in 2016-2017 and 2019. Grants stays the Extended stable at 1.6 percent of GDP in the medium-term (same as the historical of 2015-2019). Credit Facility Primary total expenditure increases 0.6 percent of GDP between 2019 and 2025, based Arrangement on higher expenses in wages and salaries and goods ans services. However, capital (February, 2021) expenditure declines by 1.8 percent of GDP between 2019 and 2025, reaching 4.7 percent of GDP in the medium-term (-2.9 percentage points lower than the historical average of 2015-2019). Interest payments increase to 1.2 percent of GDP since the public debt stock stays slightly above 2020 level (46 percent of GDP). Debt services and access to regional markets: debt service payment arrears (August- September, 2020) were cleared and the government returned to the external and regional financial markets. Scenario 1 Macro shock Real GDP growth rate is assumed to be 1 percentage point lower than the average growth (Lower GDP assumed in the baseline for 2021-2025, which assumes a slower recovery when the Growth) COVID-19 and political crisis abates. Revenue declines in nominal terms relative to the baseline scenario, while primary expenditures does not changed in nominal terms relative to the baseline scenario. Scenario 2 Policy option Revenue: following Baseline assumptions. (SOE shock) Expenditure: +0.75 percent of GDP of subsidies to SOEs per year in 2021 and 2022. Financing: a call of guarantees and other financing support of 1 percent of GDP per year in 2021-22 from the government to the SOEs unable to absorb losses or to repay their own liabilities. Scenario 3 Fiscal Primary expenditure: rationalization could yield approximately 1 percent of GDP in Consolidation expenditure savings. Tax revenue: a review of exemptions and recent tax measures to confront COVID-19 should raise domestic tax revenue by at least 1.5 percentage points to 16.4 percent of GDP, surpassing by 1.4 percentage point the level achieved in 2016-2017 and 2019. Source: IMF (2021); World Bank projections (2021–25). 46 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 1.21: B s lin Sc n rio Proj ctions Fi ur 1.22: Sc n rio 1 Proj ctions: Low r Growth % of GDP WBG proj ctions % of GDP 6 50 6 55 45 50 5 5 45 40 35 40 4 4 35 30 30 3 25 3 25 20 20 2 2 15 15 10 10 1 1 5 5 0 0 0 0 2020e 2017 2015 2018 2016 2019 2024 2021 2022 2023 2025 2015 2016 2017 2018 2019 2021 2022 2023 2024 2025 2020 Public Debt - Baseline (RHS) Public Debt - Baseline (RHS) Fiscal Deficit - Baseline Public Debt - Scenario 1 (RHS) Fiscal Deficit - Baseline Fiscal deficit - Scenario 1 Sourc : IMF, WEO d t b s , Octob r 2019 nd IMF nd WBG stim t s for 2020. Author’s c lcul tions nd proj ctions. >>> >>> Fi ur 1.23: Sc n rio 2 Proj ctions: Fi ur 1.24: Sc n rio 3 Proj ctions: SOE Risks R form with Shocks % of GDP % of GDP 7 55 7 55 50 50 6 6 45 45 5 40 5 40 35 35 4 30 4 30 25 25 3 3 20 20 2 15 2 15 10 10 1 1 5 5 0 0 0 0 2015 2016 2017 2018 2019 2021 2022 2023 2024 2025 2015 2016 2017 2018 2019 2021 2022 2023 2024 2025 2020 2020 Public D bt - B s lin (RHS) Public D bt - R form (RHS) Public D bt - Sc n rio 2 (RHS) Public D bt - R form w/low r dp (RHS) Fisc l D ficit - B s lin Public D bt - R form w/CLs (RHS) Fisc l d ficit - Sc n rio 2 Fisc l D ficit - R form Fisc l d ficit - R form w/low r dp Fisc l D ficit - R form w/CLs Sourc : IMF, WEO d t b s , Octob r 2019 nd IMF nd WBG stim t s for 2020. Author’s c lcul tions nd proj ctions. MALI PUBLIC EXPENDITURE REVIEW >>> 47 Implication for Fiscal Policy Directions Moreover, SOEs (such as EDM-SA and CMDT) are a source of contingent liabilities, because their debt may Government Expenditure be explicitly or implicitly guaranteed by the state. As a first step towards strengthening the state ownership and R1.1 Rebalance current resource allocations. oversight function, the Government may wish to deepen and expand the basic portfolio data on these SOEs. Security and national defense absorb a large part of public expenditure, thereby narrowing fiscal space and Fiscal Sustainability crowding out social and infrastructure spending. The need to allocate greater resources to infrastructure and R1.3 Achieve medium-term fiscal consolidation to social spending brings to the fore the fiscal implications build fiscal buffers, manage against fiscal risks, of continuing to spend 18 percent of the budget on and maintain debt sustainability. security and national defense, 36 percent more than is spent on education and almost 3.5 times health sending. The baseline scenario described above reflects a relatively weak fiscal and debt outlook for the next few The volatility of public investment is explained by years. A review of exemptions and recent tax measures the country’s vulnerability to macroeconomic and to confront COVID-19 could raise domestic tax revenue geopolitical shocks and its effects on external financing. by 1.5 percent of GDP, while an improvement in the The political context also affects revenue collection and transparency and competitiveness of government thus public investment. These may affect the efficiency of procurement, wage bill management, and public the investment portfolio and its impact on output growth investment management could yield approximately 1 and poverty reduction. Capital expenditure should be percent of GDP in expenditure savings. Such a fiscal shielded more from the volatility of revenue collection. consolidation scenario entails moving to a primary surplus of 0.4 percent of GDP in the medium term, R1.2 Obtain a better understanding of the size and would contain liquidity risks and keep debt levels and composition of the transfers and subsidies to sustainable. As the current prolonged crisis is putting EPAs and SOEs. Mali in an unsustainable fiscal situation, this measure will be difficult in the current situation. However, fiscal These entities receive resources from the budget in the consolidation will be vital in the long run once the crisis is form of operational subsidies or carry out quasi-fiscal over (IMF 2020c). Long-term sustainability entails better activities, for example, by offering goods and services budget planning, more certain budget execution and at below market prices—often below cost recovery. more stable growth. 48 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 1.5: Fiscal Policy Implications Policy actions Policy action details Time horizon Potential fiscal gains (+) / uses (-) Government expenditure R1.1 Resource Rebalance budget allocations Medium term [Neutral] Fiscally neutral in the short term but allocation from administrative and, as positive in the long term. Improved infrastructure conditions allow, security and human capital promote growth which in turn expenditure, toward will increase revenue. infrastructure and social spending. R1.2 Current Enhance the transparency, Medium term [Neutral] Fiscally neutral. The exercise is transfers oversight, and assessment of however vital for a thorough examination of current transfers, and obtain public expenditure for better resource allocation a better understanding of and greater efficiency gains. subsidies and decentralized wages. Fiscal sustainability R1.3 Fiscal To achieve fiscal Medium term [Neutral] This measure is difficult in the current consolidation sustainability, the government situation but will be vital in the long run once the should consider setting out crisis is over, as the current prolonged crisis is in the medium-term fiscal putting Mali in an unsustainable fiscal situation. strategy a fiscal consolidation Long-term sustainability entails better and more commitment to achieve a certain budget planning and stable growth. primary budget surplus of 0.4% of GDP. MALI PUBLIC EXPENDITURE REVIEW >>> 49 2. >>> Revenue Mobilization Mali has made commendable progress in simplifying the overall structure of its tax regime and major taxes and in improving tax administration over the past decade, but still has room for improvement. The country’s tax effort has been robust and rising. Total revenues including grants averaged 18 percent of GDP over 2010–20 except for 2012 and 2018. The tax-to-GDP ratio reached the WAEMU average of 15 percent of GDP in 2016 but remains below the WAEMU target of 20 percent of GDP. This chapter identifies several reform areas to increase revenue mobilization to finance public investment needs and close tax and infrastructure gaps over the medium to long term. These reforms include (i) revising all mandatory levies on wages, taxes, and social contributions paid by employees and employers; (ii) expanding the tax base by eliminating or curbing tax expenditure; (iii) amending the real property tax (TF); and (iv) enhancing the quality of the excise tax policy. These reforms could increase tax collections by 0.6 percent of GDP in the medium term and 2.5–3.0 percent of GDP in the long run. 50 >>> MALI PUBLIC EXPENDITURE REVIEW This chapter is organized as follows. The first section amount collected in tax was relatively stable from 2010 discusses revenue performance, tax collection, and to 2014 and then grew from 12.6 percent of GDP in the profile and trends of key direct and indirect taxes, 2014 to 15.2 percent in 2017, mostly on account of tax benchmarked against peer countries. The next section administration reforms under the Revenue Mobilization examines tax administration entities and procedures, and Thematic Fund (RMTF). Despite these reforms, tax and proposed solutions to enhance voluntary compliance in customs revenue declined by 3.2 percentage points in administration. The last section outlines reform options 2018 to 11.9 percent of GDP, but swiftly recovered to to improve revenue mobilization, targeting (i) tax policies; 14.8 percent of GDP in 2019. It is projected to fall by and (ii) tax administration. 1.5 percentage points in 2020 due to the COVID-19 pandemic. Over the same period, total revenue Trends in Revenue Performance followed the pattern of tax collection. At an average of 13.2 percent of GDP during 2010–20, tax revenue The Government’s income mainly consists of tax remains insufficient to meet service delivery needs. revenue (three-quarters of total revenue) while While grants were relatively stable at around 2 percent grants remain important (over 10 percent). Total of GDP over the same period, other revenue (the sum revenue is made up of budgetary revenue (taxes, non- of non-tax revenue, capital receipts, and special funds tax revenue, and capital receipts) and special funds and and annexed budgets) has increased from 2.3 percent annexed budgets which have increased significantly in of GDP during 2010–16 to 3.9 percent over 2017–20 recent years.30 Non-tax revenue is all revenue other than (Figure 2.2). taxes (IMF, 2015a), which essentially consists of revenue from (i) the operation and provision of services;31 and (ii) Tax Revenue the use of local public services or property (Annex IV: Revenue Tables).32 Tax revenue is the main source of Tax revenue performance has improved over the finance for Mali’s development and investment needs. past decade thanks to tax policy and administration On average, during 2010–20, 73.5 percent of the reforms. Tax revenue recovered to 12.6 percent of Government’s revenue came from taxes, 4.1 percent GDP (almost to pre-2012 coup level) in 2014 and the from non-tax revenue, 0.3 percent from capital receipts, performance improved significantly during 2015–17 11.2 percent from special funds and annexed budgets, (averaged 14.7 percent of GDP). The encouraging and 11.2 percent from grants. While the share of tax as a trend came to a halt in 2018 (11.9 percent of GDP),33 component of total revenue dropped from 81.4 percent but swiftly recovered in 2019 (14.8 percent of GDP)34 in 2016 to 65.4 percent in 2020, the share from special on account of continued improvements in tax policy and funds and annexed budgets rose from 8.4 percent in administration (Annex IV). 2010 to 19.4 percent in 2020 (Figure 2.1). If grants are excluded, tax accounted for 82.7 percent of government Administrative reforms have aligned closely with tax revenue during 2010–20. policy changes to help increase tax revenue. Tax policy reforms have relied primarily on broad-based taxes at The past decade (2010–20) has witnessed growth moderate rates. This includes a 2017 law forbidding new in both revenue and public expenditure. Comparing discretionary exemptions, increased taxes on financial total revenue collection and public expenditure shows transactions and telecommunications, the elimination the unfavorable developments since 2010 when public of oil price subsidies, restraint on exemptions to duties expenditure dramatically rose above total revenue from and taxes (which had previously been widespread to all sources. Total revenue and grants were about 18.1 encourage investment, income redistribution, etc.), and percent of GDP over 2010–20 except in 2012 (14.6 a property tax regime for landholders in the cities and percent of GDP) and 2018 (15.6 percent of GDP). The agricultural areas (IMF, 2018a). 30  Special funds and annexed budgets, or Recettes Etablissements Publics Nationaux, are funds for parastatals/public agency-type entities with a public service mandate characterized by (i) a legal entity separate from the state; (ii) their own assets; and (iii) financial autonomy. These entities are distinct from budget entities that are part of the state such as departments or ministries. Special funds and annexed budgets accounted for 1.6 percent of GDP (2010–18 average) but surged to 4.1 percent in 2019 and will be maintained at 3.9 percent since 2020 onwards (World Bank, 2019b; IMF, 2020b). 31  This type of revenue is derived from the remuneration of services provided by local authorities such as the issuing of administrative instruments; removal of household waste; educational or recreational services; roads and highways; water, electricity, and sanitation (pest control, public latrines, etc.); and fuel distribution infrastructure. In certain cases this revenue also includes the shared proceeds of fines. 32  This includes, for example, market operator fees, street lighting fees, parking fees, or license fees. It also includes revenue from the lease or sale of property owned by the cercle or commune. 33  The revenue contraction could be attributed to several factors including mainly due to the security situation and higher international fuel prices. 34  The 2019 revenue recovery also included a one-off collection of tax arrears, however (IMF, 2020b). MALI PUBLIC EXPENDITURE REVIEW >>> 51 >>> >>> Fi ur 2.1: R v nu Structur b Sourc Fi ur 2.2: R v nu Coll ction nd (2010–20) Tot l Public Exp nditur (2010–20) % of GDP 100% 30 90% 25 80% 20 70% 15 60% 10 50% 5 40% 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2019 2020 Gr nts Sp ci l funds Exp nditur T x r v nu C pit l r c ipts nd nn x d bud ts Tot l r v nu Gr nts Non-t x r v nu T x r v nu Tot l r v nu & r nts Oth r r v nu s Sourc : M li MEF, IMF, nd World B nk st ff c lcul tions. Not : Oth r r v nu s includ non-t x r v nu , c pit l r c ipts, Not : = stim t . nd sp ci l funds nd nn x d bud ts. = stim t . Sourc : WDI, IMF, nd World B nk st ff c lcul tions. Tax revenues are expected to decline to 13.2 percent March (-49.5 percent year-on-year; y/y) and April (-20.2 of GDP in 2020 due to the COVID-19 outbreak and percent y/y), domestic revenue collection started to the political crisis. Tax revenues had been expected recover in May (9.9 percent y/y) and continued during to increase to 15.5 percent of GDP in 2020 in the pre- June–August with growth averaging 9.5 percent. The COVID forecast. Revenue projections underpinning performance has mostly been driven by direct taxes the assessment of the impact of COVID-19 have while indirect tax revenue, including VAT, plunged in been made under considerable uncertainty about the recent months.36 duration of the pandemic and the depth and nature of its economic impact. In response to the resulting economic The correlation between per capita GDP and tax- crisis, the Government has provided tax measures to to-GDP ratios confirms that countries with higher improve households’ finances: value-added tax (VAT) incomes tend to collect more in taxes.37 Almost all sub- exemptions on water and electricity prices from April to Saharan African (SSA) countries raised taxes amounting June 2020, exemptions from the flat-rate contribution of to 7–17 percent of GDP in 2017. Mali’s tax collection fixed employer contributions (CFEs) and housing tax (TL) is in line with other SSA countries and above the trend for April to December 2020 inclusive, and a reduction in line, indicating its better tax performance compared with the synthetic tax35 rate from 3 percent to 2.8 percent for other countries with similar GDP per capita (Figure 2.3). 2020 (OECD 2020). Its performance in 2017 was better than the WAEMU average (14.7 percent of GDP) and that of its structural Nevertheless, tax revenues have started to recover peers (9.8 percent of GDP). However, it was lower than since May 2020. Recent tax collection figures from the all its aspirational peers, except Lao PDR which reached General Directorate of Taxes (DGI; Direction Générale only 12 percent of GDP (Figure 2.4). des Impôts) show that after a dismal performance in 35  The synthetic tax regime applies to companies with annual turnovers of less than CFAF 50 million (US$ 89,634). 36  Tax collection information as of October 2nd, from DGI (2020). 37  The observation is well established in tax analysis literature. For example, OECD (2016) looks at the pattern of tax-to-GDP ratio and GDP per capita of OECD countries compared with Latin American and Caribbean and African countries. It shows that tax-to-GDP ratios tend to be higher in high-income countries. 52 >>> MALI PUBLIC EXPENDITURE REVIEW Like most WAEMU countries, Mali relies heavily between 2010 and 2019), petroleum (34 percent), and on indirect taxes, particularly VAT, and, to a lesser beverages and cigarettes (14 percent). extent, direct taxes. Tax composition evolves over time and Figure 2.5 shows the tax revenue composition Mali ranked fifth among its WAEMU peers for during three intervals: 2005–09, 2010–14, and 2015–19. income tax collection in 2017. Direct taxes consist Together, VAT and income tax (personal and corporate) almost entirely of taxes on companies, or corporate accounted for the largest shares of tax revenue. The income tax (CIT), and individuals, or personal income share of VAT decreased from 39 percent of tax revenue tax (PIT). All employers are also required by law to pay in 2005–09 to 36 percent in 2015–19. This fall can be the fixed employer contribution (CFE), a 3.5 percent explained by a variety of factors including exemptions payroll tax on the gross salary of every employee (Box and reduced rates, fraud, evasion and tax planning, 2.1). CIT revenue averaged 2 percent of GDP over and weaknesses in tax administration (OECD/AUC/TAF, 2010–19 and individual taxation (PIT and CFE) averaged 2020). Meanwhile the share of income tax increased 1.3 percent of GDP over the same period (Figure 2.6). from 25 percent in 2005–09 to 31 percent in 2010–14 In 2017, the combined total revenue from CIT and PIT but fell back to 29 percent in 2015–19. The fluctuation plus CFE increased to 3.7 percent of GDP, compared of income tax is attributed to an economic slowdown, to the WAEMU average of 4.1 percent of GDP and the an increase in fraud due to rising insecurity, recurrent average among its aspirational peers of 7.1 percent of terrorist attacks, and administrative challenges (OECD/ GDP (Table 2.3). AUC/TAF, 2020). The share of trade taxes dropped from 14 percent in 2005–09 to 12 percent in 2015–19. Examining tax buoyancy can clarify the relationship Trade liberalization across the Africa region has resulted between economic development and revenue in lower import tariffs, a narrower excise base of goods outcomes. Tax buoyancy is defined as the ratio of and services, and the abolition of taxes on export taxes, the growth rate of tax revenues and the growth of the lowering total trade tax revenues (OECD/AUC/TAF, economy, in real terms.40 Generally, as GDP increases, 2020). the tax base—and hence tax revenues—should grow proportionately without the need to make any Indirect taxes account for more than half of all tax adjustments to the tax base or tax rate. The estimates revenue—69 percent in 2017, amounting to 10.5 presented in this chapter represent the average for the percent of GDP. Most indirect tax revenue comes period 2010–19.41 from VAT (nearly 40 percent of total revenue between 2010 and 2019; Table 2.2). Other indirect taxes such The tax system in Mali is relatively buoyant across as excise38 and trade are less significant. Apart from most taxes, partly reflecting recent improvements VAT, there are (i) excise tax i.e. indirect taxes on specific in tax policy and administration. Overall, tax revenue goods (the Special Tax on Selected Products or ISCP); seems to be in line with GDP growth, with a few (ii) financial activities, petroleum products (TIPP; Taxe exceptions (Table 2.1). However, the high buoyancy in Intérieure sur les Produits Pétroliers); (iii) access to the certain taxes may be driven by changes in the tax system public telecommunications network;39 and (iv) tax due during the period considered. The buoyancy of PIT and by exporters of gold and other mining products not CFE is much greater than 1, meaning that revenues from governed by the Mining Code (Section II-VII of the CGI). these taxes have grown much more rapidly than GDP, Excise revenues averaged 1.3 percent of GDP during and this could be because of excessive taxes on labor 2010–14 and increased to 2 percent of GDP during (Box 2.1). 2015–19 (Figure 2.6). Excise revenues or ISCP derive mostly from gold (51 percent of total excise revenue 38  The ISCP is imposed on major excisable items produced domestically or imported including kola nuts; nonalcoholic and alcoholic beverages; tobacco products; weapons and ammunition; plastic bags; marble and gold; and passenger vehicles. The rates are ad valorem, ranging from 0 percent (nonalcoholic beverages) to 50 percent (alcoholic beverages). 39  The TARTOP is a 5 percent turnover tax levied on any person holding a network operating license issued by or on behalf of the Government of Mali. Three enterprises are currently subject to this tax: Orange Mali, Sotelma Mali, and Alfa Télécom. The tax was introduced in the 2013 budget law and accounted for an average of 0.27 percent of GDP between 2016 and 2018. Lexology (the comprehensive source of international legal updates, analysis and insights) reported that telecom services revenue in Mali is estimated to grow at 7.5 percent during 2016–21 and mobile voice will continue to remain the largest revenue-contributing segment (92 percent of the total telecom revenue through 2021). (IMF, 2016a, 2019a; Lexology, 2017). 40  Tax buoyancy is an indicator that measures the efficiency and responsiveness of tax collection in response to growth in the overall economic activity or national income inclusive of any changes in the tax system. A tax is buoyant if the tax revenues increase at least proportionately or more than proportionately in response to a rise in national income or output which is the tax base. The overall buoyancy of a tax system is measured by the percentage change in total tax revenues with respect to the percentage change in the respective tax base or broadly the percentage change in GDP. 41  Full period-average estimates of buoyancy have the advantage over annual buoyancies as they tend to comparatively reduce yearly fluctuations. MALI PUBLIC EXPENDITURE REVIEW >>> 53 >>> >>> Fi ur 2.3: T x Mobili tion in Fi ur 2.4: B nchm rkin T x-to-GDP Sub-S h r n Afric (2017) R tios (2017) % of GDP/GDP p r c pit % of GDP 35 20 SYC 30 NAM T x R v nu s % of GDP 15 25 ZAF 6X +3.8 55 12. MUS MOZ 20 MWI MRT Y=- BFA SEN 10 TGO RWA 15 UGA MLI GIN ZWE ZMB BDI NER ETH MDG LBR TZA STP GMB 10 SLE GNB BEN COD 5 CAF TCD 5 SDN NGA 0 0 5 6 7 8 9 10 M li SSA WAEMU Af h. Ch d C nt. Af. R p. T jikist n L os U b kist n Zimb w nd Rw nd Ln GDP p r c pit (Const nt 2010 US$) U Structur l P rs Aspir tion l P rs T x to GDP Av r Sourc : M li MEF, WDI, IMF, nd World B nk st ff c lcul tions. Sourc : M li MEF, IMF, OECD, nd World B nk st ff c lcul tions. Not : GDP p r c pit (in const nt 2010 US$) in 2017 is us d for Not : Th SSA’s v r t x-to-GDP r tio is c lcul t d from 26 th 32 SSA countri s. Afric n countri s (OECD R v nu St tistics in Afric , 2019). >>> Fi ur 2.5: Composition of T x R v nu s (2005–19) 2005-2009 2010-2014 2015-2019 VAT 39% VAT 37% VAT 36% Incom t x 25% Incom t x 31% Incom t x 29% Oth r indir ct t x s 16% Oth r indir ct t x s 16% Oth r indir ct t x s 17% Tr d 14% Tr d 13% Tr d 12% Excis on p trol um products 6% Excis on p trol um products 3% Excis on p trol um products 6% Sourc : M li MEF nd World B nk st ff c lcul tions. 54 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur 2.6: R v nu Coll ction b T x T p (2010–19) % of GDP 6 5 4 3 2 1 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 VAT Tr d PIT + CFE CIT Excis Prop rt t x Sourc : M li MEF, IMF, nd World B nk st ff c lcul tions. Not : = stim t . >>> Table 2.1: Responsiveness of Revenues to GDP Growth (2010–19) Tax type Buoyancy ratio Total tax revenue 1.44 Direct taxes 1.30 PIT + Employer contribution (CFE) 2.31 CIT 1.75 Value-added tax (VAT) 1.24 Domestic VAT 1.35 VAT on imports 1.16 Excise 2.95 Excise on petroleum products (TIPP) 4.49 Excise on gold (under ISCP) 0.81 Property tax 0.68 Import duties 1.18 Source: Mali MEF, IMF, and World Bank staff calculations. MALI PUBLIC EXPENDITURE REVIEW >>> 55 >>> Table 2.2: Tax Revenue (2010–20) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e % of total tax revenue Tax revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Direct taxes 30.2 30.4 34.7 32.1 36.4 30.6 29.7 31.0 30.2 31.5 32.7 Gold sector 12.5 11.5 13.8 8.8 6.3 4.2 5.1 5.4 5.2 5.5 6.2 Other 17.7 18.9 20.9 23.3 30.1 26.3 24.5 25.6 25.0 26.0 26.5 Indirect taxes 69.8 69.6 65.3 67.9 63.6 69.4 70.3 69.0 69.8 68.5 67.3 VAT 38.6 42.7 37.8 40.5 37.6 38.0 37.7 38.7 36.9 36.8 35.4 Domestic VAT 14.6 17.2 15.2 15.2 15.3 15.3 16.1 15.0 13.6 15.9 13.9 VAT on imports 24.0 25.5 22.6 25.3 22.3 22.7 21.6 23.7 23.2 20.9 21.5 Excises on petroleum 3.8 0.6 3.3 2.8 3.1 8.6 8.1 6.3 7.8 3.5 2.8 Import duties 14.0 15.4 13.2 13.9 13.0 13.1 12.7 13.3 13.3 12.7 13.0 Other indirect taxes 15.1 16.6 18.5 18.3 16.8 17.5 17.6 17.4 17.6 20.0 23.1 Gold sector 6.2 6.7 8.6 6.9 5.8 5.1 5.3 4.8 4.9 5.6 6.7 Non-gold sector 8.9 9.8 9.9 11.4 11.0 12.4 12.3 12.5 12.7 14.4 16.4 Tax refund (1.6) (5.7) (7.6) (7.5) (6.9) (7.8) (5.8) (6.6) (5.7) (4.6) (7.1) Source: Mali MEF, IMF, and World Bank staff calculations. Most indirect taxes are also buoyant. Domestic VAT percent) and the OECD average (42 percent). Its VAT is more buoyant than VAT on imports, suggesting that rate (18 percent) is slightly lower than the EU average the performance of domestic VAT is more effective in (21 percent) and the OECD average (19 percent). keeping up with the growth of the economy. The VAT regime is filled with exemptions and has a narrow scope Declining property tax revenues may reflect the of refunds which may risk cascading. The buoyancy of broad range of exemptions and an inappropriate excises on petroleum products (TIPP) is very high at 4.49, tax base. The property tax system includes the Tax but is just 0.81 for excises on gold, which may be due on Property Income (IRF) and the Real Property Tax to falling gold prices since 2014. Property tax buoyancy (TF). The IRF43 applies to the income from developed is also low at 0.68, possibly because land and property properties received by individuals and legal entities taxes may not have kept pace with developments in when the properties are not included in the profits market prices, reflecting the need for the property tax of a company liable to CIT. The TF44 is based on the system to be revised. annual rental value of buildings and unimproved land held for more than three years. Revenue from property Tax Policy taxes fell from 0.6 percent of GDP over 2010–15 to 0.4 percent of GDP in 2019 (IMF, 2015a). This decline Overall, Mali’s main statutory tax rates are in line with may be due to: (i) a number of exemptions such as other WAEMU countries and its structural peers, unimproved land used in the agricultural sector, places although higher than the average of its aspirational of worship, and property occupied by the owner or peers (Table 2.4). The CIT flat rate is 30 percent, higher immediate family members; and (ii) an inappropriate than the SSA average42 of 28 percent. Similarly, the tax base—rental value is not suitable for the Malian PIT top marginal tax rate of 40 percent is higher than context and should be replaced by an indexed value any regional average except the European Union (38 per hectare. 42  The 32 countries used to calculate the Sub-Saharan Africa average were: Benin, Burkina Faso, Burundi, Central African Republic, Chad, Congo Dem. Rep., Ethiopia, Gambia, Guinea, Guinea-Bissau, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, São Tomé and Príncipe, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Tanzania, Togo, Uganda, Zambia, and Zimbabwe. 43  The IRF rates are 12 percent for permanent and semi-permanent buildings and 8 percent for earthen brick (adobe) buildings. 44  The real property tax (TF) is payable by the owner of the building or land on January 1 of the year preceding the tax year. The rate of the TF is 3 percent, reduced to 1 percent for vacant buildings. The TF is collected for the benefit of local governments. 56 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 2.3: Benchmarking General Government Revenues (2017) % of GDP Selected No. of GNI per Total Tax VAT Excise Trade Property CIT PIT + countries countries capita revenue revenue tax tax SSC in group/ Range in US$ Income group High 59 > 12,640 35.32 21.38 5.49 1.95 0.54 1.34 2.60 11.64 Income Upper 58 3,880–13,120 32.04 18.13 3.97 1.37 1.54 0.40 1.83 3.55 middle income Lower 46 1,110–3,650 26.19 15.96 3.47 1.51 1.71 0.20 2.30 3.17 middle income Low income 30 < 1,000 18.22 11.24 2.11 0.80 0.96 0.03 1.14 1.14 WAEMU Benin Low 800 17.50 13.20 3.65 0.29 5.89 0.02 1.60 1.50 Burkina Low 590 22.06 17.25 7.13 2.06 2.73 0.17 2.60 3.34 Faso Côte Lower 1480 20.36 16.47 3.59 1.48 4.91 0.68 2.06 3.21 d’Ivoire middle Guinea- Low 680 17.40 10.80 3.80 0.70 3.00 0.60 1.80 0.40 Bissau Mali Low 770 18.44 15.17 5.87 2.38 2.02 0.53 1.99 1.68 Niger Low 360 21.15 13.11 4.03 0.63 2.01 0.05 2.36 1.95 Senegal Lower 1280 19.55 15.43 6.35 1.28 2.28 0.28 2.27 3.30 middle Togo Low 600 21.36 16.10 7.13 1.60 3.65 0.12 1.98 1.11 Structural peers Afghanistan Low 550 25.25 8.02 2.43 N/A 3.33 0.00 0.90 1.05 Central Low 440 12.80 7.03 2.40 1.00 2.40 N/A N/A N/A African Rep Chad Low 640 14.65 7.31 N/A N/A N/A N/A N/A N/A Uganda Low 620 15.11 13.45 4.06 2.78 1.50 N/A 0.93 2.20 Zimbabwe Lower 1370 14.37 13.22 3.90 2.50 1.10 N/A 1.80 2.70 middle Aspirational Peers Lao PDR Lower 2240 16.07 12.02 3.66 2.69 1.12 0.08 1.30 1.20 middle Rwanda Low 730 22.85 15.53 4.85 2.13 1.06 0.01 1.05 6.33 Tajikistan Low 1000 29.67 18.98 8.70 1.30 1.20 1.30 2.47 5.20 Uzbekistan Lower 2350 24.72 15.19 4.85 2.46 0.89 1.06 4.57 6.49 middle Source: WDI; IMF FAD database; Mali MEF; Draft Technical Assistance Report for Mali: Situation of tax and customs, February 2019; IMF Article IV, Guinea-Bissau: World Bank (2019c); Central African Republic: IMF (2018b) and World Bank staff calculations. Note: Since 2018, WAEMU countries started rebasing their national accounts which resulted in, in some cases, increase in nominal GDP level and subsequent decline in tax-to-GDP ratio. To this date, seven countries (Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Niger and Togo) have completed the rebasing exercise except Mali (IMF 2021a). For compatibility purpose, this table uses pre-rebase GDP figures. N/A=no data available; GNI= gross national income; PIT = personal income tax; SSC= social security contributions; VAT= value-added tax; For Mali, PIT + SSC include the Tax on Wages and Salaries (ITS) and fixed employer contribution (CFE). Per capita GNI is measured according to the Atlas Method from the World Development Indicators (WDI). MALI PUBLIC EXPENDITURE REVIEW >>> 57 >>> Table 2.4: Benchmarking Statutory Tax Rates Countries Statutory tax rate of major taxes (%) CIT PIT (top bracket) VAT WAEMU Benin 30 30 18 Burkina Faso 27.5 25 18 Côte d’Ivoire 25 60 18 Guinea-Bissau 25 20 10 Mali 30 40 18 Niger 30 35 19 Senegal 30 40 18 Togo 28 35 18 WAEMU average 28 36 17 Structural peers Afghanistan 20 20 - Central African Republic 30 50 19 Chad 35 60 18 Uganda 30 40 18 Zimbabwe 25 15 15 Structural peers average 28 37 18 Aspirational peers Lao PDR 24 24 10 Rwanda 30 30 18 Tajikistan 23 13 18 Uzbekistan 14 12 20 Aspirational peers average 23 20 17 Africa average 28 32 15 Asia average 21 28 12 Latin America average 28 32 13 Europe and Central Asia average 19 31 20 EU average 21 38 21 OECD average 24 42 19 Source: Mali MEF, IMF, KPMG, and World Bank staff calculations. 58 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Box 2.1: Key Features of Income Taxes in Mali The core personal income tax—the Tax on Wages and Salaries (ITS)—applies to all amounts paid during the year to employees by public and private employers. The ITS is based on all remuneration, salaries, or earnings including benefits in kind, bonuses, allowances, and various indemnities. The ITS is also applied to amounts paid to individuals who reside in Mali and engage in a professional activity or collect taxable income in the country, regardless of their status or nationality. The following are exempt from the ITS: family allowances, transportation grants, solidarity allowances, life annuities and temporary compensation to work-related accident victims, and severance or retirement benefits. Other taxes related to direct taxes are the CFE, vocational training tax, youth employment tax, housing tax, and mandatory levies for the National Social Security Institute (INPS) and health insurance. Corporate income tax and tax on industrial and commercial profits (IS-BIC)1 are in compliance with the WAEMU harmonization directives. The base and rate of the tax are in line with the directives. Losses in one fiscal year can be carried forward for three subsequent fiscal years, as authorized by the WAEMU. Agricultural establishments are not subject to the IS-BIC, but rather to the tax on agricultural profits (IBA). The provisions of the IBA are contained in Section V in Articles 99-120 of the General Tax Code (CGI). Source: IMF (2016a). Mali: Technical Assistance Report – Tax Policy (Diagnostic Assessment). Note: 1/ IS-BIC is composed of IS (Impôt sur les Societés, Corporate Income Tax) and IBIC (Impôt sur les Bénéfices Industriels et Commerciaux, Tax on Industrial and Commercial Profits). Legal entities are subject to IS and individuals to IBIC. >>> Box 2.2: Decentralization and Local Taxation in Mali Decentralization is the transfer of revenue and expenditure authority from the central government to local administrations (IMF, 2015a). The goal of decentralization is to enhance the equity and efficiency of public service delivery, especially by bringing communities closer to public decisions, allowing the public sector to better match government services to local demands and needs, and hence to achieve improved allocative efficiency (Boex et al., 2004). Mali’s subnational jurisdictions’ resources consist of local tax revenue, local non-tax revenue, intergovernmental transfers, borrowings, and grants. Mali is composed of 761 subnational entities: 703 communes (e.g. villages in rural areas and townships in urban areas), 49 cercles or counties, 8 regions, and the District of Bamako, which is made up of 6 communes. All of these territorial units are set up as local governments (collectivités territoriales). The decentralization framework and policy in Mali have been rehabilitated following the security crisis. The new National Decentralization Policy Framework Document (DCPND), covering the period 2015–24, is based on the lessons learned from the previous policy framework. It focuses on strengthening peace, security, democratic governance and sustainable development (World Bank, 2019a). Local taxes in Mali are governed by the CGI, the law governing subnational jurisdictions (Code des Collectivités Territoriales). The DGI collects 40 percent of the local jurisdictions’ revenue. Whereas the DCPND broke down the local taxes by the type of tax base: individuals, economic activity, extractive activity (mining), vehicles, and other, the DGI disaggregated local taxation by regimes. Local taxation by the DGI is composed of local taxes on business activities, individuals, and natural resources and other local taxes. Local taxes on business activities, such as the Business License Tax (patente), contribution des licences, and Road Transport Tax, made up 45 percent of local revenue in 2013. Local taxes on individuals include income tax and the Regional and Local Development Tax, and the Real Property Tax or TF (derived from sharing of the Tax on Property Income). Natural resource and other local taxes—e.g. surface fees, exploration permits, the quarry or gold panning tax, and vehicle taxes—made up 6.5 percent of local tax revenue in 2013 (IMF, 2015a). Expanding local revenue mobilization will mean amending the current tax policy framework. Property taxation has tremendous potential for mobilizing improved revenue and equity particularly in developing countries. Property tax generates about 0.3–0.6 percent of GDP for low- and middle-income countries, compared to 1.1 percent in higher-income (OECD) countries (Kelly, 2002). The property tax base also tends to fall more on those with the ability to pay, as immovable property is often a primary repository of wealth. Property taxation depends substantially on active government participation to warrant that tax base information and property values are kept up-to-date and that taxes are properly assessed, billed, collected, and enforced (Kelly et al., 2020). MALI PUBLIC EXPENDITURE REVIEW >>> 59 The productivity and C-efficiency45 of VAT have The relevant stakeholders have an established fluctuated over the past decade (Figure 2.5). Mali’s collaboration mechanism for conducting tax VAT efficiency in 2017 was in the middle rank (0.43) expenditure analysis. This requires regular collaboration among WAEMU countries, slightly higher than the among the DGI, DGD, the Tax and Financial Services WAEMU average (0.42) and higher than all its structural Computerization Support Unit (CAISFF; Cellule d’Appui peers (Figure 2.8). However, among its aspirational à l’Informatisation des Services Fiscaux et Financiers), peers, Mali’s C-efficiency ratio was below that in and the Statistics Institute. Since 2012, tax expenditure Tajikistan (0.59) and Lao PDR (0.57). data have been generated using the revenue forgone method to assess revenue lost due to exemptions Mali’s trade revenue, or import duty, is the second prescribed by the DGI and DGD. The analysis is lowest of the WAEMU countries. Revenue from import performed by the Tax Policy Formulation, Proposal, and duties amounts to about 1.8 percent of GDP (Annex IV, Analysis Unit (CPF) of the DGI on the recommendation Table A4.1) and accounted for 13.4 percent of total tax of the Fiscal Affairs Department of the IMF in 2011. Each revenue between 2010 and 2020 (Table 2.2). At 2.02 year, the CPF, under DGI and the DGD, updates the percent of GDP in 2017, revenue was slightly higher than list of exceptional provisions in the Standard Integrated Niger’s, at 2.01 percent.46 However, it was much lower Government Tax Administration System (SIGTAS; than the WAEMU average of 3.3 percent of GDP and of Système intégré de gestion des impôts et taxes Benin (5.9 percent) and Côte d’Ivoire (4.9 percent). In assimilés) and computerized customs management contrast, its revenues from import duties are higher than system (ASYCUDA or SYDONIA47), respectively. The all its aspirational peers (Table 2.3). CAISFF within the MEF is responsible for identifying and >>> >>> Fi ur 2.7: VAT Productivit nd Fi ur 2.8: B nchm rkin VAT C-Effici nc (2010-19) Productivit nd C-Effici nc (2017) 0.5 0.7 0.6 0.43 0.40 0.41 0.41 0.5 C- ffici nc r tio 0.4 0.38 0.38 0.35 0.35 0.4 0.33 0.3 0.33 0.3 0.2 0.1 0.2 0 Burkin F so To o Guin -Biss u B nin C nt. Af. R p. T jikist n M li U b kist n L os Ni r 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Côt d'Ivoir Zimb bw Rw nd U nd VAT Productivit C- ffici nc WAEMU Structur l Aspir tion l P rs P rs C-Effici nc r tio Av r Sourc : M li MEF, WDI, IMF, nd World B nk st ff c lcul tions. Sourc : M li MoF, WDI, IMF nd World B nk st ff c lcul tions. Not : No d t v il bl for Af h nist n nd Ch d; hous hold fin l consumption (% of GDP) in 2017 w s us d for ll countri s, xc pt L o PDR (2016 d t w r us d). 45  VAT productivity is the ratio of actual VAT revenues to the product of the standard VAT rate and GDP. VAT C-efficiency is the ratio of actual VAT revenues to the product of the standard rate and final consumption. 46  Consolidated revenue data from other countries are incomplete and some of them only have time series until 2018. As 2018 was an abnormal year for Mali’s revenue collection, we use 2017 as a benchmark year (instead of the average or 2018) for country comparisons. 47  Automated System for Customs Data (ASYCUDA) or Système douanier automatisé system (SYDONIA) has been developed by UNCTAD and is a computerized customs management system which covers most foreign trade procedures. The system handles manifests and customs declarations, accounting procedures, transit and suspense procedures. 60 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Box 2.3: Sources of Tax Expenditure Tax expenditures come from (i) the Common Law regime (CGI and Code des Douanes or CD); (ii) the Derogation regime (CI, CM, Real Estate Management Act, Microfinance Act, etc.); (iii) bilateral and international agreements; and (iv) exceptional measures (laws, ordinances, decrees, etc.). The summary table of annual tax expenditures (Annex IV, Table A4.2) provides expenditure information disaggregated by origin—i.e., between the DGI and the DGD. Tax expenditures are also categorized by type of taxes: VAT, corporate income tax and tax on industrial and commercial profits (IS-BIC), registration fees, custom duties (DD; Droits de douane), import adjustment tax (TAI), statistical fees (RS), special tax on selected products (ISCP), and tax on petroleum products (TIPP). The DGD’s custom duties (DD) are also classified by order number 0-7.1 Source : Draft Budget Laws (Project de Loi des Finances), 2016–20. Evaluation du montant et du processus d’octroi des exonérations fiscales et douanières (November 4, 2016). inventorying the existing exemptions and interfacing followed by direct tax (32 percent of total revenue). In the two databases of the two directorates (DGI and 2019, the World Bank investigated how taxes and DGD). The tax expenditure, together with the previous budget expenditures in Mali redistribute resources to year’s budget execution information is included in the reduce poverty and inequality (Hounsa et al., 2019). The document of the draft Budget Law48 for the preparation study found that the richest decile pays more than 75 of the next year’s Budget Law. percent of total direct taxes and 50 percent of all indirect taxes. In contrast, while the three bottom deciles pay Tax expenditures are embedded in a number of less than 2 percent of total direct taxes, they pay a major taxes, primarily customs and VAT exemptions. significant amount—more than 8 percent—of all indirect Tax expenditure measurements relate to six tax types: taxes. This is because the poorest individuals are more three domestic taxes (domestic VAT, CIT, and the tax likely to work in informal sectors, evading taxes, and on industrial and commercial profits (IS-BIC), and leaving all the burden on the small number of the richest registration fees) and three import taxes (VAT on imports, individuals who are employed in formal sectors. import duties, and statistical fees or RS; MEF, 2020a). Tax expenditures are calculated separately between Non-Tax Revenue the DGI and the DGD and categorized by regime (CGI, CI, CM, etc.), law, order, decree, etc (see Box 2.3 for Mali’s non-tax revenue collection is the second more details). Between 2013 and 2019, the amount of lowest among the WAEMU countries (Figure 2.11). total tax expenditure averaged CFAF 228.9 billion or 2.8 Non-tax revenues can come from several different percent of GDP: CFAF 134.9 billion or 1.7 percent of sources such as rents and royalties on petroleum and GDP from the DGI, and CFAF 94 billion or 1.1 percent mining, fines and penalties, and other property income of GDP from the DGD49 (Figure 2.9 and Annex IV, Table (interest and dividends). Data on non-tax revenues A4.2). Tax expenditures arising from ministerial decrees are often less detailed than tax revenue data. The accounted for the largest share (27.7 percent), followed Government was unable to provide disaggregated data by those under other tax expenditures (18.1 percent) on non-tax revenue so the analysis in this topic is limited. and those under the Mining Code (13.7 percent) (Figure Non-tax revenues averaged about 0.7 percent of GDP 2.10 and Annex IV, Table A4.2). over 2010–20 (Annex IV, Table A4.1). It declined from 1.4 percent of GDP in 2017 to 0.6 percent of GDP in 2018 Mali’s tax system aligns with the ability-to-pay due to delays in the sale of the fourth telecommunications principle of taxation50 and direct taxes are more operating license (IMF, 2020a). Before the COVID-19 progressive than indirect ones. As discussed above, pandemic, non-tax revenues were expected to increase over the period 2010–19, government revenue in Mali from 0.7 percent of GDP in 2019 to 1.3 percent of GDP predominantly came from indirect taxes on goods and in 2020. Due to the pandemic, non-tax revenues are now services, particularly VAT (39 percent of total revenue), expected to fall short of these projections, at 0.8 percent 48  Project de loi des finances. 49  The Government was unable to provide disaggregated data for 2016 tax expenditures between the DGI and DGD. 50  Under this principle, the income tax burden is shared among individual taxpayers on the proposition that contributions should be based on their economic wellbeing. This principle states (i) that persons with equal ability to pay should pay the same taxes (“horizontal equity”); and (ii) that persons with greater ability to pay should pay higher taxes (“vertical equity”) (Shukla and Glenday, 2012). MALI PUBLIC EXPENDITURE REVIEW >>> 61 >>> >>> Fi ur 2.9: T x Exp nditur s b Ori in Fi ur 2.10: T x Exp nditur s b R im (2013–19) (2013–18) % of GDP % of GDP 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2013 2014 2015 2016 2017 2018 2019 Minist ri l d cr s 27.7% Minin Cod (CM) 13.7% Inv stm nt Cod (CI) 5.8% CGI 6.3% DGI Oth r t x xp nditur s 18.1% DGD Sov r i n d bt h ld b th comm rci l b nks 5.3% Tot l Microfin nc Act 4.6% Public Procur m nt Act 10.9% VAT on R l Est t D v lopm nt Act 0.3% Est blishm nt r m nts (t x tr ti s) 7.2% Sourc : Ev lu tion du mont nt t du proc ssus d’octroi d s Sourc : Ev lu tion du mont nt t du proc ssus d’octroi d s xonér tions fisc l s t dou nièr s. Nov mb r 4, 2016); Dr ft xonér tions fisc l s t dou nièr s. Nov mb r 4, 2016); Dr ft Bud t L ws 2016-21, MEF. Bud t L ws 2016–21, MEF. Not : Th Minin Cod (CM) cov rs th sum of t x xp nditur s for th Minin Cod nd withholdin s t sourc und r th Cod . >>> >>> Fi ur 2.11: B nchm rkin Non-T x Fi ur 2.12: Gr nts (2010–20) R v nu (2017) % of GDP % of GDP 6 3.5 5 3.0 2.5 4 2.0 3 1.5 2 1.0 1 0.5 0 0.0 Guin -Biss u Burkin F so To o M li Ch d C nt. Af. R p. L os B nin Af h nist n T jikist n Ni r 2010 2011 2012 2013 2014 2015 2016 2017 2018 Côt d'Ivoir Zimb bw Rw nd nd 2019 2020 U WAEMU Structur l Aspir tion l P rs P rs Non-t x r v nu Av r Sourc : M li MEF, L o PDR MoF, IMF Articl IV, M cro conomic Sourc : M li MEF. nd fisc l mod l (MFMod), nd World B nk st ff c lcul tions. Not : = stim t . 62 >>> MALI PUBLIC EXPENDITURE REVIEW of GDP. Mali’s non-tax revenue collection places it among the material impact of the COVID-19 outbreak. The the low-performing African and WAEMU countries while authorities now project grants to reach about 2.4 percent countries that are net recipients of revenues through the of GDP. The impact of the 2020 coup on grants is not Southern African Customs Union (SACU) have high non- expected to be as drastic as the 2012 coup because tax revenues (OECD/AUC/ATAF, 2020). (i) the coup in 2012 took place in February–March when most grants were under negotiation/preparation, Grants whereas the 2020 coup took place in August and grants would be expected to be disbursed in the third and fourth Political instability and institutional weaknesses quarter of 2020; and (ii) greater and earlier disbursement lead to volatile levels of grants (Figure 2.12). Mali’s under the RCF and ECF has already occurred due to the institutional weaknesses include the lack of a strategic COVID-19 pandemic.51 grant collection policy and public financial management regulations and limited capacity to execute investment Tax Administration projects. Grants can be separated into project grants and budgetary support. Following the military coup in Organization and Recent Reforms early 2012, donor support was suspended and Mali’s grants dropped significantly from 3.2 percent of GDP The General Directorate of Taxes and General in 2011 to 0.2 percent in 2012 (CFAF 13 billion). Prior Directorate of Customs are the two main tax to the coup, based on a projection in November 2011, administration entities. The DGI is comprised of four grants had been expected to amount to 2.9 percent of different departments: the Directorate of Large Business GDP (CFAF 129.9 billion) in 2012 (IMF, 2013). Taxpayers (DGE), the Directorate of Medium-Size Business Taxpayers (DME), the Directorate General of Re-engagement of major donor support usually District Taxes (DID), and regional directorates (DRs). A follows re-engagement with IMF programs. In 2013 computerized management tool, SIGTAS, was launched re-engagement with the Rapid Credit Facility (RCF) in 2017 as an effective information system to increase began in early 2013 and the Extended Credit Facility tax collection and interconnect different management (ECF) in end-2013 (IMF, 2013). After the 2011–13 political systems (the DGI, the DNDC, the National Directorate and security instability, and the 2013 international for Commerce and Competition, and the National military interference in the North, grants increased to Directorate of Land, Maritime, and River Transport) to an average of 2.6 percent of GDP between 2013 and support revenue mobilization. 2015, reflecting imports of military services in the current account (IMF, 2015c). During 2016–18, the Government Various IMF technical assistance missions used domestic financing to offset lower disbursements since 2014 have helped implement a number of of foreign loans and grants, bringing total domestic administrative reforms. These include diagnostic tools financing to the equivalent of 2.6 percent of GDP in 2018 like the Tax Administration Diagnostic Assessment Tool (IMF, 2018c). Because the principal donors’ multi-year (TADAT). In particular, the RMTF has provided targeted support programs expired in 2017 and their renewals capacity development support to Mali, mainly in three started in 2019, Mali’s grants decreased to 1.2 percent areas: (i) corporate and compliance risk management; of GDP in 2018 (0.9 percent for project grants and 0.4 (ii) core business functions and procedures; and (iii) percent for budgetary support) but rose to 1.9 percent support functions.52 of GDP in 2019 (IMF, 2018c). A strategic development plan for 2019–21 was The Government is seeking international donors introduced to create a framework and implement to provide grants to reduce the fiscal deficit and specific measures to improve revenue mobilization. minimize pressures on the public finances due to In February 2019, supported by a technical assistance 51  The 2012 experience shows that IMF re-engagement took almost 12 months and re-engagement with other donors took even longer (around 18 months for World Bank Budget Support). The authorities therefore expect re-engagement between the second and third quarter of 2021, however, the it might take more or less time depending on the nature of the 2020 military coup and the ongoing peace process. Consequently, although the drop in 2020 grants will not be as drastic as in 2012, the rebound might not be as quick either. It may take up to two calendar years to bounce back. 52  The RMTF architecture has ten modules and the main support to Mali include Modules IV, V, and VI. Module IV covers tax administration corporate and compliance risk management (country-specific capacity to identify, assess, and mitigate institutional and compliance risks); Module V covers tax administration core business functions and procedures (efficient and effective registration, filing, payment, taxpayer services, tax audit, and dispute resolution processes); and Module VI covers tax administration support functions (operational plans, performance monitoring, human resource and information technology policies, and budgeting processes) (IMF, 2016b). MALI PUBLIC EXPENDITURE REVIEW >>> 63 mission from the Fiscal Affairs Department of the IMF, the between tax and customs administrations is still limited DGI began implementing reforms to improve tax discipline (IMF, 2019a). in three main areas: updating the registers, intensifying VAT and ITS audits, and strengthening the collection of Inefficiencies in the core functions and deficiencies tax arrears (IMF, 2019a). The DGI prepared a 2019–2021 in the governance of tax administration remain, Strategic Development Plan (PSDGI; Plan Stratégique giving rise to informality, which in turn jeopardizes 2019-2021 de la Direction Générale des Impôts) to: (i) tax performance. A recent IMF TADAT mission expand the tax base to reach tax revenue of 13.2 percent (November 2019, see Box 2.4) found deficiencies in of GDP in 2021 despite the COVID-19 outbreak and the several core tax administration functions, including coup; (ii) establish an atmosphere that promotes tax taxpayer identification, registration, payment compliance; (iii) reinforce employee professionalism as a processing, arrears management, and tax appeals. prerequisite for performance; and (iv) continue executing The overall coordination of different units within the rules of good governance (IMF, 2019a). the tax administrations could also still be improved. Unsatisfactory tax office functioning, lack of The authorities have made improvements in risk coordination, and corruption damage the business mitigation, tax collection, dispute resolution, and environment and push the private sector into informality. revenue forecasting reforms (IMF, 2019c). The The remainder of this section lays out major areas that PSDGI has a comprehensive process to mitigate risks require improvement, following the low-scoring tax through a multi-year compliance improvement plan and administration areas in the IMF TADAT report (2019), the authorities regularly monitor progress and evaluate and WBG Enterprise Survey (2016). the impact of risk mitigation initiatives through ad-hoc audit procedures (IMF, 2019a). Strong withholding Taxpayer identification and registration remain arrangements and advance payment mechanisms incomplete due to the lack of a needs-oriented are in place. Administrative appeals are carried out taxpayer service program. Taxpayer registration independently by the Tax Legislation and Litigation lacks certain information for shareholders, directors, Department (SDLC; Sous-direction de la Législation and subsidiaries. SIGTAS does not allow taxpayers undam et du Contentieux) and an established two-tier to register or update their data online. No operational review mechanism is in use. Information on the dispute risk mitigation programs to prevent and control the process is readily available to the public and explicitly risks of IT system failure and cyber security violation brought to the attention of taxpayers. The Planning have been developed. In addition, SIGTAS does not and Monitoring Unit (CPS) under the DGI contributes interface with the Integrated Accounting Application, to and regularly monitors tax revenue forecasting and implemented and managed by the Paierie Générale du estimating. Trésor (Paymaster General of the Treasury) since 2011 (World Bank, 2013). Areas for Improvement Payment processing is slow and lags behind the However the PSDGI has over-ambitious targets WAEMU average. The system and tools to implement and remains vague about how some immediate programs to mitigate key human capital risks have not challenges will be addressed. An IMF Fiscal Affairs been assessed by an independent authority. Due to Department mission in February 2019 identified ongoing the lack of a call center, taxpayers’ telephone requests problems in several areas. First, considering the DGI’s get delayed. No enforcement strategies are enacted current capabilities, the PSDGI is too ambitious and against non-filers. Electronic filing is available, but few too imprecise in dealing with the immediate challenges taxpayers use it, despite the DGI’s efforts to promote it faces. The plan covers a wider area than rigorously e-tax. Electronic payment has been implemented but promoting tax compliance. The plan does not help to is not yet operational. The DGI’s information cross- improve the core organization and is not conducive to checking system is limited. On average, firms in Mali increased revenue mobilization. Second, the DGI still spend 276 hours a year filing, preparing, and paying has no reliable central taxpayer file. Third, despite the three major taxes and contributions (CIT, VAT, and labor availability of resources, remote tax return filing is still in taxes, including payroll taxes and social contributions). the testing phase. Fourth, tax audits and investigations This compares with an average of 281 hours for SSA of medium-sized and large enterprises remain low (12 countries, 258 hours for WAEMU countries, and 215 percent of all audits in 2017 and 2018). Fifth, cooperation hours for Mali’s aspirational peers (Table 2.5). 64 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Box 2.4: Summary of Tax Administration Diagnostic Assessment Tool Performance Assessment The IMF, the World Bank, and the African Tax Administration Forum assessed Mali’s tax administration system during November 5–17, 2019 using the TADAT diagnostic tool. TADAT provides a baseline assessment of tax administration performance that can be used to identify priorities for reform. The TADAT framework focuses on the administration of the major direct and indirect taxes critical to central government revenues i.e., VAT; IS-BIC; the wage and salaries tax (ITS); the ISCP including gold, tobacco and beverages; and the financial activities tax. It assesses 32 high-level indicators across 9 key performance outcome areas (POAs) covering most tax administration functions, processes and institutions to strengthen tax administration, enhance revenue mobilization, improve services to taxpayers, and promote better taxpayer compliance and discipline. The TADAT assessment shows Mali performs strongly in risk mitigation (POA 2) and dispute resolution (POA 7), and satisfactorily in efficient collection systems (POA 5) and government tax revenue forecasting (POA 8). The overall assessment suggests room for improvement (Table B2.4A). >>> Table B2.4A Evaluation of the Core Functions of Mali’s Tax Administration Indicator Detailed indicator Score POA 1: Integrity of the Accurate and reliable taxpayer information. D registered taxpayer Knowledge of the potential taxpayer base. C base POA 2: Effective risk Identification, assessment, ranking, and quantification of compliance risks. C management Mitigation of risks through a compliance improvement plan. A Monitoring and evaluation of compliance risk mitigation activities. A Management of operational risks. D Management of human capital risks. D POA 3: Supporting Scope, currency, and accessibility of information. C voluntary compliance Time taken to respond to information requests. D Scope of initiatives to reduce taxpayer compliance costs. D Obtaining taxpayer feedback on products and services. C POA 4: Timely filing of On-time filing rate. C tax declarations Management of non-filers. D Use of electronic filing facilities. D POA 5: Timely payment Use of electronic payment methods. D of taxes Use of efficient collection systems. B Timeliness of payments. D Stock and flow of tax arrears. D POA 6: Accurate Scope of verification actions taken to detect and deter inaccurate reporting. D reporting in declarations Use of large-scale data-matching systems to detect inaccurate reporting. D Initiatives undertaken to encourage accurate reporting. D Monitoring the tax gap to assess inaccuracy of reporting levels. C POA 7: Effective tax Existence of an independent, workable and graduated dispute resolution A dispute resolution process. Time taken to resolve disputes. D Degree to which dispute outcomes are acted upon. C POA 8: Efficient Contribution to government tax revenue forecasting process. B revenue management Adequacy of the tax revenue accounting system. D Adequacy of tax refund processing. D POA 9: Accountability Internal assurance mechanisms. D+ and transparency External oversight of the tax administration. C Public perception of integrity. D Publication of activities, results and plans. C+ Source : IMF (2019c). TADAT. Mali : Rapport d’Évaluation de la Performance. MALI PUBLIC EXPENDITURE REVIEW >>> 65 Arrears management could be improved in VAT reports. In addition, no independent public survey is repayment and dispute resolution. The time taken to conducted to assess the level of public confidence in resolve disputes and pay VAT refunds exceeds 90 days, the tax administration. far longer than international good practice. Figure 2.11 presents the Doing Business post-filing index, which Perceived high levels of corruption in tax measures the process of claiming a VAT refund and administration have exacerbated problems with both going through a corporate income tax audit. Mali ranks compliance and revenue collection. The World Bank’s 173rd out of 190 countries for ease of paying taxes, Enterprise Survey (World Bank, 2016a) shows that second bottom among the WAEMU members, and does the tax administration currently makes it hard to carry worse than all its aspirational peers (Table 2.5 and Figure out business—it ranked 9th of the top 10 constraints 2.14). Its score is 48.953 whereas for WAEMU countries businesses identified from a list of 15 business the average is 53.2, for its aspirational peers it is 69.3 environment obstacles (Figure 2.13). Just under a third (32 and for OECD high-income countries the average score percent) of firms stated that bribery in the form of giving is 84.3 (Table 2.5). There is scope to continue reducing gifts is frequent in dealing with tax officials, compared to the costs generated by these factors. 17 percent of firms on average for SSA and 12 percent globally (Figure 2.14; World Bank, 2016a). A recent survey An effective and efficient tax administration needs of 700 small businesses in Bamako about their willingness performance management as well as compliance to pay corporate taxes shows that corruption has a and control mechanisms. Mali currently has no statistically negative effect on tax compliance (Bourgain systematic reporting system to collect data and prepare et al., 2018). Paying bribes reduced tax compliance and publish formal annual reports such as strategic by almost 10 percentage points. Such negative plans, annual or multi-year business plans, statistical perceptions are even more undesirable in the context data, activity reports, and sectoral-industrial analysis of the country’s worsening overall competitiveness. >>> >>> Fi ur 2.13: B nchm rkin Top T n Fi ur 2.14: B nchm rkin Busin ss Environm nt Constr ints Exp ct tions of Gift-Givin to T x Offici ls % of firms citin th issu 25 40 23 35 20 20 30 16 16 25 15 % of firms 20 10 15 8 10 5 4 4 3 2 5 1 0 0 L os Guin -Biss u l Burkin F so To o Ch d C nt. Af. R p. World M li B nin Af h nist n T jikist n U b kist n Corruption ul tions Customs nd tr d r ul tions SSA Tr nsport tion T x dministr tion Ni r inform l s ctor nd disord r Crim , th ft Côt d'Ivoir Zimb bw Acc ss to fin nc U nd Politic l inst bilit El ctricit Rw nd Pr ctic s of th S n L bor r WAEMU Structur l Aspir tion l R ion P rs P rs M li SSA % of firms xp ct d to iv ifts in Av r m tin s with t x offici ls Sourc : World B nk (2020b) Ent rpris Surv s. Not : 2006 d t for Guin -Biss u; 2009 for Burkin F so; 2011 for C ntr l Afric R public nd Rw nd ; 2013 for Zimb bw ; 2014 for S n l nd Af h nist n; 2016 for B nin, Côt d’Ivoir , M li, To o nd U nd ; 2017 for Ni r; 2018 for Ch d nd L o PDR; nd 2019 for T jikist n nd U b kist n. 53  A score of 48.9 means an economy was 51.1 percentage points away from the frontier constructed from the best performances across all economies and across time. 66 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 2.15: Inform l Econom Sh r b Fi ur 2.16: Sh r of Inform l Econom R ion (1991–2015) (1991–2015) % of GDP % of GDP 50 50 43.6 42.4 41.1 40 40.0 40 38.5 38.1 35.3 36.2 32.9 33.4 31.8 30 28.1 30 26.6 27.3 25.8 24.7 24.2 23.4 22.4 21.2 20 19.4 20.2 16.7 20 15.3 10 10 0 0 OECD Middl E st Sub-S h r n M li C rib n 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Europ E st Asi nd North Afric South Asi Afric L tin Am ric 1991-99 2000-09 2010-2015 Sourc : M din nd Schn id r (2018). Sh dow Economi s Around th World; IMF Workin P p rs; nd World B nk st ff c lcul tions. >>> >>> Fi ur 2.17: B nchm rkin Inform l Fi ur 2.18: B nchm rkin T x-to-GDP Econom Sh r (2004–15) R tio nd Sh dow-to-GDP R tio (2015) % of GDP 151 countri s 70 50 60 % of GDP 40 50 30 40 s T x R v nu 30 20 20 10 M li 10 0 0 -Biss u l To o Burkin F so C nt. Af. R p. Ch d World M li L os B nin T jikist n U b kist n SSA r 0 10 20 30 40 50 60 70 Côt d'Ivoir Zimb w Rw nd nd Ni S n Sh dow Econom s % of GDP U Guin M li SSA WAEMU Structur l Aspir tion l R ion P rs P rs Inform l Econom Av r Sourc : M li MEF; M din nd Schn id r (2018). Sh dow Economi s Around th World; IMF Workin P p rs nd World B nk st ff c lcul tions. MALI PUBLIC EXPENDITURE REVIEW >>> 67 The inefficient and complex tax system is one of Governance arrangements and a performance the reasons why micro, small and medium-sized management system should be in place to improve enterprises operate in the informal sector, which in overall operational effectiveness. The strategic and turn erodes the already limited tax base. High costs, operational effectiveness of the DGI headquarters difficult formalization procedures, and the expectation of function could be strengthened by the creation and gaining a comparative advantage from not complying publication of strategic planning reports separately for with tax obligations drive many small businesses into the DGE, DME, DID, and DR; annual activity reports; an informality, which then poses further challenges for tax annual action plan for the prevention of and fight against collection. A large shadow economy clearly correlates the informal economy and financial tax crimes; and the with low levels of tax collection (Figure 2.18). Sub- dissemination of statistical data. This would help the Saharan Africa is one of the regions of the world where DGI to expand its role and resources as well as measure the informal economy is most important, averaging its progress in achieving the desired outcome for each around 36 percent of GDP between 2010 and 2015, identified goal. compared to 28 percent for South Asia and 20 percent for Europe (Figure 2.15; Medina et al., 2017). In Mali, Policy Recommendations the relative size of the informal economy has declined steadily from 44 percent of GDP in 1991 to 29 percent Although Mali has long been engaged in in 2015 (Figure 2.16) and it was smaller on average than comprehensive revenue administration reform, almost all WAEMU countries except Burkina Faso (34.2 its outcomes have not significantly improved. It is percent) over 2004–15 (Figure 2.17). commendable that the authorities are making efforts to review both tax policies and administration as part of a Proposed Solutions concerted, coherent reform program. Tax administration reforms, however, are highly politically charged, fiscally The taxpayer service could be strengthened by costly, and long term in nature. As such, it is critical that carrying out a business process mapping exercise. the DGI and DGD step back to review what has been This would help it meet taxpayers’ demands and done, what challenges remain, and how to prioritize and ensure a healthy tax system and business-friendly sequence further reforms. environment. It would be worthwhile for the DGI and DGD to map five core tax administration functions: (i) The following table summarizes major recommendations taxpayer identification, registration, and de-registration for further reforming the tax system, targeting first tax (or cancellation); (ii) the filing of tax declarations and policies and then tax administration. payment processing; (iii) arrears management; (iv) tax audits; and (v) tax appeals. These functions are carried out predominantly at the local and regional office levels. In order to identify and remedy problems linked to VAT evasion, the DGI and the DGD will need to collaborate closely. The exchange of data between customs and taxes is vital for fighting tax and customs fraud (IMF, 2019d) but it is important to go beyond simply exchanging information.54 Absolute and complete cooperation between the two administrations is required, in particular for: (i) risk management; (ii) identification of undertaxed importers (grouping, segmentation, etc.); (iii) cross-sharing and processing of audit results; and (iv) assistance to large importers in collecting tax arrears. This collaboration needs to be formalized in a memorandum of understanding (IMF, 2019a). 54  The two directorates general (DGI and DGD) interchanged information only through the established channel of communication by sending the request rather than the active approach that allows staff to meet and discuss tax exemptions and tax expenditure concerns. The CAISFF also was not able to communicate with the DGI and DGD. (IMF, 2016a). 68 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 2.5: Recommended Policy Measures Policy actions Policy action details Time Potential fiscal gains horizon (+) / uses (-) Tax policy R2.1 Increase • Gather a complete database with a breakdown by each Short (+, -) short-term cost tax payment taxpayer separated by income bracket. term and long-term gain.1 incentives and • Eliminate unnecessary individual taxation. encourage • Adjust the progressivity of the tax on wages and salaries. formal employment. R2.2a Expand • Eliminate tax expenditures especially in deductions, Medium 0.6% of GDP in the the tax base. exclusions, credits, exemptions, and preferential term medium term (potential treatment with strengthened collaboration between DGD for 2.5–3.0% in the and DGI. long run). • Expand local revenue mobilization which will require amending the current tax policy framework and properly archiving the supporting documents for revenues and expenses to assist intergovernmental fiscal relations between the central and subnational government. R2.2b Amend • Abolish property tax exemptions such as for agricultural Medium (+) the real land and buildings occupied by the owner or dependent term property tax. family members. • Rebase the tax on indexed property values rather than the rental value. R2.2c Enhance • Collect and present the excise collection data for all Medium (+) excise tax. selected products. term • Initiate an in-depth analysis of the excise tax regime. • Introduce new excisable items to include in the net. Tax administration R2.3 Establish • Establish an archiving system to ensure the safekeeping Medium (+) an up-to- of taxpayer-related official documentation and term date and correspondence in a way that each taxpayer should have comprehensive a unique folder containing all official documents and record of correspondence. taxpayers • Organize information sessions and seminars jointly to enhance with the sectoral chambers and establish tax facilitation taxpayer centers. registration. • Provide special information for business start-ups through the tax offices’ registration units, and also in cooperation with other government agencies. >>> MALI PUBLIC EXPENDITURE REVIEW >>> 69 >>> Table 2.5: continued Policy actions Policy action details Time Potential fiscal gains horizon (+) / uses (-) Tax administration R2.4 Set up • Develop appropriate and effective communication Medium (+) Tax Facilitation initiatives to increase taxpayers’ familiarity with the tax term Centers to system and enable the transfer of knowledge and skills facilitate tax through a “learning by doing” approach. payments. • Establish a tax legislation portal, an effective call center facility, and a guidance brochure. • Enrich and tailor the electronic filing system based on the needs of taxpayers in each segment. R2.5 • Establish a new tax entity to regulate both customs and Medium (+) Establish a taxes. term dedicated debt • Establish a dedicated unit and dedicated team to apply management tailored and debtor-oriented strategies for enforcement unit and and debt collection. This unit should be staffed by a re-engineer dedicated team specializing in behavioral changes and the tax audit deploying new methods to influence taxpayers’ behavior. process to • Develop a debt management strategy to deploy new enhance debt tailored treatment strategies, measures, and procedures management. for debt collection issues such as the prevent, assist, recover, and enforce approach. • Consolidate tax audit functions into a single department in the same building, reporting to the Chair of a new tax entity. • Establish a fully functional dedicated unit to manage, plan, conduct, operate, and assess the tax audit activities. The staff of this unit should work only on tax audits. R2.6 Continue • Develop the intranet platform. Short / (+) investment • Promote the use of SIGTAS 3.0 system and automatic medium in IT. product of the indicators. term 1. Considering each category of tax expenditures, the estimated fiscal gain is calculated based on the following assumptions: Medium term: (i) tax expenditures arising from the CM, ministerial decrees, Establishment Agreements (tax treaties), Microfinance Act, and sovereign debt held by the commercial banks are used to encourage economic development hence difficult to cut; (ii) tax expenditures claimed by the CGI, CI, and VAT on Real Estate Development Act are straightforward to reduce so 100 percent of the average of each type of tax expenditure as a percentage of GDP during 2013–19 could be recovered; and (iii) tax expenditures incurred through the Public Procurement Act and other tax expenditures are moderately monitored with only 25 percent rebound of the average of each type of tax expenditure as a percentage of GDP during 2013–1p. Long-term: assumes tax expenditures averaging 2.8 percent of GDP between 2013 and 2019 are brought back fully into the tax base (Annex IV, Table A4.2). 70 >>> MALI PUBLIC EXPENDITURE REVIEW 3. >>> Public Finance Management Despite a fragile context and deteriorating security situation, Mali has made significant progress on some core public finance management (PFM) reforms in recent years. Nevertheless, weaknesses remain that undermine budget performance and value for money. Public investment has been below the WAEMU average since 2010 and remains below pre-2012 levels. Inefficient management practices have undermined public investment quality and contributed to the decline in gross fixed capital formation. Use of competitive procurement methods is in line with the target recommended by the WAEMU, but weaknesses, particularly in the payment of suppliers, continue to undermine competition and inflate the cost of services and works. Addressing the investment efficiency gap could increase the impact of investment on growth by (i) strengthening PFM governance; (ii) improving the socio-economic impact of investments; (iii) consolidating investment efforts; and (iv) maintaining infrastructure over the long term. Significant savings from improved procurement processes could be achieved by (i) improving public access to information; (ii) introducing risk-based controls; (iii) pursuing the transition to e-procurement;(iv) automating procurement planning; (v) deploying procurement units at the regional level; and (vi) strengthening financial management and procurement capacities. MALI PUBLIC EXPENDITURE REVIEW >>> 71 This chapter is organized as follows. The first section Mali’s Public Expenditure and Financial presents recent public finance management (PFM) Accountability (PEFA) scores remain at a basic level reforms in Mali. The following sections examine two PFM with limited progress between recent assessments. areas in more depth: public investment management Comparing its 2018 and 2019 PEFA scores, 9 out of and procurement. Each section provides a brief 31 indicators recorded an improvement, 5 regressed, overview, including comparisons with peer countries, and 17 remain unchanged. Progress has been made in identifies scope for potential savings, and offers policy the area of ​​budget reliability, management of assets and recommendations for reforms. liabilities, policy-based fiscal strategy and budgeting, and predictability and control in budget execution since Public Finance Management Reforms: the 2018 PEFA (Table 3.1).59 But other pillars have not Progress and Challenges improved much, notably the transparency of public finances, accounting and reporting, and external scrutiny Mali’s Public Finance Management Reform Plan and audit due to the low quality of some programming (PREM 2017–2021) aims to optimize the country’s documents and reporting, delays in setting up asset fiscal space through efficient and transparent accounting, and ineffective control structures. public spending to achieve growth objectives and sustainable development. The plan builds on Despite a fragile and deteriorating security situation, previous programs and reform strategies, including recent PFM efforts have focused on some core the first and second Programs on the Improvement reforms such as program budgeting and expenditure and Modernization of PFM in Mali (PAGAM/GFP I management. Recent reforms include the move to 2006–2009 and PAGAM II/GFP II 2011–2015) as well program budgeting, the interfacing of IT applications as several interim plans, implemented in 2010 and and securing the Ministry of Finance information system, 2016.55 It is managed by a PFM support unit (CARFIP) and the strengthening of control structures (Box 3.1). that ensures PFM reform coordination with the Substantial capacity building has also been carried out technical directorates of sector ministries, the National through training and the acquisition of equipment and Council of Civil Society and Territorial Communities, logistics across various areas of public finance. Other the National Assembly, and development partners, recent reforms have focused on modernizing the tax and and prepares annual progress reports. 56, 57 The World custom administrations, particularly the digitalization Bank is currently supporting CARFIP in the assessment and simplification of procedures, thereby ultimately of the PREM 2017–2021. contributing to better governance and an improved business climate. CARFIP has played a critical role in advancing Mali’s PFM reform agenda, but its effectiveness has been Systematic weaknesses continue to undermine undermined. It is hampered by limited staffing and Mali’s budget performance, however. Political resources, resistance to reform in the administration, capacity and financial constraints continue to undermine and the absence of an inter-ministerial steering the effective functioning of the public finance system. committee—which have been successfully used in other Challenges to the effective operationalization of program key decentralization and capacity strengthening public budgeting persist, undermining the ability of ministries administration reforms. As a result, the dialogue is not to reallocate resources within their programs according sufficient at a political leadership level to implement to their priorities and expected results. Expenditure critical reforms, administrative reforms to support management is hampered by a systematic use of ex ante budget reforms (i.e. the delegation of financial authority control, a limited automated procurement system, and the to a program manager, institutionalization of internal limited operationalization of some financial management audits and use of the management control58) or the systems, affecting value for money and efficient public redundancies between control structures. spending. Several reforms to modernize human resource management have not advanced. Despite progress in 55  The PREM aims to support the implementation of the country’s Strategic Framework for Economic Recovery and Sustainable Development (Cadre Stratégique pour la Relance Économique et le Development durable (CREDD 2019-2023). 56  Apart from the CARFIP, the Government also set up a Technical Committee, chaired by the Minister of Economy and Finance, in charge of strategic guidance and monitoring of the PREM implementation. The Committee is managed through a technical secretariat, beneficiary structures, and thematic commissions. 57  PFM arrangements were defined by two mains Law (i) Loi No2018 du 23 juillet portant approbation du Code de transparence dans la gestion des finances publiques et (ii) la Loi No2014-043 du 3 septembre 2014 relative aux Lois de finances. 58  The management control (contrôle de gestion) is a tool to support decision making that aims to assess the real-time achievements and performance of the administration to ensure efficient and effective use of public resources. 59  Note the 2018 PEFA is based on the 2016 PEFA assessment that was updated in 2018 according to the new 2016 PEFA methodology. 72 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 3.1: Selected PEFA Scores (2018 and 2019) Performance Indicator PEFA PEFA +/- (2018) (2019) I. Budget reliability PI_1 Aggregate expenditure outturn D B + II. Transparency of public finances PI_7 Transfers to subnational governments B+ B - PI_8 Performance information for service delivery C+ D - III. Management of assets and liabilities PI_11 Public investment management C C+ + IV. Policy-based fiscal strategy and budgeting PI_16 Medium-term perspective in expenditure budgeting D+ C+ + PI_17 Budget preparation process B B+ + V. Predictability and control in budget execution PI_19 Revenue administration D D+ + PI_21 Predictability of in-year resource allocation B B+ + PI_22 Expenditure arrears C B + PI_23 Payroll controls C+ D+ - PI_24 Procurement C+ A + PI_25 . Internal controls on non-salary expenditure B+ A + VI. Accounting and reporting PI_28 In-year budget reports C+ D+ - VII. External scrutiny and audit PI_30 External audit D+ D - Source: PEFA 2018, PEFA 2017. the digitalization of the fiscal administration, more needs Public Investment Management to be done in the dematerialization of procedures and supporting documents, staff training, and auditing. Strengthening public investment management (PIM) contributes to countries’ long-term goals by As in other countries, the COVID-19 pandemic improving fiscal sustainability, promoting growth, has tested Mali’s PFM system. It had to support the and ensuring efficient service delivery. PIM is Government’s emergency response in delivering fiscal defined as “an approach to managing government response packages and adjust to new requirements and expenditures for public infrastructure strategically and challenges. The COVID-19 shock hit the economy hard efficiently” (JICA, 2018). This implies that improvements amid an already challenging social and security situation. in the management of public investment can generate Lower revenues and higher expenditure due to security significant benefits for a country regardless of the and COVID-19 response measures have increased the amount invested. Even though public investment is a Government’s financing requirements and led to the top priority for governments aiming to support growth, amendment of the 2020 budget law in May 2020. The the average country loses about 30 percent of the Government created a Special Fund in April 2020 as returns on its investments to inefficiencies in its public part of the fight against COVID-19 but it did not become investment management arrangements (IMF, 2018d). operational as the World Bank’s development policy According to the IMF, the benefits of improving PIM can lending initially aimed to support the governance issues be substantial, with the most efficient investors seeing of the fund, notably related to fiscal transparency and twice the growth impact of their investment compared reporting, was delayed (MEF, 2020b). to the least efficient investors (IMF, 2015d). MALI PUBLIC EXPENDITURE REVIEW >>> 73 >>> Box 3.1: Overview of Mali’s Recent PFM Reforms Mail’s PFM system continues to be aligned with the relevant WAEMU directives and currently the last two of the eight directives are being transposed into the national legal and regulatory framework. A key priority will now be to focus on the full operationalization of all directives to foster the efficiency and transparency of Mali’s public finance management system. Recent reforms in budget preparation have focused on the roll out of program budgeting since 2018 and led to the preparation of annual performance review of budget programs in 2019. Program managers have been appointed but the effective roll out is being undermined by several challenges such as the failure to delegate financial authority to program managers, the multiplicity of programs (148), the absence of an organizational mechanism, the low quality of certain objectives and indicators, and the limited consistency between certain programs and sector policies. Efforts to strengthen budget execution have centered around cash management and accounting through the deployment of the SICA-STAR software, and the updating the Integrated State Accounting Application (AICE; Application Intégrée de Comptabilité de l’Etat) and the Integrated Expenditure Management System (SIGD). Efforts are concentrated on interfaces with other applications relating to revenue and stock accounting. The SIGD is connected to all sector ministries but not all agencies, and program managers do not yet have full authority to manage the SIGD. Recent public procurement reforms have focused on the deployment of and training in the Integrated Procurement Management System (SIGMAP) as well as the regulatory text of the decentralized procurement structures. Nonetheless, challenges persist related to procurement processes, procedures, and capacity gaps that undermine the transparency and efficiency of public expenditures. The Integrated Public Investment Management System (SIGFIP) is operational and has been installed in the sector ministries’ planning directorates. Current efforts focus on strengthening the monitoring and evaluation functions, particularly for monitoring multi-year project payments. All the IT System reforms were conducted by the Support Unit for Tax and Financial Services (Cellule d’Appui à l’Informatisation des Services Fiscaux et Financiers, CAISFF) but beyond these relevant achievements, the lack of formal Information System Governance remains. Progress has been made in strengthening internal control and audit functions through the adoption of a national internal control strategy, the preparation of a guide for the account section of the supreme court, and the elaboration of a risk mapping in several ministerial departments. However, the institutionalization of the management control and internal audit is lagging, there is a need for better clarity of roles of actors in the external and internal control. The creation of a Court of Auditors in Mali in order to pool the actions of control structures is also a major challenge for the Malian government. Recent progress has been also made in budget transparency. Mali’s transparency score is 39 compared to the global average of 42 in the 2019 Open Budget Survey. According to the 2019 PEFA, 8 out of 12 documents are presented to the National Assembly. Since 2011, Mali has prepared its citizens’ budget. However, challenges persist, associated with aligning the economic classification with international standards, establishing asset accounting, the coverage of central administration operations not recorded in the state’s financial statements, and the transparency of the fiscal transfer system. A series of recent fiscal administration reforms have focused on introducing new taxes, the deployment of specific software in revenue services (SIGTAS, SYDONIA) and the phasing out of cash payment of taxes and customs duties. In addition, the customs administration is strengthening its border management through the use of technology. Despite progress in these areas, challenges remain, especially related to the numerous exemptions that constitute a high fiscal cost, the expansion of the tax base through informal taxation, fiscal registration and moving procedures online (digitalization). Efforts have also focused on combating corruption through the strengthening of the Joint Committee for Economic and Financial Intelligence and Investigations (Comité Mixte de Renseignements et d’Investigations Economiques et Financières, CMRIEF) and four brigades focused on border fraud were deployed at the end of 2019. Expenditure management was strengthend at the deconcentrated and decentralized levels with the deployment of the Resources of Decentralized Communities (ReCoDe) software in 413 local governments which complements the current local information system COLLOC by fulfilling similar functions to the SIGD at central level. While the Government had committed to transfer 30 percent of the budget revenue to local governments by 2020, this target was not yet reached by 2020 – preliminary estimates suggest the transfers are even below the 23 percent target set in the LF 2020. To achieve this objective, an overhaul of local taxation is needed to strengthen local revenue mobilization. Source: IMF (2020a) First Review Under the Extended Credit Facility Arrangement; Republic of Mali (2018, 2019); Enquête sur le budget ouvert du Mali 2019. 74 >>> MALI PUBLIC EXPENDITURE REVIEW Countries can follow different PIM frameworks based The main challenge is its weak evaluation capacity and on their institutional setting and the complexity of dependence on donors to select, design and implement their public investment system, but they should all good projects. However, independent review by the include certain features to ensure PIM efficiency. Government of the projects evaluated could help to The Rajaram Framework (Rajaram et al., 2010) defines improve their impact on the country’s development by: a set of clear “must-have” features to ensure that public (i)  ensuring that national and capacity constraints are investment is efficiently managed (Figure 3.1). These are: (i) taken into account in the project design; (ii)  obtaining pre-screening of investment projects to ensure alignment the funds necessary for the efficient operation of the with national priorities; (ii) appraisal of investment projects asset once the project is handed over to the national to ensure their feasibility; (iii) independent reviews of authorities; (iii)  optimizing synergies between projects appraised projects to control for “optimism bias”, which in the same sector; and (iv) controlling “optimism bias”, can lead to suboptimal investment; (iv) a strong link such as overestimation of benefits and underestimation between the selection of projects and the budget process of costs, in the preparation of investment projects. to ensure consistency with the fiscal framework and recurrent funding for operating and maintaining existing Public Investment: Trends and Composition assets; (v) reviews of appraised projects to ensure, among other things, clear organization arrangements, Between 2012 and 2018, total investment has been realistic timetables for implementation, and monitoring strongly affected by the 2012 crisis, and the upward arrangements; (vi) adjustment of projects based on trend since then has not yet restored it to pre-crisis changes in funding profile or other circumstances; (vii) levels. The 2012 crisis caused public investment to facilitating the handover of management responsibility to decline initially, followed by private investment two ensure there is adequate funding for the operation of the years later. In 2014, public investment overtook private asset and the provision of services; and (viii) evaluation of investment for the first time. Between 2015 and 2017, finished projects. there was a slight positive trend in total investment, but public investment then declined from 2017 onwards Aid-dependent countries like Mali face challenges (Figure 3.2). This places Mali in a rather weak position in implementing these “must-have” features, but in relation to its comparator countries (Figure 3.3). In the Government can help to ensure PIM efficiency particular, in comparison with WAEMU, there is a clear through effective implementation of these features. inversion of the trend from 2010 onwards; before that Table 3.2 summarizes some of the challenges Mali date Mali’s performance was better than the WAEMU faces in implementing the “must-have” features of PIM. average (Figure 3.4). Fi ur 3.1: K F tur s of Good Public Inv stm nt M n m nt Consist nc in Authorit to M int n nc of ss t Ev lu tion to proj ct scr n nd r ist r; op r tion nd improv pr p r tion r j ct proj ct m int n nc of ss t uid nc 1 2 3 4 5 6 7 8 Impl m nt tion Adjust m nt Ind p nd nt Ev lu tion Op r tion Appr is l S l ction Guid nc r vi w Link to K to An ff ctiv bud t nd d v lopm nt cr dibl procur m nt proc ss to support str t s l ction impl m nt tion nd op r tion Sourc : R j r m t l. (2010). A Di nostic Fr m work for Ass ssin Public Inv stm nt M n m nt. MALI PUBLIC EXPENDITURE REVIEW >>> 75 >>> Table 3.2: Challenges Associated with the “Must-Have” Features of Public Investment Management PIM “must-have” Challenges Relevant to Mali Investment • Government strategy documents are too general and their link to No guidance & project sectoral strategies too weak, limiting the extent to which they can development provides basis for preliminary screening of projects. Formal project • Governments face a serious lack of appraisal capacity combined Yes appraisal with a lack of guidance on defining the project preparation process and on appraising domestically financed projects and public-private partnerships. Independent review • Lack of capacity for independent review. Yes of appraisal Project selection and • Weak integration between the recurrent and development budget Yes budgeting and substantial off-budget aid. Aid coordination departments manage the relationship with partners but do not have a priority- setting function for investment. • Central financial agencies do not function as effective gatekeepers of either donor-funded or domestically funded projects. Project • Weak project management capacity induces donors to set up implementation multiple project implementation units. • Procurement follows varying donor standards rather than national procurement standard. Project adjustment • Reliance on donors to supervise the project implementation process Yes and trigger reviews of off-tracked projects. • Lack of a monitoring process for domestically financed projects. Facility operation • Inadequate asset registration system once handover takes place. Yes • Inadequate funding for operation and maintenance, in part because of weak integration of recurrent costs of donor projects into fiscal policy and budgets. Basic completion • Reliance on donors to review and evaluate their projects. Yes review and evaluation A further feature of public investment in Mali is its agriculture, transport, roads, and water remain marginal uncorrelated relationship with GDP growth. Since over the period (Figure 3.6).60 the 2012 crisis, large changes in GDP growth have had little connection to trends in total investment (Figure 3.5). Access to and quality of public investment This situation highlights the weak impact of public and infrastructure remains weak. Despite the high level private investment on growth, which is mainly related to of investment in the education sector, access to public the many inefficiencies observed in PIM. education infrastructure is below the levels observed for Sub-Saharan Africa (SSA) and low-income developing The evolution of the composition of public investment countries. The situation for public health infrastructure in Mali between 2010 and 2017 clearly shows the in Mali is even more critical. The only exception is Government’s priorities in education, energy, and access to treated water, where Mali performs better health. Education remains the priority sector for public than comparators, even though the level of investment investment over the period. The energy sector was in this sector is very low (Figure 3.7). In addition, the particularly affected after the 2012 crisis but benefited in quality of infrastructure, which had been perceived to be 2017 from the efforts made in terms of public investment good relative to other comparable countries, has been priorities. The health sector is the third key sector for declining since 2012 and fell below them from 2014 public investment, but its level in 2017 remains lower onwards (Figure 3.8). This measure highlights the point than in 2014. An effort was also made regarding rail that low fixed capital stock ultimately affects the quality investment in 2017. Investment in other sectors, such as of infrastructure. 60  The figure does not include military expenditure, which is mostly extra-budgetary. 76 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 3.2: Inv stm nt b Sourc Fi ur 3.3: B nchm rkin Tot l (2007–18) Inv stm nt (2017) % of GDP % of GDP 25 40 20 29.0 30 26.6 25.6 15 22.7 22.9 23.2 20.5 20.5 19.2 20 10 10.8 10 5 0 0 C ntr l Afric n R public Af h nist n Ch d WAEMU T jikist n L o P.D.R. M li U b kist n 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Rw nd nd U Tot l Inv stm nt Priv t Inv stm nt Public Inv stm nt Sourc : World Economic Outlook nd IMF. Sourc : World Economic Outlook nd IMF. >>> >>> Fi ur 3.4: B nchm rkin Tot l Fi ur 3.5: Tot l Inv stm nt nd nv stm nt (2007–18) Growth (2007–18) % of GDP % of GDP 25 25 20 20 15 15 10 5 10 0 -5 5 -10 0 -15 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 M li Tot l Inv stm nt WAEMU GDP (in p rc nt ) Sourc : World Economic Outlook nd IMF. Sourc : World Economic Outlook nd IMF. MALI PUBLIC EXPENDITURE REVIEW >>> 77 >>> Fi ur 3.6: Composition of Public Inv stm nt b K S ctors (2010–17) % of GDP 5.00 4.00 3.00 2.00 1.00 0.00 2010 2014 2017 Educ tion H lth A ricultur Air tr nsport W t r nd s nit tion En r R ilro d Tr nsport Ro ds W t r tr nsport Sourc : BOOST. >>> >>> Fi ur 3.7: B nchm rkin M sur s Fi ur 3.8: B nchm rkin of Infr structur Acc ss (2017) Infr structur Qu lit (2007–17) 4.0 90 4.0 80 Infr structur Qu lit (Sc l : 1-7) 3.5 3.5 3.0 70 3.0 60 2.5 2.5 50 2.0 2.0 40 1.5 1.5 30 1.0 20 1.0 0.5 10 0.5 0.0 0 0.0 Acc ss to tr t d w t r (RHS) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Public duc tion production Public h lth infr structur infr structur El ctricit p r c pit M li Sub-S h r Afric M li Sub-S h r Afric Low Incom D v lopin Countri s Low Incom D v lopin Countri s Sourc : IMF. Sourc : IMF. 78 >>> MALI PUBLIC EXPENDITURE REVIEW As a result, Mali does not have the infrastructure Public Investment Management Assessment worthy of the funds it has devoted to it. Inefficient (PIMA) management has led to a considerable loss of invested funds, even as the total level of investment has been The 2017 PIMA for Mali found a robust, although declining since 2017, leading to a decline in gross paradoxically inefficient, management framework. fixed capital formation. In an extremely harsh natural In accordance with the methodology prepared by the and geopolitical environment, infrastructure assets IMF, the PIMA takes stock of public investment, its are deteriorating rapidly due to a lack of appropriate features, and its efficiency, and subsequently reviews maintenance. According to the 2017 Public Investment the management procedures to identify any current Management Assessment (PIMA), the stock of fixed weaknesses. Mali’s management framework is fairly capital is growing much more slowly than either the robust compared to other countries of the sub-region economy or the population, which places Mali among and other developing countries, but it produces very little the least-equipped countries in the sub-region in terms sustainable fixed capital per unit of capital expenditure of fixed capital per capita (IMF, 2018e). Moreover, Mali per capita. According to the PIMA, key areas of concern has weaknesses in its classification of expenditure, are: (i) coordination between central government and which may result in some spending being included in the local government entities; (ii) public-private partnerships public investment program (PIP) but not generating gross (PPPs); (iii) regulation of infrastructure enterprises; (iv) fixed capital formation, particularly in education. This project appraisal; (v) project selection; (vi) monitoring of partly explains the decrease since 2012 in the quality of public assets and; (vii) maintenance. The key findings are investments from the point of view of users (Figure 3.8). summarized in Box 3.2. >>> Box 3.2: Mali’s Public Investment Management Assessment: Selected Key Findings Legislation. Even though the regulatory framework is consistent, through a multitude of laws, decrees, and regulatory texts, and has been updated, Mali does not have a global legislation for public investment. Moreover, the implementation of this regulatory framework is still limited in certain phases of public investment management, such as PPPs, infrastructure companies, and accounting for assets. Planning. The three-year investment plan, which is published, breaks the national investment strategy down by sector. Preparation of the three-year investment plan is based on an ascending partnership process. Maintenance costs are not systematically covered for the conservation of infrastructure. Sectoral and national strategies are properly coordinated, reviewed every year, and consolidated into a unified document that presents the key indicators for economic activity and impact for each sector. Appraisal and selection. The process for investment project preparation includes ex ante assessment. The assessment methodology is complete. Major structuring projects are not systematically subject to a cost-benefit analysis using a standard methodology. The risk analysis is still limited. Projects are assessed against criteria, that are published on the Ministry of Economy and Finance website. Projects included in the budget are selected from a list of assessed projects. The project assessment process does not systematically involve a technical review of the quality of the studies. Execution. According to the legal framework, the procurement process should be open and transparent, contracts be subject to physical and financial monitoring in coordination with the contracting authorities, and should be audited. In practice, public procurement arrangements could be more transparent, open, and effective. Although funds are disbursed in a timely manner, this is undermined by the absence of commitment plans and external financing outside of the treasury single account, which can also affect the timely implementation of projects. Monitoring and evaluation. While rules apply to project management and assessment, they do not reflect improvements made to projects during the process of execution. Effective management is complicated by weaknesses in the information system and assessments are still insufficiently focused on the expected results. Reporting. The inventory of public assets is conducted on a partial basis, the information is not included on the balance sheets, and there is no amortization/depreciation. Coordination and decentralization. Recourse to borrowing for investment by local governments is limited by law. The amount of transfers is known more than six months before the beginning of the fiscal year. Planning is coordinated on a concerted basis. The financial and operational role of local governments in the financing efforts is practically very low. Source: IMF (2018e) Mali: Public Investment Management Assessment (PIMA). MALI PUBLIC EXPENDITURE REVIEW >>> 79 Scope for Improving Efficiency in the the largest efficiency gap relative to its peers, losing Management of Public Investments about 43 percent of potential investment gains due to inefficiencies in its PIM processes. Based on available The execution of the revised budget stands on expenditure data for 2018, if Mali addressed two- average at just over 76 percent over the period 2009– thirds of its investment efficiency gap, it could increase 17 (Figure 3.9). This is mainly due to the low execution the impact of investment on growth by more than 40 rate of the externally funded budget, which averages percent, adding 2.6 percentage points to its annual GDP 57 percent, while the execution rate of the domestically growth. financed budget was more than 90 percent over the period (Figure 3.10). The significant underutilization The Government recognizes both the weaknesses of external assistance contributes to the overall of its PIM system and the challenges to be met in inefficiency of public investment and can be attributed order to make public investments more efficient to the complexity of managing the project management and is already implementing reforms. A meeting with requirements of several donors and the use of specific the international affairs advisor and project manager development partners’ procedures, combined with of the École Nationale d’Administration Publique du lengthy review and non-objection processes between Québec was organized in order to define a collaboration the Government and development partners. Given on capacity building for the PPP unit and the actors these low execution rates, there is room for efficiency involved in the PPP process. It has documented the improvements. investment project selection process and developed a national infrastructure master plan for the identification In the context of a tight fiscal setting, a strong of major investment projects. Discussions are under PIM system is critical to ensuring high returns on way with stakeholders on a standardized cost-benefit investment and infrastructure quality. According analysis framework for these projects, including a risk to the 2017 PIMA, Mali manages to achieve only 57 analysis. The initial 2020 budget law (Loi de Finances) percent of its capital investment effort in fixed capital, presents, for each project, the impact on fixed capital compared to the global average of 73 percent. The formation. Future operating and maintenance costs IMF’s PIMA 2017 report noted that the country has of capital projects are recorded in project documents. >>> >>> Fi ur 3.9: Approv d, R vis d nd Fi ur 3.10: R vis d nd Ex cut d Ex cut d Public Inv stm nt (2009–17) Public Inv stm nt b Sourc (2009–17) CFAF billions CFAF billions 1,000 700 900 600 800 700 500 600 400 500 400 300 300 200 200 100 100 0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 Approv d bud t R vis d bud t (Dom stic ll Fund d) R vis d bud t Ex cut d (Dom stic ll Fund d) Ex cut d R vis d bud t (Ext rn ll Fund d) Ex cut d (Ext rn ll Fund d) Sourc : BOOST. Sourc : BOOST. 80 >>> MALI PUBLIC EXPENDITURE REVIEW Experimentation with the introduction of cash-aligned 2020 budget, resources were allocated mainly to three expenditure commitment plans in the 10 largest ministries: defense, security, and health (Figure 3.12). ministries continues with technical assistance from the IMF. Work on the opening balance sheet is in progress Policy Recommendations through the commissions set up for this purpose to identify, evaluate and enhance the value of State assets. To improve the efficiency of public investments, Finally, version 2 of the AICE, AICE 2, has been deployed Mali will need to strengthen its PIM system. Greater and user training is under way. attention needs to be paid to the quality of public investments to ensure that the expected socio-economic The Impact of COVID-19 on Public returns are generated: Investment • R3.1 Strengthen the management and efficiency Preliminary assessment of the 2020 revised budget of public investment by: (i) continuing to develop suggests a slight cut in public investment, even capacities and tools such as program budget though a few investments in sectors supporting the reform, performance contracts for the project Government’s security concerns and its emergency heads and structure, training activities on risk response to the pandemic were increased. Although analysis, financial analysis, monitoring of physical the revised 2020 budget shows a nominal 6 percent project execution, and adaptation of the information cut in public investment compared to the initial budget, systems and interfaces in all directorates of the MEF; the level of investments is still slightly higher than the (ii) professionalizing the investment project selection 2019 investment budget (Figure 3.11). A preliminary process, (iii) improve the three-year investment assessment of the 2020 revised budget shows: (i) plan through a permanent review of old projects allocations to equipment and investments have increased to identify those to be discontinued and budget over the 2019 budget; (ii) the special investment budget those to be maintained in the portfolio as a priority; declined, mainly driven by cuts in external resources and (iv) strengthening ex ante and ex post evaluations, to a lesser degree of domestically funded resources; and through the development of training sessions before (iii) while cuts were made across the board in the revised issuing project specifications, generalization of ex >>> >>> Fi ur 3.11: Public Inv stm nt Bud ts Fi ur 3.12: Public Inv stm nt Bud t (2019–20) b S l ct d Ministr (2019–20) 1,200 160 140 1,000 120 in CFAF billions 800 in CFAF billions 100 600 80 60 400 40 200 20 0 0 MEF MA MDAC MSPC MIE MEE MEN MSAS MTAD 2019 2020 (LDI) 2020 (LDR) 2019 2020 (LDI) 2020 (LDR) 2019 2020 (LDI) 2020 (LDR) Public inv stm nt bud t (tot l) D f ns Productiv Soci l Oth r nd s ctors s ctors Sp ci l Inv stm nt bud t ( xt rn l) S curit Sp ci l inv stm nt bud t (dom stic) Equipm nt nd inv stm nt 2019 2020 (LDI) 2020 (LDR) Sourc : BOOST. Sourc : BOOST. MALI PUBLIC EXPENDITURE REVIEW >>> 81 post reviews and assessments of completed projects of a participative annual and multiyear sectoral focusing on their efficiency and socio-economic planning process to prioritize maintenance and impact; and (v) further involving civil society and upkeep activities. local governments to improve the efficiency of public investment, through annual regional meeting on the Procurement topic of infrastructure maintenance and financial execution of capital budgets and periodic meetings Public procurement is a fundamental and critical between the infrastructure management units and element of good governance, job creation and committees representing civil society. private sector growth. While a well-performing procurement system contributes to better value for • R3.2 Strengthen PPP management. Manage money, increased fiscal space, and effective public the risks linked to the management of public investment, poorly governed procurement systems can investments by private stakeholders, through the hinder development goals and outcomes and result in publication and the implementation of a decree for additional cost and waste of public funds. According the law on PPPs. to a World Bank study, unsatisfactory procurement performance significantly affected the development • R3.3 Improve sustainability of public investment outcomes of projects, with those outcomes being three by: (i) developing accounting and financial information to five times more likely to be negative in cases with poor on public assets, through implementation of the procurement performance (World Bank, 2014). documentation on monitoring, assessment, and amortization/depreciation of non-financial assets A considerable amount of Mali’s public resources is and inventories; (ii) ensuring that maintenance costs allocated to acquiring goods, construction works, are covered for the conservation of infrastructure, and services. In Mali, total public procurement amounts through the establishment of a precise definition of on average to US$ 1.1 billion (CFAF 657 billion) or 34.4 maintenance and upkeep costs and; (iii) organizing percent of government expenditure over the period the governance of maintenance work to ensure 2016–18 and 7.4 percent of GDP. However, much more adequate levels of quality in maintenance and than the sums at stake, the quality and availability of key upkeep expenditure, through the identification of the public services rely on the effectiveness and efficiency of focal points in key ministries, and the establishment the country’s public procurement systems. >>> Table 3.3: Public Investment Management: Recommended Policy Measures Policy action Policy action detail Time horizon Potential fiscal gains (+) / uses (-) (% of GDP) R3.1 • Develop capacities and tools and adaptation of the Medium term Strengthen information systems and interfaces in all directorates of the management. MEF. • Professionalize the investment project selection process. 2.6 • Improve the three-year investment plan through a permanent review. • Strengthen ex ante and ex post evaluations. • Involve civil society and local governments. R3.2 • Publish and implement the decree for the law on PPPs. Short term Enhance PPP management. R3.3 Maintain • Develop accounting and financial information on public Medium term infrastructure assets. over the long • Ensure that maintenance costs are covered for the Medium term term. conservation of infrastructure. • Organize the governance of maintenance work to ensure Medium term adequate levels of quality in maintenance and upkeep expenditure. 82 >>> MALI PUBLIC EXPENDITURE REVIEW Key Features of Mali’s Procurement System procurement information on awarded contracts, as well as other information such as dispute resolution. Public procurement in Mali is well in line with WAEMU Public access to procurement information is limited, as directives promoting competition and transparency the ARMDS has not created the Public Procurement but decentralized procurement procedures need to Journal, which was intended to disseminate relevant be strengthened to meet the challenges of today information on government contracts (e.g., information and tomorrow. Public procurement in Mali is governed on invitations to bid), despite it being a requirement of by decree n°2015-0604-RM of September 25, 2015. the public procurement code. Public-private partnerships are governed by Law 2016- 061 of December 30, 2016. A set of ministerial decrees Progress has been made in the creation of and orders complete the legal and regulatory framework. procurement oversight and integrity systems. In line But the legislation needs to be strengthened further to with the WAEMU guidelines, Mali’s Dispute Resolution resolve the inconsistencies between certain articles of the Committee (DRC) is an independent committee covering public procurement code and those of the implementing disputes, from bidders’ claims to disputes between decree of the public procurement code issued to administrative structures on public procurement issues. comply with the code. For instance, the thresholds for Mali has also a National Anti-Corruption Committee and the approval of contracts at the decentralized level is no a Central Office for the Fight against Illicit Enrichment. longer compatible with the new thresholds in the public Even though their effectiveness remains unproven, they procurement code. The Malian legal framework for PPPs are indicative of the Government’s willingness to establish has also not yet been translated into WAEMU directives entities to lead the fight against corruption. The penal but this is planned for 2021 with the support of the IMF. code provides for certain specific public procurement offences but has not been enforced due to governance Mali has established a formal institutional framework weaknesses. The public procurement code also provides for procurement. The institutional arrangement for for numerous sanctions the ARMDS can impose against public procurement in Mali is consistent with the public procurement bidders as well as administrative architecture recommended by WAEMU Directives, with sanctions for civil servants. These sanctions on bidders a regulatory authority (ARMDS; Autorité de Régulation are regularly published on ARMDS’ website. While des Marchés Publics) distinct from the administrative annual public procurement audits are critical for quality structure responsible for control (DGMP-DSP; Direction control and compliance, audits have focused mainly on Générale des Marches Public et des Délégations de compliance and less on performance and follow up, and Service Public). The ARMDS has adequate financial enforcement of audit recommendations has been weak. independence to carry out training activities and audits of public procurement contracts and the state subsidy is Open competition is the preferred procurement regularly granted, but the most recent public procurement method but has not had the expected impact. audit reports available is from 2017, with the 2018 audit Statistics provided by the DGMP-DSP indicate that report currently being prepared. The DGMP-DSP is so open competition is the default procurement method far established and operational in 12 of Mali’s 19 regions. (Table 3.4). Over the review period 2016–18, the share There are 17 procurement units at the central level and in of open tenders increased from 88 percent in 2016 all sector ministries, but no procurement units have yet to 95 percent in 2018, reaching the 95 percent target been set up at the regional level due to a lack of funding. recommended by WAEMU, which is a significant achievement. However, contracts are often executed Lack of institutional capacity continues to late without penalties for payment delays due to the undermine the efficiency of procurement. Despite weak capacity of suppliers, contractors, and providers. training, capacity among public procurement staff Deadlines specified in the tender documents are not remains low, partly due to high staff turnover and a lack realistic given the scope and the complexity of the of professionalization. The ARMDS developed a national services requested. In addition, contracting authorities capacity-building strategy for public procurement actors cannot require suppliers and service providers to fully but its implementation was disrupted by the COVID-19 comply with their commitments when they themselves pandemic. However, in 2020 all procurement plans are at fault and rarely pay on time. Payment delays affect were prepared and transmitted in the SIGMAP even private sector cash flows, pushing many of them out of though approximately 28 percent of restricted tenders government procurement contracts. These delays in were not included in the procurement plans. The payment for goods, works, and services are the greatest Public Procurement Portal provides up-to-date public challenge for public procurement in Mali. MALI PUBLIC EXPENDITURE REVIEW >>> 83 >>> Table 3.4: Number of Tenders and Total Value by Procurement Method (2016–18) 2016 2017 2018 Method Number % Number % Number % Open tender 1,434 88% 4,566 93% 4,384 95% Restricted tender 98 6% 224 5% 90 2% Direct contracting 95 6% 93 2% 128 3% Total 1,627 100% 4,883 100% 4,602 100% Source: DGMP-DSP. >>> Table 3.5: Selected Indicators from the Benchmarking Public Procurement Report (2017) Indicator Description 1. Needs assessment, The indicators assess the quality, adequacy, and transparency of the information calls for tenders, and bid provided by the procuring entity to prospective bidders. preparation 2. Bid submission phase The indicators examine the requirements that suppliers must meet in order to bid effectively and avoid having their bid rejected. 3. Bid opening, evaluation, The indicators measure the extent to which the regulatory framework and and contract award phase procedures provide a fair and transparent bid opening and evaluation process, as well as whether, once the best bid has been identified, the contract is awarded transparently, and the losing bidders are informed of the procuring entity’s decision. 4. Content and management The indicators focus on several aspects during the contract execution phase of the procurement contract related to the modification and termination of the procurement contract, and the procedure for accepting the completion of works. 5. Payment of suppliers The indicators focus on the time and procedure needed for suppliers to receive payment during the contract execution phase. Source: World Bank (2016b) Benchmarking Public Procurement 2017. Mali’s automated procurement system is operational bids is hampered as SIGMAP is not accessible from mainly at the central level, but it is not yet a fully- the Government’s procurement portal. As part of fledged e-procurement system. The Integrated the full dematerialization of the public procurement Procurement Management System (SIGMAP) is process, a feasibility study was carried out in 2020 deployed to all sector ministries at central administrative for this purpose. Arrangements are underway as part level and four regions. Deployment in Koulikoro, Ségou of the implementation of the Support Program for the and Sikasso has been delayed due to the postponement Improvement of Public Finances in Mali (PAAMEFIP) to of supervision and assistance missions during the recruit a consultant who will support the CAISFF and COVID-19 crisis. All procurement plans are elaborated, the DGMP/DSP in implementing this reform. This project transmitted, and processed electronically via SIGMAP. for the complete dematerialization of public procurement The system also tracks all transactions linked to contract will take place in two stages (i) the first will consist of awards as well as recording supporting documents upgrading the SIGMAP and (ii) the second will concern used during the procurement process electronically. the development of an interfaced Web portal with It is supported by the ARMDS’ efforts to establish a SIGMAP. standardized filing and record-keeping system for public procurement documents. However, access to SIGMAP The Benchmarking Public Procurement 2017 report is only available via the Government’s network and does is useful for comparing Mali’s procurement regulatory not report on certain statistics (procurement calendar framework to some countries across Africa (World by phase, contract type, etc.). Online submission of Bank, 2016b). The report scores procurement practices 84 >>> MALI PUBLIC EXPENDITURE REVIEW and regulations aggregated around eight indicators. Mali ranks at the bottom regarding the bid submission For the purpose of this comparison, the following five phase because government providers are not required indicators were selected: (i) needs assessment, calls to register in a government registry of suppliers for tenders, and bid preparation; (ii) bid submission before bidding. In the case of the second indicator, phase; (iii) bid opening, evaluation, and contract award its performance is undermined by the fact that the phase; (iv) content and management of the procurement procurement system never uses electronic opening bids. contract; (v) payment of suppliers (Table 3.5) Countries with a score close to 100 are considered to have The more advanced the execution phase of regulatory frameworks that are closely aligned with the procurement, the more Mali’s performance best international practices, while those scoring 50 deteriorates. For supplier payments, Mali’s score (48 or below are considered to have significant room for percent) is well below its peer countries, ahead only of improvement. Burkina Faso (42 percent). Times for suppliers to receive payments are not enforced. More seriously, at the time Mali scores above most of its peers in two of payment, the contracting authority may request a indicators: needs assessment, calls for tenders, and discount of 20 to 40 percent or more on the invoice for bid preparation; and the content and management the contract award amount from the supplier. In particular, of the procurement contract (Table 3.6). Mali scores this was the case in the context of the clearance of the 59 percent for the first indicator, only lagging behind domestic debt initiated in 2015 by the Government. Burkina Faso (68 percent). This can be explained by open tendering being the default procurement method Snapshot of Public Procurement Efficiency and the obligation of the purchasing entity to inform other Aspects bidders of post-award contract variations as well as to them. For the second indicator, Mali scores 73 percent, A rapid assessment was carried out in three sector jointly leading with Cameroon, which can be attributed ministries (education, health, and agriculture) over to two aspects: (i) providers cannot modify the contract the period 2016 to 2018 to assess potential fiscal unilaterally during implementation; and (ii) the terms for savings from improved procurement practices based contract termination are part of the legal framework and on the available information.61 The review focused the procurement contract. on the planning and contracting process of public contracts awarded for school supplies and supplies for In contrast, Mali performs worse than its peers for year-end exams (Ministry of National Education), hospital bid submission (48 percent) and the bid opening, construction works (Ministry of Health), and agricultural evaluation and contract award phase (57 percent). inputs and equipment (Ministry of Agriculture). >>> Table 3.6: Benchmarking Public Procurement: Indicators and Scores of selected WAEMU countries Scores Indicators Mali Togo Cameroon DRC Burkina Faso 1- Needs assessment, calls for tenders, and 59 51 49 57 68 bid preparation 2- Bid submission phase 48 63 73 73 81 3- Bid opening, evaluation, and contract 57 43 71 71 57 award phase 4- Content and management of the 73 68 73 64 68 procurement contract 5- Payment of suppliers 48 67 48 67 42 Source: World Bank (2016b) Benchmarking Public Procurement 2017. 61  This review was based on the public procurement financed through the national budget completed by available information in statistics provide by DGMP and in the ARMDS’s annual report. MALI PUBLIC EXPENDITURE REVIEW >>> 85 The results of the assessment suggest that delays articulation expenditure commitment plans with public in contract approval and insufficient availability of procurement plans, annual work programs and budgets funds constitute a first barrier in the procurement (PTBA) and the cash flow plan for better optimization of process. The contracting authorities are required to expenditure programming based on available cash. document the availability of appropriations before launching any procurement process. In principle, this Approval times for contracts exceed the limits document constitutes the interface between the budget required by the public procurement code. The and the contracts to be awarded. It confirms that the average approval time for contracts awarded under allocated resources for this contract are available, even if review, including those approved by the Council of it does not offer all the security required to ensure public Ministers, is 29 working days on average (Table 3.7), resources are available at the time of the approval by exceed the 10 required by the public procurement code. the financial controller. If these credits are not available The long time taken to approve public contracts in the or are insufficient, approval will not be given, causing agriculture sector (on average 37 days) can be attributed delays in the approval process. to the high procurement volumes that pass the ceiling for procurement contracts and thus require approval by There are however efforts to establish the dematerialized the Cabinet of the Ministry. In the case of the agriculture interface between the budget and the contracts sector, weak contracting practices have increased through the implementation of the commitment plan by vulnerability to fraud and abuse. For instance, awarding program for the eight pilot ministries (Water and Energy, of contracts for fertilizers for the 2015/16 season by the Infrastructure and Equipment, Agriculture, Economy and CMDT—the semi-public limited company responsible Finance, National Education, Health, Employment and for managing Mali’s cotton production chain—resulted Security and Civil Protection) were developed in 2020. In in 40 percent of adulterated fertilizers for a total of CFAF perspective, efforts will be increased for the generalization 60 billion. This scandal led to the arrest of the chairman of this tool at the level of all sectoral ministries and the of the Union of Cotton Cooperatives. >>> Table 3.7: Length of Contract Approval Period Working days, average MINISTRY Number of days Education 22 Health 28 Agriculture 37 Source: Ministries. >>> Table 3.8: Contracts Awarded by Type of Procurement (2017) Contracting Goods Works authorities Number of % Total contract % Number of % Total contract % contracts amount contracts amount Ministry of Health 99 36% 26,809, 920,537 32% 10 17% 4,133,314,267 20% and Public Sanitation Ministry of 77 28% 47,345,839,006 56% 23 38% 14,514,131,634 70% Agriculture Ministry of 99 36% 10,534,653,384 12% 27 45% 2,163,667,558 10% Education Total 275 100% 84,690,412,927 100% 60 100% 20,811,113,459 100% 86 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 3.9: Contracts Awarded by Type of Procurement (2018) Contracting Goods Works authorities Number of % Total contract % Number of % Total contract % contracts amount contracts amount Ministry of Health 118 51% 17,238,940,209 55% 7 16% 5,008,113,134 24% and Public Sanitation Ministry of 32 14% 5,620,911,426 18% 18 41% 13,784,785,023 66% Agriculture Ministry of 80 35% 8,523,070,848 27% 19 43% 2,189,883,581 10% Education Total 230 100% 31,382,922,483 100% 44 100% 20,982,781,738 100% Long average payment times increase the costs The Impact of COVID-19 on Public of public procurement contracts. A comparison of Procurement domestic budget procurement prices with similar public procurement contracts for donor projects revealed price Many African governments have put in place differences of 18–27 percent. This discrepancy in prices measures to prevent the spread of the pandemic. can be attributed to long payment times but is also In Mali, the Government has issued a specific decree62 explained by the fact that the National Treasury is not in relation to the COVID-related contracts to facilitate required to respect the payment deadline of 60 days. the procurement of goods and services, in particular The time taken for suppliers to receive payment may diagnostic tests and medical equipment (gloves, masks, exceed 6–7 months, if not more in some cases. This and ventilators). period includes 60 days for the payment order and 60 days for the actual payment. These delays make it more Based on the information available and provided by difficult for small and medium enterprises to participate the DGMP-DSP, contracts awarded under COVID-19 in the contracting process, as they do not have sufficient amount to US$ 11 million (CFAF 6.2 billion). Most of the cash flow. Other enterprises over-estimate their costs to contracts were financed by Mali’s development partners reflect these additional charges. for the benefit of selected ministries, in particular the Ministry of Health. In July 2020, the Ministry of National Estimating the fiscal savings from improved Education (MEN) obtained accelerated COVID-19 procurement processes focuses on the over- funding from the Global Partnership for US$7 million. In evaluation of costs. Using the volume of public the meantime, hygiene kits (handwashing system, soap, procurement in the three sectors and an average gels, etc.) and masks have been provided to the MEN by overload assumed to be 23 percent, public other ministries (for example the Ministry of Commerce). procurement reforms to reduce payment delays and the extra costs related to the inefficiency of Preliminary information shows a mixed performance the contracting system would have resulted in with some governance issues in the use of the the following budget savings: CFAF 2.4 billion for COVID-19-related funding. For instance, contracts education (0.04 percent of GDP), CFAF 5.1 billion for awarded for the catering of patients in isolation and for health (0.09 percent of GDP), and CFAF 4.4 billion drugs in particular have been subject of scandals. The for the agricultural sector (0.08 percent of GDP) in Pharmacie Populaire du Mali was accused of buying fake 2018. Including all purchases financed by the national and counterfeit medicines. Some patients at the hospital budget, savings amount to US$ 132 million (CFAF 76 did not receive optimal nutrition and it is not known billion), representing 1.3 percent of GDP. exactly what the funding was spent on. In addition, it 62  Décret N°2020-0276 fixant le régime des marchés publics relatifs aux mesures de prévention et de riposte contre la maladie à COVID – 19. MALI PUBLIC EXPENDITURE REVIEW >>> 87 is unclear that the firms awarded these contracts have process, where risk is high, and control other any expertise in the purchased goods and, in many procurement ex post, and (iii) establish a priori cases, the same companies were awarded more than controls by the DGMP-DSP when the national 54 percent of the total amount of the contracts. There cotton entity (CMDT) is awarding agricultural is some anecdotal evidence that procurement process contracts to mitigate the possible risks of non- is long as reflected in delays in the contracts signing transparency or corruption procurement. and payment processing beyond the norm of 45 days. In contrast, procurement made on the local market was • R3.6 Move towards e-procurement to conduct generally well executed. all procurement operations from the publication of procurement plans to the signing of contract. Policy Recommendations To achieve this, it is recommended to conduct an e-procurement readiness assessment and a road The country’s legal and institutional frameworks no longer map on the reforms and their timing. In the meantime, seem appropriate in light of the challenges faced. The the government could take the appropriate steps security problems the country has been experiencing to ensure that electronic mail submissions are over a large part of the territory for several years and, authorized under acceptable security conditions. more recently, the COVID-19 pandemic demonstrates the need for a more agile and responsive procurement • R3.7 Automate and harmonize procurement system. It is now an urgent necessity to digitalize public planning, revenues, and budget limits through procurement, simplify procedures, and shorten decision- the Integrated Public Finance Management System making processes. Giving regions greater autonomy and (SIGFIP) and Integrated Procurement Management ensuring the effective participation of all stakeholders are System (SIGMAP) will further strengthen the system’s also increasingly important needs. ability to deliver a more efficient procurement process with the potential of expenditure savings • R3.4 Strengthen public access to procurement and avoidance of pending bills. information. Priority may be given to the creation of the Procurement Journal in line with the requirement • R3.8 Strengthen the institutional framework. of Article 63 of the public procurement code. Deploy the regional public procurement units foreseen by Decree N°2016-0115/PM-RM of • R3.5 Introduce a risk-based approach to March 15, 2016 to finalize the implementation of controls, with agriculture being one of the pilot the institutional framework for public procurement in sectors. To improve expenditure management, Mali. the Government may wish to foster expenditure control by: (i) removing redundant controls, • R3.9 Strengthen financial management and (ii) changing systematic ex ante control to a procurement capacities with a focus on planning, combination of ex ante control for the procurement contract execution, and payments. 88 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 3.10: Procurement: Recommended Policy Measures Policy actions Policy action details Time Potential fiscal horizon gains (+) / uses (-) Tax policy R3.4 Strengthen • Create the Procurement Journal in line with the Medium procurement requirement of article 63 of the public procurement term transparency. code. R3.5 Introduce a risk- • Remove redundant controls. Medium based approach to • Change systematic ex ante control to a combination term controls to strengthen of ex ante and ex post control for the procurement procurement process, process. with agriculture being • Establish a priori controls by the DGMP-DSP when one of the pilot sectors. the CMDT is awarding agricultural contracts. R3.6 Move towards • Conduct an e-procurement readiness assessment and Medium 1.3 e-procurement to a road map of the reforms and the timing. term foster efficiency and transparency. R3.7 Secure resources • Enhance coordination between different units under Medium for procurement. MEF and automate and harmonize procurement term planning, revenues, and budget limits. • Strengthen the links between the Integrated Public Finance Management System (SIGFIP) and Integrated Procurement Management System (SIGMAP). R3.8 Enhance public • implement the legislation by establishing regional Medium procurement at public procurement units. term subnational level. R3.9 Improve • Carry out capacity training focusing on in planning, Short procurement contracts, execution and payments for sector term capacities. ministries and subnational entities. MALI PUBLIC EXPENDITURE REVIEW >>> 89 4. >>> Education Mali recently adopted its 10 year education plan for 2019–28 but its first year of implementation has been severely undermined by the political crisis and the pandemic. Much-needed reforms have been put on hold, even though access to education at all levels has stagnated and repetition and completion rates lag those of peer countries. The sector is largely government funded and the country has succeeded in decentralizing and deconcentrating two-thirds of its expenditure. But spending is regressive and critical education inputs, particularly for basic education, are largely underspent. Despite recent reforms to the education civil service, uneven distribution of teachers, weaknesses in payroll control, and recent salary increases have undermined the sustainability and management of the education wage bill. Moreover, high dropout and repetition rates and inefficient use of teachers’ time are driving inefficiencies in the sector. To improve education performance and achieve better value for its limited resources, the Government may want to (i) address internal efficiencies, such as the reduction in repetition and dropout rates; (ii) improve inefficiencies in teaching by increasing teachers’ hours and reducing disparities in deployment; (iii) enhance the management of teachers; (iv) strengthen spending efficiency by reprioritizing expenditure towards basic education; and (v) enhance the efficiency of the education system. 90 >>> MALI PUBLIC EXPENDITURE REVIEW The chapter is organized as follows.63 Section 4.1 and institutional) since 2012 had a devastating impact on presents an overview of Mali’s education system, the education system and outcomes (Box 4.1). Critical focusing on the sector’s organization and strategy. reforms were put on hold, external funding reduced or Section 4.2 analyzes the performance of the education suspended (see Section 4.3), and the preparation of system across different dimensions, including PRODEC II, initially planned for 2014, was delayed by five enrollment, repetition, dropout rates, learning outcomes, years. The Government adopted a transitional plan for teacher utilization, rates of return, and the management 2015–17, which was extended to 2018. PRODEC II was of teachers. Section 4.3 discusses key trends in public finally prepared through extensive sector consultation at education spending and the distribution of expenditure central level in less than a year, adopted in mid-2019 by educational level, economic classification, and and is currently in its initial implementation stage (MEN, administrative level. Section 4.4 discusses efficiency MIRS, and MJEC, 2019). aspects of the education sector using the data envelopment analysis (DEA) model and sheds particular PRODEC II’s first year of implementation has been light on the drivers of internal efficiency and inefficiencies undermined by a series of domestic and external related to teacher utilization. Section 4.5 concludes with shocks. The roll out of education reforms has been policy recommendations. disrupted by social tensions, the COVID-19 outbreak, and the recent political crisis. A series of wage-related Context teachers’ strikes paralyzed the education sector in 2019 and 2020. The COVID-19 pandemic, coupled Mali’s Education Sector Strategy with the recent political crisis, has led to nationwide school closures for seven months and interrupted the The recently approved education plan for 2019–28 functioning of the education ministries. This has delayed emphasizes improving quality and strengthening the adoption of important legislation related to the the decentralization process. The Second Education establishment of the PRODEC II Steering committee Sector Plan (PRODEC II; Programme Décennal de (Republic of Mali, 2020a) and the updated education law Développement de l’Éducation Deuxième Génération) (Loi d’Orientation de l’Education), reflecting the axes and builds on the first plan under which key responsibilities reforms needed for PRODEC II. have been gradually transferred from central government to regions, counties (or cercles), and communes since The closure of schools and vocational learning 2002.64 PRODEC II focuses on: (i) strengthening the centers due to the pandemic has been associated internal and external efficiency of the education system; with several risks, particularly to the most vulnerable (ii) improving the training and management of teachers; students. As did most countries, Mali closed its schools (iii) promoting equitable access and inclusion and basic on March 19th as part of its containment measures. This education for all; (iv) strengthening the governance of has led to problems including: (i) learners dropping out of the sector; and (v) increasing the sector’s resilience.65 school; (ii) the resurgence of early marriage of schoolgirls; The plan is expected to be implemented in three phases (iii) the demotivation of students and parents; (iv) loss of with the first phase already launched through the learning; (v) the risk of school children enrolling in the implementation of a four-year costed action plan (Plan army; (vi) increased risk of abuse, violence, and a lack d’actions undamental budgétisé), covering 2019–22. of access to child protection services; and (vii) increased The plan is expected to be partially funded by available rural exodus and emigration (MEN, 2020a). Closures resources and by additional funding mobilized by have disproportionately affected the most vulnerable development partners. students, especially those living in areas affected by the security crisis. Most importantly, girls are at a higher risk PRODEC II’s preparation has been delayed by the of dropping out of school completely. They might face security situation and institutional disruptions over a disproportionally larger burden for caring for family recent years. Mali’s multiple crises (security, political, members with COVID-19 and younger siblings and be at 63  This chapter updates the previous 2017 PER informed by more recent and more granular data, including (i) an updated and more comprehensive BOOST set (covering the period 2010–20); and (ii) the 2017/18 annual statistics, and recent household surveys such as 2018 DHS, 2018 ECHVM and 2019 EMOP. While assessing the performance, financial, and efficiency aspects of the sector over the past 10 years, it also provides a snapshot of how the COVID-19 pandemic has affected the education sector. The data available have also made it possible to carry out a set of econometric and technical analysis, including the DEA, a benefit incidence analysis, and other relevant multivariable regression assessments. 64  Mali’s Government comprises four levels: the national administration, the regions and one district (the District of Bamako), counties (cercles), and communes. The latter three form the local government authorities. 65  Annex 4.1 summarizes PRODEC II’s objectives and targets. MALI PUBLIC EXPENDITURE REVIEW >>> 91 >>> Box 4.1: Impact of the Country’s Insecurity and Conflict on the Education System Context: The history of Mali’s education sector is characterized by political disruption, conflict, and social crisis. The armed conflict that began in 2012 had a particularly devastating effect on the education system and outcomes in terms of attainment, students dropping out, and repetition, especially in the north. It led to a massive displacement of people (including students and teachers), the destruction of infrastructure, and schools closing. It also reduced the demand for education as falling incomes led to less financial resources for school. Students stayed at home due to increased insecurity, and migration forced families to find new schools for their children. A study conducted by Mali’s development partners in 2015 estimated it would take US$ 130 million in immediate support and over US$ 1 billion over the next six years to rehabilitate the existing infrastructure, and repair and build new schools and health centers. The 2015 Peace Accord between the armed groups and the new government marked a new starting point for peace but the situation has remained instable, particularly in the ongoing conflict zones. Impact: According to a 2016 World Bank study, each year of conflict in a commune is associated with a 4 percent decline in school attendance and 0.3–0.4 fewer years of education per child. After four years of conflict (the duration of armed conflict in some northern regions), children and youth are about 16 percent less likely to be in school. Migration is associated with an even stronger adverse impact on schooling. For instance, children and youth aged 6 to 17 from migrant families have roughly 2.3 fewer years of education than those from non-migrant families. South-South migration is associated with a much larger negative impact on schooling for girls than for boys. Present situation: Conflict and insecurity continues to disrupt schooling, particularly in the regions that form part of the education cluster (the education cluster aims to reach children and youth in conflict-affected areas in the central and northern regions of Mali: Tombouctou, Kidal, Gao, Mopti, Ségou, and Koulikoro). The number of closed schools increased from 1,113 to 1,151 between December 2019 and January 2020, with the school closure rate varying from 6 percent in Ségou to 41 percent in Ménaka. Basic education schools (first cycle) have been disproportionately affected by this as more of them are located in remote and rural areas and thus they are more exposed to the conflict. Source: PRODEC II (2019-2028), World Bank PER (2017), Education Cluster January 2020. risk from undesirable family coping mechanism like child students, alongside public awareness messages about marriage. The full impact can only be assessed after the the crisis and preventive measures in many parts of the data become available. country.66 The official reopening of schools in September was accompanied by several safety measures, such as To mitigate the impact of the pandemic, the Ministry awareness raising about proper hygiene, sanitary kits, of National Education (MEN; Ministère de l’Éducation and guides to inform teachers about safety measures Nationale) prepared a COVID-19 strategy. To address in schools.67 While resources are needed to support the these risks, the strategy aims to: (i) limit the risks of post-pandemic measures related to the reopening of school dropouts through the educational routine and the schools and the passing of compulsory national exams, provision of key protective information; (ii) consolidate the recent coup and subsequent delay of donor aid the learning acquired before the closure of schools and have interrupted the sector’s external funding—including thus facilitate the resumption of classes in a protective the most recent funding of the Global Partnership for environment; and (iii) continue to provide learning in a Education—leaving the education sector in a dire state. protective environment. Education Structure Overall, the COVID-19 outbreak has diverted capacity and resources away from PRODEC’s broader reform Education is managed and funded through central, agenda to focus on distance learning, ensuring deconcentrated, and decentralized services but inclusion, and the safe reopening of schools. During frequent organizational changes have undermined the school suspension, a mixture of technology (radio, the effective management of the system. At television, the internet) has been used to broadcast the central level, three ministries are responsible educational content for primary and secondary for managing education and training: (i) the MEN, 66  Around 79 percent of the population live in rural areas, only 17 percent have electricity, 87 percent have access to the radio and 40 percent have a television. 67  Due to the loss of the last quarter in 2019/20, it was decided to use September-December to teach the last quarter of 2019/20, and to start the 2020/21 school year in January 2021. 92 >>> MALI PUBLIC EXPENDITURE REVIEW responsible for pre-school education, special education, streams, including general secondary education (three basic education, general secondary education, years) and vocational and teacher training schools technical education and vocational training, and normal (two to four years); the latter constitutes an important and non-formal education; (ii) the Ministry of Higher educational stream embedded in the system to directly Education and Scientific Research (MESRS; Ministère train preschool and basic education teachers. de l’Enseignement Supérieur et de la Recherche) which oversees universities and post-secondary education; The public sector is the main provider of basic and (iii) the Ministry of Employment and Vocational education while the private sector plays a central Training (MEFP; Ministère de l’Emploi et de la Formation role in secondary education. Out of about 3.6 million Professionnelle), responsible for vocational training, students enrolled in the public school system, more than skills development, and apprenticeships programs. The half are enrolled in public schools (57 percent), about organization of the sector has been subject to changes one-fifth are in private schools, 13 percent in Medersas since 2002. The recent restructuring since September (religious schools), and 11 percent in community 2018 has focused on merging and separating the schools.68 Private and community schools together MEN and the MESRS almost on a yearly basis. These account for 80 percent of preschool enrollment. At the institutional changes have undermined continuity basic education level, around 57 percent of students and leadership in the implementation of programs were enrolled in public schools and 16 percent in and reforms, leading to frequent changes in staff and private schools. Due to a lack of capacity after basic responsibilities. education, the Government transfers a large share of its students to general, technical, and vocational private Since 2002, the Government has comprehensively secondary schools, which catered for almost 70 percent decentralized the education sector. All education of secondary students in 2016/17.69 ministries are now represented at the regional and subregional levels by deconcentrated services which Demographic Trends correspond to the different levels of decentralization (regions, counties, and communes). Of the three Mali’s young population, coupled with a high level education ministries, the MEN is the most advanced in of demographic pressures, is putting severe strain implementing administrative and fiscal decentralization. on its education system. The country has a relatively The deconcentrated structures are responsible for large school-age cohort with an estimated 47 percent supporting schools by providing technical support and of the population aged under 15 (preschool, primary, carrying out educational supervision, inspection, and and lower secondary age) and 20 percent aged 15–24, training etc. The local management structure has been or the age of upper secondary and tertiary attendance. reinforced by an increased emphasis on community Among school-age children, about half are girls. The participation mechanisms at the school level, notably population is growing fast, with a growth rate of 3.6 parents’ associations (APEs; associations de parents percent, and the number of 6–24 year-olds is expected d’élèves) and school management committees (CGSs; to increase by one-third, from 9.9 million in 2020 to 13 comités de gestion scolaire). million in 2030. Basic education will absorb the bulk of these students, with 1.5 million additional students Mali’s formal education system consists of two entering basic education over the next ten years. To years of preschool education, six years of primary accommodate the increase in the number of school- education, and three years of lower secondary aged children and youth, Mali will need to scale up its education. Primary education is compulsory and begins efforts to construct schools and classrooms and recruit at the age of seven. Together, primary (Fondamental I, or teachers, while managing its available public resources the first cycle of basic education) and lower secondary better in a constrained fiscal setting. (Fondamental II, or the second cycle of basic education) education cover Grades 1-9 and have been free since 1970. Upper secondary education consists of several 68  Medersas follow an official recognized curriculum but differ from other schools as they teach in Arabic and offer Islamic education (reading and understanding of the Koran) as an extra subject. They receive support from the BID as well as from the Government in form of funding for school materials, training and equipment, and construction of classrooms. Similar to public schools, community schools benefit from transfers that support the school improvement funds (ADARS), school lunches, teaching material and cover the exams fees. Community teachers are also funded with US$ 43 (CFAF 25,000) per teacher/month and receive free training. 69  Except the training of teachers in teacher training schools where the public sector accommodates all students. MALI PUBLIC EXPENDITURE REVIEW >>> 93 Performance first cycle of basic education. Compared to its structural and aspirational peers, Mali ranks at the bottom on Access to preschool education in Mali remains this measure (Figure 4.2). Discrepancies in access by very low. Although the number of children attending gender also persist, with net enrollment among girls 6 preschool education slowly increased from 64,000 in percentage points lower than among boys. Access to the 2010 to 131,000 in 2018, it remains the least-developed second cycle of basic education has largely stagnated at level in the education system. The preschool gross a low level with an average GER of 54 percent and an enrollment rate (GER) reached 7 percent in 2018 (Figure average NER of 32 percent during 2010–18. 4.1), far below the Sub-Saharan Africa (SSA) average of 34 percent, while the net enrollment rate (NER) was only Access to secondary and higher education has 5 percent. shown little improvement. Enrollment rates in secondary education have stagnated, hovering around Access to basic education has declined in recent 27–29 percent between 2010 and 2018 (Figure 4.1). years, partly due to political fragility and the insecurity Only 14 percent of children of official secondary school situation. The GER for the first basic education cycle age were at school in 2018—this is significantly lower stood at 84 percent in 2011 but declined in subsequent than the enrollment rates of other peer countries such as years to 76 percent in 2018 as a result of the 2012 Zimbabwe (36 percent) and Rwanda (22 percent), but a political crisis and the fragile security situation since bit higher than Chad (9 percent) and the Central African then (Figure 4.1). Achieving universal primary education Republic (4 percent). Access to tertiary education also remains challenging for the country, with less than two- remains limited (the GER averages 6 percent) and is thirds of children of primary school age enrolled in the lower than the SSA average of 9 percent. >>> >>> Fi ur 4.1: Gross Enrollm nt R t B Fi ur 4.2: B nchm rkin N t Enrollm nt Educ tion L v l nd Y r (2010–18) in th First C cl of B sic Educ tion (Prim r ) 90% 100% 98% 95% 95% 91% 94% 95% 80% 80% 73% 70% 66% 60% 59% 60% 50% 40% 40% 30% 20% 20% 10% 0% 0% Rw nd (2018) U b kist n (2018) L os (2018) T jikist n (2017) Zimb bw (2013) CAR (2012) nd (2013) Ch d (2016) M li (2018) 2010 2011 2012 2013 2014 2015 2016 2017 2018 Pr -school B sic duc tion (1st c cl ) B sic duc tion (2nd c cl ) U S cond r T rti r Aspir tion l p rs Structur l p rs Sourc : UNESCO St tistics, 2010–18. Sourc : UNESCO St tistics. 94 >>> MALI PUBLIC EXPENDITURE REVIEW Repetition, Dropout, and Completion Rates Children are still likely to drop out of basic education in Mali. In the first cycle of basic education, dropout rates Mali has high repetition rates in basic education. range from 11 percent for Grade 2 to 20 percent in Grade Repetition rates are particularly high in Grades 4–6— 6 (Figure 4.5). In the second cycle of basic education, over 20 percent, compared to 12 percent in Grade 1 the dropout rates reached 19 percent in 2018. The and 14 percent in Grade 2 (Figure 4.3). Rates increase difference between boys and girls is marginal. According further in the second cycle, reaching 32 percent in Grade to the Household Survey (EMOP) in 2019, among 9 in 2017/18. Mali has the worst rates among its peer 6–14 year-olds the main reasons for dropping out were countries; for instance the average repetition rate is only voluntary (45 percent for girls and 58 percent for boys), 9 percent in Uganda and 16 percent in Chad for the first failure at school (15 percent for both), and parents’ lack cycle of basic education, and 1 percent and 22 percent of interest (11 percent for girls and 7 percent for boys). in the second cycle (Figure 4.4).70 Boys are more likely Low income and the opportunity cost associated with to repeat during the first cycle of basic education, while forgone child labor are suggested as key factors behind the rates are almost the same for boys and girls in the this lack of interest in school (UNICEF, 2019). second cycle of basic education. 70  Based on UNESCO statistics in 2015 and 2016. MALI PUBLIC EXPENDITURE REVIEW >>> 95 >>> >>> Fi ur 4.3: B sic Educ tion R p tition Fi ur 4.4: B nchm rkin B sic Educ tion R t s b G nd r (2017/18) R p tition R t s 35% 32% 40% 36% 30% 35% 26% 30% 25% 22% 21% 20% 20% 25% 20% 19% 21% 22% 20% 15% 14% 16% 12% 15% 13% 10% 10% 9% 5% 5% 4% 5% 4% 5% 1% 0%0% 1% 0% 0% (2016) Ch d (2015) (2016) Af h nist n (2017) T jikist n (2016) (2017) (2017) M li L os Gr d 1 Gr d 2 Gr d 3 Gr d 4 Gr d 5 Gr d 6 Gr d 7 Gr d 8 Gr d 9 Rw nd U nd B sic duc tion (1st c cl ) B sic duc tion (2nd c cl ) Structur l p rs Aspir tion l p rs Bo s Girls All B sic Educ tion (1st c cl ) B sic Educ tion (2nd c cl ) Sourc : EMIS 2017-2018. Sourc : UNESCO St tistics. >>> >>> Fi ur 4.5: B sic Educ tion Dropout R t s Fi ur 4.6: B nchm rkin B sic Educ tion b G nd r (2016/17–2017/18) Compl tion R t s (2014–17) 25% 100% 95% 22% 88% 86% 20% 20% 19% 80% 73% 16% 15% 15% 14% 60% 53% 54% 54% 11% 11% 48% 44% 10% 40% 37% 28% 26% 27% 28% 5% 5% 20% 14% 0% 0% Gr d 1 Gr d 2 Gr d 3 Gr d 4 Gr d 5 Gr d 6 Gr d 7 Gr d 8 Gr d 9 T jikist n (2017) (2017) (2015) (2015) Af h nist n (2015) (2016) Ch d (2014) M li (2015) L os Zimb bw Rw nd U nd First c cl of b sic duc tion S cond c cl of b sic duc tion Aspir tion l p rs Structur l p rs Bo s Girls All 2nd c cl of B sic Educ tion compl tion r t (Low r S cond r ) 1st c cl of B sic Educ tion compl tion r t (Prim r ) Sourc : EMIS 2017-2018. Sourc : UNESCO St tistics, b s d on hous hold surv s. 96 >>> MALI PUBLIC EXPENDITURE REVIEW Basic education completion rates in Mali are still as the main reason for 6–11 year-olds never having low. Basic education completion rates were estimated attended school (56 percent for girls and 53 percent for at 48 percent for the first cycle and 28 percent for the boys). Almost half of 6–11 year-olds from the poorest second cycle in 2015, placing Mali among the worst households have never attended school compared with performing countries compared to its peers (Figure 4.6). only 24 percent from the richest (Figure 4.7). There are High repetition rates in both cycles, long journeys to also large disparities between rural and urban areas: 48 school, and insufficient school supplies are among the percent of 6–11 year-olds and 40 percent of 12–14 year- barriers preventing children from completing a full cycle olds have never attended school in rural areas compared of basic education (UNICEF, 2019). The survival rate for to 19 and 15 percent in urban areas. The regions with the last grade of the second cycle of basic education the highest out-of-school rates are Mopti (56 percent was estimated to be 68 percent in 2016, placing Mali of 6–14 year-olds) and Tombouctou (52 percent) while behind peer countries like Afghanistan (78 percent) and rates are low in Bamako (9 percent). Zimbabwe (94 percent). High repetition rates meant the percentage of Out-of-School Children children who are over-age increases with age. Nearly 28 percent of 7-year-olds are over-age for their Although basic education is supposed to be current grade, while among 11-year-olds, the proportion compulsory, more than one-third of school-age reaches 50 percent for girls and 48 percent for boys children have never attended school. Estimates from (Figures 4.8 and 4.9). the Household Survey (EMOP) in 2019 suggest that 42 percent of 6–11 year-olds and 34 percent of 12–14 year- Learning Outcomes olds have never attended school (Figure 4.7). Among younger children, 67 percent of 6-year-olds have never Learning outcomes are poor. According to the latest attended school, suggesting children enter the school 2011 international learning assessment (PASEC; system late. Girls are less likely to enter school than Programme d’Analyse des Systèmes Éducatifs de la boys (Figures 4.12 and 4.13). Among 6-year-olds, 70 Confemen), the large majority of Grade 2 students did percent of girls have never been at school, compared not have sufficient competency in mathematics (56 to 65 percent of boys. Parents’ lack of interest is cited percent) and French (66 percent). The 2015 Early Grade >>> Fi ur 4.7: Out-of-School 6-14 Y r-Olds (2019) 60% 50% 40% 30% 20% 10% 0% Quintil 2 Quintil 3 Quintil 4 Quintil 2 Quintil 3 Quintil 4 All Girls Bo s Urb n Rur l All Girls Bo s Urb n Rur l Poor st Rich st Poor st Rich st 6-11 rs 12-14 rs H v n v r tt nd d school Dropp d-out Sourc : World B nk c lcul tion b s d on Hous hold Surv EMOP, 2019. MALI PUBLIC EXPENDITURE REVIEW >>> 97 >>> >>> Fi ur 4.8: School St tus of Bo s b A Fi ur 4.9: School St tus of (2019) Girls b A (2019) 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 6 7 8 9 10 11 12 13 14 6 7 8 9 10 11 12 13 14 Dropout Dropout At school, ov r At school, ov r At school, und r /ontim At school, und r /ontim H v n v r tt nd d school H v n v r tt nd d school Sourc : World B nk c lcul tion b s d on Hous hold Surv EMOP, 2019. Not : C lcul tion of ov r- nd und r- is b s d on th l l for ch r d : 6–11 rs for th 1st c cl of b sic duc tion, 12–14 rs for th 2nd c cl of b sic duc tion. Reading Assessments results confirm that more than years for girls. Compared to its peers, the country has a two-thirds of students in Grade 2 did not have basic low Human Capital Index (Figure 4.12). literacy competency. The results are worse by Grade 5, where only 10 percent of students have sufficient International and national assessment results competency in mathematics and 13 percent in French. suggest that poor children and those who repeat Together, these findings suggest almost 90 percent of grades perform less well than others, while children students perform poorly at the end of the first cycle with preschool experience perform better. The PASEC of basic education. The 2016 national BEEKUNKO results showed that girls outperformed boys in French in evaluation showed similar poor learning outcomes, Grade 2 but boys did better in mathematics in Grade 5 particularly in the early grades: 64 percent of Grade 2 than girls. Students from the poorest households fared students scored less than 50 percent in literacy and worse in literacy in Grade 5, with a 48 percentage point 77 percent scored below that in mathematics (Figure difference between the scores of the poorest and the 4.10). Students’ performance in national examinations richest children. Likewise, students who had repeated improved between 2016 and 2018, but it has declined a grade performed worse than those who had not, since 2018 in basic education and technical education underscoring the detrimental impact of repetition on (Brevets de Techniciens, BT1 and BT2) and since 2017 in student performance. It is also noteworthy that results secondary education (Baccalauréat, BAC) (Figure 4.11). from the national BEEKUNO evaluation suggest that students who had attended preschool performed Mali’s Human Capital Index is estimated to be 0.32 better than others, highlighting the importance of early in 2020. The index captures the amount of human education. capital a child born in 2020 could expect to attain by the age of 18. In other words, a child born in 2020 is These results have been attributed to a number of likely to only reach 32 percent of his or her potential as factors, such as teacher training and availability of a child born into conditions of complete education and textbooks. Results from PASEC suggest that students full health. One of the components of this index is the taught by untrained teachers tend to perform less well expected years of school that a child is likely to attain: in French than others in Grade 2 but there was no In Mali this is estimated to be 5.6 years for boys and 4.9 significant correlation between teachers’ training and 98 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 4.10: P rform nc of 6-14 Fi ur 4.11: P rform nc in N tion l Y r-Olds in BEEKUNKO Ev lu tion (2016) Ex min tions (2013–19) 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% M ths M ths M ths M ths 2013 2014 2015 2016 2017 2018 2019 Lit r c Lit r c Lit r c Lit r c Gr d 2 Gr d 6 Gr d 9 Gr d 10 BT2 Scor d 50 out of 100 nd bov B sic duc tion Scor d l ss th n 50 out of 100 CAP BT1 Without n corr ct it ms BT1 Sourc : UNICEF (2019) An l s du S ct ur d l’Educ tion. Sourc : Ministr of Educ tion, 2013–19. Not : BT = Br v t d T chnici ns, BAC = B cc l uré t, CAP = C rtific t d’Aptitud Prof ssionn l. >>> Fi ur 4.12: B nchm rkin Hum n C pit l Ind x Scor s (2020) 0.6 0.5 0.5 0.47 0.46 0.4 0.38 0.38 0.4 0.32 0.3 0.3 0.2 0.1 0 M li Ch d U nd Af h nist n Zimb bw Rw nd L os T jikist n Structur l p rs Aspir tion l p rs Sourc : Th Hum n C pit l Proj ct, World B nk 2020. MALI PUBLIC EXPENDITURE REVIEW >>> 99 performance in mathematics. Results from BEEKUNO led to improved performance. The most recent data highlighted the importance of teachers’ experience and show that the bulk of education staff (87.5 percent) are professional qualifications for students’ performance. teachers and more than half work in basic education.72 Students whose teachers had more than 5 years of Teachers have a variety of employment statuses. In an experience and schools with a higher proportion of effort to improve the working conditions of centrally and teachers from teacher training institutes performed locally employed contract teachers, the Government better. These findings have been underscored by the began to integrate them into the local government recent World Bank 2020 study that highlighted how (LG) civil service in 2010. These now account for the teachers—especially new ones—lack the minimum largest category of teachers. The remaining contract qualification required to teach basic school programs, workers will have to pass competitive exams to enter which has a negative impact on student learning and the LG civil service. In 2018, following a series of strikes outcomes.71 PASEC also found that the classroom and negotiations, the Government established an equipment index (tables, desks, school material, autonomous status for teachers.73 Despite being given electricity, etc.) was positively associated with student more secure employment and a slightly better salary performance in French in Grade 2. Access to textbooks scale, there is evidence it has not improved the quality tended to improve students’ performance in French in of teaching, as the results of national and international Grade 2 and Grade 5. Despite this, the ratio of textbooks learning assessments discussed above suggest. per student in Grade 5 has slightly deteriorated from 0.9 in 2010/11 to 0.7 in 2014/15. About 44 percent of Despite efforts to secure funding for teacher students in Grade 2 and 14 percent in Grade 5 did not recruitment over the past decade, teachers remain have mathematics textbooks. in short supply. Over the past decade, the Government has secured a fixed envelope of about US$ 13 million Rate of Return on Education (CFAF 7 billion) for teacher recruitment in the budget. Most of the teachers (91 percent in 2010–15 and 60 In Mali, education is strongly related to greater percent in 2016–18) have been recruited to teach in prosperity, with each additional year of education basic education. To address teacher shortages, as resulting in about 13 percent higher wages. Estimates evidenced by practices such as double shifts in basic from the 2019 National Household Survey show that education and overtime in secondary education, the two-thirds of the working-age population (15-64 year- Second Education Sector Plan (PRODEC II) committed olds) have no formal education (Figure 4.13). The share to recruiting 5,125 teachers per year, 70 percent in basic is higher among women, rural populations, and people education. Achieving this may be challenging given it in Mopti and Tombouctou. Average wages rise steadily requires the mobilization of additional public resources with increasing educational attainment but men on in a tight fiscal setting. average earn more than women at all levels of education (Figure 4.14). Estimates from Mincerian regression Mounting insecurity in several regions, coupled suggest that each additional year of education results with school closures, have resulted in teachers in about 13 percent higher wages. A wage earner with leaving education and contributed to their uneven first cycle basic education earns 32 percent more than geographical distribution. In the first cycle of basic one without any education diploma (Figure 4.15). The education, the number of students enrolled increased gap increases to 38 percent for those with second cycle by 2 percent between 2015 and 2018, while the basic education, 86 percent for those with secondary number of teachers increased by 17 percent (Figure education, and more than 100 percent for those with 4.16). Although this improved the student-teacher ratio higher education so each additional level of education is at the national level from 57:1 to 49:1, in some areas it worth investing in. has deteriorated, especially the northern regions such as Tombouctou and Gao, which registered the highest Teacher Management student-teacher ratio in public schools of the first cycle of basic education in 2017/18 (Figure 4.17). Mali’s teachers work under a variety of employment regimes but improved financial security has not 71  In its first year (2011), the newly established Teacher Education program only managed to train 4 percent of the teachers in first cycle basic education, and 6 percent of those in second cycle basic education (Republic of Mali, 2020b). 72  According to the latest data available (from 2015) there are 73,297 employees in public education. Of these, 87.5 percent are teachers, 8.7 percent are administrative staff at deconcentrated level, and 1.2 percent are non-teachers (see Annex VII for more information). 73  Law No. 2018-035 of June 27, 2018 on the general status of LG employees. 100 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur 4.13: Distribution of th Workin Popul tion b L v l of Educ tion, 2019 100% 5 5 4 9 11 8 90% 11 11 13 11 9 9 10 9 14 11 18 8 17 27 14 9 80% 13 15 13 13 20 16 16 29 70% 15 19 34 60% 23 50% 19 40% 80 82 83 82 74 75 73 78 20 70 67 72 66 67 63 30% 57 46 20% 39 28 10% 0% S √© ou 15-24 25-34 35-44 45-54 55-64 15-64 Wom n M n Rur l Urb n s Koulikoro Sik sso Mopti Tombouctou G o B m ko K A A A A A A G nd r Ar R ion Non duc tion S cond r 2nd c cl of b sic dcuc tion 1st c l of b sic duc tion Hi h r duc tion Pr school >>> >>> Fi ur 4.14: E rnin s b G nd r nd Fi ur 4.15: Minc ri n R r ssion R sults of Educ tion l Att inm nt (2019) E rnin Incr s s b L v l of Educ tion (2019) CFAF 2000 4.0 140% 3.5 120% 1500 3.0 100% 2.5 80% in '000 1000 2.0 60% 1.5 40% 500 1.0 0.5 20% 0 0.0 0% B sic B sic S cond r Hi h r No of b sic duc tion S cond c cl of b sic duc tion Hi h r duc tion First c l S cond r diplom duc tion duc tion duc tion (1st c cl ) (2nd c cl ) M n Wom n All R l tiv to p r c pit GDP (ri h xis) Sourc : Authors’ c lcul tions b s d on EMOP 2019. Not : Estim t d nnu l s l r b s d 2014 CFAF. MALI PUBLIC EXPENDITURE REVIEW >>> 101 >>> >>> Fi ur 4.16: Numb rs of Stud nts nd T ch rs Fi ur 4.17: Stud nt-T ch r R tio in in B sic Educ tion (2014/15 nd 2017/18) B sic Educ tion (2014/15 nd 2017/18) Public schools, first c cl of b sic duc tion Public schools, first c cl of b sic duc tion 1,600,000 70 65 1,368,213 1,394,777 60 1,400,000 60 57 1,200,000 51 51 49 School - Teacher ratio 50 4746 47 47 48 4446 1,000,000 42 40 800,000 30 600,000 20 400,000 200,000 10 24,128 28,306 0 0 Stud nts T ch rs B m ko Tombouctou s GAO S ou Mopti Sik sso All public schools K 2015 2018 2017-2018 2014-2015 Sourc : MEN, Annu ir N tion l d s St tistiqu s d s Ens i n m nt Sourc : EMIS 2015-2014 nd 2018-2017. Fond m nt l 2014-2015, 2017-2018; EMIS 2015-2014 nd 2018-2017. * D t for Kid l for 2015 r not v il bl nd d t for Koulikoro r b in r vi w d. A key barrier to the effective management of teachers Government (86 percent), followed by households (10 are the practices for deploying them. The distribution percent), and development partners (4 percent) (World of teachers does not necessarily reflect the number Bank, 2017). Household contributions are low compared of students enrolled, but is influenced by teachers’ to the SSA average: they amounted to 0.4 percent in preferences for urban areas (Republic of Mali, 2020b). 2014 compared to 2.4 percent in Benin, 2 percent in The country is characterized by strong geographical, Burkina Faso, and 1 percent in Burundi, although Malawi economic, and cultural disparities, while political and and Niger were similar at 0.3–0.4 percent (World Bank, security-related tensions mean some areas are more 2017). However, Malian households spend more on popular among teachers. There is no clear policy early and basic education than on post-basic education, on financial or non-financial incentives to encourage raising questions about the equity of the school system teachers to work in rural, high-risk, and other difficult (UNICEF, 2019). areas. To address shortages, remote and insecure areas recruit local teachers, who tend to be less well- Trends in Education Expenditure qualified. Although this practice undermines the quality of education, it has allowed education to continue to be The Government’s commitment to the sector is delivered in insecure areas. reflected in its significant share of the budget, and gradual increases in spending since 2012. Education Financing was the largest sector in the national budget (accounting for 16.2 percent), followed by defense (12.2 percent) Financing Sources and finance (12.2 percent) during 2018–20 (see Annex II). The bulk of education expenditure (on average 93 Mali’s education sector depends heavily on percent) is managed by the MEN (Figure 4.18). Following government financing. According to the 2014 a fall in 2012 associated with the political crisis, public household data, in total, about US$ 614 million (CFAF 295 expenditure on education has shown an upward trend billion) was spent on education from public and private (on average 11 percent) with the exception of 2016, sources combined. The bulk of this was funded by the reaching US$ 616 million (CFAF 355 billion) in 2018 102 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 4.18: Av r Educ tion Appropri tions Fi ur 4.19: Public Educ tion Sp ndin nd Exp nditur b Educ tion Ministr (2010–20) b Sourc (2010–18) Educ tion xp nditur s (% of GDP, l ft xis) 400 135 350 130 300 125 In CFAF billions 250 120 in US$ 200 115 150 110 100 50 105 0 100 2010 2011 2012 2013 2014 2015 2016 2017 2018 MEN; 93% MESRS; 5% MEFP; 2% Ext rn ll fin nc d (l ft xis) Oth r; 0% Dom stic ll fin nc d (l ft xis) P r stud nt sp ndin (ri ht xis) Sourc : BOOST. Sourc : BOOST. >>> Fi ur 4.20: B nchm rkin Educ tion Sp ndin (2010–18) Av r 25 2500 Educ tion xp nditur (% of tot l public xp nditur , l ft xis) 20 2000 15 1500 10 1000 5 500 0 0 WAEMU C ntr l Afric n R public Af h nist n Ch d T jikist n WAEMU C ntr l Afric n R public Af h nist n Ch d T jikist n M li U b kist n M li U b kist n L os L os Rw nd Rw nd nd nd Av r Av r U U Structur l p rs Aspir tion l p rs Structur l p rs Aspir tion l p rs Educ tion xp nditur s GDP p r c pit % of GDP (ri ht xis) Sourc : World D v lopm nt Indic tors (2010–18). Not : d t v il bilit : M li (2010–16), CAR (2010–11), Af h nist n (2010–17), U nd (2010–17), Ch d (2010–13), Rw nd (2010–17), T jikist n (2010–12, 2015), L o PDR (2010–14), U b kist n (2013–17). MALI PUBLIC EXPENDITURE REVIEW >>> 103 (Figure 4.19). Despite this, available data on spending 13 percent in 2013 to 19 percent in 2018, although it per student shows a decline from US$ 129 in 2011 to then fell to 16 in 2019 and 15 percent in 2020 (Figure US$ 110 in 2016, suggesting spending has not kept 4.21). Relative to GDP, Mali’s education expenditure pace with the growth in the school-age population.74 remains slightly below the recommended benchmark of 4–6 percent of GDP, amounting to 3.8 percent in 2018. The increase in education resources has been almost It spends less than the WAEMU average and ranks fifth entirely domestically funded. Domestic funding after Uzbekistan, Tajikistan, Rwanda, and Afghanistan accounted for 95 percent of spending on average among its peers. However, it spends more by this 2010-2018. External financing in the sector has shifted measure than Chad and Lao PDR, even though they from budget support to ad hoc project support since have a higher GDP per capita. the 2012 political crisis. External funding accounted for only 3 percent of public education expenditure over the Recent budget cuts and the freezing of external aid period 2013–18 (Figure 4.19). have put the system in severe financial distress. In terms of the adequacy of education expenditure, Compared with its peers, Mali’s education spending PRODEC II provided an opportunity to address sector performance is mixed, with a high share of the overall challenges, channel funding to priority areas, and budget but a low share relative to GDP (Figure 4.20). mobilize domestic and external resources. COVID-19 Spending on education is just below the West African has imposed additional funding needs on the sector, Economic and Monetary Union (WAEMU) average of while the 2020 mid-year budget cuts and reallocations 18.2 percent of total public expenditure, but more than towards COVID-19-related emergency expenditure most of its structural and aspirational peers. Mali is also show the Government has prioritized the health sector, within the internationally recommended benchmark but also defense and finance, which manages most of (UNESCO, 2015) of education expenditure of 15 percent the emergency projects related to the pandemic (Figure of the national budget, with the share increasing from 4.22). >>> >>> Fi ur 4.21: Tr nds nd R quir d Fi ur 4.22: Comp rison of Bud t Educ tion Appropri tions nd Exp nditur Appropri tions of S l ct d S ctor Ministri s (2010–22) (2019–20) 600 25 400 350 500 20 300 400 in billions CFA in percentage 250 in billions CFAF 15 300 200 10 150 200 100 5 100 50 0 0 0 MEFP MSHP 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 MA MEN MESRS MEE MIE MDC MS MFE Actu l Bud t Educ tion nd Productiv Oth r H lth s ctors Educ tion xp nditur s (l ft xis) PRODEC II costin (l ft xis) 2019 Sh r of Public xp ditur s (ri ht xis) 2020 (Initit l bud t) Sh r of GDP (ri ht xis) 2020 (R vis d bud t) Sourc : MOF (BOOST). Sourc : MOF (BOOST). Not : MSHP= Min of H lth, MEE= Min of En r nd W t r, MA=Min of A ricultur , MDC=Min of D f ns nd Comb t nts, MS=Min of S curit , MFE= Min of Fin nc nd Econom . 74  Based on the population of children of preschool, basic education, and secondary school age. 104 >>> MALI PUBLIC EXPENDITURE REVIEW Expenditure by Education Level scholarships, raising equity concerns as most students accessing tertiary education tend to come from well-off More than half of education expenditure goes on households. Preschool spending is also low even though basic education, where the majority of students it is known to improve cognitive skills and educational are enrolled, but leaves scope for improvements in attainment. other educational levels.75 The share spent on the first and second cycles of basic education dropped Compared to its peers, Mali spends less on primary slightly from 55 percent of public expenditure in 2015 education but spends relatively more on secondary to 52 percent in 2017 (Figure 4.23)—this is still in line and tertiary education. As Figure 4.24 shows, Mali with the Global Partnership for Education good practice ranks just after Lao PDR and below the WAEMU average recommendation of 50 percent (GPE, 2020). Over the for spending on primary education (corresponding to same period, the share spent on secondary education first cycle basic education). In contrast, its secondary rose from 25 percent to 30 percent in 2017 while the and tertiary education spending is above the WAEMU post-secondary education share fell from 21 percent average, making Mali one of the countries with the to 17 percent. Education spending is disproportionate highest share of spending at these levels among its peers. to enrollment as basic education accommodates 85 There seems to be room to reallocate resources towards percent of all students. In contrast, tertiary education primary education given the large number of students out represents less than 3 percent of students and receives of school and taking equity considerations into account, almost one-fifth of public resources. About one-fifth of as low-income students make up a decreasing share of recurrent expenditure on higher education is spent on students as the level of education rises. >>> >>> Fi ur 4.23: R curr nt Educ tion Fi ur 4.24: B nchm rkin Av r Exp nditur b L v l (2015 nd 2017) Educ tion Sp ndin b L v l (2010–18) 120 400 60 350 100 50 21.5 17.0 300 80 40 in percentage 250 25.2 30.2 in US$ 60 200 30 18.1 6.7 150 40 20 100 20 45.0 10 37.4 50 0 0 0 2015 2017 SSA T jikist n Af h nist n Ch d CAR L os M li WAEMU Av Rw nd nd Post s cond r S cond r U Pr school B sic duc tion (C cl II) Hi h r B sic duc tion (c cl I) Tot l r durr nt xp ndiutr s (ri ht xis) Aspir tion l p rs Structur l p rs T rti r S cond r Prim r Sourc : MEN 2017; UNICEF (2019) An l s du S ct ur d l’Educ tion. Sourc : WDI. Not : d t v il bilit : M li (2010–16), CAR (2010), Af h nist n (2010–17), U nd (2010–14), Ch d (2010–13), Rw nd (2010–13, 2015-2016, 2018), T jikist n (2010–12, 2015), L o PDR (2010–14). No d t v il bl for U b kist n. 75  Since the budget nomenclature is not aligned to the Government’s education priorities and goals (with budget codes for preschool, primary, secondary, and tertiary education often combined), this expenditure review by level is based on data available in the 2017 RESEN (UNICEF, 2019). The breakdown is based on the recurrent budget, as information on the investment budget by level is not available. MALI PUBLIC EXPENDITURE REVIEW >>> 105 Expenditure by Economic Classification expenses, such as textbooks and teaching material. These account on average for one-fifth of MEN’s goods Staff salaries consume an increasing share of public and services spending. A 2011 audit of private secondary education expenditure, reflecting the increased schools—both general and vocational—highlighted that transfer of responsibilities to the local government approximately one-third of resources (amounting to level. As Figures 4.25 and 4.26 show, the lion’s share US$ 5 million, or CFAF 2.5 billion) were paid to “ghost of recurrent expenditure is consumed by staff salaries, students”, who were no longer enrolled, although which represent about 58 percent of total education schools continued to report them in order to receive expenditure and up to three-quarters of basic education the funding.76 Another exercise carried out by the MEN recurrent expenditure. Spending on salaries has grown in 2018 identified approximately US$ 13 million (CFAF in real terms over the past 10 years with the payroll of civil 8 billion) of resources associated with inconsistencies servants and contract workers at the local government between the Technical Academy’s database of students level almost doubling (Figure 4.27). The upward trend and that of the National Directorates. The misuse of in the wage bill can be attributed to the conversion of resources has been attributed to fragmented student contract workers to civil servants, salary adjustments databases, a lack of effective internal controls verifying (see below) and, to lesser degree, to the recruitment of student attendance, and a lack of accountability staff associated with the transfer of responsibilities to the mechanisms for the private schools. In an effort to LG level. Similarly, total salaries for the deconcentrated address this, the Government is in the process of frontline units also increased substantially. In contrast, automating the entire chain from student registration to the payroll for civil servants and contractual staff at the reporting and verification for the second cycle of basic central government level showed a decline in real terms education and secondary education, as well as linking over the same period. private school subsidies to student performance and attendance. Critical educational inputs such as school meals, education materials, and textbooks are underfunded Public investment in the education sector has (Figure 4.28). Non-salary recurrent expenditure has fluctuated, reflecting the fragile context and halved between 2013 and 2018, both as a share associated volatility of donor aid (Figure 4.29). of spending and in real terms. About 20 percent of Despite these oscillations, investment has shown an expenditure in the first cycle of basic education was on upswing since 2014, bringing it back to pre-crisis levels non-salary recurrent expenditures, below the one-third both in real terms and as a share of total expenditure. recommended by the Education for All – Fast Track Despite a rise in external aid in the aftermath of the 2012 Initiative. The MEN’s budget for critical inputs for basic crisis, accounting for US$ 46 million (CFAF 28 billion) in education are low—for example, funding for school 2015, it has fallen to US$ 17 million (CFAF 10 billion) in lunches is about 17 cents (CFAF 100) per student. School 2018. This was offset by a mobilization of domestically grants (ADARS; Appui en matériel à l’enseignement funded resources, amounting from US$ 2 million (CFAF undamental) are also low and often only a few of these 13 billion) to US$ 68 million (CFAF 39.5 billion) over the resources reach the schools (Republic of Mali, 2020b). same period, reflecting the Government’s commitment Funding for spending on textbooks for primary education to the sector, with a focus on primary and secondary is most often not available Transfers hovered at around education. 4–5 percent of education expenditure during 2010–17; the spike in the share to one-fifth of expenditure in The bulk of external aid is provided off budget. 2018–20 can be attributed to the integration of higher According to a 2018 donor aid inventory, 98 percent of education entities such as universities and research and external aid for education is off budget and provided by training institutes into the budget of the MESRS. about 20 bilateral and multilateral organizations and 10 non-government organizations (NGOs). The proliferation Private secondary schools have also benefited of donor and NGO projects and programs and the lack from subsidies; but governance challenges have of consolidated reporting on aid implementation not only undermined the effective management of these undermines strategic planning in the sector but also resources. The Government subsidizes students at puts a severe administrative strain on the education private schools by paying their tuition and some of their ministries, in particular the MEN, in terms of procurement, disbursement, and monitoring requirements. 76  Koni Audit, Contrôle physique des élèves « étatiques » dans les établissements d’enseignement secondaire privés et de la gestion du financement public alloué à ces établissements: Année Scolaire 2009-2010, 2011. 106 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 4.25: Exp nditur b Economic Fi ur 4.26: Curr nt Exp nditur Cl ssific tion (2010–20) b Sp ndin C t or nd L v l (2015) 450 100% 400 350 80% 300 60% 250 200 40% 150 100 20% 50 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Pr school B sic duc tion (c cl 1) B sic duc tion (c cl 2) Non form l S cond r T rti r Actu l Bud t S l ri s Goods nd S rvic s Oth r Schol rships Tr nsf rs Inv stm nt Subsidi s School m t ri l Goods nd s rvic s S l ri s Sourc : BOOST. Sourc : UNICEF (2019) An l s du S ct ur d l’Educ tion. >>> >>> Fi ur 4.27: Tot l S l ri s for MEN Civil Fi ur 4.28: MEN S l ct d Educ tion l S rv nts nd Contr ct Work rs (2010–17) Inputs (2014–16) 180 16 160 14 140 12 120 iin CFAF billions in CFAF billions 10 100 8 80 6 60 40 4 20 2 0 0 2010 2011 2012 2013 2014 2015 2016 2017 Schol rships r nts School lunch School (ADARS) School m t ri l nd t xt books School m t ri l nd t xt books (public) School m t ri l nd t xtbooks (priv t ) S l ri s (civil s rv nts nd contr ctu l of th St t ) S l ir s (civl s rv nts nd contr ctu ls of LGs) S l ir s (tot l) B sic duc tion S cond r duc tion 2014 2015 2016 Sourc : BOOST. Not : br kdown of s l ri s b mplo m nt st tus is onl v il bl for 2010–17. MALI PUBLIC EXPENDITURE REVIEW >>> 107 >>> Fi ur 4.29: Public Inv stm nt Exp nditur , b Ministr nd Sourc (2010–18) 60 50 50 40 40 in CFAF billions in CFAF billions 30 30 20 20 10 10 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 MIRS (l ft xis) MESRS (l ft xis) Dom stic ll fund d inv stm nt (ri ht xis) MEFP (l ft xis) MEN (l ft xis) Ext rn ll fund d inv stm nt (ri ht xis) Sourc : BOOST. Expenditure by Administrative Level national average but student-teacher ratios and poverty rates are lowest. Poor regions such as Ségou, Sikassa In line with Mali’s decentralization and and Koulikoro—which also have much higher student- deconcentration policy, the MEN has gradually teacher ratios—have per-student spending below the increased its administrative and fiscal national average (CFAF 21,700/ US$ 35). decentralization over the last decade. More than three-quarters of its expenditure is now managed Budget Implementation Performance at subnational level. In 2010, deconcentrated and decentralized structures managed spending of CFAF Budget execution is characterized by underspending 106 billion, or 69 percent of the budget, which has risen across all categories, although the deviation is to CFAF 250 billion, or 80 percent of the budget, in the largest for investment (Table 4.1). Overall, there 2020 Budget Law—an increase in real terms of more has been a variation of 5 percent between planned than 50 percent (Figure 4.30). These increases were and actual spending in the education budget over the mainly in favor of the subnational entities, in particular the period 2010–18. Salaries averaged a slight underspend communes, whose expenditure increased from CFAF 34 of under 2 percent during this period. Budgetary billion in 2010 to CFAF 98 billion in 2016, accompanied allocations for goods and services have been almost by a budgetary boost for the relevant deconcentrated fully implemented. Transfers show a similar pattern, structures, the CAPs. This dynamic is partly due to the except for during 2013 and 2014 when there was an changes in responsibilities that took place in 2012: the average underspend of 13 percent, which is surprising communes, which previously only managed the first as transfers are typically easily executed. Investment cycle of basic education, were charged with managing shows the lowest budget execution rate. Even though the second cycle as well. donor aid remains below pre-crisis levels, disbursement rates have fluctuated substantially and, on average, less The distribution of resources shows the spending than half of budgeted amounts were spent between per student varies significantly among the regions 2014 and 2018, reflecting challenges in managing and is biased towards wealthier regions (Figure volatile aid. In contrast, domestically funded investment 4.31). The distribution of resources favors the capital, performed better—the average execution rate in 2016– Bamako, where spending per student is above the 18 was 97 percent. 108 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 4.30: Distribution of Educ tion Fi ur 4.31: Distribution of Educ tion Exp nditur b L v l (2010–17) Exp nditur b R ion (2010–17) 100% 35,000 80 30,000 70 80% 60 25,000 50 60% 20,000 indic 40 15,000 40% 30 10,000 20 20% 5,000 10 0% 0 0 Kit l Tombouctou G o Mopti s S ou Sik sso Koulikoro B m ko 2017 2016 2015 2014 2013 2012 2011 2010 K Bud t Actu l C ntr l D conc ntr t d D c ntr li d Exp nditur s (Av . 2016-17 in CFAF million) l ft xis Exp nditur s p r c pit (Av . 2016/17) l ft xis Stud nt/T ch r (b sic duc iton c cl I) (ri ht xis) Pov rt incid nc (ri ht xis) Sourc : BOOST (MEN). Sourc : BOOST (MEN). Not : Pov rt incid nc d t r not v il bl for Kid l, T oudénit nd M n k . Exp nditur d t r not v il bl for th r ions of M n k ndT oudénit, s th w r onl cr t d in 2012. >>> Table 4.1: Education Budget Execution: Initial Budget versus Actual Spending (2010–18) 2010 2011 2012 2013 2014 2015 2016 2017 2018 Avg. Salaries -1.1 -0.9 -2.3 -3.5 -1.8 -0.8 -1.8 -0.5 -2.7 -1.7 Goods & -0.5 -0.8 -0.3 -0.9 -2.5 -5.0 -0.4 -0.4 -2.4 -1.5 services Transfers -4.2 -0.2 -0.6 -11.3 -14.9 -6.7 -5.9 -1.9 -4.3 -5.6 Investment -43.0 -9.4 -40.8 0.0 -77.9 0.2 -43.3 -3.9 -23.7 -26.9 Domestic 147.7 1.7 0.0 0.0 -3.5 -14.9 -0.2 -0.1 -7.5 13.7 External -48.1 -11.1 -72.9 -100.0 2.8 -87.9 11.0 -55.0 -51.2 Total -11.2 -2.6 -2.1 -3.0 -6.8 -2.0 -6.9 -1.2 -6.6 -4.7 Source: BOOST. The sector’s implementation performance masks (ii) Weak control and processing of teacher salaries challenges it faces across the budget cycle which owing to delays in updating the payroll software for severely undermine the delivery of services within processing salaries on recruitment and the absence schools. Some of the main challenges include: of an effective payroll system for local government teachers.77 (i) Unrealistic budgets due to a lack of planning tools, insufficient statistical data, and weak coordination (iii) Disconnects between the allocation of funds for and capacity to estimate needs. ADARS and school cafeterias and the numbers of students or criteria governing funding. 77  See Annex VII MALI PUBLIC EXPENDITURE REVIEW >>> 109 (iv) Insufficient transparency and traceability of transfers (x) A weak management information system, which to the schools, due to opaque local government is not up to date (for instance the 2017/18 annual accounting systems. statistics are not yet available), severely affecting the budget cycle from planning to execution and (v) Weaknesses in procurement undermining the timely monitoring (World Bank, 2017). provision of school supplies and textbooks. These shortcomings partly reflect shortcomings in Mali’s Fragmented student databases, with multiple (vi) public financial management systems, which makes actors undertaking controls and inefficient controls it more difficult for the sector to address them (see undercutting the allocation of school fees and partial Chapter 3). scholarships to private secondary schools, resulting in misuse of resources but also late payments to Inequality of Distribution of Public Resources cover school materials and textbooks. Access to education is biased towards the rich in (vii) Weak control of overtime enabling excessive use of Mali. Enrollment among the poorest students declines bonuses and overtime at tertiary level. with increasing levels of education (Figure 4.32). In the first cycle of basic education, 13 percent of students Absence of controls by local government over (viii) are from the poorest quintile while 25 percent are from compliance or the actual transfer of resources to pay the top quintile. The gap widens at post-basic level: 6 teachers, with most local governments not subject percent of secondary students are from the poorest to external audits. quintile and 60 percent from the richest quintile, while for higher education the shares are 2 percent and 75 (ix) Complex management of externally funded projects, percent. A benefit incidence analysis suggests that US$ with lengthy review and non-objection processes 34.1 million of public spending went to the lowest quintile between the Government and development in the first cycle of basic education, with US$ 65.6 million partners. going to the richest quintile (Figure 4.33). Spending on >>> >>> Fi ur 4.32: Enrollm nt Conc ntr tion Fi ur 4.33: Distribution of Educ tion Curv s b Educ tion L v l (2018) Exp nditur b W lth Quintil Across All Educ tion L v ls (2017) 100 300 267.2 nrolm nt, % (tot l) 250 80 Million 2017 US $ 200 60 150 40 109.4 Cumul tiv 100 65.6 75.5 20 34.1 50.6 50 16.710.9 3.5 2.0 0 0 0 20 40 60 80 100 of b sic duc tion of b sic duc tion Tot l Hi h r duc tion S cond c cl First c cl S cond r Cumul tiv w lth ind x quintil s, % of popul tion First c cl of b sic duc tion Lin of qu lit S cond c cl of b sic duc tion S cond r duc tion Low st quintil S cond quintil Rich st Hi h r duc tion Third quintil Fouth quintil Sourc : World B nk c lcul tion b s d on D mo r phic nd H lth Sourc : World B nk c lcul tion b s d on D mo r phic nd H lth Surv (2018). Surv (2018). 110 >>> MALI PUBLIC EXPENDITURE REVIEW the poorest students also declines with increasing levels Service Status. It is estimated this will lead to an increase of education. In total US$ 267 million of public spending in spending in the annual education wage bill of CFAF went to the richest quintile (representing 46 percent of 58.6 billion or 0.6 percent of GDP. This structural increase the public spending) whereas the lowest quintile only will narrow the fiscal space for education investments received US$ 50.6 million (7 percent). Equity analysis and put additional pressure for spending cuts across the in 2019 highlighted that the richest quintile received national budget in the short and medium term. on average six times more resources than the poorest quintile (UNICEF, 2019). Public education expenditure Efficiency therefore benefits the higher income groups more than the lower ones. Linking Public Expenditure and Outcomes Preliminary Outlook: Impact of COVID-19 Compared with Afghanistan and Rwanda, Mali has on Education Spending and Recent Salary poorer educational outcomes despite spending Adjustments greater resources.79 Mali spent US$ 120 per student in public schools in the first cycle of basic education Based on forecast scenarios, the COVID-19 pandemic compared with US$ 60 in Afghanistan and US$ 42 is expected to reduce the growth of education in Rwanda in 2016 (Figure 4.34). Despite higher per expenditure in 2020 and lead to a decline in 2021. capita spending, Mali’s primary completion rate is 30 Slowing economic activity during the pandemic has percentage points lower than Afghanistan’s and 19 already translated into lower tax and other government percentage points lower than Rwanda’s. Compared revenue while governments have reprioritized their to African countries with a high rate of out-of-school budgets towards health, social protection, and fiscal children of primary school age, Mali spends less than stimulus measures partially at the expense of education. Senegal and more than Niger or Burkina Faso, but Forecasts made before the pandemic estimated that has the lowest of primary net enrollment and primary public education spending in SSA would grow on completion rates. This suggests that Mali has room to average by 6.9 percent. According to revised forecasts, increase efficiency in the use of resources and achieve the average growth in education expenditure in SSA better educational outcomes. countries (total and per capita) was forecast to drop in 2020 (assuming the worse case scenario) but regain a Relative Efficiency of Resource Utilization in lower but positive growth rate in 2021. Under the same First Cycle of Basic Education80 scenarios, Mali’s education expenditure is expected to grow more slowly in 2020 but decline in 2021. Data envelopment analysis (DEA) is used to assess the capacity of public schools to convert educational Recent salary adjustments in 2018 and 2020 have inputs (resources) into outcomes. It analyzes sought to improve teachers’ motivation and working how public schools use their resources to generate conditions, but have come at a high cost. The educational outcomes compared to the performance conversion of teachers from civil service status to an of their peers. In other words, DEA is a relative and autonomous status in 2018 led to an annual increase not an absolute efficiency analysis. It helps to identify in spending of CFAF 5.6 billion or 0.06 of GDP. After a better performing schools producing better educational series of strikes and school closures, teachers’ unions outcomes to serve as models for others. The efficiency negotiated special provision for teachers in the new scores are estimated at county level,81 using aggregated legislation.78 This meant that teachers were included in inputs and outputs from public schools at the basic an additional 20 percent increase which the Government education (first cycle) level. Based on the 2016/17 school recently gave to all civil servants who have General Civil year databases, the inputs include teachers’ salaries82 78  Article 39 of the law n° 2018-007 of January 16th 2018 on the teacher status in secondary education, basic education and pre-school and special education provides that “any increase in the remuneration of civil servants falling under the general status shall automatically apply to teaching staff of the secondary education, basic education and pre-school and special education ”. 79  Data are not available for the other peer countries. 80  The DEA analysis is focused only on public schools of first cycle of basic education given some data is not available for private schools and for second cycle of basic education. 81  Mali’s territorial organization has three levels: regions, counties (cercles) and communes. The decision-making unit (DMU) in the DEA analysis is at the county level. As of 2017, the country has 11 regions (Kayes, Koulikoro, Sikasso, Segou, Mopti, Tombouctou, Gao, Kidal, Menaka, Taoudeni and Bamako), divided into a total of 49 counties. For the DEA, the database from the MEN uses nine regions, excluding Menaka and Taoudeni, comprising 46 counties. 82  Teachers’ salaries are based on the estimated average of salary of civil servants and contractual teachers taken from the 2017 RESEN analysis (UNICEF, 2019). MALI PUBLIC EXPENDITURE REVIEW >>> 111 >>> Fi ur 4.34: B nchm rkin Public Unit Costs nd Prim r Outcom s, 2016 M li, Af h nist n, Rw nd nd Afric n countri s with hi h r t s of out-of-school childr n 200 120% 185 180 100% 160 140 80% US$ const nt 120 119 120 100 60% 80 52 60 40% 60 42 40 20% 20 0 0% Ni r M li Burkin F so S n l Af h nist n Rw nd (2016) (2016) (2015) (2016) (2016) (2016) Public unit cost in first c l Prim r Compl tion r t Prim r n t nrollm nt R t of out-of-school childr n of of b sic duc tion (prim r ) (s cond r xis) (s cond r xis) prim r school (s cond r xis) Sourc : UNESCO St tistics nd WDI. per student and the number of teachers and classrooms Relatively efficient counties registered better per student. The output measures83 include the repetition promotion and net attendance rates, and showed rates, the Grade 1 to Grade 5 promotion rates, and the lower repetition rates. Table 4.2 suggests that the net attendance rate at county level in 2017/18. This net most efficient county has average repetition rates that attendance rate is from the Household Survey (ECHVM, are 8 percentage points lower than the least efficient 2018), which captured the access of schools for children county. Moreover, promotion rates in the first cycle of at county level. basic education also appear higher in those efficient counties. Based on the household survey in 2018, the Efficiency scores vary across counties and regions. net attendance rate of first cycle of basic education is At the county level, Tessalit and Youwarou appear to be around 61 percent in the most efficient county, whereas inefficient relative to their peers with the lowest efficiency it is only 44 percent in the least efficient county. These scores of 41 and 44 percent, respectively (Figure 4.35). results suggest that those counties have some room Menaka, Kidal, Kolokani and Gourma-Rharous have to improve access to education as the most efficient the highest relative efficiency scores. Efficient counties counties. could be benchmarks for the others, suggesting that the other counties could employ similar efforts to improve Compared with the most efficient counties, the least efficiency. At the regional level Bamako and Gao are on efficient counties have almost the same distribution average more efficient than the others, with scores of of teachers, but enroll fewer students, suggesting an 89 and 86 percent respectively. Mopti, Kayes, Segou inefficient utilization of teachers. Table 4.2 suggests and Sikasso have efficiency scores ranged from 63 to that the least efficient counties have a student-teacher 69 percent. The average efficiency score across the ratio of 40:1, while the most efficient have a ratio of 46 counties is 71 percent, which means that there is 58:1.84 The inefficient counties get almost the same scope to increase efficiency, and 29 percent of inputs for distribution of teachers as the most efficient counties, inefficient counties could have been redeployed to other but have fewer students (22 percent compared to counties to improve efficiency. 30 percent). This suggests that teachers should be 83  Promotion and repetition rates are estimated using 2016/17 and 2017/18 databases. 84  Global Partnership for Education recommended a student-teacher ratio of 40:1, however other factors such the qualification of teachers and school environment (pedagogical groups, classrooms, etc.) influence the quality of the education. 112 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur 4.35: Effici nc Scor s b Count nd R ion 100% 89% 86% 80% 77% 67% 71% 71% 68% 69% 63% 60% 44% 41% 40% 20% 0% SIKASSO MENAKA KITA KENIEBA KANGABA DIOILA BANDIAGARA MACINA KOUTIALA BAMAKO GAO KAYES YELIMANE KATI KORO DJENNE TOMINIAN BARAOUELI NIONO BOUGOUNI KADIOLO NIAFUNKE DIRE GOURMA-RHAROUS TESSALIT Av r Av r GAO KAYES KIDAL KOULIKORO MOPTI SEGOU SIKASSO TOMBOUCTOU Sourc : Authors’ stim t b s d on EMIS 2016–17 nd 2017–18, ECHVM 2018. >>> Table 4.2: Input and Output Indicators by Quintile of County Efficiency Scores Efficiency quintile Least efficient Quintile 2 Quintile 3 Quintile 4 Most efficient Net attendance rate 44% 49% 44% 49% 61% Repetition rate 26% 22% 23% 28% 18% Promotion rate Grades 1-2 69% 75% 75% 75% 79% Promotion rate Grade 3 67% 68% 67% 73% 73% Promotion rate Grades 4-5 60% 64% 63% 63% 65% Average teacher’s salary per 103 88 79 75 64 student (US$ 2018) Student-teacher ratio 40:1 47:1 51:1 53:1 58:1 Distribution of teachers 28% 17% 16% 13% 26% Distribution of enrollment 22% 17% 16% 15% 30% Student-classroom ratio 46 53 57 63 68 Source: Authors’ estimate based on EMIS 2016–17 and 2017–18, ECHVM 2018. distributed more equally and used more efficiently. outputs. This represents 6.2 percent of Government In line with this inefficient utilization of teachers, the expenditure on education in 2018. average total teachers’ salaries per student is higher for the least efficient counties: US$ 103 compared to US$ The number of pedagogical groups per classroom 64 for the least efficient counties. The results from the seems to significantly affect efficiency. Based on the DEA predicted that nearly US$ 33.8 million in teachers’ available data, the second stage analysis tries to identify salaries could be saved with the same educational the factors that significantly affect counties’ efficiency. MALI PUBLIC EXPENDITURE REVIEW >>> 113 These factors are related to the school environment, basic education are related to wasted resources caused such as the percentage of women teachers; the ratio by repetition or dropout (UNICEF, 2019). In 2015, the of pedagogical groups and classrooms;85 and the coefficient had fallen to 53 percent, suggesting that percentage of schools in the county with electricity, more resources are wasted. Over the same period, the water, latrines, or a library. The results show that the ratio internal efficiency coefficient for the second cycle of of pedagogical groups to classrooms has a negative basic education fell from 59 percent to 49 percent, due contribution to efficiency. It means that efficient counties to the high repetition and dropout rates. If the system did are more likely to have a low ratio of pedagogical groups not allow repetitions so only dropouts were counted, the to classrooms compared to the inefficient ones. The internal efficiency coefficients in 2015 would have been other variables are not significant factors in influencing 67 percent for the first cycle of basic education and 82 efficiency scores. percent for the second cycle. Drivers of Internal Efficiency Repetitions and dropouts in basic education public schools cost nearly 16 percent of the Government’s The internal efficiency of Mali’s education system expenditure on education, representing 0.6 percent remains poor. For every 100 children who enter Grade of GDP. Based on government spending and enrollment 1, only 15 reach the end of the first cycle of basic in public schools in 2017, the Government spent around education without repeating a grade. Overall, 51 percent US$ 178 per student in the first cycle of basic education remain in the system until the final grade of the cycle, and US$ 53 in the second cycle. Given that a total of taking on average 9.2 years to complete it, instead of 475,200 students in public schools at basic education 6 years (Table 4.3). Most of those who reach Grade 7 level repeated a grade in 2017/18, the cost of school complete the second cycle of basic education, but it repetition is estimated at around US$ 65.2 million takes on average 5.9 years instead of 3 years, due to (Table 4.4). These costs are driven mainly by the first high repetition rates. cycle of basic education, accounting for US$ 57 million. Furthermore, the cost of students dropping out87 of Internal efficiency has decreased since 2010, public schools at basic education level was estimated at reflecting a waste of resources due to repetition around US$ 29 million. Overall, repetitions and dropouts and students dropping out. The internal efficiency in public schools of basic education combined cost coefficient86 of the first cycle of basic education was around US$ 94.3 million in 2017, representing 16.2 estimated to be 66 percent in 2010, meaning that 34 percent of public education expenditure or 0.6 percent percent of student-years invested in the first cycle of of GDP. >>> Table 4.3: Reconstructed Cohort Analysis for the First Cycle of Basic Education (2017–18) Grade Survival rate1 (%) Grade 2 82 Grade 3 71 Grade 4 61 Grade 5 51 Grade 6 41 Reach Grade 6 without repetition 15 Complete Grade 6 51 Average time taken to reach Grade 6 9.2 years Source: EMIS 2018–17 and 2017–16. 1/ Percentage of students enrolled in the first grade of a given level who are expected to reach a given grade. 85  Pedagogical groups are the number of groups/class of students at school. Normally, one group uses one classroom, but if there are not enough classrooms, they can share the classroom, or alternate their use of the classroom. 86  The internal efficiency coefficient is calculated as the ratio of the ideal number of student-years required to produce a number of graduates from a given student cohort in basic education to the actual number of student-years spent to produce the same number of graduates, expressed as a percentage. 87  The number of students dropping out from public schools is estimated to be 147,460 for Grades 1–5 in the first cycle of basic education, and 53,070 for Grades 7 and 8 in the second cycle during 2016/17–2017/18. 114 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 4.4: Resource Loss due to Repetition and Dropping Out in Public Schools by Level (2017) Repetition Dropout Total Share of Share of government GDP expenditure on education First cycle of basic 57,005,788 26,268,803 83,274,591 14.3% education Second cycle of basic 8,271,409 2,828,817 11,100,227 1.9% education Total 65,277,197 29,097,621 94,374,817 0.6% 16.2% Source: Authors’ calculation based on EMIS 2016–17 and 2017–18, UNESCO Institute for Statistics. Efficient Use of Teachers urgent need to improve teaching effectiveness in order Actual teaching time in the second cycle of basic to reduce the “time wastage”. education and secondary level is less than the hours set by policy. Results from the 2017 RESEN (UNICEF, Teachers’ strikes also result in the inefficient use of 2019) show that a public school teacher in the second resources, costing nearly 11 percent of government cycle of basic education teaches 14.4 hours per week education expenditure or 0.4 percent of GDP. on average, which is 6.6 hours less than the scheduled Teachers’ strikes are one the main reasons for teachers’ time according to policy (Table 4.5). At secondary level, absenteeism in Mali (UNICEF, 2019). During the 2018/19 the teaching gap per week is estimated to be 2.7 hours school year, there were 69 declared strike days, resulting per teacher for general education and 8–9 hours for in a significant loss of teaching time. Based on class technical and vocational education. Given the number hours per day, these strikes represented 235 class of teachers88 at each level of education and based on hours per teacher in technical and vocational secondary, estimated salaries of US$ 4–6 per hour, the annual and 345 class hours in the first cycle of basic education loss is estimated at US$ 16.4 million in 2015. This is (Table 4.6). Given the number of teachers89 at each level mainly driven by the hours lost in the second cycle of of education and based on an estimated salary per hour, basic education, estimated at US$ 13.4 million. In total, the annual loss is estimated at US$ 65.7 million in 2018, this represents 4 percent of government education amounting to 10.7 percent of government education expenditures, or 0.1 percent of GDP, and suggests the expenditure or 0.4 percent of GDP. >>> Table 4.5: Costs of Hours Lost by Education Level (2014–15) Expected Actual Average Annual costs Share Share of teaching teaching salary per of shortfall of GDP government hours per hours per hour, per (US$ 2015) expenditure week, per week, per teacher (US$ on teacher teacher 2015) education Second cycle of basic 21 14.4 3.9 13,471,302 3.0% education General secondary 16–18 14.3 5.9 1,623,256 0.4% Technical secondary 16–18 10 5.4 204,238 0.0% Vocational secondary 16–18 9 5.3 1,184,526 0.3% Total 16,483,321 0.1% 3.7% Source: Authors’ calculation based on EMIS 2016–17 and 2017–18, UNESCO Institute for Statistics. 88  In 2014–15, there were estimated to be 14,369 teachers in the second cycle of basic education, 2,823 in general secondary education, 151 in technical secondary education, and 772 in vocational secondary education. 89  In 2018, there were estimated to be 28,187 teachers in the first cycle of basic education, 18,311 in the second cycle, 4,266 in general secondary education, and 1,681 in technical and vocational secondary education. MALI PUBLIC EXPENDITURE REVIEW >>> 115 >>> Table 4.6: Costs of Teachers’ Strikes by Level (2018) Expected Actual Average Annual costs Share Share of teaching teaching salary per of shortfall of GDP government hours per hours per hour, per (US$ 2015) expenditure week, per week, per teacher (US$ on teacher teacher 2015) education First cycle of basic 5 345 3.5 34,021,229 5.5% education Second cycle of basic 4.2 290 4.3 22,969,769 3.7% education General secondary 3.4 235 6.5 6,495,015 1.1% Technical and 3.4 235 5.9 2,313,487 0.4% vocational secondary Total 65,799,501 0.4% 10.7% Source: Authors’ calculation, World Development Indicators. Note: Exchange rate, 2018: US$ 1 = CFAF 576.2. Actual teaching hours in higher education are also The rules for teaching groups are also unclear and not below the recommended hours, which cost the uniform between different structures at the university, Government nearly US$ 1 million in 2019. Results leading in some cases to very low, and costly, student- from the Analysis of Supplementary Hours in Public teacher ratios (8 students per teacher). An updated Higher Education in 2019 show that in total permanent HR database of teachers is needed to better identify teachers did not fully complete 27,000 hours of courses, teachers and their skills to promote their involvement in and 35,000 hours are lost due to teachers’ absences education. without specified reasons.90 Those hours represent nearly 10 percent of supplementary hours, and 7 percent There is also a discrepancy in the actual teaching of total teaching hours.91 Furthermore, supplementary time and training of assistant teachers in higher hours were counted on a semester basis rather than on education. Almost half of assistant teachers are in an annual basis. This makes it harder to take into account training, but two-thirds of them are teaching and are hours which were not used in the first semester but were paid for an average of 155 supplementary hours per not accounted for in the second semester, leading to semester, which almost represents the 168 hours of payments for 7,000 additional hours. Estimates suggest teaching service due. Efforts should be made to improve that the Government could have saved US$ 1 million in the effective training of assistant teachers. 2019 if permanent teachers were fully present and fully completed their hours. Policy Recommendations Another key challenge is that some tertiary structures Despite the Government’s strong commitment to the lack an effective human resource (HR) management education sector during a time of political instability database, raising the risk of payroll-related abuse. and insecurity, outcomes have remained poor. Mali For instance, some teachers have moved to other has made important progress in the decentralization ministries or have been retired but remain on the teacher of administrative and financial education functions. list. There is a discrepancy between the list of effective However, security and political instability have resulted teachers and the HR database of higher education. in the disruption of learning due to schools closing, Furthermore, legislative texts for certain administrative staff losses, and infrastructure destruction. Access to functions such as the discharge of teachers, teaching basic education has declined in recent years while more hours and administrative responsibilities are unclear. than one-third of children have never attended school. 90  Ministère de l’Enseignement Supérieur et de la Recherche Scientifique, Une analyse des heures supplementaires dans les établissements publics, 2020 91  The analysis counted 844,000 teaching hours, which were directly financed by the Government. This breaks down to 204,000 hours of teaching service for permanent teachers (24 percent), 368,000 supplementary hours by permanent teachers (44 percent), and 272,000 supplementary hours by temporary teachers (32 percent). 116 >>> MALI PUBLIC EXPENDITURE REVIEW Parents’ lack of interest is cited as the main reason salaries despite the country’s shrinking fiscal space. for 6–11 year-olds never having attended school. The This structural increase will narrow the fiscal space quality of education has also been poor as evidenced for education investments. Thus, in the context of a by low completion rates of basic education and dismal tighter fiscal setting, increases in education expenditure learning outcomes. Teacher management remains a key are most likely to come from a reprioritization of the challenge characterized by ineffective efforts to reform education budget and by making better use of the teachers’ status, increase their qualification levels, and available resources. reduce teacher shortages, deployment disparities, and frequent absenteeism, particularly due to strikes. There are a number of concrete steps Mali can take to address current inefficient practices in the education Education is the second largest sector in the national sector: budget and domestically funded resources have increased steadily since 2012. Despite increased • R4.1 Address internal inefficiencies in education funding for the sector, public resources are biased by reducing repetition and dropout rates in towards post-basic education and are regressive. In line basic education, which waste 16 percent of public with Mali’s decentralization and deconcentration policy, spending on education, and 0.6 percent of GDP, each the MEN manages three-quarters of its expenditure at year. To address these high rates, the Government subnational level. Staff salaries consume an increasing needs to pursue its efforts to improve the learning share of public education expenditure, reflecting in conditions for students, focusing on (i) organizing part an increased number of staff associated with the awareness-raising campaigns among parents about transfer of responsibilities to the LG level, the conversion the importance of schooling, especially for girls, of contract workers to civil servants, and in part salary in rural areas, in Mopti and Tombouctou regions; adjustments. Investments are undermined by the (ii) organizing a regular system for evaluation and volatility of donor aid, the proliferation of projects, and learning assessment in basic education; (iii) the their management being almost entirely off budget. timely and full transfer of the ADARS in line with the Weaknesses in the sector’s budget management have new legal framework (Decree 2019-3325); and (iv) undermined the efficient use of education resources increasing the availability of textbooks by creating a and thus the functioning of schools as frontline service specific budget line for funding textbooks in basic providers. education (first cycle). In 2020, Mali’s education system has faced a double • R4.2 Improve inefficiencies in the utilization of shock with the impact of COVID-19 and the recent teachers by: political instability. The COVID-19 outbreak has diverted capacities and resources away from PRODEC’s - Closing the gap between actual and broader reform agenda to focus on distance learning, recommended teaching hours in basic and ensuring inclusion, and the safe reopening of the schools. secondary education, which is costing nearly 4 The recent coup, resulting in institutional disruption of percent of public spending on education and 0.1 the education ministries and the suspension of donor percent of GDP. The Government should seek to aid, had a detrimental impact on the management of the (i) improve the supervision of teachers to reduce sector and funding. The sector needs additional funding absenteeism and (ii) pursue the establishment of to support post-pandemic measures related to the performance contracts between the CGS and the reopening of schools and holding compulsory national teachers. exams. However, the 2020 mid-year budget cuts and - Adopting an open consultative process on reallocations towards COVID-19-related emergency discussing working conditions and pay reforms. expenditures show the Government has prioritized Given the distraction from labor disputes, it is spending in favor of the health sector but also defense, recommended to (i) set up a commission composed finance and economy. of representatives from the government and teachers for wage mediation, deployment of teachers and While the outlook is uncertain, it most unlikely that other HRM related aspects to guide the reform the Government will be able to generate significant process while (ii) introducing an annual monitoring additional fiscal space for education in the short system with key performance indicators on pay and or medium term. The difficult political context in Mali employment performance to allow the tracking of together with union pressures has led to rising teachers’ the reform progress. MALI PUBLIC EXPENDITURE REVIEW >>> 117 - Reducing discrepancies in the deployment of subsidies funding secondary private schools as of teachers. To correct regional discrepancies in well as the evaluation and certification of the private teacher numbers and make remote and difficult secondary schools; (ii) improve salary processing areas more attractive, it is recommended to: (i) and control; (iii) complement the current design of an make the zone bonus more attractive in order to integrated HRM platform by implementing teaching encourage mobility; (ii) improve teachers’ living and staff management software in the Human Resource working conditions in difficult areas by mobilizing Directorate, AE, and the CAP; and secure resources communities to ease their entry and living conditions for the operationalization of the HRM platform, in remote areas; and (iii) establish a special including training at central, decentralized and mechanism for promoting in-service training for deconcentrated levels; and (iv) focus on capacity teachers in remote areas to improve their career building among budget managers in decentralized prospects. entities (resource budgeting, fund allocation criteria, procurement monitoring, and control). • R4.3 Enhance the management of teachers by: • R4.5 Enhance the efficiency of the education - Strengthening HR management of teachers, system by: particularly in higher education. The Government may want to review the legislative texts for - Improving the functioning of the education discharging teachers in higher education, establish information management system. To address clear criteria for supplementary hours, and establish current shortfalls related to the coverage, a consistent and regular updated teacher database. timeliness and reliability and availability of data, The Government may also want to focus on which undermines informed decision making, the updating its HR database, including teaching service Government may want to invest in the education due and supplementary teaching hours, to better information system by extending its virtual private monitor teachers’ and assistant teachers’ effective network to all levels and developing interfaces teaching time as well as their skills to promote their between existing systems to facilitate the production involvement in education. of statistical data essential for planning. - Establishing a traceability system for resources • R4.4 Strengthen spending efficiency by: transferred to local government. To better track and monitor the use of resources (such as staff - Reprioritizing expenditure in education towards expenditure, school grants ADRARS, school basic education. The Government may want to lunches, textbook repair, and school maintenance) address inefficiencies in post-basic education, it is recommend establishing a partnership with a redirecting any savings to basic education. These mobile phone company to use messaging systems could include: (i) pursuing efforts to control the to inform all entities, including the most distant ones, use of subsidies (notably school fees) to private about the allocation, mobilization, and execution of secondary schools through the deployment of a transferred resources. simple software allowing the verification of student - Establishing a system to capture and monitor enrollment/attendance and school performance; and off-budget donor support. The political instability (ii) reviewing scholarship programs at the secondary has led to a fragmentation of donor funding in the and tertiary level to ensure they target low-income education sector outside the budget. To enhance students while also linking the annual awarding of the predictability and traceability of off budget scholarships to performance. donor aid, it is recommended to capture and track - Strengthening public finance management. To external aid by putting in place a database that will improve implementation performance, the education be administered by the MEN with the support of ministries in coordination with Ministry of Finance the development partners. This process would also should: (i) pursue the automation of the management require a close dialogue with the Ministry of Finance. 118 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 4.7: Recommended Policy Measures Policy actions Policy action details Time horizon Potential fiscal gains (+) / uses (-) Tax policy R4.1 Address internal Reduce repetition and dropout rates by organizing Medium term 0.6 inefficiencies parental awareness-raising campaigns about the importance of schooling, especially for girls, ensuring the effective transfer of ADARS, and improving the availability of textbooks. R4.2a Close the gap Improve the supervision of teachers to reduce Short term 0.1 between actual and absenteeism and pursue the establishment of recommended teaching performance contracts between the teachers and the hours CGS. R4.2b Adopt an open Set up an independent commission to guide wage Medium term 0.4 consultative process mediation and teacher deployment, and introduce to discuss pay and annual monitoring of pay and performance to track working conditions. reform progress. R4.2c Reduce Make remote and difficult areas more attractive to discrepancies in teachers by offering teachers bonuses and career the deployment of development opportunities and improving their teachers. working and living conditions. R4.3 Enhance the Strengthen the human resource management of Short term management of teachers, particularly in higher education.* teachers R4.4 Strengthen •  Reprioritize education expenditure towards basic Medium term spending efficiency education. •  Strengthen public finance management.* Medium term R4.5 Enhance the •  Render the education information management Medium term efficiency of the system more functional.* education system •  Establish a traceability system for resources Medium term transferred to local government.* •  Establish a system to capture and monitor off- Medium term budget donor support. Note: * Part of the 2017 Education PER recommendation and in line with analysis of this chapter. MALI PUBLIC EXPENDITURE REVIEW >>> 119 5. >>> Health Mali’s health personnel levels are significantly below global norms, acting as a major bottleneck for the effective delivery of good-quality health services. While health has been one of the sectors at the forefront of the fiscal decentralization process, the public resources allocated to providing health services are significantly below local expenditure needs. As a result, frontline health facilities face tight resource constraints and have needed to rely extensively on user fees. Such large out- of-pocket (OOP) payments result in forgone medical treatment and self-medication among some, and risk pushing others into poverty. While technical efficiency at individual health facilities has recently increased, Mali’s health service provision remains between 18 and 27 percent below the efficiency frontier, while the coverage offered is not as effective as it could be due to suboptimal treatments and weak adherence to diagnosis and treatment protocols. Policy recommendations to tackle those constraints include (i) improving the technical efficiency of health spending by increasing the number of health care workers; (ii) improving the provision and pricing of medical products; (iii) improving allocative efficiency by increasing spending on primary and secondary health care services; and (iv) improving governance and health financing mechanisms by consolidating the decentralization process, increasing the share of pooled funding, and removing targeted user fees. 120 >>> MALI PUBLIC EXPENDITURE REVIEW This chapter is organized as follows. The first section areas. CSCOMs account for the majority of all direct introduces the sectoral context. The next section analyzes contacts with patients (about 0.43 contacts per person health outcomes and equity performance, benchmarked per year in 2018). CSCOMs provide a basic service against Mali’s international peers. The following section package (Paquet Minimun d’Activités) and operate looks at public health financing followed by an analysis alongside other health structures such as private clinics, of the efficiency of the country’s health care. The chapter polyclinics, medical laboratories, and pharmacies as well concludes with recommendations for reforms. as traditional healers. The frontline operational level also included 62 functioning CSRéfs in 2018. These play the Context dual role of being a deconcentrated outpost of the MoH as well as a decentralized health service provider with Organization oversight from cercle (county) governments. The key agency responsible for the health care One particular aspect of the Malian health system sector in Mali is the Ministry of Health and Social is the relatively high degree of devolution of Development (MoH; Ministère de la Santé et du responsibilities for the provision of health services Développement Social). The MoH is responsible for at the local level. Mali began the administrative developing national health policy, coordination, resource decentralization of the health sector in 2004, when it mobilization, budget planning, investment decisions, adopted a plan for the transfer of health sector roles and research. The deconcentrated entities at the and responsibilities, and set up a Decentralization and regional level and the District of Bamako are responsible Devolution Support Unit (CADD; Cellule d’Appui de for the provision of technical support, coordination, and Déconcentration et Déconcentration) in the MoH. Before monitoring of the operational level. decentralization, CSCOMs were private non-profit entities under the management of ASACOs and ASACOs The delivery of health care services in Mali is worked directly with the MoH to set up a CSCOM. organized around a three-level pyramid. At the bottom of the pyramid are the 60 health districts, which are Under the decentralization framework, local divided into catchment areas. These catchment areas government replaced the Ministry of Health in are the principal administrative units spanning between partnering with ASACOs. ASACOs sign a mutual 5,000 to 15,000 inhabitants within a 15-kilometer assistance agreement (CAM; Convention d’Assistance radius. Each catchment area has a community health Mutuelle) with the municipal government at the commune center (CSCOM; Centre de Santé Communautaire) level. The CAMs determine the package of services the that offers a minimum package of preventive and CSCOM will offer and establish the mutual contractual curative health care services. The second layer of the responsibilities (both financial and technical) for health health system is provided by the eight public hospitals service provision between the commune and the located in the regions of Kayes, Kati, Sikasso, Ségou, ASACO. The frontline operational levels, in conjunction Mopti, Tombouctou, Gao, and Bamako. At the top of with local authorities, are responsible for the planning the pyramid, the central tertiary referral level consists and management of the health budget at the local level. of five national hospitals and six public scientific and Local governments—at the commune, cercle, and technical institutes. Service provision at this level deals regional levels—are in charge of formulating policies for with serious cases in need of specialized interventions or the creation and management of CSCOMs, maternity cases of clinical relapses. clinics, CSRéfs, and regional hospitals. ASACOs own and manage the CSCOMs, in collaboration with the The Community Health Centers and the district technical head of the CSCOM. hospitals (Centres de Santé de Référence or CSRéfs) make up the frontline operational level. The Intergovernmental transfers are still insufficient to CSCOMs are run by community health associations account for the imbalances between local health (ASACOs; Association Communautaires de Gestion des expenditure needs and weak local tax collection CSCom) which are under the oversight of commune performance. Although the devolution framework has governments. CSCOMs are private non-profit entities been established and the transfer of resources to the partially subsidized by the public authorities. They also local level has begun, intergovernmental fiscal transfers rely on cost recovery, contributions from the community, and allocations are insufficient, unpredictable, and not and a significant level of contributions from non- based on need. This has created or increased inequalities governmental organizations (NGOs), especially in rural and imbalances in the distribution of resources between MALI PUBLIC EXPENDITURE REVIEW >>> 121 subnational governments (World Bank, 2018a). The hospital per 2.4 million inhabitants. Table 5.1 details the low levels of public resources allocated to health at distribution of CSCOMs across regions in 2014 and the local level means ASACOs need to rely heavily on 2018. Overall, the distribution of primary care facilities cost recovery through user fees charged at the point of per population remained fairly constant in Mali, across service to manage the volume of services the CSCOMs all regions. At the national level, the number of health provide. Cost recovery often represents up to over half centers rose by 13.6 percent between 2014 and 2018 of facilities’ revenues, and translates into high out-of- but this increase matched the estimated population pocket (OOP) payments for patients. growth rate so that the density remained constant. The number of CSCOMs with at least one doctor has Health Infrastructure increased by 18 percent between 2014 and 2018. Health infrastructure is sparsely distributed in The population’s access to basic health facilities Mali overall. The country is below the World Health has remained fairly stable between 2009 and 2018. Organization (WHO) norm of one health center per The percentage of Malians living within 5 kilometers of 10,000 inhabitants, one prefectural hospital (equivalent a health facility fluctuated between 56 percent and 59 to a CSRéf) per 250,000 inhabitants, and one regional percent over this period while the proportion living within >>> Table 5.1: Primary Health Care Infrastructure by Region (2014 and 2018) Year CSCOMs Percent change CSCOMs with at Percent change CSCOMs per 10,000 2014–18 least one doctor 2014–18 inhabitants Kayes 2014 216 47 0.9 2018 241 11.6% 57 21.3% 0.9 Koulikoro 2014 196 78 0.7 2018 221 12.8% 92 17.9% 0.7 Sikasso 2014 223 52 0.7 2018 241 8.1% 60 15.4% 0.7 Ségou 2014 194 83 0.7 2018 206 6.2% 82 -1.2% 0.7 Mopti 2014 165 52 0.7 2018 174 5.5% 57 9.6% 0.6 Tombouctou 2014 75 17 0.9 2018 95 26.7% 22 29.4% 1.1 Gao 2014 67 2 1.0 2018 74 10.4% 17 750.0% 1.1 Kidal 2014 11 2 1.4 2018 18 63.6% 5 150.0% 2 Taoudenit 2014 NA NA NA 2018 15 N/A 5 N/A 0.8 Menaka 2014 NA NA NA 2018 25 N/A 4 N/A 3.3 Bamako 2014 57 56 0.3 2018 58 1.8% 58 3.6% 0.2 Total excluding 2014 1147 333 0.8 Bamako 2018 1310 14.2% 401 20.4% 0.8 Total Mali 2014 1204 389 0.7 2018 1368 13.6% 459 18.0% 0.7 Source: Annuaire statistique 2014, 2018 du Systême Local d’Information Sanitaire (SLIS) du Mali. 122 >>> MALI PUBLIC EXPENDITURE REVIEW 15 kilometers fluctuated between 85 percent and 90 Despite improvements, strong regional disparities percent, apart from in 2016 and 2017 when there was a persist in the availability of health staff (Table 5.3). In sharp decline (81 percent and 76 percent respectively). 2014, Bamako and Kidal were the only regions with at It is also worth noting the substantial decline—from least 1 doctor per 10,000 residents. By 2018, 5 of the 11 90 percent in 2011 to 85 percent in 2012—due to the regions were above the WHO threshold. However, there political events in Mali at the time (Figure 5.2). were stil a number of regions with substantial shortages of doctors and midwives, although the number of Health Personnel nurses appears to provide adequate coverage for the population (Figure 5.3). Health service provision is labor intensive, and Mali lacks the human resources to meet the needs of Health Service Utilization a growing population. In 2018 Mali had 0.57 health workers per 1,000 inhabitants which lagged significantly Recent household survey data suggest that over half behind the WHO norm of 2.3 (Figure 5.1a). The density of the population are forgoing necessary health care. is also below the average for countries with similar levels On average, more than half of the population in need of of public health expenditure. Mali spends about US$ health care services reported forgoing care with only 49.1 13.8 per capita on public health compared to US$ 7.7 in percent using outpatient health services (Figure 5.4). The Uganda, yet Uganda has 1.6 health workers per 1,000 share of forgone care is higher for the poorest quintile inhabitants (Figure 5.1b). (60 percent), ranked by income of consumption levels, and in the regions of Kayes, Koulikoro, and Taoudenit, Mali has increased the number of staff in key health and it remains high even in Bamako (40 percent). The categories between 2014 and 2018, improving the low levels of service use in environments with better- density from a very low base. The largest increase than-average health service accessibility (there are more was among midwives (92.8 percent) followed by doctors CSCOMs relative to population than average in Kayes, (75.8 percent). One doctor served about 8,000 residents Koulikoro, and Taoudenit, and greater health personnel in 2018, down from over 12,000 in 2014, while each density in Bamako) suggests that access to health care midwife served about 6,000 inhabitants and each nurse is not the only constraint to effective care provision, but 3,500 inhabitants in 2018 (Table 5.2). The WHO norm is that financial barriers and service quality can also be for 1 doctor per 10,000 inhabitants, 1 nurse per 5,000 critical bottlenecks. inhabitants, and 1 midwife per 5,000 inhabitants. >>> Fi ur 5.1: B nchm rkin H lth P rsonn l D nsit . H lth P rsonn l D nsit Comp r d b. H lth P rsonn l D nsit nd Public to WHO Norm H lth Exp nditur Numb r of doctors, nurs s nd midwiv s Numb r of doctors, nurs s nd midwiv s 20.1 15 LMICs UZB v r (p r 1,000 poppul tion) (p r 1,000 poppul tion) (3.2) WHO 7.4 12 norm TJK (2.3) SSA v r (1.52) 2.7 9 LICs LAO ZWE WHO norm (2.3) v r UGA (0.86) 1 RWA 6 M li (0.57) M li 0.4 AFG 3 TCD 0 0.1 7.4 20 55 150 40 110 D nsit of doctors, nurs s, nd midwiv s Lo of public h lth xp nditur p r c pit (USD) Sourc : World D v lopm nt Indic tors; WHO Glob l H lth Obs rv tor . Not : Hum n r sourc d t for M li r from 2018. Hi h-incom countri s xclud d. MALI PUBLIC EXPENDITURE REVIEW >>> 123 >>> >>> Fi ur 5.2: Acc ssibilit of H lth Fi ur 5.3: H lth P rsonn l C p cit C nt rs (2009–18) G ps b R ion (2018) % of popul tion livin within iv n r dius Doctors Midwiv s Nurs s 90 K s -166 90 88 89 88 86 Koulikoro -60 -194 86 87 85 Sik sso -75 -240 Popul tion (%) 80 81 S ou -56 -313 -17 Mopti -13 -208 76 Tombouctou -17 -103 70 G o Kid l T oud nit -4 -21 -9 59 58 58 59 58 M n k 60 57 58 56 56 57 B m ko 2010 2012 2014 2016 2018 -300 0 300 600 900 -300 0 300 600 900 -300 0 300 600 900 15 km-r dius 5 km-r dius Sourc : Annu ir St tistiqu 2018 du S stèm Loc l d’Inform tion Sourc : Annu ir St tistiqu 2018 du S stèm Loc l d’Inform tion S nit ir (SLIS) du M li. S nit ir (SLIS) du M li nd uthors’ own c lcul tions. Not . Th p rsonn l ps r c lcul t d inst WHO norms for h lth p rsonn l d nsit >>> Table 5.2: Health Personnel (2014 and 2018) Percent change Number of inhabitants Percent change Year Number 2014–18 per health personnel 2014–18 Doctors 2014 1,399 12,372 2018 2,460 75.8% 7,967 -35.6% Midwives 2014 1,698 10,194 2018 3,273 92.8% 5,988 -41.3% Nurses 2014 3,955 4,376 2018 5,493 38.9% 3,568 -18.5% Source: SLIS 2014, SLIS 2018 and authors’ own calculations. >>> Table 5.3: Health Personnel by Region (2018) Region Doctors Midwives Nurses Total health personnel per 10,000 per 10,000 per 10,000 per 10,000 Kayes 1.1 1.4 2.1 4.6 Koulikoro 0.8 1.4 2.2 4.4 Sikasso 0.8 1.3 3.0 5.1 Ségou 0.8 1.0 1.9 3.8 Mopti 1.0 1.0 2.2 4.1 Tombouctou 0.8 0.9 2.4 4.1 Gao 1.3 2.1 3.7 7.1 Kidal 2.1 4.4 12.7 19.2 Taoudénit 0.8 0.8 1.5 3.1 Menaka 1.9 2.5 7.2 11.6 Bamako 3.7 4.7 5.5 13.9 Total except Bamako 0.9 1.2 2.4 4.6 Total Mali 1.3 1.7 2.8 5.7 Source: Annuaire Statistique du Système National d’Information Sanitaire (SNIS) 2018 and authors’ own calculations. 124 >>> MALI PUBLIC EXPENDITURE REVIEW The main drivers for forgoing care include a most frequently cited reason for forgoing care, especially preference for self-medication and high financial among the poorest households (Figure 5.5). Financial barriers. Self-medication is the most important barriers and widespread self-medication are common alternative to using outpatient care services for those characteristics of health systems in low-income in need of care, across all income groups and across countries like Mali. most regions in Mali. Financial barriers are the second >>> Fi ur 5.4: Outp ti nt S rvic Utili tion b Quintil nd R ion (2018) . B Quintil b. B R ion 100 100 90 90 80 80 70 70 (%) (%) 60 Us of OP s rvic s, 60 Us of OP s rvic s, n tion l v r (49.1%) n tion l v r (49.1%) 50 50 P rc nt P rc nt 40 40 30 30 20 20 10 10 0 0 Poor st Q2 Q3 Q4 Rich st B m ko Tombouctou Kid l G o Mopti Sik sso S ou T oud nit Koulikoro s M n k 20% 20% K Sourc : M li EHCVM (2018), individu ll w i ht d d t . Not : P rc nt s r th sh r of thos in n d of outp ti nt c r . >>> Fi ur 5.5: Motiv s for For oin C r b Quintil nd R ion (2018) . B Quintil b. B R ion G o 0.6 28.6 11.5 6.0 Poor st 20% 0.7 14.1 33.4 10.5 Tombouctou 4.2 16.3 6.4 16.4 K s 0.9 15.1 30.6 12.2 Q2 1.0 11.9 29.5 12.8 Sik sso 0.1 12.0 24.7 12.5 Koulikoro 0.2 10.8 29.0 17.2 Q3 1.2 10.4 23.7 10.8 Mopti 0.9 8.5 29.6 9.0 S ou 0.2 6.8 33.3 10.2 Q4 0.5 8.0 21.3 15.6 Kid l 6.9 6.5 20.5 10.2 T oud nit 18.1 4.8 21.2 7.2 M n k 10.9 4.6 19.5 11.3 Rich st 20% 0.3 4.8 21.8 14.5 B m ko 0.0 4.3 20.2 14.1 Dist nc Fin nci l Autom dic tion Oth r b rri rs Dist nc Fin nci l Autom dic tion Oth r b rri rs Sourc : M li EHCVM (2018), individu ll w i ht d d t . Not : P rc nt s r th sh r of thos in n d of outp ti nt c r . MALI PUBLIC EXPENDITURE REVIEW >>> 125 >>> Fi ur 5.6: Cont cts with H lth S rvic Provid rs b Quintil nd R ion (2018) . B Quintil b. B R ion Tombouctou 3.1 1.6 51.9 Poor st 20% 3.8 2.2 35.4 M n k 2.1 0.3 51.3 G o 1.0 1.2 51.0 Q2 4.5 4.4 36.0 Kid l 3.0 5.5 47.4 Mopti 6.0 2.7 43.1 Q3 3.2 9.2 41.5 Sik sso 4.1 5.0 41.5 S ou 5.1 3.5 40.9 Q4 1.9 10.4 42.2 K s 1.2 6.7 33.3 B m ko 2.2 27.8 31.5 Koulikoro 2.8 9.6 30.4 Rich st 20% 3.4 20.0 35.3 T oud nit 1.0 17.8 29.7 Tr dition l Priv t Public Tr dition l Priv t Public Sourc : M li EHCVM (2018), individu ll w i ht d d t . Not : P rc nt s r th sh r of thos in n d of outp ti nt c r . >>> Fi ur 5.7: R sons for P ti nt Diss tisf ction with H lth S rvic Provid rs b Quintil nd R ion (2018) . B Quintil b. B R ion M n k 52.2 28.5 42.9 57.5 60.2 45.9 Poor st 20% 6.6 11.8 8.0 28.6 8.3 5.2 G o 6.1 16.4 9.4 50.7 20.2 2.2 Koulikoro 5.2 19.4 9.4 47.2 8.0 8.5 Q2 11.8 22.5 9.5 37.0 13.2 8.2 Tombouctou 8.4 46.4 2.3 42.1 20.5 2.8 K s 5.3 25.1 11.0 36.7 15.6 4.6 Q3 9.8 20.4 11.6 35.0 16.1 8.5 S ou 10.6 25.6 7.1 34.2 10.1 4.9 Sik sso 9.4 11.9 10.9 31.9 13.5 7.2 Q4 15.2 28.1 9.5 41.1 16.0 7.6 Mopti 19.4 23.5 9.5 31.5 8.8 7.4 B m ko 16.7 32.4 4.8 25.6 10.5 5.8 Kid l 27.8 44.4 40.4 22.2 62.3 23.4 Rich st 20% 13.7 33.4 9.1 35.7 11.4 5.6 T oud nit 31.7 7.4 24.3 11.2 25.0 20.1 F cilit W it P rsonn l Cost Dru stockoutOth r F cilit W it P rsonn l Cost Dru stockout Oth r Sourc : M li EHCVM (2018), individu ll w i ht d d t . Not : P rc nt s r th sh r of thos in n d of outp ti nt c r . The combination of self-medication and financial treatment from less well-regulated private providers who barriers can contribute to increasing antimicrobial have financial incentives to inappropriately prescribe resistance, generating negative externalities antibiotics, offer truncated courses of treatment, or use (Laxminarayan et al., 2020). Antimalarial drug lower quality formulations. Alsan and colleagues (2015) resistance, for example, is one of the greatest challenges took a systematic look at this issue and found evidence to Mali’s national malaria control program. Co-payments associating large out-of-pocket health payments with in the public sector promote the development of antibiotic antimicrobial resistance in low- and middle-income resistance by inducing patients to purchase antibiotic countries. 126 >>> MALI PUBLIC EXPENDITURE REVIEW Public sector facilities remain the main health service (an increase from about 5 percent in 2014), and the the providers in Mali for those in need of health care. use of private health care providers tends to be higher Across all income groups and all regions in the country, among urban populations. The regional breakdown of the majority of those in need of health care services the utilization data shows that traditional healers are attend the public sector facilities (CSCOMs and CSRéfs). generally a substitute for public health facilities. In regions Private sector providers are also used, but to a lesser where the use of public health care is high (Kayes, Gao, extent, and these are more likely to be approached by and Tombouctou), public health facilities tend to crowd the better-off segments of the population. Specifically, out traditional healers. about 20 percent of the population in need of care who choose private health facilities belong the richest quintile Despite high levels of forgone care, user satisfaction as opposed to just 2 percent from the poorest quintile. is relatively high with 88 percent of service users Traditional healers also contribute to meeting the reporting being satisfied or very satisfied with demand for health care, albeit to an even lower extent the service received. Among those who were not (Figure 5.6). satisfied, the cost of services was the main reason for dissatisfaction across all income groups, followed The public health system—CSCOMs, CSRéfs, and by long waiting times, the cleanliness of health care public hospitals—serve on average over 75 percent facilities, and the qualifications of health personnel. of Malians in need of health care services. Consistent Drugs being out of stock was the main reason for patient with the system structure, health care needs are mostly dissatisfaction in Menaka and Kidal (Figure 5.7). handled at the basic service level by CSCOMs (62 percent). Urban Malians are much more likely to get Performance services from higher tiers such as CSRéfs and public hospitals, perhaps because doctors are more likely to Population Outcomes and Burden of Disease refer patients to higher levels of care when they are closer to hand. The use of traditional healers is still Mali is among the five countries in the world with the common but declining (from about 17 percent in 2014 heaviest burden of disease. The burden of disability to 6.7 percent in 2018) with this rate being higher in rural associated with a disease or disorder can be measured areas (7.6 percent). Private providers, including doctors in units called disability-adjusted life years (DALYs). and dentists and private clinics and hospitals, serve DALYs represent the total number of years lost to illness, about 10 percent of the population in need of health care disability, or premature death within a given population. >>> Fi ur 5.8: Comp rison nd Evolution of th Burd n of Dis s in M li (1990–2017) . Glob l Comp rison b. Evolution DALYs p r 100,000 popul tion % of DALYs 1990 2000 2010 2017 5% 6% 6% 6% 15% 16% 21% 24% 80% 78% 74% 69% M li 1k 10k 20k 30k 40k 50k 60k 70k 80k 90k Non−communic bl dis s s Communic bl & NMN dis s s Injuri s Sourc : IHME (2020) GBD Comp r D t Visu li tion. MALI PUBLIC EXPENDITURE REVIEW >>> 127 >>> Fi ur 5.9: B nchm rkin K H lth Outcom s . Lif Exp ct nc b. Inf nt Mort lit 85 125 80 75 TCD M li 50 AFG ZWE R t p r 1,000 Liv Births 75 UZB U B ZB UGA LAO 70 TJK 25 RWA TJK RWA UZB AO LAO Y rs 65 AFG 10 GA AZ UGA ZWE 60 5 M li 55 D TCD 2 Low r Upp r Low r Upp r Low Middl Middl Hi h Low Middl Middl Hi h 50 Incom Incom Incom Incom 1 Incom Incom Incom Incom 250 500 1,006 3,995 12,236 35,000 100,000 250 500 1,006 3,995 12,236 35,000 100,000 GNI p r c pit , US$ GNI p r c pit , US$ c. M t rn l Mort lit d. Und r 5 Mort lit 1500 200 TCD 800 AFG TCD M li 100 UGA ZWE M li R t p r 100,000 Liv Births 400 R t p r 1,000 Liv Births AFG ZWE 200 RWA LAO 50 UGA TJK LAO RWA 100 25 50 UZB 25 UZB 10 TJK 10 5 5 2 2 Low r Upp r Low r Upp r Low Middl Middl Hi h Low Middl Middl Hi h 1 Incom Incom Incom Incom 1 Incom Incom Incom Incom 250 500 1,006 3,995 12,236 35,000 100,000 250 500 1,006 3,995 12,236 35,000 100,000 GNI p r c pit , US$ GNI p r c pit , US$ Sourc : World D v lopm nt Indic tors Not : Both X nd Y x s r xpr ss d in lo rithmic sc l . In 2017, Mali recorded 70,000 DALYs per 100,000 the total number of years lost or lived with disabilities people, the fourth largest burden of disease in the world in 2017 (Figure 5.8b). behind the Central African Republic, South Sudan, and Chad (Figure 5.8a). Mali’s has performed below expectations for key health outcomes such as life expectancy, maternal The burden of disease remains dominated mortality, and child mortality. Mean life expectancy in by communicable, maternal, neonatal, and Mali is about four years short of what would be expected nutritional diseases. While the impact of non- based on its gross national income (GNI), at 59 years communicable diseases (in total DALYs) increased instead of 63. It also has a 40 percent higher rate of gradually from 10 percent in 1990 to 24 percent infant mortality than would be expected, a 57 percent in 2017, communicable, maternal, neonatal, and higher rate of maternal mortality, and a 62 percent higher nutritional diseases still accounted for 70 percent of rate of child mortality (Figure 5.9). 128 >>> MALI PUBLIC EXPENDITURE REVIEW Service Coverage at the same level as Mali in 2000 increased their SCI by almost 100 percent. For example, Uganda started Population coverage of essential health services has at about 23 and managed to increase coverage by 96 increased substantially between 2000 and 2017, but percent, while Lao PDR started at 25 and increased by remains low both in absolute and relative terms. One 103 percent. standard metric to capture population coverage is the WHO Service Coverage Index (SCI) used in the context Equity of monitoring of Sustainable Development Goals (SDG) Target 3.8 which tracks two universal health coverage The share of the population covered by essential (UHC) indicators: financial protection and coverage of health services is increasing in Mali while inequity essential health services. in access is decreasing. Using several waves of household health population surveys (Demographic and The UHC SCI is a standardized index ranging from Health Surveys and Multiple Indicators Cluster Surveys) 0 to 100 (full population coverage) representing the we calculated the concentration index (CI)92 for health average coverage of 14 tracer indicators in 4 essential service coverage against the distribution of the socio- areas: (i) reproductive, maternal, newborn, and child economic index for skilled attendance at birth and full health; (ii) infectious diseases; (iii) noncommunicable child immunization. Figure 5.11 plots the time series diseases; and (iv) service capacity and access (WHO, of mean population coverage (vertical axis) and the CI 2019). Between 2000 and 2017 (Figure 5.10), Mali’s (horizontal axis). For skilled birth attendance, the trend is SCI increased from 22 to 38 (73 percent). While this very clearly towards increased coverage, from 42 percent represents a substantial achievement, its performance in 2001 to 73 percent in 2018. Inequality has reduced remains below that of its peers. Globally, service coverage by 61 percent, with the CI falling from 0.294 in 2001 to tends to converge, meaning that countries starting from 0.115 in 2018. For immunization, the positive trend of a low base increase coverage faster than those starting increasing coverage and falling inequality held between from a higher base. On average, countries which started 2001 and 2006 but then reversed. Inequality increased >>> Fi ur 5.10: B nchm rkin H lth S rvic Cov r (2000–17) . Ch n s in Univ rs l H lth C r b. Comp rin Growth in Cov r with Cov r t rtin Points 100 180 2017 90 160 80 RWA 140 70 2000 120 60 LAO Hi h incom 100 50 UGA ECA TCD ZWE MENA 80 LAC 40 MLI Upp r middl incom EAC AFG TJK 30 60 Low middl incom SA 20 40 SSA low incom UZB M li 10 20 0 0 Av r b r ion Av r b incom roup 0 10 20 30 40 50 60 70 80 90 Individu l countri s S rvic cov r ind x v lu in 2000 Sourc : WHO (2019) UHC Glob l Monitorin R port. Sourc : WHO (2019) UHC Glob l Monitorin R port. Not : Th v r s of th E st Asi & P cific r ion nd th South Asi r ion xclud hi h-incom countri s. 92  The concentration index is the analog of a Gini coefficient for an income distribution and measures the area between the diagonal of equal distribution and the concentration curve of a given variable ranked along an ordinal socio-economic distribution variable. The CI is bounded by construction between -1 (extreme concentration towards the poor) and +1 (extreme concentration towards the better off). The absolute value of the concentration index measures the degree of inequality with CI = 0 indicating a perfectly equal distribution. MALI PUBLIC EXPENDITURE REVIEW >>> 129 between 2006 and 2009 and coverage declined, and Modulaire et Permanente Auprès des Ménages (EMOP) inequality increased during 2009–15. The trend reversed survey collects the information required to measure again between 2015 and 2018 with coverage picking up these two metrics. and inequality falling, although Mali has not yet returned to the higher coverage and lower inequality levels of Households spend most of their OOP health 2006 and 2009. payments on drugs and laboratory and consultation fees which together account for about 90 percent of Despite improvements in inequality in access to their expenditure (Figure 5.12). The OOP composition essential health services, inequalities in health is relatively stable across socio-economic quintiles, with outcomes have worsened, highlighting the expenditure on drugs accounting for about 60 percent importance of social determinants of health. For of OOP expenditure. example, while stunting and under-five mortality rates have improved, inequalities also increased between On average, OOP health expenditure accounted for 2006 and 2018. close to 9 percent of household budgets in 2018 (Table 5.4). The average share at the national level Financial Protection remained relatively constant between 2011 and 2018, at around 7 percent, but this hides critical socio-economic Financial protection is another key dimension of inequalities. Health OOP expenditure accounted for universal health coverage. It captures the degree to a larger share of household budgets (total household which health service utilization exposes beneficiaries consumption) among the poorest households (13 percent to financial hardship through large OOP payments. per year compared with 5 percent for the richest quintile). Financial protection is measured by two standard The share in rural areas was almost double the share in metrics: (i) catastrophic health expenditure, which urban areas in 2018 (10 percent against 5 percent). The measures the share of households spending 10 percent share of the population spending 10 percent or more or more of their budget on health OOP payments;93 and of their budget on health follows a similar pattern and (ii) impoverishing expenses, which measures the share of fluctuated around 2.2 percent between 2011 and 2018. the population pushed below the extreme poverty line by This share is also much higher for the bottom quintile substantial OOP payments. In Mali, the annual Enquête (5.5 percent) compared to the top quintile (0.6 percent). >>> Fi ur 5.11: Evolution in S rvic Cov r nd In qu lit (1995–2018) . Skill d Birth Att nd nc b. Full Childhood Immuni tion 100 100 2015 90 90 2012 2009 2009, MICS 80 80 2018, DHS 2003 70 70 2001 2006, DHS 60 60 2018 1995, DHS 1995 50 50 2001, DHS 40 40 2006 30 30 20 20 2012, DHS 10 10 2015, MICS 0 0 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0 0.1 0.2 0.3 0.4 0.5 Conc ntr tion ind x for skill d birth tt nd nc Conc ntr tion ind x for full immuni tion Sourc : H lth Equit nd Fin nci l Prot ction Indic tors (HEFPI) D t b s (2020). Not : A positiv CI d not s conc ntr tion tow rds th b tt r off. Th l r r th CI, th r t r th in qu lit . 93  The rate of catastrophic OOP expenses for health is the official metric (Indicator 3.8.2) adopted by the UN Member States to track country level progress of SDG target 3.8 (UHC). The World Bank and the World Health Organization produce a global joint monitoring report on financial protection every two years (see WHO and World Bank, 2019). 130 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 5.4: Health Expenditure as a Share of Household Budgets and Incidence of Catastrophic Health Expenditure (2011–18) 2011 2013 2014 2015 2016 2017 2018 Budget % spending Budget % spending Budget % spending Budget % spending Budget % spending Budget % spending Budget % spending share over 10% share over 10% share over 10% share over 10% share over 10% share over 10% share over 10% Mali 7.6 2.6 5.1 1.7 7.7 3.5 6.2 2.1 7.2 2 7.3 1.5 8.7 2.1 Q1 11.4 3.5 6.3 1.6 10 5.2 8 3.7 8.6 3.5 9.4 2.9 12.7 5.5 Q2 10.3 3.4 5.5 1.9 9.2 4.7 7.1 2.8 8.6 2.8 7.8 2.1 9.6 2.1 Q3 7.1 2.5 5.2 1.3 8.1 3.3 6.5 1.7 7.3 1.3 7.4 1.1 8.6 1.5 Q4 5.8 2 4.5 1.1 6.8 2.1 5.4 1.3 6.7 1.1 6.6 0.3 7.4 0.6 Q5 4.3 1.4 4.1 2.5 4.6 2 4.2 1.1 4.7 1.1 5.4 1.1 5.4 0.6 Urban 5.4 1.6 5.7 1.6 4.7 1.3 4.9 1.7 5 1.4 4.9 0.9 5.5 1.3 Rural 8.3 2.9 4.8 1.7 8.7 4.1 6.6 2.3 7.9 2.2 8.1 1.7 9.9 2.3 Source: INSTAT Mali, EMOP surveys. >>> Table 5.5: Health Budget Shares Among the Poor and Incidence of Impoverishing Health Expenditure 2011 2013 2014 2015 2016 2017 2018 Budget Budget Budget Budget Budget Budget Budget % impover- % impover- % impover- % impover- % impover- % impover- % impover- share share share share share share share ished due ished due ished due ished due ished due ished due ished due among among among among among among among to OOP to OOP to OOP to OOP to OOP to OOP to OOP poor poor poor poor poor poor poor Mali 10.5 4.3 5.8 3.8 9.2 3.8 7.5 4.4 8.5 4.5 8.6 5.3 11.3 4.5 Kayes 10.9 7.2 8.4 4.6 11.6 3.6 8.6 7.5 11.9 9.3 14.4 3.4 9.5 5.5 Koulikoro 13.1 1.6 6.1 4.6 11.9 3.6 7.8 4.9 7.8 2.6 8.6 7.6 12.9 6.9 Sikasso 14.2 4.9 6.7 4.4 11.2 4.1 9.5 6.0 10.6 4.3 9.8 5.3 14.9 2.5 Ségou 10.1 6.8 4.7 5.2 8.6 4.9 7.0 2.6 6.8 2.5 8.0 4.9 8.5 2.8 Mopti 7.1 1.6 4.0 1.1 4.8 1.9 5.4 2.5 6.7 5.7 6.8 3.3 8.1 5.7 Tombouctou 7.4 6.0 - - 2.2 1.3 2.0 1.7 4.6 3.3 2.9 5.3 5.4 1.8 Gao 5.3 3.7 - - 8.2 5.3 6.9 5.0 6.6 4.2 3.9 2.5 7.6 7.2 Kidal 1.3 0.0 - - - - - - - - - - - - Bamako 2.0 3.1 5.5 3.0 3.3 8.0 4.0 2.1 5.4 4.1 5.6 28.3 4.4 9.0 Urban 10.2 4.3 8.6 3.3 6.9 4.6 7.4 5.1 7.0 4.6 7.9 12.3 9.0 7.4 Rural 10.5 4.3 5.2 3.9 9.4 3.7 7.5 4.3 8.6 4.4 8.6 4.8 11.5 4.2 MALI PUBLIC EXPENDITURE REVIEW Source: INSTAT Mali, EMOP surveys. >>> 131 >>> >>> Fi ur 5.12: Composition of Out-of-Pock t Fi ur 5.13: Impov rishin H lth H lth P m nts b Quintil (2018) Exp nditur (2018) Q1 Q2 Q3 6% 5% 5% 6 Pov rt lin 16% 13% 12% 12% 15% 13% (in mutipl of th pov rt lin ) 5 59% 62% 64% P r c pit consumption Consumption 4 ross of OOP Q4 Q5 3 Consumption n t of OOP 5% 5% 2 15% 14% 16% 15% 1 59% 60% 0 Cumul tiv popul tion r nk d b p r c pit xp nditur Consult L b Dru Immuni tion OOP sh r ov r 10% Ov r 10% nd impov rish d M d. Eq Hosp Ch ckup Circumcision Impov rish d (OOP sh r < 10%) Push d furth r b low PL Sourc : EHCVM (2018), hous hold w i ht d v r s. Sourc : EHCVM (2018), hous hold w i ht d v r s. Not : P r c pit consumption is xpr ss d in multipl s of th n tion l pov rt lin . Th upp r 1% of th distribution is trimm d. E ch point r pr s nts sin l hous hold, r nk d from th poor st to th rich st. Th v rtic l lin s r pr s nt th ir h lth OOP xp nditur . The figures suggest that health OOP payments play 10 percent or more and thus becoming impoverished. a critical role in pushing some of the population The orange lines show the percentage of the population further into poverty. In 2018, about 4.5 percent of the impoversished despite OOP payments below 10 percent population would not be not have been categorized of their household budgets, while the red lines show the as poor if they had not incurred health expenditure. In share of the population pushed further below the poverty other words, health OOP payments contributed 4.5 line because of OOP expenditure. percentage points of the total poverty headcount in Mali, and they also contributed to increasing the poverty gap The impact of COVID-19 on Health Service by pushing already poor households further below the Utilization poverty line (Table 5.5). Bamako, Gao, and Koulikoro are the regions where the incidence of impoverishing health Mali accounts for a small share of the COVID-19 expenditure is the highest. cases in Sub-Saharan Africa (SSA). The COVID-19 outbreak started in Mali at the end of March 2020, and The impoverishing effect of health OOP expenditure the 100th case was registered by April 12, 2020. Overall, is shown graphically in Figure 5.13. The figure ranks by mid-October, Mali accounted for 0.3 percent of all all households in the 2018 EHCVM according to total COVID-19 cases in SSA, but has about 1.7 percent of expenditure per capita expressed as a multiple of the its population (Figure 5.14a). national poverty line. The upper part of the curve shows total consumption expenditure gross of OOP spending. Although cases have been lower than regional The lower “drips” shows how health OOP expenditure average, fatality rates have been higher. The reduces their welfare from gross consumption levels. COVID-19 disease burden (mortality per population) can The longer the drip below the curve, the higher the be decomposed into two components: the confirmed OOP amount. The gray lines show the share of the case rate and the case fatality rate.94 While the case population spending 10 percent or more of their budget fatality rate indicates the severity of the disease, the on health while still remaining above the poverty line and confirmed case rate indicates how widely it has spread. the brown lines the share of the population spending Figure 5.14b plots the confirmed case rate of COVID-19 94  Mortality rate = no. of deaths/population = (no. of deaths/confirmed cases)*(no. of confirmed cases/population) = case fatality rate*confirmed case rate. 132 >>> MALI PUBLIC EXPENDITURE REVIEW (horizontal axis) against the case fatality rate (vertical impact on other essential health services. A recent axis) for Mali and the average for West SSA95 in 30 day post-COVID-19 analysis of routine health facility data in increments since the 100th case. While the COVID-19 Mali compared the service usage that might have been mortality burden is similar in Mali (0.6 deaths/10,000 expected in 2020 (based on historical monthly figures) to people) to West SSA (0.7 deaths/10,000), in West SSA actual usage of selected essential health services. The the burden reflected high community transmission and objective of this analysis was to estimate the magnitude relatively low case fatality rates (around 2 percent of of forgone care in Mali due to COVID-19. Overall, the confirmed cases), whereas in Mali it was characterized results of this analysis suggest that immunization by lower community transmission and a higher case services have been significantly negatively affected since fatality rate (around 5–6 percent during the first two the outbreak started in Mali with average reductions of months, falling to about 4 percent by mid-October). about 20 percent per facility (Figure 5.15a). This reduction was geographically widespread (Figure 5.15b). Similarly, While the direct burden of COVID-19 has been pre-natal consultations, family planning consultations, relatively small compared to the rest of the region and curative care consultations fell by about 10 percent and the rest of the world, it had a significant indirect on average. 95  West SSA consists of Benin, Burkina Faso, Cameroon, Cape Verde, Chad, The Gambia, Ghana, Ivory Coast, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, São Tomé and Príncipe, Senegal, Sierra Leone, and Togo. MALI PUBLIC EXPENDITURE REVIEW >>> 133 >>> Fi ur 5.14: Imp ct nd Incid nc of COVID-19 . COVID-19 R l tiv Burd n in b. Comp rin C s s nd C s Sub-S h r n Afric F t lit R t s W st Sub-S h r n Afric M li ccounts for 0.3% of ll c s s in SSA, MR = 0.1 MR = 0.5 whil r pr s ntin 1.7% of its popul tion. p r 10,000 p r 10,000 C s s, c s f t lit , nd mort lit 80 10 MR = 1 50 p r 10,000 . 9 25 NGA COD UGA 8 10 ETH MOZ SDN ZAF 5 TZA AGO CIV 7 MDG CMR KEN 2.5 NER BFA MWISEN +60d TCD SOM MLIGIN GHA 6 ZWE ZMB +30d +90d 1 BDI TGO RWA SSD BEN 5 +120d ERI SLE CAF +150d .5 LBR COG MRT +180 (Oct. 8) 4 .25 BWA NAM MLI LSO GMB MUS GNB GNQ GAB 3 .1 SWZ +60d COM +30d +150d .05 2 +90d W st−SSA CPV +120d +180 (S p. 14) 1 STP SYC 0 .05 .1 .25 .5 1 2.5 5 10 25 50 80 0 .05 .1 .15 .2 .25 .3 .35 .4 .45 .5 Sh r of tot l SSA COVID−19 c s s (%) Confirm d c s r t (CCR), p r 100 popul tion Sourc : Our World In D t (Nov mb r 12, 2020). Not : Th r d lin s in Fi ur 5.15b r pr s nt th iso-mort lit r t : th s m mort lit r t r sultin from diff r nt combin tions of c s f t lit r t s nd confirm d c s r t s. >>> Fi ur 5.15: Imp ct of COVID-19 on Ess nti l H lth S rvic s . Ch n in S rvic Us b. Imp ct b R ion (D c 2017–Jun 2020) (M r–Jul 2020) 50 M rch 2020 April 2020 M 2020 p r st blishm nt 40 Tombouctou Tombouctou Tombouctou M n k M n k M n k Koulikoro Koulikoro Koulikoro 30 Sik sso Sik sso Sik sso Jun 2020 Jul 2020 20 Av r Tombouctou Tombouctou 10 M n k M n k Koulikoro Koulikoro COVID Sik sso Sik sso 0 D c mb r D c mb r D c mb r 2017 2018 2018 2019 2019 2020 No disturb nc Jun Jun Jun Limit d disruption Mod r t disturb nc Si nific nt disturb nc s S v r disturb nc s Estim t d v lu s Prov n v lu s Sourc : World B nk/Glob l Fin ncin F cilit n l sis (2020) b s d on M li MoH (DHIS2) d t . 134 >>> MALI PUBLIC EXPENDITURE REVIEW Financing from 40 percent to 28 percent. During the same period, the share of domestic public expenditure increased from Overall Trends in Health Financing 11 percent of total spending to 35 percent in 2017. Total health expenditure decreased slightly in real At about US$ 31.5 per capita, Mali is among the terms from around CFAF 19,000 per capita in 2000 10 countries with the lowest health expenditure in (in 2017 prices) to about CFAF 18,000 in 2017 (Figure the world. Its expenditure is lower than most selected 5.16). It increased slightly in real terms between 2000 comparator countries (Figure 5.17 and Table 5.6), and and 2009, but then decreased by about 30 percent lower than the SSA regional average of US$ 138 and from CFAF 22,400 in 2009 to CFAF 15,800 in 2012. the low-income country (LIC) group average of US$ 45. Expenditure returned to 2010 levels in 2014 (around Its health expenditure is 30 percent lower than would CFAF 21,000 per head). Relative to gross domestic be expected for a country with a similar level of GDP product (GDP), total health expenditure decreased from per capita (US$ 44.8). This low level is due to its low 5.6 percent of GDP in 2000 to 3.8 percent in 2017. income level combined with the small share of GDP During the same period, domestic public resources allocated to health (3.8 percent) compared to its peers, allocated to health remained constant at around 1.5 the regional average (5.8 percent), and the LIC average percent of GDP. of 6.4 percent. Public health expenditure makes up 34.9 percent of total health expenditure, which places Mali on The composition of health financing has changed a par with comparator countries, but the health sector’s since 2000. The share of external financing increased share of government expenditure (5.8 percent) is lower from 26 percent in 2010 to 44 percent in 2014. Between than its peers. OOP expenditure on health still represents 2014 and and 2017, domestic resources allocated an important share of total health expenditure (35.1 to the sector (both public funding and private OOP percent) but Mali’s dependence on OOP expenditure expenditure) increased by 20 percent, but external remains lower than the regional average of 36.7 resources fell by 42 percent over the same period, percent and the LIC average of 40.9 percent. External resulting in a reduction in total health spending of about resource dependence in Mali (28 percent of total health 14 percent. Since the 2012 political crisis, private OOP expenditure) is on a par with the LIC average of 28.6 payments have declined from 45 percent of total health percent and slightly higher than the regional average expenditure to 35 percent, while external resources fell (21.5 percent). >>> Fi ur 5.16: H lth Fin ncin Tr nds (2000–17) 25,000 20,000 15,000 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Dom stic OOP Ext rn l Oth r Sourc : World D v lopm nt Indic tors (2020). MALI PUBLIC EXPENDITURE REVIEW >>> 135 >>> Fi ur 5.17: B nchm rkin P r C pit H lth Exp nditur A inst Incom . Tot l H lth Sp ndin b. Public H lth Sp ndin 10,000 10,000 Tot l h lth xp nditur p r c pit US Doll rs Public h lth xp nditur p r c pit US Doll rs 5,000 5,000 2,000 2,000 1,000 1,000 500 Mali 500 300 ($13.8 per capita) Mali 200 300 200 ($31.5 per capita) 100 ZWE 60 100 ZWE 40 RWA UZB UZB 30 60 TJK 22 AFG RWA LAO TJK LAO 40 UGA 10 30 UGA 22 TCD AFG TCD Low r Upp r Low r Upp r Low Middl Middl Hi h Low Middl Middl Hi h 10 Incom Incom Incom Incom Incom Incom Incom Incom 250 370 500 1,006 2,000 3,995 7,000 12,236 25,000 50,000 100,000 250 370 500 1,006 2,000 3,995 7,000 12,236 25,000 50,000 100,000 GNI p r c pit , US$ GNI p r c pit , US$ Sourc : World D v lopm nt Indic tors (2020); WHO Glob l H lth Exp nditur D t b s (2020). Not : D t r for 2017. Both X nd Y x s r xpr ss d in lo rithmic sc l . >>> Table 5.6: Benchmarking Health Expenditure and Coverage Share of Total Total primary Public Public OOP share External UHC health health care share (% share (% (% total share (% index exp. per exp. per expenditure total health government health total health [0-100] capita capita (% total expenditure) expenditure) expenditure) expenditure) (IHME) (US$) (% GDP) health expenditure) Afghanistan 68.4 12.0 5.1 2.3 75.5 19.4 57.1 26.5 Lao PDR 67.0 2.7 35.1 4.0 46.2 16.7 78.2 37.1 Mali 31.5 3.8 34.9 5.8 35.1 28.0 81.8 27.3 Rwanda 49.8 6.6 34.3 8.9 6.2 50.4 - 32.7 Chad 30.8 4.6 15.8 4.7 58.0 21.1 - 16.7 Tajikistan 59.1 7.4 29.0 5.9 63.2 7.7 46.7 48.6 Uganda 45.0 6.3 15.5 5.1 38.6 43.2 59.0 27.7 Uzbekistan 118.9 6.4 43.3 10.2 53.4 2.6 - 59.6 Zimbabwe 88.5 6.6 51.6 15.2 20.6 14.7 - 32.8 Sub-Saharan 137.9 5.8 33.1 7.1 36.7 21.5 65.0 33.8 Africa Low income 45.2 6.4 23.9 6.1 40.9 28.6 66.1 27.7 Lower middle 134.4 5.5 44.2 7.7 39.0 11.7 60.2 46.8 income Upper middle 475.6 6.8 55.6 11.2 32.7 3.6 49.5 63.2 income Source: WHO Global Health Expenditure Database (2020), IHME (2020) GBD Compare Data Visualization, and World Development Indicators (2020). Note: The IHME UHC index is constructed as a proxy measure of UHC based on the coverage of maternal, child, and selected communicable disease interventions which also captures access to high-quality health care or broader health system functioning through amenable mortality i.e. mortality that should not be fatal in the presence of effective medical care (see Stenberg et al., 2017, 390: 231-66 and 390: 1423-59). 136 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur 5.18: H lth Fin ncin Tr nsition (2000–17) . M li’s Tr j ctor Comp r d b. B nchm rkin Ch n s in OOP to Exp ct d Tr nsition Exp nditur A inst Public H lth H lth fin ncin tr nsition Sp ndin (1995–2017) in OOP/c pit h lthsp ndin (%) 2500 10000 10 20 30 40 50 60 70 80 Upp r 20 Low Low r Hi h Tot l h lth xp nditur p r c pit , US Sh r of tot l h lth xp nditur (%) Incom Middl Middl Incom Incom Incom REGRESSING 15 Tot l h lth xp. Mali Mali (l ft xis) 2000 2017 Ethiopi Burkin F so 10 Public h lth xp. Af nist n 500 in % tot l (ri ht xis) U nd M l wi Ni r 5 Out-of-pok t Rw nd 100 in % (ri ht xis) M li SLOW TRANSITION 0 RAPID TRANSITION Ext rn l in % 25 tot l (ri ht xis) -5 Anu l ch n -10 5 5 -5 0 5 10 15 20 150 250 500 1000 2500 5000 10000 25000 50000 Anu m ch n in pool d/c pit h lth sp ndin (%) GNI p r c pit , US$ Sourc : World D v lopm nt Indic tors d t b s (2020), nd WHO Glob l H lth Exp nditur D t s t (2020). Not (LHS): Th lin s r pr s nt th xp ct d tr j ctor of countri s b s d on ll obs rv tions. Th dots r pr s nt M li’s position in 2000 nd 2017. >>> Fi ur 5.19: D composition of Ch n s in Public H lth Exp nditur (2000–17) . B incom roup b. B Countr 5 15 nu l rowth (%) 2000-2017 nu l rowth (%) 2000-2017 4 10 3 5 2 0 1 P rc nt P rc nt 0 -5 LICs LMICs UMICs HICs-Non OECD RWA TJK UZB LAO MLI UGA TCD OECD Economic rowth Economic rowth A r t public sp ndin ch n A r t public sp ndin ch n R prioriti tion R prioriti tion Sourc : Authors’ c lcul tions from World D v lopm nt Indic tors d t b s (2020), nd WHO Glob l H lth Exp nditur D t s t (2020). Mali is at an early stage in its health financing more pooled public financing (Figure 5.18a). Mali has transition, with low financing overall and a large share achieved a significant reduction in the share of health of OOP and external financing. Typically, as a country’s expenditure financed through OOP payments from over income level increases, its total health expenditure also 68 percent in 2000 to around 35 percent in 2017, lower increases, while the composition gradually shifts away than the expected OOP share given Mali’s income level. from OOP expenditure and external finance and toward The share of publicly financed health expenditure is MALI PUBLIC EXPENDITURE REVIEW >>> 137 already higher than might be expected for its income partly because of a reprioritization of the public budget level while the share of externally funded expenditure is towards health. slightly lower. Mali’s pace of transition is faster than most of its comparator countries (Figure 5.18b). In Chad, Lao Sources of Funds PDR, Uganda, and Uzbekistan pooled funding sources are increasing at a similar annual rate to OOP financing. The share of funds mobilized through government and compulsory contributory schemes went up Per capita government health expenditure during 2013–16. As Figure 5.20 shows, government and increased by about 2.7 percent per year on average compulsory contributory schemes accounted for 41.2 between 2000 and 2017, mostly due to improving percent of public funds in 2016, up from 21.4 percent in macroeconomic conditions and increasing public 2013. OOP expenditure by households made up more spending overall. Changes in public health expenditure than half of all public funding in 2013 (53.3 percent), but can be decomposed96 into changes in economic then began to fall, accounting for 34.2 percent in 2015 growth, changes in aggregate public spending, and and 36.9 percent in 2016. The Government remains changes in how much health is prioritized, i.e. its share heavily reliant on private OOP expenditure for cost of the domestic budget. Overall, increasing public recovery through user fees, however. health expenditure per capita has mostly been driven by favorable macroeconomic conditions for countries Economic Allocation in all income groups (Figure 5.19a). In Mali, growth in public health expenditure was driven first by economic Publicly budgeted health funding is used to cover growth and then by increases in aggregate public operating expenditure (wages and salaries, and spending (Figure 5.19b) while health retained a constant non-personnel expenditures such as contracts), share of the budget. This contrasts with countries like capital expenditures, and transfers. Until 2011, Rwanda, Tajikistan, and Uzbekistan where government current expenditure accounted for roughly one-third of health spending per capita increased on average by total public health spending while capital expenditure 12.5 percent, 11 percent, and 6.5 percent respectively, consumed another 40 percent. The remainder consisted >>> Fi ur 5.20: Sourc s of H lth Fundin (2013–16) . Tot l Amounts b. Sh r of Tot l H lth Exp nditur 66.6 2013 2014 2016 112.2 125.1 21.4% 25.3% 25.5% 27.4% 81.6 2015 108.8 53.3% 47.1% 128.1 2015 2016 110 2014 189 102.3 25.6% 21.9% 40.2% 41.2% 86.9 34.2% 36.9% 2013 183 73.5 0 50 100 150 200 Fundin sch m Gov rnm nt nd compulsor contributrr sch m s Hous holds´out-of-pock t h lth c r xp ns s Priv t volunt r h lth sch m s Sourc . N tion l H lth Accounts (2013-16). 96  We can write with P being per capita public financing for health in constant local currency unit (LCUs), H being health’s share of public expenditure, E being the aggregate public expenditure share of GDP, and Y being GDP per capita in LCUs. Since this will also hold true for t+1, we can take the log difference between t+1 and t and write to decompose the growth rate in per capita public financing for health over time into changes in the right-hand-side components. 138 >>> MALI PUBLIC EXPENDITURE REVIEW of transfers, generally managed centrally, and used for which they have only been receiving since 2012. These grants to public institutions, subsidies for treatments, amounts remain modest, under CFAF 2 billion per year. and various programs for disease control. Since 2011, Most health personnel spending is under the control of however, the share of current expenditure has increased the Ministry of Health, either budgeted centrally or at the significantly. This was a result of two factors: the decline deconcentrated levels—Regional Health Directorates in the capital budget after international donors withdrew and the CSRéfs. The MoH has been strengthening their support in 2012, and then, beginning in 2014, the staff working in local and regional offices. But the big near doubling of the personnel budget (Figure 5.21). source of increase in personnel spending in 2014 was Current expenditure and transfers remained around the subsidized health staff salaries. Until 2014, total wages same before and after the 2012 crisis, with the sharp and salaries paid to the employees of the MoH varied decrease in public health expenditure in 2012 being between CFAF 2 billion to CFAF 3 billion. In 2014, the driven by the significant drop in capital outlays. Capital staff salaries budget at the MoH increased fivefold, the expenditure then increased slowly each year until 2017 increase mostly covering the salaries of CSCOM and after which it fell again significantly. CSRéf health workers. Expenditure on drugs and vaccines accounted for Capital expenditure in Mali is generally financed over 20 percent of current expenditure until 2014, from the national Special Investment Budget, which and for around 10 percent afterwards. While the includes all capital expenditure across the country. All nominal amount spent on drugs and vaccines remained ministries, including the MoH, submit their capital budget stable, their decrease in the share of current expenditure requests to the Ministry of Economy and Finance, which was driven by the significant increase in personnel then allocates these funds across all sectors, including spending in 2014, when it jumped from less than 50 health, consistent with its macroeconomic framework. percent to over 65 percent of current expenditure. For The allocation criteria are not always transparent and two years after the beginning of the 2012 crisis, current ministries with the greatest bargaining powers can expenditure declined (as it did in other sectors), but the get the largest budgets. Except in 2012 and 2013, downward path was reversed when the Government the capital budget for Mali’s health sector has mostly infused additional funding in 2014. As a result, the share depended on international donor contributions. Donor of personnel expenditure has nearly doubled from the funding typically covers around 70 percent of all capital 2013 figure, a share that remained relatively stable until expenditure in the health sector. Overall, the execution 2018 (Figure 5.21). rates are relatively high (Figure 5.23). As Figure 5.22 shows, spending on personnel was Functional Allocation mostly executed at the central level, but it is also increasing at the local level. Decentralized spending Most of Mali’s health budget is absorbed by hospital in Mali is concentrated in education, health, and general care and administrative costs. On average over the administration (World Bank, 2018a). While the education past three years, 40 percent of the budget was allocated sector accounts for over 68 percent of decentralized to hospital care and research, 30 percent to primary spending, the health sector represents slightly less care, 20 percent to administration and coordination than 7 percent and decentralized expenditure represent including decentralized outlays, and over 4 percent to about 20 percent of all health spending. These transfers drugs, vaccines and medical commodities (Table 5.7). typically cover wages, salaries, and operating costs. Mali has been experimenting with a performance-based Total spending on personnel in deconcentrated entities management approach for public resources since 2009, was CFAF 19 billion in 2017, up from CFAF 11 billion culminating in the full adoption of program budgeting in 2013 against a trend of increasing decentralization of in January 2018. The MoH has been responsible for public health spending. the execution of four programs since 2018, and two additional programs related to social protection and Most health personnel in Mali are paid for by public inclusion since 2020. With the adoption of these two funds. Staff are recruited and paid by the Ministry of new programs, the share of the health budget allocated Health or local authorities to be deployed in CSRéfs. to administration and coordination, hospitals, and CSCOMs also receive publicly funded staff from the primary care fell, while social protection and inclusion central or local government. Local governments was allocated 12 percent, and the share allocated to generally pay for personnel using money set aside under drugs, vaccines, and medical goods almost doubled the Heavily Indebted Poor Country (HIPC) initiative, (Table 5.7). MALI PUBLIC EXPENDITURE REVIEW >>> 139 >>> Fi ur 5.21: Economic Composition of H lth Exp nditur (2010–18) 130 120 Public xp nditur in billion CFAF 110 100 90 80 70 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Oth r oods/s rvic s P rsonn l Tr nsf rs Dru s C pit l V ccin s Sourc : BOOST. >>> Fi ur 5.22: P rsonn l Sp ndin b Bud tin L v l nd M in P rsonn l T p s (2010–17) C ntr l D sconc ntr t d 2017 16.3 12.6 0.3 6.3 2016 16.4 10.5 0.2 5.7 2015 15.2 10.2 0.3 5.0 2014 17.8 8.8 0.2 4.1 2013 1.9 7.8 0.3 3.0 0.1 2.7 2012 2.1 7.8 0.2 2.9 2011 1.9 1.2 0.2 0.2 2010 2.8 6.8 0 5 10 15 20 0 5 10 15 20 Communit P rsonn l P rsonn l P rsonn l PPTE Sourc . BOOST (2010-17). Not . Th P s P uvr s Très End ttés initi tiv (PPTE, or hi hl ind bt d poor countri s; HIPC) initi t d b th IMF nd th World B nk in 1996 r f rs to d bt-s rvicin r li f for thos v r poor nd ind bt d countri s on c rt in conditions. The share of the public health budget allocated to the imbalance between high expenditure responsibilities decentralized and deconcentrated expenditure has and weak tax collection performance at the local also steadily increased in recent years. The share government level, but it remains to be seen whether of the budget allocated to central level items has fallen they are sufficient, predictable enough, and allocated in from about 90 percent in 2018 to around 70 percent proportion to local fiscal need to contribute to improved in 2019–20. This is a positive move towards correcting health service delivery at the local level. 140 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 5.7: Public Health Budget (2018–20) 2018 2019 2020 National budget (billion CFAF) 2,331 2,388 2,605 Health budget (billion CFAF) 108 103 126 Health budget share (%) 4.6% 4.3% 4.8% Program budgets (in % of health budget) - Administration, coordination, decentralization 22.5% 22.4% 18.8% - Primary health care and disease control 31.6% 33.6% 25.6% - Drugs, vaccines, financial access to health care 3.5% 3.4% 6.2% - Hospital care and research 42.4% 40.5% 37.5% - Social protection and inclusion 0.0% 0.0% 11.9% Budget by levels (in % of health budget) Central 90.6% 69.7% 72.2% Deconcentrated 0.2% 20.9% 19.6% Decentralized 9.2% 9.4% 8.2% Budget by function (in % of health budget) Operational costs 73.2% 71.6% 73.8% Investments 26.8% 28.4% 26.2% Personnel 20.7% 21.6% 19.4% Source. MoH, Direction des Finances et du Materiel (2020). >>> Fi ur 5.23: Bud t Ex cution R t s (2010–17) Curr nt xp nditur Curr nt tr nsf rs C pit l xp nditur 2017 99,62952 2017 99,15779 2017 99,72608 2016 97,62972 2016 98,50647 2016 98,60927 2015 97,81233 2015 97,81597 2015 83,19916 2014 99,84457 2014 98,5797 2014 99,53227 2013 94,66888 2013 97,01559 2013 98,30595 2012 96,92203 2012 97,78314 2012 99,28942 2011 98,43163 2011 99,83101 2011 98,78669 2010 84,616 2010 99,10543 2010 98,73064 70 80 90 100 110 94 96 98 100 102 70 80 90 100 110 Sourc : BOOST (2010–17). The overall division of the budget between operational execution rates have varied around a relatively high and investment costs has been relatively stable over average (around 95 percent), especially for current the past three years, and budget execution rates are expenditure and current transfers. Capital expenditure relatively high. Operational costs account for about 73 execution rates are more volatile and slightly lower but percent of the budget, of which 20 percent represents remained above 80 percent on average between 2010 personnel costs, leaving 27 percent for investment and 2017 (Figure 5.23). costs. Based on budget data from up to 2017, budget MALI PUBLIC EXPENDITURE REVIEW >>> 141 Efficiency coverage of essential services based on key interventions that include reproductive, maternal, newborn, and Mali’s performance in improving health outcomes is child health; infectious diseases; non-communicable largely constrained by the low volume of resources diseases; and service capacity and access among the invested in the sector, but it has scope to achieve general and the most disadvantaged population. The better outcomes on the intensive margin through indicator is an index reported on a unitless scale of 0 efficiency improvements. This section assesses to 100 computed as the geometric mean of 14 tracer the efficiency of public health expenditure in three indicators of health service coverage (WHO, 2019). complementary dimensions: at aggregate level, at the facility level, and at the level of health service utilization In terms of essential health service coverage, (effective coverage). Mali’s potential efficiency gains from public health expenditure are around 19–27 percent (Figures 5.24c Aggregate Efficiency and d). Again, we estimated the stochastic frontier for service coverage first with a sample of all countries in the Aggregate efficiency estimates suggest that Mali is world and then with a more restricted sample focusing positioned around 13 percent below the efficiency exclusively on Sub-Saharan Africa. Mali’s potential frontier in terms of life expectancy, and 19–27 efficiency gains based on all countries (Figure 5.24c) is percent below the frontier in terms of essential about 27 percent, which is equivalent to raising it from health service coverage. In order to assess the size an SCI of 37.5 to the level of achievement of countries of potential aggregate efficiency gaps in Mali compared such as Lao PDR (50.7), Comoros (51.8), Zambia to other countries, we start by focusing on the extent (53.2), Zimbabwe (54.1), or Guatemala (54.5). Focusing to which public health expenditure translates into on Sub-Saharan African countries (Figure 5.25d), the higher level outcomes such as life expectancy and potential efficiency gains are somewhat smaller but still population coverage of essential health services. We significant, at around 19 percent. Realizing these gains use cross-country data and estimate simple stochastic would be equivalent to bringing Mali’s essential health frontier models to measure the distance between Mali’s service coverage to the level of Mauritania (41.1), the outcomes and the estimated outcome frontiers. For Republic of Congo (41.4), or Burundi (41.6). each outcome, we estimate two frontier models, the first based on all available cross-country data (Figures Technical Efficiency 5.24a and c), and the second based exclusively on Sub- Saharan African countries (Figures 5.24b and d). Estimates of the technical efficiency distribution across district hospitals (CSRéfs) find that overall, For life expectancy, the size of the potential technical efficiency in 2019 is close to 85 percent for efficiency gain for public health expenditure in curative consultations, and 89 percent for assisted Mali is around 13 percent (Figures 5.24a and b). deliveries. The analysis used recent facility level data This translates to a gain in life expectancy of about collected from the district health information system 9 years, and this estimate is relatively stable whether (DHIS2) focusing on district level hospitals. A data we consider all countries in the world (Figure 5.24a) envelopment analysis model assessed the degree to or focus exclusively on Sub-Saharan African countries which facility level inputs (employed human resources, (Figure 5.24b), which share greater similarities in terms beds) are combined to produce optimal volumes of of health systems and financing structures. However, health services (curative consultations and deliveries life expectancy is arguably influenced by social assisted by skilled personnel). determinants of health outcomes beyond the influence of health sector policies. Data envelopment analysis measures the efficiency of decision-making units by comparing them with the Population coverage of essential health services is a best producer in the sample to derive comparative specific output measure which is strongly correlated efficiency. In Mali, district level hospitals deliver on with higher level outcomes such as life expectancy, average about 20,000 curative consultations and 1,500 or child and maternal mortality. We rely here on the deliveries assisted by a skilled birth attendant per year. WHO index for service coverage, which is used for The variation in the volume of services provided is the official UHC monitoring of SDG 3.8.1. Coverage substantial, even after standardizing the service volume of essential health services is defined as the average by facility size. The coefficient of variation is just over 120 142 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur 5.24: B nchm rkin A r t Effici nc Estim t s - Stoch stic Fronti r Mod l . Lif Exp ct nc , All Countri s b. Lif Exp ct nc , Sub-S h r n Afric 90 81.4 Stoch stic ffici nc fronti r Stoch stic ffici nc fronti r rs / lo sc l ) rs / lo sc l ) In ffici nc is bout In ffici nc is bout 81.4 13.9% or 9.4 rs 13.1% or 8.8 rs 73.7 73.7 66.7 xp ct nc ( xp ct nc ( 66.7 Qu dr tic fit (95% CI) 60.3 60.3 M li M li Lif Lif 54.6 54.6 7.4 20.1 54.6 148.4 403.4 1,097 2,981 8,103 2.7 7.4 20.1 54.6 148.4 403.4 1,097 Public h lth xp nditur (USD p r c pit / lo sc l ) Public h lth xp nditur (USD p r c pit / lo sc l ) c. S rvic Cov r , All Countri s d. S rvic Cov r , Sub-S h r n Afric Ind x (WHO) ([0−100] / lo sc l ) 90 Stoch stic ffici nc fronti r 90 Ind x ([0−100] / lo sc l ) Stoch stic ffici nc fronti r (M li) 26.8% in ffici nc in s rvic cov r (M li) 18.5% in ffici nc in s rvic cov r 54.6 54.6 Qu dr tic fit (95% CI) M li M li 33.1 33.1 S rvic Cov r A simil r s rvic cov r outcom could b chi v d S rvic Cov r t th fronti r with $2 p r c pit comp r d to $11 curr ntl sp nt. 20.1 20.1 2.7 7.4 20.1 54.6 148.4 403.4 1,097 2,981 8,103 2.7 7.4 20.1 54.6 148.4 403.4 Public h lth xp nditur (USD p r c pit / lo sc l ) Public h lth xp nditur (USD p r c pit / lo sc l ) 1,097 Sourc : World D v lopm nt Indic tors (2020) nd World H lth Or ni tion (2020). Not : Authors’ c lcul tions. L t st v il bl d t point: 2017. Sub-S h r n Afric n countri s r pr s nt d b or n dots. percent for curative consultations, and 100 percent for converged around a higher efficiency level between assisted deliveries. We use the model to estimate facility 2017 and 2019. The median efficiency score for curative level efficiency scores measuring the distance between consultations increased from 83 percent in 2017 to 85 the facilities’ output level and the empirical production percent in 2019, and the median efficiency score for frontier. skilled birth attendance increased from 81 percent to 90 percent over the same period. Bamako and the region Facility level technical efficiency improved in Mali of Mopti have the highest efficiency scores, while Kayes between 2017 and 2019. Figure 5.25 shows the and Sikasso have the lowest. At a more granular level, empirical distribution of the efficiency scores between the analysis reveals that facilities have converged in their regions in 2017 and 2019, focusing on curative efficiency scores between 2017 and 2019 as the least consultations and assisted deliveries by skilled health efficient facilities in 2017 have increased their score personnel. In both cases, the efficiency score distribution more than the most efficient. MALI PUBLIC EXPENDITURE REVIEW >>> 143 >>> Fi ur 5.25: T chnic l Effici nc Estim t s for District Hospit ls (2017 nd 2019) D t Env lopm nt An l sis . Effici nc Distribution, b. Effici nc Distribution, Cur tiv Consult tion Assist d D liv ri s Effici nc Effici nc distribution distribution in 2019 in 2019 82.9% 84.9% 80.7% 89.4% Effici nc Effici nc distribution distribution in 2017 in 2017 .5 .6 .7 .8 .9 1 .5 .6 .7 .8 .9 1 Effici nc scor s (cur tiv consult tions) Effici nc scor s ( ssist d d liv ri s) c. R ion l Scor s, Cur tiv Consult tions DEA ffici nc scor for ssist d d liv ri s d. R ion l Scor s, Assist d D liv ri s DEA ffici nc scor for ssist d d liv ri s 1 1 .9 .9 .8 .8 .7 .7 .6 .6 .5 .5 B m ko s Koulikoro Mopti Sik sso Sé ou North (KGMT) B m ko s Koulikoro Mopti Sik sso Sé ou North (KGMT) K K 2017 Effici nc 2019 Effici nc 2017 Effici nc 2019 Effici nc Sourc : World B nk st ff n l sis b s d on MoH (DHIS2) d t . Not : V rtic l dott d lin s r pr s nt th m di n for ch distribution. Effective Coverage (Efficiency in Service adherence to treatment protocols). For a similar level of Utilization) service coverage or service utilization, differences in how effectively these services are provided to the population Differences in aggregate health sector efficiency can will translate in different health outcome levels. National also be accounted for by variations in how effectively data systems rarely collect systematic information on health services are used by the population. The effective coverage (either supply or demand side) in low- concept of effective coverage encompasses two key income and fragile settings but recent research working dimensions, the supply side (such as the quality of papers specifically look at the demand side of effective diagnostics and treatment services provided), and the coverage in Mali. demand side (such as choice of service provider and 144 >>> MALI PUBLIC EXPENDITURE REVIEW Poor adherence to antibiotics has significant testing positive receive severe malaria treatment (against negative externalities as it not only reduces the a norm of 10 percent); and (iii) 41 percent of patients chance of individual treatments being effective, who tested negative receive severe malaria treatment. but also contributes to pathogen resistance at the societal level. Understanding antibiotic use is important Acute care subsidies aimed at children at risk are in Sub-Saharan Africa: on the one hand, there is a deficit effective in reducing underuse of needed care. in antibiotic use in the region, with more than 490,000 As African healthcare systems, including Mali, move children per year dying from pneumonia alone—an illness towards subsidized primary care for children, effective often cured by an antibiotic (UNICEF, 2016; WHO, 2005). policy making requires understanding how far subsidies On the other hand, treatment adherence is especially encourage healthcare use when acute care is needed, important for drugs that are at risk of being rendered and whether complementary health information policies ineffective through the rise of resistant pathogens and can improve usage. Health information provided on the bacteria, as many common antibiotics are (WHO, 2012). doorstep by community health workers (CHWs) can complement targeted price subsidies by improving Mali could make substantial effective coverage optimal care seeking. Research by Sautmann et al. (2020) gains by improving adherence to proper antibiotic seeks to investigate this question. This work is extremely treatments. Blandohl and Sautmann (2020) document relevant for Mali in a context where free care subsidies, overall low adherence rates to antibiotic treatment an extended CHW network, and performance-based among children under the age of 5 in Mali (40 percent subsidies for primary care facilities are either being adherence overall), and they show how gender piloted or proposed within the national sectoral strategy. differences affect the rate of adherence. Exploiting a unique daily health diary dataset in the context of a price Subsidy and information interventions complement subsidy experiment conducted in 2012 and 2013, the each other in improving care for those children with paper underlines important patterns for the efficiency the highest mortality risk. Sautmann et al. (2020) found of health investments on both the extensive and the that the subsidy increased doctor’s visits by 168 percent intensive margin. On the extensive margin, they find and the total value of received care by 80 percent. that price subsidies can contribute to increasing the Importantly, the data on conditional care seeking show take up of treatment, suggesting that financial barriers that this increase in demand did not crowd out private are an important deterrent to service use in Mali. On the spending on acute care, and it mostly reduced underuse, intensive margin, the effectiveness of antibiotic treatment with only a small increase in overuse. For children up to could be improved by increasing adherence from a one year old who received the subsidy, CHW visits led to low base. Gender difference in treatment adherence a significant additional reduction in the underuse of care. could be addressed by explicitly targeting public health The results are consistent with the view that costs are a messages on educated household heads. primary barrier to receiving appropriate care among the population. Sub-optimal antimalarial treatment prescription is also pervasive and contributed to lowering the CHWs offer a cost-effective delivery platform to effectiveness of basic care in Mali. Health policies boost access to, demand for, and use of essential in low-income countries like Mali must address two health services. The global evidence suggests that opposing challenges: many patients do not seek care CHWs can guarantee returns on investment at a rate when they are ill, while those who do often consume as high as 10:1 (Dahn et al., 2015). Maintaining and a great deal of unnecessary treatment. The typical strengthening CHW programs is one of the less costly recommendation is to subsidize critical treatments in the ways to provide essential primary health services to public sector, while staffing facilities with trained doctors rural populations. Recent models piloted in Mali showed to act as gatekeepers. The gatekeeping role of physicians that when CHWs are properly trained, equipped, and can often be compromised due to knowledge gaps or to supervised, proactive community case management misaligned financial incentives but Lopez et al. (2020) structured around frequent home visits can result in show that in Mali, patient-driven pressure for over- dramatic reductions in child mortality (Johnson et prescription of antibiotics is more to blame than doctor- al., 2018). Since 2009, the health system in Mali has driven motives. The paper also documents how much relied on CHWs to deliver essential community health antimalarial treatments are sub-optimally prescribed: (i) services to rural populations. In 2015, Mali had 2,337 58 percent of malaria negative patients are prescribed CHWs affiliated with 775 facilities covering 40 percent with antimalarials (ACTs); (ii) 78 percent of the patients of the rural population (Saint-Firmin et al., 2017). There MALI PUBLIC EXPENDITURE REVIEW >>> 145 is currently no formal legal framework defining the roles cost-effective strategy for accelerating progress and responsibilities of CHWs with respect to the health toward universal health coverage, especially for system. Recently, however, CHWs have been presented low- and middle-income countries. Mali’s health as one of the pillars of the new national health strategy expenditure structure could be shifted further away (MoH, 2020). from curative tertiary care towards primary care service providers (CSCOMs) and district level hospitals Policy Recommendations (CSRéfs). While the percentage of in-facility deliveries has increased in Mali (67 percent in 2018), maternal and Support from international development partners, neonatal mortality remain high. One possible reason is including debt relief for the most vulnerable that most births in health facilities in Mali occur in basic countries, will be crucial. These should be combined primary care clinics (44 percent) which offer women and with spending reprioritization and the realization of newborns little recourse to life-saving services in the potential efficiency gains in public spending. Possible event of complications. Redesigning the system so that policy options to realize potential efficiency gains include deliveries occur more often in facilities where life-saving improving the technical and allocative efficiency of obstetric and newborn care is available could save Mali’s health service, and its governance and financial precious lives. mechanisms. Improving Governance and Financing Improving Technical Efficiency Mechanisms In Mali, the low density and the uneven distribution Consolidating the decentralization process in the of the health workforce, the low quality of care, and health sector to reduce the asymmetry between the high cost of medicines, reduce the technical the decentralized revenues and the decentralized efficiency of health spending Recommendations to spending could help local governments to provide improve technical efficiency are detailed in the table basic health services. The lack of transfers of below: financial resources from local governments to frontline health facilities is one of the main reasons for health Improving Allocative Efficiency facilities’ dependence on cost recovery through user fees. Oversight of the management and operations Investing in stronger primary and secondary health occurring at community facility level by local government care has been recognized as the most effective and and the MoH could also be strengthened through Source of technical Recommendations inefficiency Low personnel density and Increase the number of health professionals at facility level, focusing in under-served sub-optimal distribution of areas and in high disease burden areas. health personnel Increase incentives for health personnel to be deployed and to operate in remote and conflict-affected locations. Consolidate and expand frontline cost-effective delivery platforms such as CHWs who can facilitate contact tracing for COVID-19 management as well as provide a set of essential promotive, preventive, and curative care focusing on child and maternal health, and who could be more flexibly deployed according to disease burden and health need. Quality of care Provide greater on-the-job training and mentorship opportunities and tighten supervision of clinical staff. Ensure proper training, supervision, and equipment for CHWs, including digital tools to facilitate task management, distance learning, and to optimize performance and reporting. Pharmaceutical use Strengthen the public pharmaceutical supply chain and its regulatory bodies. Reinforce regulation of the private pharmaceutical sector. Conduct a systematic review of the Essential Medicines List with a view to increase the share of generic drugs and reduce drug prices. 146 >>> MALI PUBLIC EXPENDITURE REVIEW the establishment of tripartite performance contracts adopted in 2018, creating the Régime d’Assurance building on the existing mutual assistance agreements Maladie Universelle, but the application decrees needed (CAMs). to render the law effective have not yet been established. Increasing the share of pooled funding would Removing targeted user fees for essential maternal reduce the share of out-of-pocket payments. OOP and child health services could contribute towards payments still make up over one-third of total health maintaining basic service coverage while preventing expenditure. Mali has several coexisting pooling financial hardship due to health expenditure among schemes (management of fee exemption mechanisms the poorest. Mali already has targeting mechanisms to through the government budget, community-based identify the poorest and most vulnerable (Unique Social health insurance, private insurance), so reducing the Registry or RSU, and Medical Assistance Regime or fragmentation of these schemes could also contribute RAMED), but the enrolment of beneficiaries remains to efficiency gains through economies of scale in their below targets and the application of the user-fee removal administration. A law moving in that direction was policy still varies depending on the service provider. >>> Table 5.8: Recommended Policy Measures Policy Policy action details Time horizon Potential fiscal actions gains (+) / uses (-)a R5.1 Improve Introduce workforce plans and incentives for health personnel Short term (-) technical to be deployed and to operate in priority, remote, and conflict- efficiency via affected locations. improvement Provide greater on-the-job training and mentorship Short term (-) and support opportunities and tighten supervision of clinical staff. of healthcare professionals Increase the number of health professionals at the facility Medium term (-) and level, focusing on under-served and high disease burden promotion of areas. equity and Consolidate and expand frontline cost-effective delivery Medium term (-) quality of platforms to provide essential care in child and maternal healthcare health, and more flexible deployment according to disease service. burden and health need (such as epidemic outbreaks). Ensure proper training, supervision, and equipment for CHWs. Medium term (-) R5.2 Improve Conduct a systematic review of the Essential Medicines List Short term (+) technical with a view to increasing the share of generic drugs and efficiency reducing drug prices. via improved Strengthen the public pharmaceutical supply chain and its Medium term (+) resource regulatory bodies. management. Reinforce regulation of the private pharmaceutical sector. Medium term R5.3 Improve Increase the share of public health expenditure allocated to Short term Neutral allocative primary and secondary care services, by introducing a funding efficiency. mechanism linked to the spatial demand for packages of essential services and community health workers. R5.4 Improve Increase the share of pooled funding to reduce the share of Short term (-) governance OOP payments.* and health Targeted removal of user fees for essential maternal and child Medium term (-) financing health services.* mechanisms. Consolidate the decentralization process in the health sector.* Medium term Neutral a. Fiscal gains or uses at disaggregated levels are difficult to ascertain due to data limitation. At the aggregate level, if Mali’s existing public health expenditure was as efficient as the most efficient country in the region, it could improve its health service coverage by around 18.5 percent. This represents a fiscal gain of 0.25 percent of GDP while achieving the same result, which should be re-allocated into other sectors in need (for instance, R5.1 and R5.4) to improve quality and coverage of the healthcare service. Note: * Part of the 2018 Health PER recommendation. MALI PUBLIC EXPENDITURE REVIEW >>> 147 6. >>> Agriculture Mali devotes a larger share of its budget to supporting its agricultural sector than peer countries. Despite increased budgetary constraints, public spending on agriculture has grown over the last decade. However, efficiency is low and resources could be better allocated. Current expenditure and subsidies in the crop subsector take up nearly half of the budget, to the detriment of investment and the livestock and fisheries subsectors. The budget allocated to regions and deconcentrated service units does not allow the regions to provide adequate services to farmers. To increase the efficiency of agricultural spending the Government should consider (i) streamlining its deconcentrated services and increasing the resources allocated to them to provide their services; (ii) increasing the efficient use of cotton fertilizers by strengthening research into improved varieties and farming practices; and (iii) improving the use of non-cotton input subsidies by strengthening management and oversight of procurement markets and adopting e-vouchers and competitive selection of suppliers for the distribution of subsidized inputs. 148 >>> MALI PUBLIC EXPENDITURE REVIEW This chapter is organized as follows: Section 6.1 The operationalization of these principles and provides a brief overview of the context, in particular policies is embodied in the national investment the policy framework and institutional arrangements program. The National Agricultural Sector Investment for policy implementation. Section 6.2 presents the Program (PNISA; Programme National d’Investissement performance of the agriculture sector. Section 6.3 dans le Secteur Agricole), developed in 2014, examines trends in public expenditure in agriculture, operationalizes the agricultural development policy including compliance with the Maputo Commitment, and the Economic Community of West African States and budget allocation and execution especially at (ECOWAS) Agricultural Policy and the Comprehensive the subsector and decentralized levels. Section 6.4 Africa Agriculture Development Program. It constitutes considers spending efficiency by assessing the input the framework for planning public action in the agricultural efficiency of subsidized fertilizers using a cross-sectional sector over a 10-year rolling horizon.97 analysis based on household surveys. Section 6.5 concludes with policy recommendations. Insitutional Arrangements for Policy Implementation Context At the central government level, responsibility for The agriculture sector employs over 72 percent policy implementation is shared among several of Mali’s population and accounts for more than ministries, subject to frequent institutional changes. 37 percent of GDP (on average over 2010–19). The institutional framework for the management of the Subject to the Sudano-Sahelian climate, its agricultural agricultural sector includes the Ministry of Agriculture performance varies from one year to the next. It is (MA; Ministère de l’Agriculture), the Ministry of Livestock highly dependent on rainfall despite having the potential and Fisheries (MEP; Ministère de l’Elevage et de la to irrigate an estimated 2.2 million hectares, including Pêche), the Food Security Commission (Commissariat à more than 1.8 million hectares in the Niger River Basin. la Sécurité Alimentaire), the Ministry of the Environment The crop subsector accounts for over 50 percent of and Sanitation (MEADD; Ministère de l’Environnement agricultural GDP and consists mainly of subsistence et de l’Assainissement et du Développement Durable) agriculture (85 percent of the added value of the which also covers the crop subsector, and the Ministry subsector). Livestock is the second-most important of Energy and Water (MEE; Ministère de l’Energie subsector, accounting for over 37 percent of agricultural et de l’Eau) for the water for agricultural production GDP, while fisheries represent 7 percent, and forestry 5 component. The search for efficiency and synergy has percent. resulted in constant institutional restructuring in recent years. In 2014, the MA and the MEP were merged in Policy Framework 2014 to form a unified Ministry of Rural Development, only to be split again in 2016. In late 2020, under the The law defines the overarching long-term principle current transitional government, the two ministries were for agriculture sector development. Recognizing merged again. that the agricultural sector is the engine of growth and industrialization, the Agricultural Orientation Law (LOA; At the regional and local level, agricultural policies are Loi d’Orientation Agricole) was adopted in December implemented by various government agencies including 2005. Its key objectives are: (i) the promotion of a the deconcentrated regional services, parastatals, and sustainable, modern and competitive agricultural sector; local governments. Several key national directorates and (ii) an essential reliance on smallholder farms. The within the MA and MEP98 have units (regional directorates) Agricultural Development Policy adopted in 2013 defines at the regional level and service units at commune the guidelines for the application of the LOA framework. level. For each region, there are a cluster of regional While primarily aimed at meeting the country’s increasing directorates—a Regional Directorate of Agriculture food needs, it also targets a shift from subsistence (DRA, Direction Régionale de l’Agriculture), a Regional agriculture to a sustainable, diversified, modern, and Directorate of Rural Engineering, a Regional Directorate competitive agriculture in regional and subregional of Production and Animal Industries, a Regional markets, and aims to place farmers at the center of its Directorate of Veterinary Services, and a Regional approach. Directorate of Fisheries—in charge of different policy 97  PNISA provides a development blueprint which involves participation from both public and private sectors. The revised PNISA (2019–23) is yet to be validated. 98  Notably the National Directorate of Agriculture and National Directorate of Rural Engineering under Ministry of Agriculture; the National Directorates of Production and Animal Industries, National Directorates of Veterinary Services and National Directorates of Fisheries under Ministry of Livestock and Fisheries. MALI PUBLIC EXPENDITURE REVIEW >>> 149 implementations. Ten parastatals (EPAs; Établissement Non-governmental entities also play an important public à caractère administratif)99 located in different role, especially in investment projects. In addition regions are responsible for the specific development to government entities, development partners, non- of irrigated agriculture. These EPAs, though supported governmental organizations (NGOs), consular services, by Ministry of Agriculture, are highly autonomous.100 In and professional organizations also contribute to the addition, fiscal decentralization also enables commune- implementation of agricultural policy. In addition, the level governments to promote their own agriculture Superior Council (Conseil Supérieur) and the National plans with decentralized funds. Executive Committee of Agriculture (Comité Exécutif National de l’Agriculture), which have divisions at The tasks of planning, monitoring and evaluation, and regional and local levels, serve as coordinating bodies accountability of resource mobilization are entrusted between the Government and farmers. to the Planning and Statistics Unit, on the basis of the program budget. While PNISA serves as the blueprint Performance for agriculture development,101 the actual planning on resource mobilization is operationalized by Planning With an average annual growth rate of 5.2 percent and Statistics Unit (CPS; Cellule de Planification et des (2010–19), Mali’s agricultural sector is one of the Statistiques)102 hosted within the Ministry of Agriculture. In most dynamic within ECOWAS, the West Africa addition, budget allocation has been planned on the basis economic bloc, where agricultural growth averaged of result-based management since the implementation of 3.8 percent over the period 2010–19. Subsistence program budgeting in 2018 (Box 6.1).103 farming has grown by 6.4 percent per year on average >>> Box 6.1: Challenges in Monitoring and Evaluation of Agriculture Projects The Programming and Monitoring/Evaluation subunit (UPSE; Unité de programmation et de Suivi/Évaluation) within the CPS is responsible for monitoring and evaluation (M&E) and accountability. The services provided by UPSE include reviews of project and programs, an annual business survey report, statistical yearbooks, and, most recently, the joint sector review (for all agriculture subsectors). However, the UPSE has limited resources to ensure its proper functioning. Reviews of projects and programs are therefore limited to the monitoring of financial execution. There is no consolidated annual report based on documents from various technical departments of the relevant ministries on the projects carried out by all stakeholders. Moreover, the lack of a harmonized operational M&E framework adds to the difficulty of assessing performance and providing the necessary guidance. The joint sector review, an accountability and mutual responsibility mechanism promoted by the African Union Commission, was kicked off in 2016 but the momentum seems to have been lost since then. The introduction of program budgets poses additional challenges. Program budgeting requires the restructuring of all sector activities into a limited number of programs piloted by designated ministry officials and accompanied by performance indicators and evaluation mechanisms. The creates challenges due to the multidimensional nature of most projects, which usually encompass several programs at the same time. The accountability principle usually implies that all actions within a program be under the responsibility of the program manager. This principle also faces challenges in the case of multi- program projects. A possible solution requires the adoption of a monitoring framework that complies with the structuring of the program budgets of all related ministerial departments. To tackle the issue of accountability, it is essential that new generations of projects be circumscribed within programs with coordination mechanisms between the different public expenditure execution units. 99  Ten EPAs are in charge of the development and management of irrigation facilities (aménagements hydro-agricoles, or AHAs) including: Office du Niger, Autorité pour l’Aménagement de Taoussa (AAT), Office de la Haute Vallée du Niger (O.H.V.N), l’Agence de Développement Rural de la Vallée du Fleuve Sénégal (ADRS), Office Riz de Mopti (ORM), Office de Développement Rural de Selingué (ODRS), Office Riz de Ségou (ORS), Office du Moyen Bani (OMB), Office du Périmètre Irrigué de Baguinéda (OPIB) and Office pour la Mise en valeur Système Faguibine (OMVF). 100 Until 2017, the budgets for the rice offices were not included in the Ministry of Agriculture’s budget. However, with the implementation of program budgeting in 2017, it is now merged into the MA budget. 101 The cost of the full implementation of PNISA is estimated at around CFAF 6,951 billion, i.e. an annual average of CFAF 695 billion which accounts for over 30 percent of the total public expenditure. 102 It is comprised of three sub-units: the Programming and Monitoring/Evaluation Unit, the Agricultural Policy Planning Unit, and the Agricultural Policy Unit. 103 Program budgeting is an important public financial management reform undertaken by the West African Economic and Monetary Union since 2009 (Directive No. 06/2009/CM/WAEMU), which aims to improve the efficiency of public spending. 150 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur 6.1: A ricultur Output b Subs ctor (2008-19) % of GDP 35 30 25 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Crop Liv stock For st r Fish r Sourc : INSTAT. >>> >>> Fi ur 6.2: C r l Production Fi ur 6.3: Cotton Production nd Yi ld (2005–19) nd Yi ld (2009–18) Million tons/k /h Tons/k /h 12.0 2.0 800,000 1,200 1.8 700,000 10.0 1,000 1,6 600,000 1.4 8.0 800 1.2 500,000 6.0 1.0 400,000 600 0.8 300,000 4.0 400 0.6 200,000 0.4 2.0 200 0.2 100,000 0.0 0.0 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Production (million ton) Yi ld (t/h ) Production (t) Yi ld (t/h ) Sourc : CPS nd MA. Sourc : CPS nd MA. (Figure 6.1). The crop subsector is the most dynamic Growth in food crop production follows an extensive with average annual growth of 6.5 percent, followed by rather than intensive model. Among the major cereals, livestock (4.5 percent), fishing (3.9 percent), and forestry maize production has grown by 14.3 percent on average (3.3 percent). per year, rice by 6 percent, and millet/sorghum by 3.6 percent. However, these high growth rates mainly MALI PUBLIC EXPENDITURE REVIEW >>> 151 resulted from increases in cultivated areas. Average Financing cereal yields per hectare, in contrast, increased by only 1.4 percent per year (Figure 6.2). Major factors behind General Trend and Comparison of Agriculture the poor productivity performance include: limited Expenditure106 investment in irrigation and modernization of subsistence agriculture (the dominant sector), very low use of modern Compared with its peer countries, Mali devotes the agricultural inputs despite fertilizer subsidies, insufficient highest budget share to the agriculture sector (2.6 adoption of sustainable agricultural practices, and weak percent of GDP). The only compariable peer country coordination of public interventions. is Rwanda (2.3 percent of GDP); the SSA average is 0.5 percent of GDP and the WAEMU average is 1.3 The production of cotton, the main agricultural export, (Table 6.1). Mali also has among the highest agricultural also grew rapidly although productivity levels and expenditure as share of value added (agriculture GDP)— quality both remain unsatisfatory. After the 2012 crisis, above all its peer countries except Afghanistan and reforms and various forms of public support have been Rwanda, and much higher than the SSA and WAEMU provided. Combined with a favourable international price averages. until recently, these have had a positive effect on the sector’s performance. Consequently, cotton production Apart from a brief downturn in 2012, the approved rebounded quickly to pre-crisis levels:104 reaching budget to the agricultural sector has kept increasing, 650,000 tons in the 2016/17 campaign and 728,000 with the crop subsector taking the dominant share. The in 2017/18 (Figure 6.3). However, the average yield in planned budget for the agricultural sector fell temporarily recent years (982 kg/ha), although an improvement, in 2012 (from CFAF 205 billion in 2010 to CFAF 75 billion remains below the threshold of 1,200 kg/ha which would 2012) due to the political and security crisis, before protect the sector from downward fluctuations in the bouncing back swiftly (Figure 6.4). The crop subsector international price. At the same time, the quality of the has the largest share by far (80 percent). The livestock cotton has declined, resulting in a low valuation of Malian and fisheries subsector remains weakly funded given its cotton on the international market. Despite government significant share of agricultural output (11 percent of the efforts to revive the sector, investment remains insufficient total approved budget during 2010–20, compared to in many key areas, including research and development almost half of the output). In fact, the budget allocation for increased yields, improved transport for raw cotton, to livestock and fisheries fell from 16 percent in 2010–13 and modernization and increased capacity in cotton to 9 percent in 2016–20. Meanwhile the share of the ginning. forestry subsector increased from 7 percent (2010–13) to 10 percent (2016-20) although its average share Mali’s livestock population is one of the largest in the remained moderate (9 percent) over the entire period Sahel region.105 It comprises nearly 12 million head of (Figure 6.5). cattle, more than 43 million head of sheep and goats, and over 1.2 million head of camels (CPS, 2018). Livestock Mali has respected the Maputo commitment of are Mali’s third largest export product after gold and devoting at least 10 percent of public resources to cotton. The livestock and fisheries subsector recorded agriculture. During 2010–11, agriculture expenditure an average annual growth of 8.3 percent over the reached an average of 12 percent of public spending. 2010–19 period. However, livestock development faces After a drop in 2012, when it fell to 8.1 percent, the share many constraints, including the prevalence of extensive has climbed back since 2013, and reached the 2010–11 production systems (pastoral and agropastoral systems) level in 2015 and 2016, although it has since fallen back, with low productivity, suboptimal feed availability and to 9 percent in 2018 and 2019. This means, the share of instability of pasture supply, and significant animal health public expenditure devoted to agriculture has averaged problems that limit export opportunities. 10.4 percent over the period 2010–19 period (Figure 6.6). 104 Cotton production already achieved 620,665 tons in early 2000 and dropped to an average of 445,000 tons during 2012/13 and 2013/14 campaigns. 105 The Sahel region here is a climatic geographic concept (suitable for livestock) which specifically refers to Burkina Faso, Niger, Mali and Senegal. 106 In accordance with the African Union/NEPAD (AU/NEPAD) guidance, the scope of public agricultural expenditure (Dépenses Publiques Agricoles) that will be analyzed in this chapter includes the executed budgets of the MA, the MEP, the MEADD, and the Ministry of Energy and Water (for the rural water supply component for agricultural use). Also, projects for agricultural use or with agricultural components housed in special accounts and ministries other than those in charge of agricultural development will be taken into account. This guidance also introduces innovations to take into account expenditures favorable to agriculture such as rural infrastructure (rural roads, irrigation, storage and conservation infrastructure, etc.) but according to the level of use of the latter for agricultural activities. 152 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 6.1: Benchmarking Fiscal Transfers to Agriculture Country/Region Size of agricultural sector Size of agriculture expenditure % of GDP % of GDP % of agricultural GDP Mali (2018) 37.3 2.6 6.7 Structural peers Afghanistan (2017) 20.5 1.4 7.0 Central African Republic (2013) 32.3 0.4 1.3 Uganda (2013) 25.8 0.7 2.9 Zimbabwe (2007) 21.2 0.0 0.0 Aspirational peers Rwanda (2016) 25.1 2.3 7.7 Tajikistan (2001) 23.8 0.3 1.4 Uzbekistan (2017) 30.1 1.2 3.9 Regional peers (average) WAEMU (2011) 25.6 1.3 4.9 SSA (2011) 15.8 0.5 2.9 Source: World Bank (2013),World Development Indicators (2020), BOOST/IFPRI(2019) and authors’ calculations from DGB/MEF data. Despite these high levels of expenditure, however, The COVID-19 response plan dedicated CFAF 20 the way the budget is allocated is not satisfactory. billion to guranteeing food security. Designed to Public expenditure is concentrated in current expenditure mitigate the situation, it was taken into account in the and input subsidies, while investment accounted for Revised Budget Law. The plan proposed a distribution only 45 percent of total agriculture expenditure over the of 56,000 tons of cereals and 16,000 tons of animal period. feed, at a total cost of CFAF 15 billion. In addition, about CFAF 5 billion has been budgeted for replenishing food Budget Adjustment Due to the COVID-19 security stocks. Based on an average consumption of Pandemic in 2020 50 kg/head over the period from June to September, this effort by the Government could help more than The COVID-19 pandemic is likely to affect the 1.8 million people. Although this social spending will food security of households and their productive contribute to increasing the deficit at a time of declining capacities. The harmonized framework, a mechanism tax revenues, it will serve to strengthen household for assessing the household food situation in Sahelian resilience against food insecurity. countries, suggests that 760,000 people were food insecure between March and May 2020 and that this Another envelope of CFAF 43 billion was prepared figure could reach 1,340,000, or nearly 7 percent of the to ensure household productive capacity. The population during the lean season, which is the period input subsidy of CFAF 43 billion which was in the initial from June to August. The COVID-19 crisis has only budget law was maintained in the amended budget law. aggravated the situation. Several risk factors related to Of this, CFAF 3 billion is earmarked for animal inputs, the epidemic are likely to threaten food security: (i) the with the remaining CFAF 40 billion dedicated to fertilizer decline in economic activity and consequently lower subsidies. This allocation is similar to that of recent incomes; (ii) lower remittance income from migrants; (iii) years; input subsidies have averaged CFAF 42 billion per rising transaction costs due to restrictions on domestic year over the period 2017–19. Such subsidies should movements and cross-border trade; and (iv) disruption help to improve the productivity of farms if implemented of local market supplies of domestic and imported efficiently. However, trade disruptions related to the foodstuffs due to the closure of the borders with Algeria pandemic could lead to higher prices and affect the and Mauritania. supply and availability of inputs, in terms of both quantities and timing. MALI PUBLIC EXPENDITURE REVIEW >>> 153 >>> >>> Fi ur 6.4: Bud t Alloc tion (2010–20) Fi ur 6.5: A ricultur Bud t Br kdown (2010–20) CFAF billions 450 400 9% 350 11% 300 250 200 150 80% 100 50 0 2010 2011 2012 2013 2016 2017 2018 2019 2020 Crop Liv stock nd fish ri s For str Crop Liv stock nd fish ri s For str Tot l Sourc : BOOST Sourc : BOOST >>> Fi ur 6.6: M puto/M l bo Commitm nt (2010–19) 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-2019 M puto r tio Tr t Sourc : BOOST/MEF. The budget allocated to the agricultural sector has fallen Increased allocations for social measures and in favor due to the crisis, meaning spending efficiency should of the health and security sectors, combined with an be the current focus. The budget fell from CFAF 391.05 expected decrease in some external financing led to billion initially to CFAF 368.09 billion, a drop from 15.01 this reduction in the revised budget. However, the percent to 13.24 percent of the total. This represent a 6 maintenance of the full amount of the input subsidy percent decrease, although the share of the budget still and the small reduction in other budget allocations, remained relatively high (above the Maputo threshold). combinded with good rainfall during the current season, 154 >>> MALI PUBLIC EXPENDITURE REVIEW offer good prospects for food production if disruptions of what is needed to implement the National Agricultural to the input supply chain are minimal. It also means that Sector Investment Program (PNISA) which envisaged a spending efficiency becomes even more important than total expenditure of about CFAF 6,951 billion, or CFAF usual for the sector. 695.1 billion per year. In reality, the budget allocated to agriculture was CFAF 308 billion per year on average Sources of Financing over the period 2014–20, 44 percent of the target in the ambitious investment program.107 Investment is one of The recent increase in agricultural expenditure is the most underfunded areas due to the slow growth in driven by domestic resources. These accounted external resources.108 for 61 percent of the increase between 2010 and 2020. During 2012–18, domestic resources increased Expenditure by Subsectors (Administrative steadily from CFAF 75 billion to CFAF 215 billion, a rate Classification) of 19 percent per year, before declining by 13 percent in 2019 to CFAF 188 billion. In 2020, the initial budget Agriculture budget allocation at subsector level allocations from domestic resources increased by 13 is skewed towards crops. The share of agriculture percent to return to the 2018 level (CFAF 213 billion). spending allocated to the Ministry of Agriculture in the After the 2012 crisis, external resources had gradually budget increased from 61 percent in 2010–13 to 69 recovered from CFAF 36 billion in 2013 to CFAF 165 percent in 2016–18, probably reflecting the political will in billion in 2017 before falling in 2018 and 2019 (to CFAF favor of supporting agricultural production through input 136 billion and CFAF 108 billion respectively), and subsidies but also the MA’s relatively efficient execution rising in 2020 to reach CFAF 171 billion (Figures 6.7 of the budget. Budget allocation to the MEADD remained and 6.8). at around 8 percent. Meanwhile, the budget allocation to the MEP declined from 10 percent in 2010–13 to 5 Despite these increases, the resources allocated to percent in 2016–18, despite the fact that livestock and agriculture still fall short of the development plan, fisheries accounted for over 45 percent of the primary especially in investment. The budget allocations fall short sector value added. >>> >>> Fi ur 6.7: Bud t Alloc tion b Sourc Fi ur 6.8: Bud t Impl m nt tion b of Fin ncin (2010–20) Sourc of Fin ncin (2010–19) CFAF billions CFAF billions 450 350 400 300 350 250 300 250 200 200 150 150 100 100 50 50 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Bud t sur r ssourc s int rn s Dép ns s sur r ssourc s int rn s Bud t sur r ssourc s xt rn s Dép ns s sur r ssourc s xt rn s Bud t tot l Dép ns s tot l s Sourc : BOOST Sourc : BOOST 107  The amount of funds recommended in PNISA includes both public and private resources. 108  External resources are usually more oriented to investment projects. MALI PUBLIC EXPENDITURE REVIEW >>> 155 Budget allocations to livestock and fisheries remain categories accounted for 56 percent of the domestic extremely limited compared with the development resources on average (with peaks of 70 percent in 2012 plan. The PNISA envisaged investment in the livestock and 2015). Input subsidies alone accounted for about subsector of CFAF 771 billion during 2015–18 to boost 30 percent. This has crowded out capital expenditure, various livestock sectors (livestock meat, poultry, hides which averaged 44 percent over 2010–18. The real and skins, and local milk processing), while only CFAF 52 share of investment is lower (around 37 percent of total billion has actually been mobilized, an execution rate of 7 agriculture spending) after subtracting the operating percent. The rates within the individual livestock sectors expenses which are witihin the capital expenditure are far from satisfatory: 2 percent for poultry farming, 3 (about 20 percent of total capital expenditure) under the percent for the dairy sector, 7 percent for the livestock/ current budget classification.109 meat sector, and 40 percent for the hides and skins sector. In fisheries and aquaculture, CFAF 10.1 billion Within the crop subsector, current expenditure and out of a planned CFAF 29.7 billion was executed. In subsidies account for 60 percent of total spending addition to the low levels of financing, the this subsector on average, crowding out critical investment spending. is also relatively more dependent on external sources Input subsidies (including deconcentrated spending for funding than on domestic ones, and is thus more and related EPAs) accounted for 42 percent110 of subject to funding volatility from one year to the next. spending during 2010–18—and even exceeded half of all spending during 2012–15—on top of the rest of Expenditure by Economic Classification the current expenditure (salaries and operational cost) which averaged around 20 percent (Figure 6.9). Capital Current expenditure dominates the budget allocation of expenditure accounted for the remaining 40 percent. domestic resources, not just in overall and subsector If the costs related to the operation of public services budget allocations but also in project budgeting. are removed from that figure (over 20 percent of total Spending of funding from domestic resources is capital expenditure in the crop subsector), the share dominated by current expenditure (salary and operating of actual investment would only be around 30 percent. costs) and input subsidies. During 2010–18, these two This amount is far from sufficient given the enormous >>> >>> Fi ur 6.9: Bud t Alloc tion to th Crop Fi ur 6.10: Bud t Alloc tion to th Liv stock Subs ctor b Economic Cl ssific tion (2010–18) Subs ctor b Economic Cl ssific tion (2010–18) 100 100% 57 38 18 27 29 30 38 58 42 40 80 80% 60 60% 40 40% 23 36 60 53 50 51 47 30 41 42 20 20% 20 25 22 20 21 19 15 12 17 18 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010-2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010-2018 Inv stiss m nt Subv ntion n intr nts C pit l Curr nt Inputs Dép ns s cour nt s Sourc : BOOST Sourc : BOOST 109 This share could be higher if budget information were sufficiently disaggregated to distinguish between investments that lead to an increase in farmers’ assets and investments in infrastructure to house government services or in rolling stock. 110 The subsidy was recorded in the common expenses section until 2016 and is administered by the Ministry of Agriculture; it has been included in the Ministry’s budget for the purposes of the analysis. 156 >>> MALI PUBLIC EXPENDITURE REVIEW investment needs in water control and sustainable soil animal feed) accounted for 7 percent of the expenditure management (crucial for a Sahelian country), research on average over that period, although the actual share and advisory support for improving productivity, and is currently much higher, because subsidies for this infrastructure (rural roads, storage and conservation subsector only started in 2017 (Figure 6.10). In contrast, infrastructure, rural energy, etc.) to encourage the gross capital expenditure averaged 31 percent, of which development of value chains. a considerable share is not for investment purposes. In fact most of the resources allocated to the technical Within the livestock and fishery subsector, current directorates111 of the Ministry of Livestock and Fisheries expenditure and subsidies accounted for over two- are used to pay salaries.112 This budget allocation is thirds of total spending. The current expenditure of partly due to the low level of domestic resources (as institutions in charge of livestock occupies the largest external sources tend to favor investment spending). share (63 percent over 2010–18). Subsidies (mainly for Low levels of investment have a direct negative impact >>> Box 6.2: Public Expenditure for Animal Health Expenditure allocated to services responsible for animal health has steadily increased over 2010–18, growing by 5.7 percent per year on average. In 2017–18, expenditure on veterinary health reached an average of CFAF 2.3 billion (25 percent of the total expenditure on the livestock subsector financed by domestic resources). Budget implementation is also high. However, similar to the rest of the livestock subsector, funding is used mainly to pay salaries. While the Bamako Central Veterinary Laboratory (LCV; Laboratoire Vétérinaire Central) generates its own resources from the sale of vaccines (50 to 60 percent of its annual budget) which enables it to meet its operating and investment needs, most other entities are have a disproportionate share of funding dedicated to operations and zero investments. It will be difficult for other bodies to fulfil their missions with such an arrangement. In addition, only 7 percent of total expenses (or CFAF 7 million per region) go to regional services, making it almost certain that the regional directorates and veterinary sectors will not be able to provide services for monitoring vaccination campaigns and surveillance of epizootic outbreaks. >>> Fi ur B6.2A: Dom stic R sourc s for th Anim l H lth S st m 3.000 2.500 2.000 1.500 1.000 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 DNSV SERVICES DECONCENTRES LCV LVG TOTAL Sourc : BOOST. Not : DNSV: N tion l Dir ctor t of V t rin r H lth (Dir ction N tion l d l S nté Vétérin ir ); LVG: G o V t rin r L bor tor (L bor toir Vétérin ir d G o). 111 Technical directories include, for instance, the DNPA (Direction Nationale Productions et des industries Animales) and DNSV (Direction nationale de service vétérinaire). 112 For instance, the salaries account for 86 percent of expenditure in the National Directorate of Animal Production and Industries and the National Directorate of Veterinary Services. MALI PUBLIC EXPENDITURE REVIEW >>> 157 on the development of pastoral areas; the realization by a few investment projects. During 2010–14, for of hydraulic, health and marketing infrastructure; and instance, staff costs represented 73 percent of total the improvement of livestock breeds. Expenditure on decentralized expenses, against 14 percent for capital animial health and provision of vaccination are far from expenditure, 10 percent for operations, and 4 percent satisfactory, especially for a country with considerablly for transfers. Most regions made practically no capital large livestock sector (Box 6.2). expenditure, with some exceptions: Ségou and Gao113 before 2015, and Sikasso and Tomboctou114 after Current expenditure also dominated government- 2015, driven by a few major investment projects. The financed projects. Among the main domestically share of capital expenditure of other regions ranged funded projects, the share of current expenditure ranges between 0 and 9 percent (Figures 6.12 and 6.13). from 17 percent to 54 percent of the total resources (Table 6.2). On average current expenditure covered 44 The deconcentration of services has not been percent of spending on livestock projects financed by accompanied by an effective transfer of resources. the Government. Limited resources have been deconcentrated, including an average of CFAF 2.5 billion (0.024 percent of GDP) Expenditure by Administrative Level (Fiscal for DRAs and local services, CFAF 360 million (0.002 Decentralization) percent of GDP) to rural engineering services (DRGR; Direction Régionale du Génie Rural) and CFAF 8 billion Decentralized expenditure remains limited and (0.06 percent of GDP) to EPAs (Figure 6.14). For dominated by current expenditure, while capital instance, the average total deconcentrated expenditures expenditure is concentrated into a few investment from the Ministry of Agriculture stands at CFAF 3.7 billion projects. The weak commitment to decentralization per year, representing 9.6 percent of the Ministry’s total (the delegation of resources to local government) expenditure. The deconcentrated resources for both the is reflected in its low and decreasing share of total MA and MEP are mainly used for salary payments.115 agriculture spending (Figure 6.11). Decentralized There is no budget for investment. EPAs fare slighly spending averaged 9 percent of the total during better with around one-third of spending devoted to staff 2010–18, but this has fallen from 10 percent during and operating expenses. However, capital expenditure 2010–14, to an average of 7 percent in 2015–18. by the EPAs is driven by investment projects in two Around 70 percent of the resources decentralized offices: OPIB (CFAF 1.5 billion per year) and ORS (CFAF to regions and local service units are used to pay 1.1 billion per year). salaries, while capital expenditure is mainly driven >>> Table 6.2: Share of Current Expenses in Major Domestically Financed Projects Project Current expenditure (% total resource) Livestock development project Liptako-Gourma region 54 In-situ conservation project for ruminant livestock 52 Support project for the development of livestock breeding in the South Kayes zone 39 Project of development valorization of the milk production 34 Five-year pastoral development program 26 Slaughter by-products processing project 17 All projects 44 Source: BOOST. 113 Shares of capital expenditure in Ségou and Gao during 2010-14 averaged at 44 percent and 24 percent respectively, mostly on the studies for the development of small dams and the construction of a vaccination park (Ségou) and construction of village irrigation schemes (Gao). 114 The share of capital expenditure in Sikasso during 2015-18 averaged at 85 percent, and the investment concentrates in hydro-agricultural development. The capex share of Timbuktu during the same period was around 65 percent as the region invested more than 500 million CFAF in village water supply. 115 For instance, salary payment accounted for 95 percent of total resources for DRAs and agricultural sectors, 93 percent for Regional Directorates of Production and Animal Industries, 95 percent for Regional Directorates of Veterinary Services and 88 percent for the Regional Directorates of Fisheries. 158 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur 6.11: D c ntr li d Bud t Fi ur 6.12: D c ntr li d Bud t b R ion (2010–18) nd Economic Cl ssific tion (2010–14) 14% 120% 12% 12% 11% 100% 10% 11% 10% 10% 10% 9% 9% 80% 8% 7% 7% 60% 6% 4% 40% 4% 2% 20% 0% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010-2014 2014-2018 B m ko s Koulikoro Sik sso S ou Mopti Tombouctou G o Kid l Ens mbl K S l ir Fonctionn m nt Tr nsf rt Inv stiss m nt Sourc : BOOST Sourc : BOOST/MEF >>> >>> Fi ur 6.13: D c ntr li d Bud t b R ion Fi ur 6.14: D conc ntr t d Bud t b Economic nd Economic Cl ssific tion (2015–18) Cl ssific tion: Tot l nd Inv stm nt (2010–17) CFAF billions 120% 2.00 1.78 1.80 100% 1.60 1.45 1.40 80% 1.20 1.00 0.940.94 60% 0.83 0.81 0.80 40% 0.60 0.50 0.45 0.37 0.40 20% 0.20 0.07 0% 0.00 B m ko s Koulikoro Sik sso S ou Mopti Tombouctou G o Kid l T oud nit OMVF OPIB ORS ADRS ODRS OHVN ORM OMB AAT Ens mbl M n k Av r K S l r Op r tion Tr nsf r Inv stm nt Tot l xp nditur Inv stm nt Sourc : BOOST Sourc : BOOST Local service delivery is further compromised by the services from the National Directorate of Rural highly fragmented regional entities. On top of their Engineering and National Directorate of Agriculture into limited resources, the effectiveness of deconcentrated a single deconcentrated service. Similarly, grouping the services are further aggravated by the multitude of planning and development functions of different EPAs units. For instance, it would be more effective to merge into a single service could promote greater efficiency. MALI PUBLIC EXPENDITURE REVIEW >>> 159 Budget Implementation Performance Budget implementation across different entities are extremely uneven. The relatively efficient execution Budget execution rates are higher for domestically of domestic resources is due to the rates achieved financed expenditure than for externally financed by the MA, the common expenses section where the projects. The overall budget execution rate for agriculture input subsidy was housed until 2016, and the National spending was 75 percent on average over the decade Agricultural Support Fund (FNAA; Fonds National 2010–19. The execution rate reached 80 percent for d’Appui à l’Agriculture).116 The budget implementation only four years of the entire decade while the 90 percent of the MEP fell from an average of 95 percent during threshold—indicting relatively satisfactory execution— 2010–13 to just 42 percent in 2016–18. One of the was only reached in 2013 and 2017. The execution rates reasons for this was a malfunction in the implementation of domestic resources averaged 85 percent over 2010– of the animal input subsidy in 2017. This led the MEF 19, but were volatile during that period: they ranged to reduce the allocation for the subsidy from US$ 10 from 58 percent (2018) to 98 percent (2014 and 2017). billion in 2017 to US$ 3 billion per year since then. The In contrast, the execution of externally financed projects budget implementation of the MEADD has fallen from 99 has been even less effective, with an average rate of percent during 2010–13 to 68 percent during 2016–18. 62 percent over the period. Difficulties in monitoring The execution of the agricultural budget delegated to the external aid by the Ministry of Economy and Finance regions has fallen from 97 percent to 77 percent. The (MEF) partly explain the low rate of exectuation. The budget implementation of the Food Security Commission complex procedures for externally financed projects and also decreased slightly from 100 percent to 91 percent weak human resources in the government departments between the two periods (Figure 6.16). responsible also affected the efficient implementation of externally financed projects (Figure 6.15). >>> >>> Fi ur 6.15: Bud t Impl m nt tion Fi ur 6.16: Bud t Ex cution for (2010–19) Dom stic R sourc s b Administr tiv Cl ssific tion (2010–18) 120% 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% MA CSA FNAA MEP 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010-2019 MEADD Oth r Ministri s D conc ntr t d D c ntr lis d Dom stic fin ncin Ext rn l fin ncin Tot l fin ncin 2010-2013 2016-2018 Sourc : BOOST Sourc : BOOST 116 Created by a ministerial order in 2011 with a fund of up to CFAF 5 billion per year, the FNAA operates in the form of a special allocation account with three windows: (i) the agricultural development window to finance a range of agricultural functions (research, advisory support, irrigation, capacity building for producers, intensification of agricultural production, selected seeds, promotion of agricultural commodity chains, support for the installation of women and young farmers, and environmental conservation); (ii) the agricultural risk and calamity window; and (iii) and the agricultural loan guarantee fund window. There is however lack of transparency in the use of the fund. 160 >>> MALI PUBLIC EXPENDITURE REVIEW Efficiency: A Case Study on Input where the amount tripled within less than a decade, from Subsidies CFAF 10 billion in 2010 to 30.6 billion on average by 2016–18 (Figure 6.19). Yet the subsidized price and the The uneven distribution of resources towards effectiveness of the fertilizer are often questioned. Given the crop subsector and into subsidies deserves the siginificant and increasing share of input subsidies in closer scrunity. As mentioned in the previous section, the agriculture budget, the section that follows uses a agriculture spending is dominated by the crop subsector, case study of crop input subsidies in the crop subsector within which subsidies alone account for 60 percent of to illuminate the efficiency discussion. After outlining the total spending. The unsustainable weight of subsidies input subsidy mechanism, it discusses the qualitative places a constraint on government resources and evidence for inefficiencies of the system, followed crowds out other expenditures. This section provides a by a statistical analysis of the efficiency of subsidized closer examination of one of the most important input fertilizers. subsidies: the fertilizer subsidy. The Fertilizer Subsidy Mechanism Fertilizer Subsidy Over the Last Decade The system of fertilizer subsidies covers cash and food The traditional farming sector is dominated by cultivation crops, and is managed by three different parastatal of rice, cotton, maize, millet, and sorghum, with wide and state organizations. They are: (i) the cotton regional variation (Figure 6.17). Rice predominates business consortium GIE Coton (Groupement d’Intérêt in Gao (83 percent of total cultivated areas) and Economique du Secteur Coton) which consists of Tomboctou (70 percent). Rice is also widely cultivated an SOE, the Malian Cotton Textile Company (CMDT; in Mopti (30 percent) and Ségou (26 percent) because Compagnie Malienne pour le Développement du of these regions’ proximity to the Niger River. Cotton is Textile) and the EPA Office de la Haute Vallée du Niger grown mainly in the regions of Sikasso (46 percent) and (OHVN) which is responsible for subsidies on cotton and Koulikoro (41 percent). Similarly, maize is important in cereals grown by qualified cotton farmers; (ii) the EPAs Sikasso (52 percent) and Koulikoro (28 percent). Millet responsible for rice cultivation (rice offices) including and sorghum are grown in almost all regions, with the notably the Niger Office (ON; Office du Niger), and (iii) greatest concentration in Ségou (30 percent), Koulikoro the Direction Nationale de l’Agriculture (DNA) which (25 percent), and Mopti (23 percent). covers regions and farmers not covered by the other two institutions. Following the rise in commodity prices in 2007/08, fertilizer subsidies were introduced to boost Fertilizer subsidies are calculated on the basis productivity growth (Figure 6.18). Initially only targeting of the campaign plan and the available budget. rice, they were extended to cotton and other food crops For instance, before each campaign the DNA would for the 2009/10 campaign. The quantity of subsidized develop a campaign plan which serves sa the basis fertilizers increased from 141,710 tons (2009/10) to for targeting different crops, which will be validated by 511,938 tons (2018/19), representing an annual growth the High Council of Agriculture (HCA; Haut Conseil de of 12 percent. The cotton sector accounts for the largest l’Agriculture). The DNA technical team then calculate share of subsidies (58 percent on average during 2009– the reference prices of main types of fertilizers and and 18), followed by the DRAs (31 percent) and rice offices the HCA sets the subisidized prices. The Government (11 percent). Urea has become the most common subsidizes the price differential by repaying a group of subsidized fertilizer (42 percent from 2016 onwards), selected suppliers upon presentation of proof of delivery followed by cotton complex (29 percent), NPK117 (22 of the fertilizer to the farmers. Fertilizer subsidies in rice percent) and DAP118 (7 percent). offices function in a similar fashion. A relatively recent initiative, input subsidies have In contrast, cotton input subsidies are automatically since expanded rapidly and the related spending run by GIE Coton. Unlike the other two sectors, the merits careful scrutiny. Total fertilizer subsidies business consortium acquires the fertilizer by public reached a peak of CFAF 58.2 billion in 2016. The tender and distributes it to its members at subsidized increase was especially significant for the cotton sector, prices. The difference between the cost of purchase and 117 Three-component fertilizers providing nitrogen, phosphorus, and potassium. 118 Diammonium hydrogen phosphate. MALI PUBLIC EXPENDITURE REVIEW >>> 161 >>> >>> Fi ur 6.17: Cultiv t d Ar b R ion Fi ur 6.18: Subsidi d F rtili r (2017/18) (2009–18) Tons 600,000 Tot l G o 500,000 Tombouctou 400,000 Mopti 300,000 Sé ou Sik sso 200,000 Koulikoro 100,000 K s 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0% 50% 100% 150% Cotton M i Ric Mill t/sor hum Cotton s st m DNA r s Offic s Tot l Sourc : EACI 2017/2018. Sourc : CMDT nd DNA. >>> Fi ur 6.19: Exp nditur on F rtili r Subsidi s b S ctor (2010–18) CFAF billions 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Cotton s st m DNA nd offic s TOTAL Sourc : CMDT nd DNA sales revenue is reimbursed by the Government. GIE The Government introduced a cotton price subsidy of Coton’s fertilizer purchase prices are usually lower than 50 CFAF/kg for the 2020/21 campaign for up to 700 the DNA’s reference prices. The high level of autonomy million tons. This measure, at a potential cost of CFAF 35 renders surveillance difficult, and gave rise to dubious billion (slightly higher than average input subsidy of CFAF procurement and waste of public resources (Box 6.3). 30.6 billion), replaced the traditional fertilizer subsidy. However, the subsidy in 2020 was too small and came Cotton input subsidies were replaced by farm-gate too late. Cotton production is expected to contract by price subsidies in the campaign 2020/21 following the over three-quarters during the 2020/21 campaign. collapse of international cotton prices in early 2020. 162 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Box 6.3: Auditing the Management of Fertilizer Subsidies in the Cotton Sector Vague budget frameworks and weak traceability have given rise to non-compliance in budget allocation, especially in the cotton sector. A 2019 audit report from the General Auditor Office (BVG, 2019) shows that significant discrepancies exist between the budget office (DGB) under the MEF and the CMDT over the amount of the cotton subsidy (Figure B6.3A). DGB statistics suggest an average of CFAF 11.7 billion of input subsidies to the cotton sector per year, while the CMDT claims an average subsidy of CFAF 22.4 billion per year, implying an extra-budgetary expenditure of over CFAF 10 billion per year. For instance, for the 2016/17 and 2017/18 campaigns, subsidies claimed by CMDT exceeded the ceilings by CFAF 29.12 billion (or 388 percent), and CFAF 15.28 billion (or 127 percent) respectively. It is not entirely clear how the additional bills were covered.1 Irregularities have been detected in the execution of fertilizer procurement contracts, which are beyond the governance framework of public procurement. Tenders are only published on national communication channels, thereby limiting the participation of international suppliers. A review of the contracts during 2015–18 shows that the selected suppliers did not align their prices with the lowest bidder resulting in losses of about CFAF 11 billion for three consecutive campaigns (2015–18).2 In addition, 20 percent of the contracts failed to meet delivery deadlines, but late penalties were not applied. Procurement in the cotton sector is entrusted to the GIE and not governed by a legal framework. The execution of the contracts is therefore beyond the control of the General Directorate of Public Procurement (DGMP; Direction Générale des Marchés Publics). Basically, GIE Coton cannot be held accountable for the contract it executes. The mismanagement resulted in higher purchasing prices. Even compared with neighboring countries with similar structures, Mali’s fertilizer procurement market is inefficient. Similar organizations exist in Burkina Faso and Niger but the prices paid for urea were 19 percent lower in Burkina Faso than in Mali in 2016 and 11 percent lower in 2017. Niger has recently undertaken reforms to improve efficiency of its public procurement and was able to purchase urea for 13 percent less than Mali in 2018. Mismanagement also resulted in the accumulation of fertilizer stocks. In some areas (Central and North-Eastern subsidiaries), GIE Coton continued purchasing fertilizer for the 2017/18 campaign while it still held a large stock of the same type from the previous campaign. The stocks were estimated at 58,601 tons and had cost CFAF 10 billion. The excessive stock further raised questions about the extra resources the GIE claimed on top of the budget ceiling on input subsidies. >>> Fi ur B6.2A: Dom stic R sourc s for th Anim l H lth S st m 3.000 2.500 2.000 1.500 1.000 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 DNSV SERVICES DECONCENTRES LCV LVG TOTAL Sourc : BOOST. Source: BVG (2019) Gestion de la Subvention d’Intrants « Coton »: Verification de Performance. Not : DNSV: N tion l Dir ctor t of V t rin r H lth (Dir ction N tion l d l S nté Vétérin ir ); LVG: G o V t rin r L bor tor 1/ It is perceived by non-state actors that the FNAA partly financed the cotton subsidy. (L bor toir Vétérin ir d G o). 2/ This amount represents the difference between the prices of the lowest bidder and the prices of the other bidders. The detailed loss each year is CFAF 6 billion for the 2015/16 campaign, CFAF 2.4 billion for the 2016/17 campaign and CFAF 2.5 billion for the 2017/18 campaign. MALI PUBLIC EXPENDITURE REVIEW >>> 163 Inefficiencies in Budget Allocation such as high distribution costs related to the degradation of rural roads and insecurity in some production areas. Budgeting for fertilizer subsidies does not follow a results-based framework. With the operationalization Inefficiencies also exist in many steps of the of the program budget, the input subsidy is included in distribution process. The World Bank (2018b) has Program 1034: General Administration of the Ministry highlighted the following inefficiencies: (i) technical of Agriculture. The program objective is “to improve bonds were sometimes issued to actors other than the coordination of the department’s policies and producers for speculative purposes;120 (ii) cash payment strategies”, with the following results indicators: (i) rate for subsidized fertilizers (i.e. the lack of credit system) is of implementation of department’s activities; (ii) rate of an additional constraint for low-income producers; (iii) implementation of Cabinet recommendations; (iii) rate the inefficiency of the distribution network (despite the of application of texts adopted for the implementation planned delivery of deposits by DNA management staff, of the Agricultural Orientation Law (LOA); (iv) rate of the fertilizer is not physically available in the communes implementation of the communication plan. The input and agricultural sectors so producers may in practice subsidy programs lack performance indicators. As a visit several times in search of fertilizer without receiving result, the traceability of the budget on subsidies remains any); (iv) the lack of quality control of the fertilizers sold; weak, evidenced by the lack of details in budget law and (v) the large number of suppliers and the absence of information discrepancies between budget planning and a transparent call for tenders for their selection, which subsidy program implementation. Until 2016, budget engenders opportunistic behavior. Many distributors allocation to the input subsidies was reflected as merely emphasized that some selected operators are not in the one entry under “common expenditure” in the budget business and do not have the capacity to supply fertilizer. law. It is only since 2017 (along with the start of program Some supervisors from the MA would therefore sell the budgeting), that allocation of the subsidy was reflected technical bonds to these suppliers who are reimbursed in the MA budget. by the Government without delivering fertilizer to the producers. Inefficiencies in Implementation An e-voucher system has been introduced to reduce Input subsidies have not improved the efficiency of inefficiency in the distribution process. Its objective the fertilizer market. Subsidized prices for fertilizers is to improve the efficiency of the subsidy by reducing often serve as a base price for the market. In Mali, the intermediaries and cumbersome administrative however, the pass through of reductions in international procedures of the current system. The system covered prices to the local market is weak, largely due to the between 0.5 percent and 2 percent of the total non-competitive setting of suppliers. State-fixed prices distributed subsidies from 2016 to 2018 (Koné et al., for urea are often higher than market prices. In 2017–19, 2019). However, the system is still at an experimental for instance, The state fixed price for urea in areas not stage and has some shortcomings. These include (i) impacted by security issues was CFAF 338/kg while the late identification of beneficiaries, which caused late the average market price was CFAF 271/kg. The state delivery of fertilizer; (ii) the inclusion of beneficiaries who fixed price was 25 percent higher than market price in do not work in agriculture sector during the first year areas with easy market access while in remote areas, 2016/17; (iii) the underestimation of beneficiaries’ needs; price differentials were even bigger. It is estimated that (iv) the low purchasing power of vouchers in the face of more than CFAF 6 billion could be saved if suppliers the need for cash payment; (v) poor telephone network were selected through a competitive mechanism.119 It coverage in some areas; and, most importantly, (vi) the should be noted that these high fertilizer prices can be persistence of late payments to suppliers. In addition, explained by (i) the unlimited time frame for payment for the cost charged by the company that manages the subsidized fertilizer, which leads to a significant increase e-voucher system is high.121 The continuation of the in the financial costs borne by suppliers; (ii) the fact that operation and its success will therefore require the the subsidy started in periods of high demand on the correction of these shortcomings. international market; and (iii) other factors of inefficiency, 119 This calculation is made on the basis of an average additional cost of 25 percent for all types of fertilizers. 120 The technical bond is a document issued to the beneficiary of the subsidy by the technical services of the regional directorate of agriculture. It contains the characteristics of the farm and the quantities of fertilizer allocated to the producer. The producer gives this bond to the selected supplier to acquire the fertilizer at the subsidized price and the gap is reimbursed to the supplier by ministry of finances on the basis of the collected bonds. 121 Information from the Permanent Assembly of Mali’s Chambers of Agriculture (APCAM; Assemblée Permanente des Chambres d’Agriculture du Mali). 164 >>> MALI PUBLIC EXPENDITURE REVIEW Efficiency Analysis of Input Subsidies The input efficiency varies across regions, mainly depending on the crop type and geography The efficiency of the fertilizer subsidies is assessed by (Figures 6.20 and 6.21). Regions with high efficiency measuring the effect of subsidized fertiliser on agricultural from fertilizers include Ségou (29 kg from subsidized productivity using cross-sectional data. Statisitcal fertilizer and 27 kg from unsubsidized fertilizer), Mopti exercises have been conducted to measure the marginal (23 kg and 18 kg respectively) and Tomboctou (23 kg effect of the use of subsidized and unsubsidized fertilizer and 14 kg respectively), which may be explained by on land productivity (yield per hectare) at regional level the predominance of irrigated rice cultivation in these (Annex VII).122 The cross-sectional analysis is based on regions. Input efficiency in Gao and Sikasso is slightly the 2017/18 Integrated Agriculture and Business Survey lower, for different reasons (dysfunctional fertilzer (EACI; Enquête Agricole et Conjoncture Intégrée) on distribution networks due to insecurity in Gao, and an traditional farm lands.123 overuse of fertilizers for the cotton sector in Sikasso leading to a diminishing marginal utility). The worst result Statistical analysis at national level suggests a was in Koulikoro, where the efficiency of subsidized significantly positive impact of subsidized fertilizer over fertilizer is negative while unsubsidized fertilizer is unsubsidized fertilizers on overall productivity. It shows positively correlated with yield increase. Yet this region that an application of one kilogram per hectare of received 21 percent of the total amount of subsidized subsidized mineral fertilizer increases agricultural output fertilizer (14 kg/ha).125 The proximity to irrigation facilities by 25 kg/ha while unsubsidized fertilier is correlated with is the main reason for the high efficiency of subsidized increases in output of 16.5 kg/ha. The greater efficiency fertilizer in regions of Ségou, Mopti and Tomboctou. of the subsidized fertilizer is probably due to improved quality control over subsidized fertilizer by the DNA The low input efficiency in the Sikasso region is and/or weak quality control for unsubsidized fertilizer. mostly due to unsatifactory increases in cotton However, more studies with more granular analysis yields. Sikasso accounts for 65 percent of national would be needed to confirm this observation.124 cotton production. Growth in cotton production in recent >>> >>> Fi ur 6.20: M r in l F rtili r Yi ld, Fi ur 6.21: Input Subsid nd Cultiv t d b R ion k /h Ar b R ion 35 60% 29 30 50% 27 50% 23 23 25 25 20 18 40% 17 15 14 1211 30% 9 10 24% 25% 22%21% 5 18% 18% 5 3 20% 1 0 10% 10% 7% -5 -4 3% 1% 0% 0%1% -10 0% Sé ou Tombouctou Mopti G o Sik sso Koulikoro s N tion l Sik sso Koulikoro Sé ou Mopti Tombouctou s G o K K Subsidi d f rtili r No subsidi d f rtili r Sh r in subsidi d f rtili r Sh r in cultiv t d l nd Sourc : EACI 2017/2018 Sourc : EACI 2017/2018 122 The marginal yield is defined as increase in production per hectare (in kg) due to the increase in fertilizer use of 1 kg/ha). 123 The survey is conducted for the traditional production system and therefore does not cover the plots managed by the Rice Offices. 124  There are almost no previous studies on the efficiency or effectiveness of the subsidy. Thériault et al. (2015) hypothesize that one kilogram of nitrogen could increase yield by 200 kg/ha, an effect four times greater than the result of this study. 125  The Kayes region received a negligible amount of the subsidized fertilizer according to the results of the agricultural survey. This made it impossible to analyze its impact. However, the unsubsidized fertilizer is less effective there with a marginal yield of only 1kg. MALI PUBLIC EXPENDITURE REVIEW >>> 165 years has been related to extensive rather than intensive implement agriculture fiscal decentralisation, strengthen growth, based mainly on the expansion of cultivated the capacity of decentralized personnel, introduce areas. Although cotton yields increased by 1.6 percent citizen satisfaction survey/citizen report card to evalute per year during 2009–16 period (World Bank, 2018b), the proximity service delivery. average yields of 930 kg/ha still remains below 1,200 kg/ ha, the threshold needed to ensure the financial viability R6.2 Increase the efficient use of cotton fertilizer. The of the sector in the face of fluctuations in international low impact of fertilizer on cotton yield requires increased cotton prices. This state of affairs requires a change investment in varietal research and soil improvement in strategy. As outlined in the Strategic Development techniques adapted to the agro-pedological conditions. Program for the Cotton Sector (CMDT/OHVN/UN-SCPC, Investment should be made in varietal improvement 2013), increased investment in varietal improvement programs and in research into amendment techniques programs and in research into fertilizer amendment according to agropedological conditions according to agropedological conditions would improve the quality, yield, and competitiveness of Malian cotton. R6.3 Improve the efficient use of the fertilizer subsidies. The extension of good agricultural practices, including the management of soil degradation and fertility, should • Cotton sector: improve the efficient use of the fertilizer also be supported. subsidy through strengthening the management and oversight of public procurement for the acquisition Significant inefficiencies exist due to lack of of cotton fertilizer. This reform involves conducting oversight and complex administrative procedures. regular auditing and put a subsides ceiling in the More efficient management of subsidies in the cotton cotton sector, and, onceimplemented, could save sector would make it possible to reduce costs by more CFAF 10 billion per year. Further structural reform of than 20 percent and thus save nearly CFAF 10 billion the CMDT will render higher fiscal agains and more per year. For the non-cotton sector, the cumbersome resilience to the sector. and complex administrative chain for implementing the subsidy is a potential source of malpractice. Indeed, • Non-cotton sector (crop and animal resources): estimates of the subsidy based on agricultural surveys improve transparency and mitigate costs due to are well below the official figures, confirming leaks in weather and security by the adoption of e-vouchers the system that non-state actors have identified. The and the competitive selection of fertilizer distributors, Government could have saved CFAF 6 billion per year mobilization of private sector including imprters and over the period 2017–19 if it had selected fertilizer distributors, financing sector, etc. Strengthen quality distributors competitively. control and M&E. Successful implementation of this measure could save CFAF 15 billion per year. Policy Recommendations R6.4 Enhance sector resilience against external Despite its relatively high share of total expenditure, shocks. Input subsidies is but one way of many that agriculture spending is highly inefficient in both its attempt to address the external shocks including allocative and its techinical efficiency. Resources are adverse weather, enironmental risks and commodity concentrated in the crop subsector at the expense of price volatility. Sector diversification and export, the livestock subsector. In economic classification, integration into global value chain and studies against spending has been heavily skewed towards current climate changes (investment to preserve marginal land expenditure and especially input subsidies at the and water resources) are important and require urgent expense of investment. Few resources are transferred attention. These investments will promote sustainable to the regions and to the decentralized services to growth agriculutre performance and reduce conflicts enable the provision of adequate services. A number of over resources. concrete steps should be taken to address the obviously inefficient practices (summarized in Table 6.3): R6.1 Streamline the workforce and increase the resources allocated to in deconcentrated services. Reforms that should accomapny the decentralization of government services in Agriculture, including restructure decontrated office to align with decentralization, 166 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table 6.3: Recommended Policy Measures Policy actions Policy action details Time horizon Potential fiscal gains (+) / uses (-) R6.1 Improve Streamline regional directorates and local offices, Medium term allocative efficiency. consistent with producer demands, and introduce a performance-informed funding mechanism. R6.2 Improve the Increase investment in varietal research aiming at Short term technical efficiency of improving the effectiveness of cotton fertilizers. agriculture inputs. R6.3 Improve the Improve the efficient use of fertilizer subsidies by Medium term CFAF 10 billion technical efficiency strengthened management in the cotton sector, via (0.097 % GDP) per of spending on regular auditing and subsidies ceiling. year subsidies. Improve the transparent procurement of fertilizers Short term CFAF 15 billion and mitigate costs due to weather and insecurity, (0.146 % GDP) per through enhanced e-voucher systems in the non- year cotton sector. R6.4 Enhance the • Increase in R&D and incentive schemes to Medium term sector’s resilience to increase economic diversification. external shocks. • Investment in infrastructure (roads and storage facilities) to support export and economic integration. • Increase in projects against environmental degradation and water preservation. MALI PUBLIC EXPENDITURE REVIEW >>> 167 >>> References Al-Samarrai, S., M. Gangwar, and P. Gala. 2020. “The Boex, Jameson, Martinez-Vazquez, Jorge, and Timofeev, Impact of COVID-19 Pandemic on Education Financing.” Andrey. 2004. “Subnational Government Structure and Policy Note. Washington, DC: World Bank. Intergovernmental Fiscal Relations.” International Center for Public Policy Working Paper Series, 0401. Andrew Archer, D. 2020. Teachers and the Public Sector Young School of Policy Studies, Georgia State University. Wage Bill. Worlds of Education website. https:// www.worldsofeducation.org/en/woe_homepage/ Bourgain, A., L. Bertinelli, and F. Leon. 2018. “Corruption woe_detail/16953/worldteachersday-lessons-from- and Tax Compliance: Evidence from Small Retailers in the-pandemic-%E2%80%9Cteachers-and-the-public- Bamako, Mali.” CREA Discussion Paper Series 18-18, sector-wage-bill%E2%80%9D-by-david-archer. Center for Research in Economic Analysis, University of Luxembourg. Asian Development Bank. 2017. “Efficient Management of State-Owned Enterprises: Challenges and BVG (Bureau du Vérificateur Général) 2019. “Gestion Opportunities”. ADB Institute. Policy Brief No 2017-4. de la Subvention d’Intrants « Coton »: Verification Asian Development Bank. de Performance: Campagnes Agricoles 2015/2016, 2016/2017 et 2017/2018.” Republic of Mali. Alsan M, L. Schoemaker, K. Eggleston, et al. 2015. “Out-of-Pocket Health Expenditures and Antimicrobial CMDT/OHVN/UN-SCPC. 2013. Programme de Resistance in Low-Income and Middle-Income Développement Stratégique de la Filière Coton de 2013 Countries: An Economic Analysis.” The Lancet Infectious à 2018. Compagnie Malienne pour le Développement Diseases. 15(10): 1203-1210. DOI: 10.1016/s1473- du Textile. 3099(15)00149-8. Dahn, B., A. Worldemariam, H. Perry, A. Maeda, D. von BEEKUNKO. 2016. Évaluation National, 2016. Glahn, et al. 2015. Strengthening Primary Health Care Évaluation des Apprentissages Scolaires par la Société through Community Health Workers: Investment Case Civile au Mali. and Financing Recommendations. https://www.who.int/ hrh/news/2015/CHW-Financing-FINAL-July-15-2015. Belinga, V., D. Benedek, R. de Mooij, and J. Norregaard. pdf?ua=1. 2014. “Tax Buoyancy in OECD Countries.” IMF Working Paper No. 14/110. Washington, DC: IMF. DGI (Direction Général des Impôts). 2020. “Nos Recettes”. DGI website. https://www.dgi.gouv.ml/nos- Bergamaschi, I. 2014. “The Fall of a Donor Darling: The recettes/. Role of Aid in Mali’s Crisis*.” Journal of Modern African Studies, 53(3):374–378. Dione, M. et al. 2019. “Integrated Approach to Facilitate Stakeholder Participation in the Control of Endemic Blandhol, C. and A. Sautmann. 2020. “Gender Diseases of Livestock: The Case of Peste Des Petits Differences in Children’s Antibiotic Use and Adherence.” Ruminants in Mali.” Frontiers in Veterinary Science Forthcoming. 6:392. doi: 10.3389/fvets.2019.00392. 168 >>> MALI PUBLIC EXPENDITURE REVIEW GPE (Global Partnership for Education). 2020. GPE Facility Arrangement.” IMF Country Report No. 18/141. website. https://www.globalpartnership.org. Washington, DC: IMF. Hounsa, T., M. Coulibaly, and A. Sanoh. 2019. “The IMF. 2018d. “Mali: Public Investment Management Redistributive Effects of Fiscal Policy in Mali and Niger.” Assessment–Review and Update”. Washington, DC: IMF. Policy Research Working Paper No. 8887. Washington, DC: World Bank. IMF. 2018e. “Mali: Public Investment Management Assessment (PIMA).” IMF Country Report No 18/114. IHME (Institute for Health Metrics and Evaluation) 2020. Washington, DC: IMF. GBD Compare Data Visualization. Seattle, WA: IHME, University of Washington, 2020. Available from http:// IMF. 2018f. “Mali: Tenth Review under the Extended vizhub.healthdata.org/gbd-compare. Credit Facility Arrangement.” IMF Country Report No. 18/360. Washington, DC: IMF. IMF (International Monetary Fund). 2013. “Mali: Staff Report for the 2012 Article IV Consultation, Request IMF. 2019a. “Mali: Mobilisation des recettes, amélioration for Disbursement Under the Rapid Credit Facility, and de la discipline fiscale et modernisation de la gestion Cancellation of the Extended Credit Facility Arrangement.” des ressources humaines.” IMF Technical Assistance IMF Country Report No. 13/44. Washington, DC: IMF. Report. Washington, DC: IMF. IMF. 2015a. “Mali: Technical Assistance Report: Local IMF. 2019b. “Mali: Appui au renforcement des capacités Taxation and Decentralization”. IMF Country Report No. de la Direction Générale des Douanes (DGD) pour un 15/291. Washington, DC: IMF. contrôle efficace des produits pétroliers.” IMF Technical Assistance Report. Washington, DC: IMF. IMF. 2015b. “Mali: Technical Assistance Report–Mining and Petroleum Taxation (Diagnostic Assessment).” IMF IMF. 2019c. TADAT. Mali: Rapport d’Évaluation de la Country Report No 15/348. Washington, DC: IMF. Performance. November 2019. IMF. 2015c. “Mali: Article IV Consultation, Fourth Review IMF. 2019d. Mobilization of customs revenues– Under the Extended Credit Facility Arrangement, and Strengthening the organizational structure and the core Request for Modification of a Performance Criterion.” functions of the administration. March 2019. IMF Country Report No. 15/339. Washington, DC: IMF. IMF. 2019e. “West African Economic and Monetary IMF. 2015d. “Making Public Investment More Efficient.” Union (WAEMU): Selected Issues.” IMF Country Report IMF Staff Report. https://www.imf.org/external/np/pp/ No. 19/91. Washington, DC: IMF. eng/2015/061115.pdf. IMF. 2019f. Technical Assistance Report for Mali: IMF. 2016a. “Mali: Technical Assistance Report–Tax Situation of tax and customs. February 2019 Policy–Diagnostic Assessment.” IMF Country Report No 16/83. Washington, DC: IMF. IMF. 2020a. “First Review Under the Extended Credit Facility Arrangement.” IMF Country Report No. 20/8. IMF. 2016b. “Modular Approach”. IMF website. Washington, DC: IMF. https://www.imf.org/external/np/ins/english/rmtf. htm#modularapproach. IMF. 2020b. “Requests for Disbursement under the Rapid Credit Facility and Rephasing of Access Under IMF. 2018a. “Mali: Selected Issues.” IMF Country Report the Extended Credit Facility Arrangement.” IMF Country No. 18/142. Washington, DC: IMF. Report 20/153. Washington, DC: IMF. IMF. 2018b. “Central African Republic: 2018 Article IV IMF. 2020c. “COVID-19: An Unprecedented Threat Consultation, Fifth Review under the Extended Credit to Development.” Regional Economic Outlook: Sub- Facility Arrangement, and Financing Assurances Saharan Africa. Washington, DC: IMF. Review.” IMF Country Report No. 18/380. Washington, DC: IMF. IMF. 2021a. “West African Economic and Monetary Union (WAEMU): Staff Report on Common Policies for IMF. 2018c. “Mali: 2018 Article IV Consultation and Member Countries.” IMF Country Report No.21/49. Eighth and Ninth Reviews Under the Extended Credit Washington, DC: IMF. MALI PUBLIC EXPENDITURE REVIEW >>> 169 IMF. 2021b. “Mali: Second and Third Reviews Under Medina, L., A. Jonelis, and M. Cangul. 2017. “The the Extended Credit Facility Arrangement.” IMF Country Informal Economy in Sub-Saharan Africa: Size and Report No.21/67. Washington, DC: IMF. Determinants.” IMF Working Paper No. 17/156. Washington, DC: IMF. JICA (Japan International Cooperation Agency). 2018. Public Investment Management Handbook for Capacity Medina, L. and F. Schneider. 2018. “Shadow Economies Development. JICA. Around the World: What Did We Learn Over the Last 20 Years?” IMF Working Paper No. 18/17. Washington, Johnson, A.D., O. Thiero, C. Whidden et al. 2018. DC: IMF. “Proactive Community Case Management and Child Survival in Periurban Mali.” BMJ Global Health 3(2). MEF (Ministry of Economy and Finance, Mali). 2019. “Strategic Framework for Economic Recovery and Kabar News Agency. 2019. “Level of Shadow Economy Sustainable Development (2019-2023 CREDD).” PRSP in Uzbekistan makes 50% of GDP.” Kabar News Agency Technical Unit. Ministry of Economy and Finance. website. http://en.kabar.kg/news/level-of-shadow- economy-in-uzbekistan-makes-50-of-gdp-1/. MEF. 2020a. Loi de Finances 2020. MEF website. http://www.finances.gouv.ml/lois-des-finances/loi-de- Keen, Michael. 2013. “The Anatomy of VAT.” National finances-2020. Tax Journal 66(2): 423–446. MEF. 2020b. Loi de Finances 2020 Rectivicative. MEF Kelly, Roy. 2002. “Designing a Property Tax Reform for website http://www.finances.gouv.ml/lois-des-finances/ Sub-Saharan Africa: An Analytical Framework applied to loi-de-finances-rectificative-2020. Kenya” Public Budgeting and Finance 20(4):36–51. MEN (Ministry of National Education) 2020a. Stratégie Kelly, Roy; White, Roland; Anand, Aanchal. 2020. de Lutte Contre la Pandémie du COVID 19 en Milieu Property Tax Diagnostic Manual. Washington, DC: World Scolaire. MEN. Bank. MEN. 2020b. Compte-Rendu Cluster Éducation – Mali. Koné, Y. et al. 2019. “Constats Empiriques sur le MEN. Programme Pilote de Subvention e-voucher au Mali.” Policy Research Brief No. 83. Feed the Future Innovation MEN, MIRS, and MJEC. 2019. Programme Décennal Lab for Food Security. de Développement de l’Éducation et de la Formation Professionnelle Deuxième Génération (PRODEC II), KPMG. 2020. Tax Rates Online. KPMG website. https:// 2019-2028. Republic of Mali. home.kpmg/xx/en/home/services/tax/tax-tools-and- resources/tax-rates-online.html MESRS (Ministère de l’Enseignement Supérieur et de la Recherche Scientifique). 2020. Une Analyse des Heures Laxminarayan, R. et al. (2020). “The Lancet Infectious Supplementaires dans les Etablissements Publics. Diseases Commission on Antimicrobial Resistance: MESRS. 6 Years Later.” The Lancet Infectious Diseases. 20(4):e51-e60. DOI: 10.1016/s1473-3099(20)30003-7. Ministère du Développement Rural. 2014. Programme National d’Investissement dans le Secteur Agricole. Lexology. 2017. Mali: Mobile Data and Value-Added Republic of Mali. Services to Support Telecom Growth. Lexology website. https://www.lexology.com/store/item/7e8463e00c31 Ministry of Finance, Ghana. 2017. 2017 State Ownership 41f6b4c787438ccfdb68-mali-mobile-data-and-value- Report. Ministry of Finance. added-services-to-support-telecom-growth. MoH (Ministry of Health and Social Affairs). 2020. Plan Lopez, C. A. Sautmann, and S. Shaner. 2020. “Does d’Action pour le Mali (Mali Action Plan) 2020-2030: La Patient Demand Contribute to the Overuse of Prescription voie à Suivre pour une Meilleure Santé. Republic of Mali. Drugs?” Forthcoming. N’krumah, A., A. Elbehri, and B. Legret. 2013. “Rice in Matta, Samer. 2018. “Dynamic Benchmarking Tool.” MTI Mali: Enhancing Competitiveness and Promoting Policies Online Tools. https://worldbankgroup.sharepoint.com/ for Inclusive Value Chain Development.” Rebuilding West sites/MFM/Documents/Tools/Presentation.pdf Africa’s Food Potential, A. Elbehri (ed.), FAO/IFAD. 170 >>> MALI PUBLIC EXPENDITURE REVIEW Norregaard, J. 2013, “Taxing Immovable Property: Essentiels dans la Communauté via les Agents de Revenue Potential and Implementation Challenges.” IMF Santé Communautaires au Mali en 2015: Résultats et Working Paper No. 13/129. Washington, DC: IMF. Conclusions Clés. Washington, DC: Palladium, Health Policy Plus. OECD (Organisation for Economic Co-operation and Development). 2016. Revenue Statistics Sautmann, C., S. Brown, and M. Dean. 2020. “Subsidies, in Africa. Paris: OECD Publishing. https://doi. Information, and the Timing of Children’s Health Care in org/10.1787/9789264253308-en-fr. Mali.” Forthcoming. OECD. 2019. Revenue Statistics in Africa 2019: Shukla, Gangadhar Prasad and Graham Glenday. 2012. 1990-2017. Paris: OECD Publishing. https://doi. Public Finance in Open Economies. Durham, NC: Duke org/10.1787/5daa24c1-en-fr. Center for International Development, Duke University. OECD. 2020. Tax and Fiscal Policy in Response to Spilimbergo, A. and K. Srinavason. 2019. Brazil: Boom, the Coronavirus Crisis: Strengthening Confidence and Bust, and the Road to Recovery. Washington, DC: IMF. Resilience. Paris: OECD Publishing. Stenberg, et al. 2017. “Financing Transformative OECD/AUC/ATAF. 2020. Revenue Statistics in Africa Health Systems Towards Achievement of the Health 2020: 1990-2018. Paris: OECD Publishing. https://doi. Sustainable Development Goals: A Model for Projected org/10.1787/14e1edb1-en-fr. Resource Needs in 67 Low-Income and Middle-Income Countries.” The Lancet Global Health 5(9): e875–87. OECD and KIPF (Korea Institute of Public Finance). 2016. https://doi.org/10.1016/S2214-109X(17)30263-2. State-Owned Enterprises in Asia: National Practices for Performance Evaluation and Management. Paris: OECD Theriault V. et al. 2015. “Revue de la Structure et de Publishing. la Performance de la Filiere Engrais au Mali.” Policy Research Paper No. 10. Feed the Future Innovation Lab Our World In Data. 2020. Our World in Data website. for Food Security. https://ourworldindata.org/ Accessed November 12, 2020. UA/IBAR-PACE. 2006. Rapport Final du Programme Pan-Africain de Controle des Epizootics. Rajaram, A., T.M. Le, N. Biletska, and J. Brumby. 2010. “A Diagnostic Framework for Assessing Public UNESCO (United Nations Educational, Scientific and Investment Management.” Policy Research Working Cultural Organization). 2015. Education 2030: Incheon Paper No. 5397. Washington, DC: World Bank. Declaration and Framework for Action. UNESCO Institute. Republic of Mali. 2018. Rapport sur la Performance de la Gestion des Finances Publiques sur la Période UNESCO. 2019. Republic du Mali : Analyse du Secteur 2013-2015 selon le Cadre Méthodologique PEFA 2016. de l’Education : Pour la relance d’un enseignement CARFIP, Republic of Mali. fondamental de qualité pour tous et le développement d’une formation adaptée aux besoins – juin 2017. IIPE Republic of Mali. 2019. Rapport 2019 sur la Performance Pôle de Dakar, UNESCO de la Gestion des Finances Publiques sur la Période 2016-2018 selon le Cadre Méthodologique PEFA 2016. UNESCO. 2020. Data for the Sustainable Development Republic of Mali. Goals, 2010-2015. Republic of Mali. 2020a. Decree on the set up and UNICEF (United Nations Children’s Fund). 2015. Rapport nomination of the Steering Committee members for de l’Etude Diagnostique de la Question Enseignante en the implementation of PRODEC II Nr 2020-000934/ République du Mali. UNICEF MENESRS-SG/Mai 2020. Republic of Mali. UNICEF. 2016. One is Too Many: Ending Child Deaths Republic of Mali. 2020b. Provision of Services in the from Pneumonia and Diarrhoea. Technical report, Education Sector. UNICEF. Saint-Firmin, P., B.D. Diakité, and A. Diawara. 2017. United Nations. 2019. World Population Prospects Analyse Situationnelle de la Prestation des Soins 2019. United Nations. MALI PUBLIC EXPENDITURE REVIEW >>> 171 Wagstaff, A. 2002. “Inequality Aversion, Health World Bank. 2018b. Revue Légère des Dépenses Inequalities and Health Achievement.” Journal of Health Publiques Agricoles au Mali (Light Reveiw in Agriculture Economics 21(4): 627–641. Public Expenditure in Mali). Washington, DC: World Bank. Wane, A., et al. 2020. “Willingness to Vaccinate (WTV) and Willingness to Pay (WTP) for Vaccination World Bank. 2018c. Public Expenditure Review Burundi: Against Peste des Petits Ruminants (PPR) in Mali.” Addressing the Challenges and Opportunities in Basic Frontiers in Veterinary Science. 6:488. doi: 10.3389/ Education. Washington, DC: World Bank. fvets.2019.00488. World Bank. 2018d. Afghanistan: Teacher Policy Study– WHO (World Health Organization). 2005. Handbook Towards a More Equitable and Efficient Use of Education IMCI: Integrated Management of Childhood Illness. Resources in Afghanistan. Washington, DC: World Bank. Dept. of Child and Adolescent Health, WHO. World Bank. 2019a. Mali Fiscal Decentralization Follow WHO. 2012. The Evolving Threat of Antimicrobial Up: A First Approach to Assess the Efficiency of Resistance: Options for Action. WHO. Subnational Government Expenditures. June 10, 2019. WHO. 2019 Primary Health Care on the Road to World Bank. 2019b. SOE Oversight in Chad, Mali, Niger Universal Health Coverage: 2019 Global Monitoring (Concept Note). World Bank Group. Report. Geneva: World Health Organization; 2019(WHO/ HIS/HGF/19.1). Licence: CC BY-NC-SA 3.0 IGO. World Bank. 2019c. Guinea-Bissau Public Expenditure Review: Managing Public Finance for Development. WHO and the World Bank. 2019. Global Monitoring Washington, DC: World Bank. http://hdl.handle. Report on Financial Protection in Health 2019. net/10986/31225 World Health Organization and International Bank for Reconstruction and Development / The World Bank; World Bank. 2019d. World Development Indicators. 2019. Washington, DC: World Bank. https://datatopics. worldbank.org/world-development-indicators/. World Bank. 2013. Mali: Recovery and Reform Support Credit Program (RRSC). May 20, 2013. World Bank. 2020b. Enterprise Surveys. https://www. enterprisesurveys.org/. World Bank. 2014. The World Bank and Public Procurement—An Independent Evaluation. Report of World Bank. 2020d. The Human Capital Index 2020 the World Bank Independent Evaluation Group (IEG), Update: Human Capital in the Time of COVID-19. Washington, DC: World Bank. Washington, DC: World Bank. World Bank. 2016a. Mali Enterprise Survey 2016. World Bank. 2020e. Reversals of Fortune: Poverty Washington, DC: World Bank Group. and Shared Prosperity 2020. International Bank for Reconstruction and Development / World Bank. World Bank. 2016b. Benchmarking Public Procurement 2017: Assessing Public Procurement Regulatory World Bank and IMF. 2020. “Mali: Joint Bank-Fund Staff Systems in 180 Economies. Washington, DC: World Debt Sustainability Analysis.” Included in IMF Country Bank. Report No. 20/153. Washington DC: IMF. World Bank. 2017. Republic of Mali: Public Expenditure Review of the Education Sector. Washington, DC: World Bank. World Bank. 2018a. Mali Fiscal Decentralization Assessment: Building a More Equitable and Stable Intergovernmental Fiscal Transfer System. Washington, DC: World Bank. 172 >>> MALI PUBLIC EXPENDITURE REVIEW Annexes MALI PUBLIC EXPENDITURE REVIEW >>> 173 >>> Annex I: Peer Country Selection To benchmark Mali’s performance, this report uses Candidate peers are first located among countries four comparable groups of peers: Sub-Saharan that are landlocked and are commodity exporters. African countries, WAEMU countries, structural peers, We then identify structural peers by narrowing down the and aspirational peers. Peer countries are selected using pool to countries whose socio-economic parameters dynamic benchmarking algorithm developed by Samer (per capita GDP, youth population, government size) Matta (2018). are within +/- 45 percent range of Mali during the benchmarking period 2009–11 (the year 2011 marks Structural peers are countries that share similar the end of the period before the coup). The use of these socio-economic features with Mali and were selected criteria resulted in the following countries: Afghanistan, by using the following criteria: Central African Republic, Chad, Uganda, and Zimbabwe. • commodity exporter Aspirational peers are identified in similar ways. We • landlocked economy focus on countries which had similar socio-economic • GDP per capita (constant 2010 US$) features (commodity exporter, landlocked economy, and • youth population (percentage of total population) a per capita GDP which is 45 percent higher or lower • size of government (government spending as than that of Mali) as Mali during the initial period (1999– percentage of GDP). 01) but have enjoyed faster per capita growth since. We identified Lao PDR, Rwanda, Tajikistan and Uzbekistan as Mali’s aspirational peers. >>> Table A1.1: Mali’s Structural Peers, Selected Indicators (2017) GDP per Government Youth population capita Population spending, HDI Country Region 15-34 (% of (constant (million) including grants (0-1) population) 2010 US$) (% of GDP) Mali SSA 762.23 18.54 32.21 22.98 0.317 Structural Peers Afghanistan SAR 618.33 35.53 35.35 25.07 0.389 Central African SSA 335.03 4.66 34.22 14.27 n/a Republic Chad SSA 823.43 14.90 33.63 14.98 0.293 Uganda SSA 666.61 42.86 34.27 18.95 0.382 Zimbabwe SSA 927.40 16.53 34.90 32.09 0.441 Aspirational Peers Lao PDR EAP 1730.40 6.86 37.24 21.94 0.452 Rwanda SSA 765.22 12.21 35.73 25.41 0.374 Tajikistan ECA 1015.47 8.92 35.82 31.52 0.533 Uzbekistan ECA 2031.05 32.39 36.40 33.33 n/a Source: WDI, WEO, HCI. 174 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Annex II: BOOST Note and Expenditure Data BOOST Data Note spans two main budget classification systems, as the country transitioned to program-based budgeting The BOOST program is the World Bank’s open in 2018. Following international consensus on the budget initiative that provides public expenditure importance of results-oriented public management information based directly on government’s own systems, WAUMU and its member states committed data. It uses data from public expenditure accounts held to rendering public financial management systems in the government’s financial management information consistent with international standards. A critical part systems. With a consistent methodology, the program of this reform focused on adopting program-based transforms granular fiscal data into accessible and budgeting, which would allow for greater tracking of readily available formats. The program has designed public finances and their outcomes. and delivered over 40 country-specific BOOST datasets in standardized format (at national level and sometimes Certain elements of the budgeting system allow for subnational level). The dataset typically allows for simple comparisons across the two budget eras while approved, revised and executed budgets to be cross- others render the two classification systems largely referenced across years with economic, functional and distinct. Administrative and economic classifications administrative classifications. are largely compatible between the two budget types. The nomenclature change in the functional classification, The BOOST in Mali has been developed and however, can make series analysis problematic. While maintained since 2015 with data series dating back programmatic classification will allow for better tracking to 2004. The World Bank has been working with the and analysis moving forward, the 2018-2020 program technical team of the General Budget Directorate (DGB) nomenclature does not have an analogous classification under Ministry of Economics and Finance of Mali to prior to 2018. collect data and build a BOOST database to support its analysis of expenditures. The main source used 2010–17 Budget Classification to construct the BOOST database is the Integrated Expenditure Management System (SIGD; Système The sequence of expenditure classification for Mali’s intégré de gestion de dépenses). object-based budget (in use until 2017) is given in Table A2.1. The chart of accounts has 12 segments with The data format of the Mali BOOST has undergone a total of 26 characters, allowing for each expenditure to several changes following the transitions of budget be classified by administrative, economic, and functional classification system into program-based budgeting. classifications and geographical location. The period covered in this Public Expenditure Review >>> Table A2.1: Sequence of Expenditure Classification for Object-Based Budgeting Administrative Economic Functional unit or Administrative Chapter (17 caractères) classification classification (6) Section Sector Entity Source Functional Order Geographic Program Code Titre PCE Ligne level of classification number localization code CSLPa financing 3c 1c 1c 1c 4c 3c 4c 2c 1c 1c 3c 2c Note: a. sIndicates whether an expenditure contributes to fighting poverty. MALI PUBLIC EXPENDITURE REVIEW >>> 175 >>> Table A2.2: Sequence of Expenditure Classification for Program-Based Budgeting Budget Administrative Programmatic Economic Functional Additional Administrative classification type classification classification classification classification classifications Section Program Action Chapter PCE Rubric Source Beneficiary of Type Code Geographic financing service service localization 1c 3c 4c 2c 2c 12c 6c 3c 2c 4c 2c 3c Note: a. Bottom row signifies the number of characters for each category. Expenditure by Economic, Functional and Administrative Classification >>> Table A2.3: Total Expenditure by Economic Classification as a Percentage of GDP (2010–19) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. Current 13.0 13.6 12.7 15.6 14.8 15.2 14.5 15.8 13.4 14.6 Compensation of employees 4.4 4.4 4.7 4.5 4.5 4.7 4.9 5.3 5.1 5.9 Use of goods and services 4.3 4.5 4.1 4.5 4.2 3.5 3.4 3.8 4.8 5.2 Transfers 2.9 3.0 2.8 3.7 3.6 3.4 3.4 3.3 3.5 3.5 Debt 1.2 1.7 1.0 2.7 2.0 2.2 1.9 2.3 - - Special Accounts 0.1 0.1 0.1 0.1 0.5 1.4 0.8 1.1 - - 2. Capital 7.4 7.3 1.9 6.1 6.4 6.0 6.4 9.3 6.7 8.9 TOTAL (1+2) 13.0 16.1 18.8 18.1 19.1 18.8 19.6 24.0 24.4 22.3 >>> Table A2.4: Total Expenditure by Economic Classification as a Percentage of the Total (2010–19) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. Current 63.9 65.2 86.8 71.9 69.9 71.9 69.2 62.9 66.6 62.0 Compensation of employees 21.7 20.9 32.0 20.9 21.3 22.3 23.4 21.0 25.6 25.0 Use of goods and services 21.3 21.5 27.8 21.0 19.7 16.6 16.4 15.0 23.9 22.1 Transfers 14.3 14.3 19.1 17.3 17.0 15.8 16.3 13.2 17.2 14.8 Debt 6.0 7.9 7.1 12.4 9.4 10.5 9.2 9.3 - - Special Accounts 0.6 0.6 0.7 0.3 2.5 6.6 3.9 4.4 - - 2. Capital 36.1 34.8 13.2 28.1 30.1 28.1 30.8 37.1 33.4 38.0 TOTAL (1+2) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: BOOST, World Bank. Note: Tables A3.3 -A3.8 are prepared using BOOST and World Bank staff calculation. Economic classification: 2010-2018: actuals, 2019: budgeted amounts. Functional classification: 2010-2018: actuals, 2019: budgeted amounts. 2018-2019 Basic and higher education amounts are combined. 2018-2019 social expenditures also include: environmental protection and housing expenditures not shown. Administrative classification: 2010-2018 actuals, 2019 budgeted amounts. Administrative units not shown each accounted for less than 0.3% of total spending, and included government hospitals, agencies, universities, research centers, etc. 176 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table A2.5: Total Expenditure by Functional Classification Relative as a Percentage of GDP (2010–19) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. General 4.5 4.1 3.3 4.6 5.3 5.9 6.9 7.0 8.9 10.0 General administration 2.2 2.0 1.2 1.6 2.1 2.1 2.8 2.7 4.8 5.8 Diplomacy and International 0.4 0.4 0.3 0.4 0.4 0.4 0.3 0.5 - - Affairs National Defense & Security 1.9 1.7 1.7 2.6 2.8 3.4 3.8 3.8 4.1 4.2 2. Social 6.8 7.0 5.4 5.8 6.0 6.2 5.9 6.6 6.2 7.6 Basic education 2.4 3.0 2.5 2.4 2.5 2.9 2.7 2.9 3.8 3.7 Higher education 1.4 1.2 1.1 1.3 1.3 1.2 1.1 1.2 - - Culture, Youth, and Sport 0.3 0.3 0.2 0.2 0.3 0.2 0.2 0.3 0.2 0.2 Health 1.6 1.6 0.9 1.0 1.2 1.3 1.2 1.3 0.9 1.2 Social sectors 0.9 0.8 0.7 0.8 0.6 0.5 0.6 0.7 1.0 1.2 Employment 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.1 - - 3. Economic 6.2 6.1 2.4 6.0 6.0 4.2 3.9 6.7 5.0 5.9 Agriculture 2.5 2.1 1.1 1.9 2.2 2.0 1.6 3.6 2.2 2.5 Mining & Industry 1.3 1.6 0.6 1.9 1.6 0.8 0.6 1.1 - - Urban & Public Works 1.7 1.5 0.4 1.7 1.4 0.9 1.1 1.6 - - Transport 0.4 0.6 0.1 0.3 0.4 0.2 0.4 0.2 - - Communication 0.3 0.3 0.2 0.3 0.4 0.2 0.1 0.1 - - 4. Debt 1.0 1.5 0.9 2.2 1.6 1.7 1.5 2.3 - - Internal debt 0.1 0.6 0.4 0.7 0.4 0.5 0.5 1.1 - - External debt 0.6 0.7 0.3 1.1 0.9 0.9 0.7 1.0 - - External debt interest 0.3 0.3 0.2 0.4 0.3 0.3 0.3 0.3 - - 5. Not mapped 1.9 2.3 2.6 3.2 2.3 3.1 2.7 2.5 - - Not mapped 1.9 2.3 2.6 3.2 2.3 3.1 2.7 2.5 - - TOTAL (1+2+3+4+5) 20.4 20.9 14.7 21.7 21.2 21.2 20.9 25.0 20.1 23.5 MALI PUBLIC EXPENDITURE REVIEW >>> 177 >>> Table A2.6: Total Expenditure by Functional Classification as a Percentage of the Total (2010–19) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. General 22.0 19.4 22.4 21.2 25.2 28.0 33.2 27.8 44.3 42.5 General administration 10.6 9.4 8.2 7.6 10.1 10.1 13.5 10.6 24.1 24.8 Diplomacy and International 2.0 1.8 2.4 1.7 1.7 1.7 1.6 1.8 - - Affairs National Defense & Security 9.4 8.3 11.8 12.0 13.4 16.2 18.0 15.3 20.2 17.7 2. Social 33.2 33.5 37.1 26.6 28.1 29.3 28.2 26.2 31.0 32.5 Basic education 11.8 14.3 17.2 11.2 11.9 13.8 12.9 11.4 18.7 3.7 Higher education 6.8 5.8 7.5 6.0 5.9 5.5 5.1 4.9 - Culture, Youth, and Sport 1.5 1.2 1.1 0.9 1.4 1.0 1.0 1.0 1.0 0.9 Health 8.0 7.6 6.0 4.5 5.7 6.1 5.9 5.3 4.3 5.2 Social sectors 4.2 4.0 4.8 3.6 2.7 2.3 3.0 2.9 4.8 5.3 Employment 0.8 0.6 0.5 0.5 0.4 0.7 0.4 0.6 - - 3. Economic 30.2 29.1 16.3 27.5 28.4 19.9 18.7 26.6 24.6 25.0 Agriculture 12.3 9.9 7.8 8.6 10.5 9.6 7.8 14.3 10.9 10.7 Mining & Industry 6.2 7.9 4.1 8.7 7.6 4.0 3.0 4.6 - - Urban & Public Works 8.2 7.2 2.5 7.8 6.5 4.5 5.3 6.2 - - Transport 2.2 2.9 0.8 1.2 1.9 0.8 2.0 1.0 - - Communication 1.3 1.3 1.0 1.2 2.0 1.1 0.7 0.5 - - 4. Debt 5.0 7.1 6.1 10.1 7.4 8.2 7.2 9.3 - - Internal debt 0.7 2.7 2.5 3.4 1.9 2.5 2.4 4.2 - - External debt 3.1 3.1 2.3 5.0 4.2 4.3 3.4 3.9 - - External debt interest 1.3 1.3 1.3 1.7 1.4 1.5 1.4 1.3 - - 5. Not mapped 9.5 10.9 18.1 14.6 10.8 14.5 12.7 10.1 - - Not mapped 9.5 10.9 18.1 14.6 10.8 14.5 12.7 10.1 - - TOTAL (1+2+3+4+5) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 178 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table A2.7: Total Expenditure by Administrative Classification as a Percentage of GDP (2010–19) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. Education 3.2 3.4 2.8 2.9 3.0 3.5 3.2 3.3 3.8 3.7 Ministry of National Education 2.9 3.2 2.7 2.8 2.9 3.2 3.0 3.2 3.0 3.5 Ministry of Higher Education and Scientific 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.7 - Research Ministry of Employment and Vocational Training 0.1 0.1 0.0 0.0 0.0 0.1 0.1 - 0.1 0.2 2. Health 0.9 1.0 0.3 0.4 0.4 0.7 0.6 0.7 0.8 1.0 Ministry of Health 0.9 1.0 0.3 0.4 0.4 0.7 0.6 0.7 0.8 1.0 3. Agriculture 1.4 1.2 0.3 0.9 1.1 1.1 0.5 2.1 1.5 1.4 Ministry of Agriculture 0.9 0.7 0.2 0.7 1.1 1.1 0.4 1.8 1.3 1.1 Ministry of Livestock 0.5 0.5 0.1 0.2 - - 0.0 0.3 0.2 0.2 4. Other 12.5 13.3 9.6 15.4 14.6 14.1 14.6 16.2 13.1 16.4 Common expenses 3.8 4.8 4.7 7.9 6.3 5.5 6.0 5.3 2.9 5.0 Ministry of Defense and Veterans' Affairs 1.4 1.3 1.3 1.3 1.5 2.4 2.6 3.0 2.9 2.7 Ministry of Equipment and Transport - - - 1.4 1.1 0.5 1.0 1.4 1.6 1.1 Special Accounts 0.1 0.1 0.1 0.0 0.5 1.4 0.8 1.0 - - Ministry of Security and Civil Protection 0.5 0.5 0.5 0.5 0.4 0.3 0.6 0.7 0.8 0.9 Ministry of the Economy and Finance 0.5 0.5 0.3 0.5 0.5 0.5 0.5 0.6 1.3 1.9 Ministry of Energy and Water 0.8 0.8 0.1 0.7 0.2 0.2 0.1 0.8 0.8 1.8 Ministry of Foreign Affairs 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.5 0.4 0.4 Ministry of Equipment and Land Use 1.6 1.6 0.3 0.0 - - - - - - Centre des Oeuvres Universitaires 0.3 0.4 0.4 0.4 0.4 0.3 0.2 0.2 - - Social Security - 0.2 0.3 0.3 0.4 0.3 0.5 0.5 - - Ministry of Territorial Administration and 0.2 0.2 0.1 0.1 0.2 0.3 0.1 0.2 0.3 0.8 Decentralization Ministry of Justice 0.2 0.2 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Presidency of the Republic 0.2 0.3 0.2 0.1 0.1 0.2 0.1 0.1 0.1 0.1 National Assembly 0.2 0.2 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 Ministry of the Environment, Sanitation, and 0.2 0.2 0.1 0.1 0.2 0.1 0.1 0.2 0.1 0.2 Development Ministry of State Property and Land Affairs 0.3 0.2 0.1 0.3 0.1 0.2 0.1 - - - Local Authorities National Investment Agency 0.2 0.2 0.0 0.2 0.2 0.1 0.2 0.2 - - (ANICT) Ministry of Sport 0.2 0.2 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.1 Ministry of Solidarity and Humanitarian Action 0.3 0.2 0.1 0.1 0.1 0.0 0.0 0.1 0.8 0.2 Prime Minister’s Office 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Ministry of Trade 0.1 0.2 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.1 Commissioner for Food Security 0.0 0.1 0.0 0.1 0.2 0.1 0.1 0.1 0.1 0.1 Malian Agency for the Development of 0.1 0.1 0.1 0.1 0.1 0.0 0.1 0.2 - - Household Energy and Rural Electrification Ministry of Digital Economy and Communication 0.1 0.1 0.0 0.0 0.3 0.1 0.0 0.0 - - Ministry of Posts and New Technologies 0.2 0.1 0.1 0.1 0.1 0.1 0.1 - - - Ministry for the Promotion of Women, Children, 0.1 0.1 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 and Families Ministry of Culture 0.1 0.1 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 Ministry of Housing and Urban Planning - - - - 0.1 0.1 0.1 0.0 - - Ministry of Public Service and Work 0.1 0.1 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 Supreme Court 0.0 0.0 0.0 0.1 0.1 0.1 0.0 0.0 0.0 0.0 Ministry of Mines and Petroleum 0.1 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1 Ministry of Decentralization and State Reform - - - - 0.2 0.0 0.0 - - - Ministry of Craft Trades and Tourism 0.0 0.0 0.0 0.0 0.0 0.0 - 0.0 0.0 0.0 Ministry of Land Use and Population - - - - 0.0 0.0 0.0 0.1 0.1 0.2 TOTAL (1+2+3+4) 18.0 18.8 13.1 19.6 19.2 19.3 18.9 22.4 19.2 22.5 MALI PUBLIC EXPENDITURE REVIEW >>> 179 >>> Table A2.8: Total Expenditure by Administrative Classification as a Percentage of the Total (2010–19) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. Education 15.8 16.5 19.4 13.2 14.2 16.3 15.3 13.4 18.7 15.5 Ministry of National Education 14.3 15.5 18.7 12.8 13.6 15.3 14.4 12.7 14.8 14.8 Ministry of Higher Education and Scientific 1.2 0.6 0.5 0.4 0.5 0.5 0.6 0.7 3.5 - Research Ministry of Employment and Vocational Training 0.4 0.3 0.2 0.1 0.2 0.6 0.3 - 0.4 0.8 2. Health 4.6 4.6 2.0 1.8 1.9 3.2 3.0 2.7 4.1 4.3 Ministry of Health 4.6 4.6 2.0 1.8 1.9 3.2 3.0 2.7 4.1 4.3 3. Agriculture 6.6 5.5 2.0 4.2 5.4 5.0 2.3 8.5 7.4 5.8 Ministry of Agriculture 4.3 3.2 1.4 3.3 5.4 5.0 2.1 7.4 6.5 4.8 Ministry of Livestock 2.3 2.3 0.6 0.9 - - 0.2 1.1 0.9 1.0 4. Other 61.3 63.6 65.7 71.2 69.2 66.5 69.8 64.7 65.1 69.9 Common expenses 18.9 22.9 32.0 36.4 29.8 25.8 28.5 21.3 14.3 21.3 Ministry of Defense and Veterans' Affairs 7.0 6.1 8.6 5.8 7.3 11.4 12.5 12.2 14.4 11.7 Ministry of Equipment and Transport - - - 6.5 5.4 2.3 4.6 5.4 7.9 4.8 Special Accounts 0.4 0.4 0.4 0.1 2.1 6.4 3.9 4.1 - - Ministry of Security and Civil Protection 2.4 2.2 3.2 2.2 1.9 1.3 2.8 2.7 4.1 3.8 Ministry of the Economy and Finance 2.7 2.2 2.1 2.2 2.4 2.2 2.3 2.4 6.4 8.0 Ministry of Energy and Water 4.1 4.0 1.0 3.2 1.2 1.0 0.5 3.2 4.2 7.9 Ministry of Foreign Affairs 2.0 1.8 2.4 1.7 1.8 1.7 1.6 1.8 2.1 1.7 Ministry of Equipment and Land Use 7.9 7.7 1.7 0.1 - - - - - - Centre des Oeuvres Universitaires 1.6 2.0 2.6 1.8 1.7 1.6 1.0 0.8 - - Social Security - 0.9 1.7 1.4 1.7 1.5 2.2 2.0 - - Ministry of Territorial Administration and 1.2 1.2 0.7 0.6 1.1 1.5 0.6 0.9 1.3 3.4 Decentralization Ministry of Justice 1.0 0.9 1.0 0.8 0.8 0.9 0.9 0.9 0.9 1.1 Presidency of the Republic 1.0 1.4 1.3 0.5 0.6 1.0 0.7 0.5 0.7 0.6 National Assembly 0.9 0.8 0.9 0.6 0.7 0.8 0.9 0.7 0.9 0.7 Ministry of the Environment, Sanitation, and 1.0 0.9 0.5 0.6 1.1 0.5 0.6 1.0 0.7 1.0 Development Ministry of State Property and Land Affairs 1.4 0.9 0.7 1.2 0.7 1.1 0.6 - - - Local Authorities National Investment Agency 0.9 0.9 0.1 0.7 1.0 0.6 1.0 0.7 - - (ANICT) Ministry of Sport 0.9 0.7 0.8 0.6 1.1 0.4 0.4 0.4 0.4 0.3 Ministry of Solidarity and Humanitarian Action 1.4 0.8 0.4 0.3 0.3 0.2 0.2 0.5 3.8 0.8 Prime Minister’s Office 0.5 0.4 0.4 0.4 0.6 0.5 0.6 0.4 0.6 0.4 Ministry of Trade 0.7 1.1 0.6 0.4 0.3 0.3 0.3 0.2 0.2 0.3 Commissioner for Food Security 0.2 0.4 0.1 0.6 0.8 0.4 0.4 0.3 0.3 0.3 Malian Agency for the Development of 0.3 0.3 0.4 0.5 0.3 0.2 0.3 0.6 - - Household Energy and Rural Electrification Ministry of Digital Economy and Communication 0.3 0.5 0.1 0.1 1.4 0.6 0.1 0.1 - - Ministry of Posts and New Technologies 0.8 0.6 0.7 0.3 0.5 0.3 0.3 - - - Ministry for the Promotion of Women, Children, 0.4 0.4 0.2 0.2 0.3 0.3 0.3 0.3 0.4 0.2 and Families Ministry of Culture 0.4 0.3 0.3 0.2 0.2 0.3 0.3 0.2 0.3 0.4 Ministry of Housing and Urban Planning - - - - 0.4 0.5 0.5 0.2 - - Ministry of Public Service and Work 0.4 0.3 0.2 0.3 0.1 0.2 0.2 0.2 0.2 0.2 Supreme Court 0.1 0.1 0.1 0.3 0.3 0.3 0.2 0.1 0.1 0.1 Ministry of Mines and Petroleum 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Ministry of Decentralization and State Reform - - - - 0.8 0.0 0.1 - - - Ministry of Craft Trades and Tourism 0.2 0.2 0.2 0.2 0.1 0.0 - 0.1 0.1 0.1 Ministry of Land Use and Population - - - - 0.2 0.2 0.1 0.2 0.5 0.7 TOTAL (1+2+3+4) 88.4 90.2 89.1 90.4 90.7 91.0 90.5 89.2 95.4 95.6 180 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Annex III: Fiscal Sustainability Analysis Scenarios >>> Table A3.1: Baseline Scenario (2020–25) in percent of GDP, unless otherwise stated Historical Projections 2015 2016 2017 2018 2019 2020e 2021 2022 2023 2024 2025 GDP at current prices (CFAF billion) 7,748 8,312 8,922 9,426 10,150 10,138 10,702 11,571 12,392 13,272 14,214 GDP at constant prices, annual 6.2 5.9 5.3 4.7 4.6 -2.0 4.0 6.0 5.0 5.0 5.0 growth rate (%) GDP deflator, annual growth rate (%) 2.9 1.4 2.1 0.4 2.5 1.9 1.5 2.0 2.0 2.0 2.0 Exchange Rate CFAF/USD 591.2 592.6 580.7 555.5 585.9 554.0 546.1 542.8 541.1 540.2 539.5 Real Exchange Rate, Index 100.0 100.1 97.6 95.1 100.1 94.9 94.2 93.6 93.3 93.2 93.0 2015=100 (1) Revenue 19.1 18.3 20.1 15.7 21.4 20.0 21.6 21.2 21.5 21.3 21.3 Direct Taxes (Tax on Income & 4.3 4.4 4.7 3.6 4.7 4.9 4.9 4.8 5.0 5.0 5.1 Profits) Indirect Taxes (Taxes on G&S and 9.7 10.5 8.8 6.9 7.8 8.4 8.8 9.1 9.2 9.2 9.2 Int'l Trade) Grants (2) 2.7 1.6 1.6 1.2 1.9 1.4 1.9 1.6 1.8 1.5 1.4 Other Revenue (3) 2.5 1.8 4.9 3.9 7.1 5.3 6.0 5.6 5.6 5.6 5.6 Expenditure 20.9 22.3 22.9 20.4 23.1 25.5 26.9 25.3 24.6 23.9 23.9 Wages and Salaries 4.6 4.8 4.8 5.0 5.1 6.1 7.1 7.1 7.1 7.1 7.1 Goods and Services 3.4 3.2 3.3 2.9 2.9 3.2 3.8 3.8 3.8 3.8 3.8 Transfers and subsidies 3.3 3.5 3.4 3.3 3.6 5.1 3.5 3.2 3.2 3.2 3.2 Other Expenses (4) 1.7 1.2 1.7 1.8 4.0 3.9 3.9 3.9 3.9 3.9 3.9 Interest Payments 0.6 0.7 0.8 0.9 1.0 1.2 1.1 1.2 1.2 1.2 1.2 Development Expenditure (5) 7.3 8.9 8.8 6.5 6.5 6.1 7.5 6.2 5.4 4.7 4.7 Primary Balance -1.2 -3.3 -2.0 -3.9 -0.6 -4.3 -4.2 -3.0 -1.9 -1.4 -1.4 Overall Balance -1.8 -3.9 -2.9 -4.8 -1.7 -5.5 -5.3 -4.2 -3.1 -2.6 -2.6 Gross Borrowing Requirements 3.3 5.5 5.8 8.2 4.0 9.7 9.4 9.0 8.6 8.6 9.1 Overall Balance (+ indicates deficit) 1.8 3.9 2.9 4.8 1.7 5.5 5.3 4.2 3.1 2.6 2.6 Amortizations Payments 1.5 1.6 2.9 3.5 2.3 4.2 4.2 4.8 5.5 6.0 6.5 Other Funding Needs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net Acquisition of Fin.Assets (e.g., 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Deposits) (5) Borrowing Sources 3.3 5.5 5.8 8.2 4.0 9.7 9.4 9.0 8.6 8.6 9.1 Issuance of Domestic Debt (% 60.0 60.0 60.0 60.0 60.0 60.0 share) (6) Issuance of External Debt (% share) 40.0 40.0 40.0 40.0 40.0 40.0 Public Debt 30.7 36.0 36.0 37.7 40.5 44.1 46.6 47.2 47.0 46.5 45.9 Domestic Debt 8.0 11.0 11.0 12.8 14.0 16.5 18.2 18.3 17.7 16.5 15.1 External Debt 22.6 25.1 25.0 24.9 26.4 27.6 28.5 28.8 29.3 30.0 30.8 Notes: (1) Real exchange rate defined as the FCFA/USD bilateral exchange rate times the ratio between int’l prices and domestic GDP deflator. (2) Includes program grants, project grants, and other grants. (3) Includes other indirect tax, nontax revenue and special funds and annexed budgets. 22.059 - 0.083 - 0.075 - 0.080 - 0.081 - 0.080 - 0.076. (4) Includes special funds and annexed budgets and net lending. (5) Excludes net lending. (6) Includes domestic debt issued to rollover maturing short-term liabilities. Source: World Bank projections. MALI PUBLIC EXPENDITURE REVIEW >>> 181 >>> Table A3.2: Reform Scenario (2020–25) in percent of GDP, unless otherwise stated Historical Projections 2015 2016 2017 2018 2019 2020e 2021 2022 2023 2024 2025 GDP at current prices (CFAF billion) 7,748 8,312 8,922 9,426 10,150 10,138 10,702 11,571 12,392 13,272 14,214 GDP at constant prices, annual 6.2 5.9 5.3 4.7 4.6 -2.0 4.0 6.0 5.0 5.0 5.0 growth rate (%) GDP deflator, annual growth rate 2.9 1.4 2.1 0.4 2.5 1.9 1.5 2.0 2.0 2.0 2.0 (%) Exchange Rate CFAF/USD 591.2 592.6 580.7 555.5 585.9 554.0 546.1 542.8 541.1 540.2 539.5 Real Exchange Rate, Index 100.0 100.1 97.6 95.1 100.1 94.9 94.2 93.6 93.3 93.2 93.0 2015=100 (1) Revenue 19.1 18.3 20.1 15.7 21.4 20.0 21.6 21.9 22.9 22.6 22.6 Direct Taxes (Tax on Income & 4.3 4.4 4.7 3.6 4.7 4.9 4.9 5.6 6.3 6.3 6.3 Profits) Indirect Taxes (Taxes on G&S and 9.7 10.5 8.8 6.9 7.8 8.4 8.8 9.1 9.2 9.2 9.2 Int'l Trade) Grants (2) 2.7 1.6 1.6 1.2 1.9 1.4 1.9 1.6 1.8 1.5 1.4 Non-Tax Revenue (3) 2.5 1.8 4.9 3.9 7.1 5.3 6.0 5.6 5.6 5.6 5.6 Expenditure 20.9 22.3 22.9 20.4 23.1 25.5 26.9 24.8 23.6 22.8 22.7 Wages and Salaries 4.6 4.8 4.8 5.0 5.1 6.1 7.1 6.6 6.1 6.1 6.1 Goods and Services 3.4 3.2 3.3 2.9 2.9 3.2 3.8 3.8 3.8 3.8 3.8 Transfers and subsidies 3.3 3.5 3.4 3.3 3.6 5.1 3.5 3.2 3.2 3.2 3.2 Other Expenses (4) 1.7 1.2 1.7 1.8 4.0 3.9 3.9 3.9 3.9 3.9 3.9 Interest Payments 0.6 0.7 0.8 0.9 1.0 1.2 1.1 1.2 1.2 1.1 1.0 Development Expenditure (5) 7.3 8.9 8.8 6.5 6.5 6.1 7.5 6.2 5.4 4.7 4.7 Primary Balance -1.2 -3.3 -2.0 -3.9 -0.6 -4.3 -4.2 -1.7 0.5 0.9 0.9 Overall Balance -1.8 -3.9 -2.9 -4.8 -1.7 -5.5 -5.3 -2.9 -0.7 -0.2 -0.1 Gross Borrowing Requirements 3.3 5.5 5.8 8.2 4.0 9.7 9.4 7.8 6.0 5.7 5.8 Overall Balance (+ indicates deficit) 1.8 3.9 2.9 4.8 1.7 5.5 5.3 2.9 0.7 0.2 0.1 Amortizations Payments 1.5 1.6 2.9 3.5 2.3 4.2 4.2 4.8 5.3 5.5 5.8 Other Funding Needs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Net Acquisition of Fin.Assets (e.g., 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Deposits) (5) Borrowing Sources 3.3 5.5 5.8 8.2 4.0 9.7 9.4 7.8 6.0 5.7 5.8 Issuance of Domestic Debt (% 60.0 60.0 60.0 60.0 60.0 60.0 share) (6) Issuance of External Debt (% 40.0 40.0 40.0 40.0 40.0 40.0 share) Public Debt 30.7 36.0 36.0 37.7 40.5 44.1 46.6 45.9 43.5 40.7 38.1 Domestic Debt 8.0 11.0 11.0 12.8 14.0 16.5 18.2 17.6 15.6 13.3 11.0 External Debt 22.6 25.1 25.0 24.9 26.4 27.6 28.5 28.3 27.8 27.4 27.1 Notes: (1) Real exchange rate defined as the FCFA/USD bilateral exchange rate times the ratio between int’l prices and domestic GDP deflator. (2) Includes program grants, project grants, and other grants. (3) Includes other indirect tax, nontax revenue and special funds and annexed budgets. (4) Includes special funds and annexed budgets and net lending. (5) Excludes net lending. 6) Includes domestic debt issued to rollover maturing short-term liabilities. Source: World Bank projections. 182 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Annex IV: Revenue Tables >>> Table A4.1: Mali: General Government Revenues (2010–20) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e In billions of CFA francs Revenue and Grants 935.8 1,049.9 925.8 1,137.2 1,215.1 1,481.1 1,522.2 1,789.7 1,475.9 2,173.3 2,045.7 Total revenue 802.1 855.7 912.8 951.2 1,057.6 1,273.4 1,389.7 1,645.6 1,358.8 1,982.0 1,806.8 1. Budgetary revenue 723.4 759.6 813.3 842.7 940.8 1,134.2 1,284.7 1,480.1 1,181.6 1,570.9 1,410.0 1.1 Tax revenue 677.6 726.7 758.7 804.5 890.5 1,082.5 1,239.3 1,353.7 1,125.8 1,495.7 1,338.7 Direct taxes 204.6 220.8 263.2 258.1 324.0 330.8 367.7 419.4 340.0 471.6 437.9 Gold sector 84.6 83.7 105.0 71.0 56.2 46.0 63.5 72.9 59.1 82.0 82.9 Other 120.0 137.1 158.2 187.1 267.8 284.8 304.2 346.5 280.9 389.6 355.0 Indirect taxes 473.0 505.9 495.5 546.4 566.5 751.7 871.6 934.3 785.8 1,024.1 900.8 VAT 261.8 310.4 286.5 325.7 335.0 411.3 467.3 523.5 415.2 550.7 474.0 Domestic VAT 99.0 125.0 115.0 122.1 136.5 166.1 200.0 203.2 153.6 237.8 185.9 VAT on imports 162.8 185.4 171.5 203.6 198.6 245.2 267.3 320.3 261.6 312.9 288.1 Excises on petroleum 25.5 4.7 25.3 22.3 27.8 93.1 100.9 84.7 87.8 52.6 38.1 products Import duties 94.6 112.1 100.5 111.8 115.5 141.8 157.4 180.1 149.7 189.7 174.7 Other indirect taxes 102.3 120.3 140.6 146.9 149.9 189.5 218.0 235.2 198.0 299.5 309.6 Gold Sector 41.7 48.9 65.6 55.3 51.9 55.5 65.4 65.6 55.2 83.5 90.0 Non-Gold Sector 60.6 71.4 75.0 91.6 98.1 134.0 152.7 169.6 142.8 216.0 219.6 Tax refund (11.1) (41.6) (57.5) (60.3) (61.7) (84.0) (72.1) (89.2) (64.7) (68.4) (95.6) 1.2 Non Tax revenue 45.8 32.9 54.7 38.2 50.2 51.7 45.4 126.4 52.8 67.2 67.1 Gold sector - 22.8 31.4 17.4 7.2 - - 8.4 3.5 4.4 6.6 Other 45.8 10.1 23.3 20.8 43.0 51.7 45.4 118.1 49.3 62.8 60.5 1.3 Capital receipts - - - - - - - - 3.0 8.0 4.2 2. Special funds and 78.7 96.1 99.5 108.5 116.8 139.2 105.0 165.5 177.3 411.1 396.8 annexed budgets Grants 133.7 194.3 13.0 186.0 157.5 207.7 132.5 144.1 117.1 191.3 238.9 MALI PUBLIC EXPENDITURE REVIEW >>> 183 >>> Table A4.1: continued 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e 2020e In peracentage of GDP Revenue and Grants 17.7 17.1 14.6 17.4 17.1 19.1 18.3 20.1 15.6 21.4 20.2 Total revenue 15.2 14.0 14.4 14.5 14.9 16.4 16.7 18.4 14.3 19.5 17.8 1. Budgetary revenue 13.7 12.4 12.8 12.9 13.3 14.6 15.4 16.6 12.5 15.5 13.9 1.1 Tax revenue 12.8 11.9 11.9 12.3 12.6 14.0 14.9 15.2 11.9 14.8 13.2 Direct taxes 3.9 3.6 4.1 3.9 4.6 4.3 4.4 4.7 3.6 4.7 4.3 Gold sector 1.6 1.4 1.7 1.1 0.8 0.6 0.8 0.8 0.6 0.8 0.8 Other 2.3 2.2 2.5 2.9 3.8 3.7 3.7 3.9 3.0 3.8 3.5 Indirect taxes 8.9 8.3 7.8 8.4 8.0 9.7 10.5 10.5 8.3 10.1 8.9 VAT 4.9 5.1 4.5 5.0 4.7 5.3 5.6 5.9 4.4 5.4 4.7 Domestic VAT 1.9 2.0 1.8 1.9 1.9 2.1 2.4 2.3 1.6 2.3 1.8 VAT on imports 3.1 3.0 2.7 3.1 2.8 3.2 3.2 3.6 2.8 3.1 2.8 Excises on petroleum 0.5 0.1 0.4 0.3 0.4 1.2 1.2 0.9 0.9 0.5 0.4 products Import duties 1.8 1.8 1.6 1.7 1.6 1.8 1.9 2.0 1.6 1.9 1.7 Other indirect taxes 1.9 2.0 2.2 2.2 2.1 2.4 2.6 2.6 2.1 3.0 3.1 Gold Sector 0.8 0.8 1.0 0.8 0.7 0.7 0.8 0.7 0.6 0.8 0.9 Non-Gold Sector 1.1 1.2 1.2 1.4 1.4 1.7 1.8 1.9 1.5 2.1 2.2 Tax refund (0.2) (0.7) (0.9) (0.9) (0.9) (1.1) (0.9) (1.0) (0.7) (0.7) (0.9) 1.2 Non Tax revenue 0.9 0.5 0.9 0.6 0.7 0.7 0.5 1.4 0.6 0.7 0.7 Gold sectors - 0.4 0.5 0.3 0.1 - - 0.1 0.0 0.0 0.1 Other 0.9 0.2 0.4 0.3 0.6 0.7 0.5 1.3 0.5 0.6 0.6 1.3 Capital receipts - - - - - - - - 0.0 0.1 0.0 2. Special funds and 1.5 1.6 1.6 1.7 1.6 1.8 1.3 1.9 1.9 4.1 3.9 annexed budgets Grants 2.5 3.2 0.2 2.8 2.2 2.7 1.6 1.6 1.2 1.9 2.4 Memorandum Items Act. Act. Act. Act. Act. Act. Act. Act. Act. Est. Est. Nominal GDP in LCU 5,289 6,124 6,352 6,541 7,093 7,748 8,318 8,922 9,482 10,140 10,138 (billions of CFAF) Source: Mali MEF, IMF, and World Bank staff calculations. 184 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table A4.2: Tax Expenditure Breakdown (2013–19) 2013 2014 2015 2016 2017 2018 2019 Nominal GDP (CFAF billion) 6,541 7,093 7,748 8,318 8,922 9,482 10,140 DGI Tax Expenditures CGI 21.1 62.7 15.4 N/A 7.7 6.9 7.4 Investment Code (CI) 4.7 9.9 2.3 N/A 10.3 13.8 11.7 Mining Code (CM)* 56.0 29.8 1.4 N/A 14.6 25.1 29.5 Ministerial decrees 78.9 26.5 106.6 N/A - - - Establishment agreements (tax treaties) 1.4 0.1 - N/A 23.3 11.9 27.4 VAT on Real Estate Development Act - - - N/A 0.8 0.7 0.1 Public Procurement Act 0.02 1.8 - N/A 29.0 25.6 19.3 Microfinance Act - - - N/A 0.6 0.7 0.9 Sovereign debt held by the commercial banks - - - N/A 16.8 18.6 19.2 Other tax expenditures - 1.7 7.7 N/A 23.9 18.5 31.9 Total 162.1 132.6 133.3 119.6 127.1 121.8 147.6 % of GDP 2.5% 1.9% 1.7% 1.4% 1.4% 1.3% 1.5% DGD Tax Expenditures CGI - - - N/A - - - Investment Code (CI) 12.2 5.9 3.5 N/A 8.3 10.9 9.6 Mining Code (CM)* - 15.7 12.1 N/A 23.8 18.9 21.2 Ministerial decrees - 24.5 34.3 N/A - - - Establishment agreements (tax treaties) 35.6 19.5 - N/A 0.3 0.5 0.2 VAT on Real Estate Development Act - 0.2 1.4 N/A - - - Public Procurement Act 23.3 19.0 18.3 N/A 20.1 23.4 32 Microfinance Act - - - N/A - - - Sovereign debt held by the commercial banks - - - N/A - - - Other tax expenditures - - 0.5 N/A 58.8 65.9 61.6 Total 71.1 84.9 70.1 77.0 111.3 119.7 124.6 % of GDP 1.1% 1.2% 0.9% 0.9% 1.2% 1.3% 1.2% Total Tax Expenditures CGI 21.1 62.7 15.4 6.0 7.7 6.9 7.4 Investment Code (CI) 16.9 15.8 5.8 14.0 18.6 24.7 21.3 Mining Code (CM)* 56.0 45.5 13.5 31.0 38.4 44.0 50.6 Ministerial decrees 78.9 51.0 140.9 51.0 - - - Establishment agreements (tax treaties) 37.0 19.7 - 6.0 23.6 12.4 27.6 VAT on Real Estate Development Act - 0.2 1.4 1.0 0.8 0.7 0.1 Public Procurement Act 23.3 20.8 18.3 30.0 49.1 49.0 51.4 Microfinance Act - - - 1.0 0.6 0.7 0.9 Sovereign debt held by the commercial banks - - - 11.0 16.8 18.6 19.2 Other tax expenditures 0.0 1.7 8.2 45.0 82.7 84.4 93.5 Total 233.2 217.6 203.4 196.0 238.4 241.5 272.2 % of GDP 3.6% 3.1% 2.6% 2.4% 2.7% 2.6% 2.7% Source: Evaluation du montant et du processus d’octroi des exonérations fiscales et douanières (November 4, 2016); Draft Budget Law (Projet de Loi de Finances) 2016-2021. Ministry of Economy and Finance, http://www.finances.gouv.ml/lois-des-finances. Note: The disaggregated data by regime of 2016 tax expenditures within the DGI and DGD are not available (N/A); * Under the Mining Code (CM) is the sum of tax expenditures for the CM and withholdings at source under the CM. MALI PUBLIC EXPENDITURE REVIEW >>> 185 Note on the Mining Code been adopted by the Council of Ministers on October 23rd, 2020, but the details yet to be disclosed. The Malian mining sector is comprised mainly of gold mining. Mali is the second-largest producer of gold in Under the Mining Code, the main taxes, duties, levies, West Africa, behind Ghana, and the fourth largest in and royalties are managed by four directorates in three Africa (after Ghana, South Africa, and Sudan). The different ministries: the DGI and the DGD in the Ministry mining companies and their subcontractors in operation of Economy and Finance (MEF), the National Geology are administered by the Mining Code. Adopted by Law and Mines Directorate (DNGM; Direction Nationale de la 015 in 2012, the Code regulates all activities relating Géologie et des Mines) in the Ministry of Mines, and the to the prospecting, exploration and exploitation of National Property and Land Registry Directorate (DNDC; mineral substances in Mali. A new code (drafted in Direction Nationale du Domaine et des Cadastres) in September 2019 and approved in the Parliament in April the Ministry of State Property and Land Affairs. It also 2020) introduced revisions aiming at eliminating mining includes the mandatory levies imposed by the INPS), companies’ VAT exemptions during production and which is under the supervision of two ministries: the shortens the period during which they are protected from Ministry for Humanitarian Action, Solidarity and the fiscal changes to 20 years. The decree of adaptation has Elderly and the MEF. >>> Table A4.3: Administrative Arrangements for Gold Mining Taxation Departments Ministries Permits Exploration permits DNGM Ministry of Mines Operating permits DNGM Ministry of Mines Fees for the issuance/renewal of mining rights DNGM Ministry of Mines Ministry of Housing, Land Affairs, Acquisition of equity DNDC and Urban Planning Royalties DNGM during the Ministry of Mines/ Ministry of exploration phase Surface Housing, Land Affairs, and Urban and DNDC during the Planning operational phase CPS/ISCPa DGI MEF Ministry of Housing, Land Affairs, Ad valorem tax DNDC and Urban Planning Direct taxation IS DGI MEF IRVM (tax on investment income) DGI MEF Capital gains on the sake of rights DGI MEF Payroll taxes b DGI MEF Super profit tax DGI MEF Indirect taxation Import duties and levies DGD MEF VAT DGI and DGD MEF Source: IMF (2015b) Mali: Technical Assistance Report—Mining and Petroleum. Note: a Payroll taxes are payable by the employer including the CFE, vocational training tax, youth employment tax, and housing tax (TL); b The CPS (tax on services) and ISCP (tax on selected products) are the same tax. The name varies depending on the mining code referenced. 186 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Annex V: Wage Bill and Procurement >>> Table A5.1: Wage Bill Mapping by Sector and Ministry Sector Ministry 400 Ministere De La Recherche Scientifique 410 Ministere De L'education Nationale 412 Ministere De L'enseignement Superieur & Recherche Scientifique 415 Universite De Bamako 416 Centre Des Oeuvres Universitaires 422 Universite De Segou Education 424 Universite Lettres Sciences Humaines Bko 426 Universite Sciences Techn. Technologies Bko 429 Universite Sciences Sociales Gestion Bko 431 Universite Sciences Juridiques Politiques Bko 440 Minist. Promotion Langues Nationales & Instruction Civique 323 Ministere Emploi & Formation Professionnelle Defense 210 Ministere De La Defense & Anc. Combattants 170 Haut Conseil Des Collectivites Territoriales 330 Min. Administration Territ. Decentralisation Et Reforme Etat 335 Ministere De La Decentralisation Et De La Reforme De L'etat 900 Depense Executee Par REGION 901 Depense Executee Par REGION 902 Depense Executee Par REGION Decentralization 903 Depense Executee Par REGION 904 Depense Executee Par REGION 905 Depense Executee Par REGION 906 Depense Executee Par REGION 907 Depense Executee Par REGION 908 Depense Executee Par REGION 910 Region De Menaka 230 Ministere De La Securite Et De La Protection Civile Security 235 Securite D'etat 310 Ministere De L'economie Et Des Finances Finance & Economy 311 Cellule Nationale De Traitement Des Informations Financieres 730 Min. Economie Numerique Et Communication 820 Ministere De L'agriculture Agriculture, Livestock 822 Ministere De L'elevage Et De La Peche & Fisheries 850 Commissariat A La Securite Alimentaire MALI PUBLIC EXPENDITURE REVIEW >>> 187 >>> Table A5.2: List of Contracts Awarded Under COVID-19 Contract Subject of the contract Amount Contracting Contract N° number (CFAF) Authorities Winners Réalisation d’activités par le PAM dans le cadre Programme Alimentaire 01 00001 Unavailable PDAZAM de projets financés par la Banque Mondial (PAM) Acquisition de 3.000 kits de dispositifs de NEPTUNE GOLD 02 00002 90,000,000 REDISSE lavage des mains SARL Acquisition de 10.000 kits d’Équipements de TOGUNA MEDICAL 03 00003 250,000,000 REDISSE Protection Individuelles API SARL Acquisition de 1.784 kits de dispositifs de 04 00004 53,520,000 REDISSE SOMADIS lavage des mains Acquisition de 10 respirateurs de réanimation et SODCO 05 00005 279,500,000 REDISSE de 10 moniteurs EQUIPEMENTS SAS Fourniture de kits sanitaires au compte du Ministère de la 06 00006 79,060,000 HORIZON SERVICES Ministère de la Communication Communication AFRICAN BUSINESS 07 00007 Acquisition de 10 respirateurs avec moniteurs 239,900,000 REDISSE SERVICES (ABS) Acquisition de savon solide, de gel hydro- 08 00008 374,482,665 REDISSE SODEMA alcoolique et d’eau de javel Acquisition de 47 climatiseurs et 12 09 00009 39,232,758 REDISSE SODISAL SARL réfrigérateurs Acquisition de 10.000 paquets de masques 10 00010 400,000,000 REDISSE SIDISAL SARL (KN95) Acquisition de 50 ventilateurs (respirateurs) et GE MEDICAL 11 00011 Unavailable REDISSE de 20 moniteurs SYSTEME Bureau des Nations Unies pour les 12 00012 Accord pour la livraison de produits Unavailable REDISSE Services d’Appui aux Projets (UNOPS) Service de consultant pour l‘Élaboration du Cadre de gestion Environnementale WOKOU Cossi Guy, 13 00013 et Sociale (CGES) et du Plan de gestion 21,460,000 REDISSE Consultant individuel Environnementale et Sociale (PGES) du Projet d’Intervention d’urgence COVID 19 au Mali Entreprise KOUMA 14 00014 Acquisition de dix (10) aspirateurs de mucosité 5,000,000 REDISSE PLUS DAOU HOLDING 15 00015 Fourniture de gels hydro alcooliques 12,750,000 MSAS-DFM SARL relatif à la réalisation de spots de radios dans le BINTHILY cadre de la sensibilisation à la maladie à COVID 16 00016 123,325,000 PDREAS COMMUNICATION 19 dans les 102 Communes d’intervention du SARL Projet pour le compte du PDREAS relatif à l’acquisition de 670 boites de tests de diagnostic COVID-19 pour la prise en charge BIO MAI & SERVICES 17 00017 575,664,000 REDISSE 3 des malades dans le cadre de la riposte contre SA la pandémie COVID-19 au Mali. relatif à l’acquisition de 83.000 litres de savon liquide, 2.500 000 bavettes (masques chirurgicaux) et 5 000 kits d’EPI pour la MEDIKA CARE Mali 18 00018 1,468,100,000 REDISSE 3 protection des personnes exposées dans SARL le cadre de la riposte contre la pandémie COVID-19 au Mali. 188 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table A5.2: Continued Contract Subject of the contract Amount Contracting Contract N° number (CFAF) Authorities Winners relatif à la réalisation de flyers et d’affiches dans le cadre de la sensibilisation à la 19 00019 maladie à COVID 19 dans les 102 Communes 30,800,000 PDREAS FILANY COM Sarl d’intervention du Projet pour le compte du PDREAS. relatif à l’acquisition de dix mille (10 000) kits d’EPI pour la protection des personnes TOGUNA MEDICAL 20 00020 250,000,000 REDISSE 3 exposées dans le cadre de la riposte contre la SARL pandémie COVID-19 au Mali relatif à l’acquisition de trois mille cinq cent (3.500) cartons de gants latex pour la prise en 21 00021 122,500,000 REDISSE 3 Société HAID 24 SAS charge des malades dans le cadre de la riposte contre la pandémie COVID-19 au Mali l’acquisition de un (01) respirateur de réanimation et de un (01) moniteur MEDIKA CARE Mali 22 00022 26,450,000 REDISSE 3 multiparamétrique dans le cadre de la réponse SARL d’urgence COVID-19 au Mali relatif à l’acquisition de 15 000 kits d’EPI pour la protection des personnes exposées dans SODCO 23 00023 375,000,000 REDISSE 3 le cadre de la riposte contre la pandémie EQUIPEMENTS SAS COVID-19 au Mali relatif à l’acquisition de 200 000 masques KN95 et 10 000 kits d’EPI pour la protection des 24 00024 650,000,000 REDISSE 3 SODISAL SARL personnes exposées dans le cadre de la riposte contre la pandémie COVID-19 au Mali relatif à la fourniture des kits de lavage des mains pour la lutte et prévention contre GEDEFOR III/ 25 00025 169,507,000 B. Business-arc en ciel COVID-19, dans les zones d’intervention du PCVA programme relatif à la fourniture des kits de lavage des mains pour la lutte et prévention contre GEDEFOR III/ GENERAL SERVICES 26 00026 196,352,000 COVID-19, dans les zones d’intervention du PCVA FASO-SARL programme relatif à la fourniture des kits de lavage des mains pour la lutte et prévention contre GEDEFOR III/ Médical Général 27 00027 376,600,000 COVID-19, dans les zones d’intervention du PCVA Systems (MGS) programme relatif à l’acquisition de masques, de gel hydro alcoolique et de savon liquide pour la protection des agents chargés de la mise en œuvre des TOGUNA MEDICAL 28 00028 60,056,400 PPMTNS campagnes 2020 de traitements de masse SARL dans les zones couvertes par le projet dans le contexte de la pandémie de la COVID-19 relatif à l’acquisition de produits hygiéniques et désinfectants dans le cadre de la lutte contre la 29 00029 45,784,000 CANAM BENKADI maladie à coronavirus dans les « Espaces AMO » et bureaux régionaux de la CANAM Total contract amount 6,315,043,823 Source: DGMP-DSP. MALI PUBLIC EXPENDITURE REVIEW >>> 189 >>> Table A5.3: Selected Contracts Managed as Part of the COVID-19 Emergency Response Date of contract Description of Supplies N° sigining for the last co- Date of First Payment Date of Final Delivery / Suppliers contractor. 1 UNICEF 01/07/2020 24/07/2020 Not Applicable 2 UNOPS 25/06/2020 01/07/2020 NA 30% advance. Paid on 3 GE 22/06/2020 NA 07/24/2020 Demande de paiement directe (DPD) de l’avance 4 Philips 15/07/2020 NA de 40% soumise le 25/08/2020 Mask supplier A (10,000 5 18/06/2020 Paid on 24/08/2020 16/07/2020 packs of KN95 masks) Supplier of B masks DPD submitted on 6 (200,000 KN95 masks + 30/07/2020 04/09/2020 01/10/2020 10,000 PPE kits) Supplier of A respirators DPD, submitted on 7 (10 resuscitation 23/06/2020 14/07/2020 01/10/2020 ventilators + 10 monitors) Supplier of respirators N/A (not yet completely Les 10 respirateurs ont 8 B (10 respirators with 26/06/2020 delivered) été livrés sans moniteurs monitors) Soap supplier A (boxes of DPD submitted on 9 solid soap, hydroalcoholic 18/06/2020 27/07/2020 24/09/2020 gel and bleach) 20,750 l of soap + 2,500,000 bibs + 5,000 PPE kits are delivered. Soap supplier B (83,000 l DPD submitted on The delivery of the 10 of liquid soap, 2,500,000 22/07/2020 01/10/2020 remaining 20,750 liters bibs and 5,000 PPE kits) of soap under the first tranche is pending availability of space in DPM stores. Note: Direct Payment Request (DPD; Demande de paiement directe) 190 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Annex VI: The Second Education Sector Plan (PRODEC II) >>> Table A6.1: Key PRODEC II Objectives and Targets (2019–28) Planned Results Level Objective Target 2025 Base 2015 Preprimary Enrollment rate 4.4% 24.6% Basic First grade enrollment rate 95% education Primary completion rate 76% Repetition rate 10% Drop-out rate 10% Ratio of 40 students (cycle 1) and 60 (cycle 2) by educational group; Textbook per child (math and French) (cycle 1) 1 (cycle 1) School Canteen Program to benefit 10% (cycle 1) and 10% (cycle 1) 8 % (cycle 2) of students with public funding; 8 % (cycle 2) Teachers effective average hourly load (cycle 2) 18 hours/week Recruitment of teaching staff at LG level 14 hours/week 100% General Survival rate 28% 40% Secondary Repetition rate 15% Share of private schools 64.1% 50% Share of students benefiting of scholarship 5% Secondary Survival rate 28% 40% Technical Allocations in school material 52,660 CFAF 60,000 CFAF to per student Vocational Survival rate 28% 40% Funding of teaching materials/student 49,000 CFAF 75,000 CFAF Teacher New entrants with BAC level 2 100% training Training for the BAC level 3 Initial training for all pre-school and basic education 100% teachers Higher Student enrollment 5% yearly increase Education Optimizing workload of overtime and additional hours Source: PRODEC II. MALI PUBLIC EXPENDITURE REVIEW >>> 191 >>> Annex VII Assessment of the Education Wage Bill The Government’s wage bill has been steadily growing The bulk of the wage bill is consumed by the education since 2010. Public spending on wages has more than sector, followed by defense and security (Figure A7.5).126 tripled in real terms between 2010 and 2020. The wage These three sectors account for about three-quarters of bill remained stable at an average of 4.7 percent of GDP Mali’s wage bill. On average over 2010–20, education between 2010 and 2018 but rose to 5.9 percent in 2019 accounted for 40.9 percent of the total wage bill or 2 and 6.3 percent in 2020 (Figure A7.1). As a share of total percent of GDP. The wage bill for Ministry of Defense and government expenditure, the wage bill has fluctuated Veterans Affairs remained stable at about 18.4 percent at around 23.4 percent over the past 10 years. The of the total wage bill and 0.9 percent of GDP over the temporary spike to 32 percent in 2012 was associated same period. Since 2015, with continuing attacks by with a fall in total public expenditure as a result of the jihadist groups, the wage bill for the Ministry of Security 2012 political crisis and a significant integration of and Civil Protection and Security Council surged from an contract workers into local authority civil service staff average of 0.3 percent of GDP in 2010–15 to more than (Figure A7.2). Mali’s wage bill as a share of GDP and 0.4 percent of GDP in 2016–20 to strengthen security domestic tax revenue ranks below the WAEMU average (Figure A7.5). and most of its structural and aspirational peers, with the exception of Uganda, Tajikistan, and Rwanda (Figures A7.3 and A7.4). >>> >>> Fi ur A 7.1: W Bill (2010–20) Fi ur A 7.2: W Bill nd Gov rnm nt Exp nditur (2010–20) 700 7 30 36 s % of ov rnm nt xp nditur 600 6 25 30 500 5 In billions of CFAF 20 24 s % of GDP s % of GDP 400 4 15 18 300 3 10 12 200 2 100 1 5 6 0 0 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2019 2020 W Bill (% of ov rnm nt xp nditur ) - ri ht xis in nomin l t rm (l ft xis) s % of GDP (ri ht xis) W Bill (% of GDP) - l ft xis Gov rnm nt Exp nditur s (% of GDP) - l ft xis Sourc : BOOST. Sourc : BOOST. Not : = stim t . Not : = stim t . 126  See Annex V for a presentation of the sectors by ministry. 192 >>> MALI PUBLIC EXPENDITURE REVIEW >>> >>> Fi ur A 7.3: B nchm rkin W Fi ur A 7.4: B nchm rkin W Bill Bill Exp nditur R l tiv to GDP (2016–18) Exp nditur R l tiv to T x R v nu (2016–18) v r v r 14% 160% 12% 140% 120% bill s % of GDP 10% bill s % of GDP 100% 8% 80% 6% 60% 4% W 40% W 2% 20% 0% 0% Burkin F so To o B nin l Guin -Biss u Af h nist n Ch d C nt. Af. R p. T jikist n L os Ni r M li Burkin F so B nin Guin -Biss u To o l Af h nist n Ch d C nt. Af. R p. L os T jikist n Ni r M li Côt d'Ivoir Zimb bw Côt d'Ivoir Zimb bw U nd Rw nd U nd Rw nd S n S n WAEMU Structur l Aspir tion l WAEMU Structur l Aspir tion l P rs P rs P rs P rs W bill s % of GDP Av r W bill s % of t x r v nu Av r Sourc : BOOST nd IMF Articl IV. Not : Inform tion bout th w bill for U b kist n is not v il bl . >>> Fi ur A 7.5: W Bill Tr nds b K S ctors (2010–20) 2.5 2.0 1.5 As % of GDP 1.0 0.5 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Actu l Bud t Educ tion D f ns S curit D c ntr li tion Fin nc & Econom A ricultur , Liv stock & Fish ri s Sourc : BOOST. Not : Ministr m ppin b s ctor is d scrib d in Ann x V: W Bill nd Procur m nt, T bl A5.1. MALI PUBLIC EXPENDITURE REVIEW >>> 193 Snapshot of Public Sector Employees and the Ministry of Employment and Vocational Training and Composition of the Education (MEFP), the bulk of the staff (95.5 percent) are employed Sector by the MEN, followed by the MESRS (4.4 percent) and the MEFP (0.1 percent) (Figure A7.7). Mali’s education workforce of teachers and non-teachers are employed under several employment regimes. The Over the past decade, the Government has secured a employment regimes include: (i) state civil servants fixed envelope of about US$ 13 million (CFAF 7 billion) (their recruitment has ceased since 2000 as part of the for teacher recruitment in the budget. This fell in 2012 devolution of certain functions to local governments (to CFAF 1.5 billion) and 2013 (CFAF 4 billion) as a result (LGs); (ii) state contract workers (recruited and assigned of the 2012 political crisis, and in 2018. Consequently, by the central government); (iii) local government civil teacher recruitment dropped during these years (Figure servant teachers (recruited and assigned by the LG A7.8). The decline in recruitment since 2014 can be governments); (iv) LG contract workers; (v) community attributed to a change in the structure of recruitment contract teachers (recruited by communities, which with the hiring of more secondary teachers, who fall into do not have state schools and benefit from subsidies); a higher salary category. In 2018, the initial budget for and (vi) temporary teachers (recruited and paid by recruitment was cut to finance the new autonomous the communities through the school management status of teachers (see Chapter 4, Section 4.2), which committees; and (vii) student teachers (enrolled in the adversely affected recruitment targets in 2018. Most of final years of teacher training institutes). the teachers (91 percent in 2010–15 and 60 percent in 2016–18) have been recruited to teach in basic According to the latest data available, from 2015, there education. To address teacher shortages, as evidenced are 73,297 employees in public education (UNESCO, by practices such as double shifts in basic education 2019). Of these, 87.5 percent are teachers, 8.7 percent and overtime in secondary education, the Second are administrative staff at deconcentrated level, and 1.2 Education Sector Plan (PRODEC II) committed to percent are non-teachers (administrative and support recruiting 5,125 teachers per year, 70 percent in basic staff working in schools) (Figure A7.6). Among the three education. Achieving this may be challenging given it key education sector ministries, the MEN, the Ministry requires the mobilization of additional public resources of Higher Education and Scientific Research (MESRS) in a tight fiscal setting. >>> >>> Fi ur A 7.6: Educ tion Workforc b Fi ur A 7.7: Emplo m nt Composition Emplo m nt R im (2015) of K Educ tion S ctor Ministri s, 2015 100% 80% 60% 40% 20% 0% MEN MEFP MESRS T ch r (C ntr l nd loc l civil s rv nts nd D conc ntr t dministr ion contr ct work rs), 66.5% C ntr l dministr tion T ch r (Communit contr ct t ch rs nd f cilit tors of non-form l duc tion), 20.9% Non-t chin st ff T ch r (Communit contr ct t ch rs nd D conc ntr t dministr tion, 8.9% f cilit tors of non-form l duc tion) C ntr l dminstr tion, 2.4% T ch r (c ntr l nd loc l civil s rv nts nd Non-t chin st ff, 1.2% contr ct work rs) Sourc : UNICEF (2019) An l s du S ct ur d l’Educ tion Sourc : UNICEF (2019) An l s du S ct ur d l’Educ tion 194 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Fi ur A 7.8: T ch r R cruitm nt Numb rs (2010–18) 6,000 5,125 5,000 4,220 4,114 4,063 4,000 3,857 3,000 2,579 2,577 2,132 2,000 1,511 1,000 781 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Y rl t r t (PRODEC II) B sic duc tion ( n r lists 1st c cl ) B sic duc tion ( n r lists 2nd c cl ) T ch r tr inin ( ll sp ci lti s) T chnic l nd voc tion l s cond r ( ll sp ci lti s) S cond r duc tion ( ll sp ci lti s) Sourc : MENESRS. Not : No dis r t d d t for th numb r of t ch rs (1st nd 2nd c cl ) for b sic duc tion in 2010 nd 2017. >>> Fi ur A 7.9: Numb r of T ch rs (2016–17) nd Administr tiv St ff (2015–16) b L v l of Educ tion nd T p of School 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Public Public Public Public Public Public Public Priv t Priv t Priv t Priv t Priv t Priv t Communit Communit Communit M d rs M d rs Pr -school B sic duc tion B sic duc tion G n r l T chnic l Voc tion l T ch r (1st c cl ) (2nd c cl ) s cond r s cond r s cond r tr inin (IFM & EFEP) D conc ntr t dministr tion Oth rs Contr ct t ch rs C ntr l dministr tion Communit t ch rs Civil s rv nt t ch rs Sourc : MEN, Annu ir N tion l d s St tistiqu s d s Ens i n m nts Préscol ir , Fond m nt l, S cond ir t Norm l, 2015-2016,2016-2017; UNICEF (2019) An l s du S ct ur d l’Educ tion. *Civil s rv nt t ch rs (hir d b th St t nd loc l ov rnm nt); Contr ct t ch rs (hir d b th St t nd loc l ov rnm nts). MALI PUBLIC EXPENDITURE REVIEW >>> 195 Figure A7.9 presents the number of teachers and that civil service teachers received 1.5 times the African administrative staff by level of education and type of school regional average while contract and community teachers (public, private, community, and Medersa). More than 52 were paid twice the African regional average (UNICEF, percent were employed in the first cycle and 5 percent in 2015). A recent study on the provision of services in the second cycle of basic education. Even though civil the education sector showed that teachers at the start servants make up the largest share of teaching staff in of their career and married with a child earn US$ 263 public schools, contract teachers are more common in (CFAF 152,000) per month, rising to US$ 505 (CFAF private, community, and Medersa schools and accounted 291,000) with experience, compared to a health worker for 57 percent of teachers in for both cycles of basic in the same marital and family situation who earns US$ education, compared to 31 percent for civil servant 232 (CFAF 134,000) per month (Republic of Mali, 2020). teachers. This shows that the integration of contract teachers into the LG civil service remains ongoing. Mali’s education wage bill doubled from CFAF 93.2 billion in 2010 to CFAF 215.3 billion in 2020 or 130.9 percent. Decomposition of the Education Wage Bill The three education ministries at the central level (MEN, MESRS, and MEFP) account for about 95 percent of Mali spends a smaller share of public expenditure on education wages, and the wage spending of the MEN alone wages in public institutions than WAEMU countries and approximates 93 percent of educational wage bill (Figure other peers. Nevertheless, teachers are paid relatively A7.11). This is not very surprising since the MEN covers well compared to those in peer countries and other the levels of preschool education, special education, public sector employees in Mali. Mali ranks at the the two cycles of basic education, general secondary, bottom among the WAEMU countries in terms of staff technical and vocational secondary, normal education, compensation as a share of the total wage bill (Figure and non-formal education. The upward trend in the wage A7.10). Compared to its structural and aspirational bill can be attributed to  an increased number of staff peers it ranks in the middle, after Chad, Afghanistan, associated with the transfer of responsibilities to the LG and Lao PDR. It is noteworthy that teachers are paid level, the conversion of contract workers to civil servants, relatively well in Mali. Data available from 2009 shows and salary adjustments (see Chapter 4, Section 4.3). >>> >>> Fi ur A 7.10: B nchm rkin St ff Comp ns tion Fi ur A 7.11: Tr nds in Educ tion W s Sh r of Tot l Public W Bill (2010–18) Bill Sp ndin b Ministr (2010–18) v r CFAF billions 100% 250 200 80% 150 60% 100 40% 50 20% 5 0% 0 To o B nin l Guin -Biss u M li Ch d Af h nist n L os Ni r 2010 2011 2012 2013 2014 2015 2016 2017 2018 Côt d'Ivoir nd Rw nd 2019 2020 S n U MEN MESRS MEFP WAEMU Structur l Aspir tion l P rs P rs St ff comp ns tion (% of th tot l public w bill) Av r Sourc : UNESCO. Sourc : BOOST. Not : Inform tion bout th w bill for Burkin F so, C ntr l Afric Not : = stim t . R public., Zimb bw , T jikist n, nd U b kist n w s not v il bl . 196 >>> MALI PUBLIC EXPENDITURE REVIEW Drivers of Inefficiencies in the amount of overtime is not known in advance which Education Wage Bill and Human undermines effective planning of the wage bill. Moreover, local authorities do not control this expense and the Resource Management system does not allow the authorization of this spending The bias in the allocation of salaries in favor of Bamako item to be limited. reflects a high prevalence of teachers in the capital (Figure A7.12). Bamako received the highest share of The absence of an effective payroll system for local the regional education wage bill in 2010–18 (17 percent) government teachers deprives the Government of an while Gao, Tombouctou, and Kidal (which have fewer effective tool to process and control wage spending. than 3,000 teachers each), combined with Menaka and There is no single computerized payroll management Taoudenit,127 together account for only 9.8 percent. HRM system for local government teachers, insufficient monitoring of trained and transferred teachers, and The processing of salaries is weakened by (i) no centralized reliable staff data. This undermines the jurisdictional conflicts between the local governments teacher payroll process as it contributes to processing and the Regional School Districts, both responsible for delays, arrears, and payroll-related irregularities and the payroll; (ii) delays in updating the payroll software for fraud (e.g., payment of multiple salaries to the same processing salaries in terms of recruitment, pay increases teacher when changing posts within a region or from or transfers; and (iii) the absence of a mechanism to one municipality to another (Republic of Mali, 2020b). monitor teachers’ presence for salary payments. As discussed in Chapter 4, Section 4.3, teachers’ status As illustrated in Figure A7.13, basic education receives changed from civil service status to autonomous status in the highest allocation on staff compensation while 2018 which has led to increases in the annual education other related expenses captured in the budget are fairly wage bill. The legislation included the development negligible.128 Some compensation is not reported in the of a 16-tiered status and salary scale for secondary budget, such as overtime. Teachers are compensated education, basic education and pre-school and special if certain student/classroom criteria are fulfilled but the education over the period 2018–21.129 >>> >>> Fi ur A 7.12: Av r Distribution of Fi ur A 7.13: Numb r of St ff nd Educ tion W Bill b R ion (2010–18) P roll (2015) 160 147.0 150 In billions of CFAF 140 30.5 30 20 19.0 10 0.2 0.2 1.3 1.8 2.3 2.8 0 int rnship Soci l contribution duc tion B sic duc tion djustm nt B m ko 17.0% D S ou 12.1% Doubl xp ns Ov rtim Administr tiv v c nc st ff s l r S cond r rs l r T chin Tr inin Sik sso 15.4% K s 11.3% Koulikoro 14.8% C ntr l ov rnm nt 10.4% Mopti 9.2% Kid l 0.9% Mid- G o 4.7% M n k 0.5% Tombouctou 3.7% T oud nit 0.0% Administr tion T ch r b sic s l r Sourc : BOOST. Sourc : BOOST. 127 The number of teachers for Menaka and Taoudenit are not available. 128 Gross salaries reflects basic salary, bonuses and allowances, overtime, deductions from salaries, and employer contributions. 129 The Law separates the statutory pay scale into 4 categories (A, B1, B2, and C) by educational certificates/qualifications, and not by job responsibility or experience. Class (1st,2nd, and 3rd) is then separated within each category and each class is also divided by grade (or echelon); for example, a teacher from preschool category C, 3rd class, and 6th grade. Base salary can be determined according to the civil servant’s salary scale multiplied by an index point, plus premiums and indemnities. Gross salary is derived from base salary and added with bonuses and allowances. Net salary is the amount received once all necessary deductions (i.e. insurances, pensions, and taxes) have been subtracted from gross salary MALI PUBLIC EXPENDITURE REVIEW >>> 197 >>> Annex VIII: Efficiency Estimates for Subsidized Fertilizers The marginal effect of the use of subsidized and unsubsidized fertilizer on productivity is measured using the equation: Productivityij = α+ β1 Subij + β2 Unsubij +γX’ij+ φi + εij (1) where the dependent variable Productivityij denotes the productivity (total output per hectare) of household i in region j (total output includes crops such as millet, sorghum, maize, rice, fonio, cotton, groundnut, soybean, cowpea, voandzou, sesame, yam, cassava, sweet potato and cocoyam. Price of each item has been used to weight the total farm output). Variables of investigation are subsidized (Subij) and unsubsidized fertilizer (Unsubij). Xij is a vector of control variables including production techniques such as the use of organic manure, phytosanitary products, the practice of anti-erosion techniques and tillage. φi is the region fixed effect, which captures all the time-invariant regional characteristics. Regressions are run over the whole sample, as well as subsamples including different regions as well as farms of different sizes. The model assumes that the yield is a linear combination of inputs, technologies and exogenous factors. Regression results are presented in Table A8.1 and A8.2. There are a few qualifications to the method due to data limitation. The quantities of improved seeds used were not collected by the survey. Also, due to the lack of detailed data on fertilizer use per crop, the analysis will consist in determining its average effect on all crops on the farm. >>> Table A8.1: Determinants of Productivity by Administrative Level Variables Kayes Koulikoro Sikasso Ségou Mopti Timbuktu Gao National Subsidized - -3.939 9.084 29.249 23.014 23.093 11.610 25.202 fertilizer (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) Non- 0.915 3.034 4.611 26.869 18.284 13.891 11.037 16.520 Subsidized (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) fertilizer Organic -0.000 0.051 -0.109 0.021 0.183 2.464 -0.879 -0.128 fertilizer (0.945) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) Phytosanitary -0.032 1.342 0.167 -1.264 1.171 6.428 -0.406 (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) share of land 4.730 -4.615 -0.889 8.907 7.918 17.149 -4.125 9.030 under anti- (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) erosion share of -5.781 3.142 -1.154 -1.423 4.331 2.816 3.029 -3.825 ploughed land (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) Constant 1,237.180 844.874 1,862.136 873.906 372.438 3,572.432 3,076.740 1,524.838 (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) Obs 203 163 189 564 195 392 234 005 210 938 79 604 57 694 1 154 310 R-squared 0.130 0.106 0.136 0.863 0.321 0.374 0.096 0.462 Source: PRODEC II. 198 >>> MALI PUBLIC EXPENDITURE REVIEW >>> Table A8.2: Determinants of Productivity by Farm Size Very small Variables Small farm Middle Big farm Very big farm farm Subsidized fertilizer 21.531 31.812 10.155 10.600 10.727 (0.000) (0.000) (0.000) (0.000) (0.000) Non-Subsidized fertilizer 19.905 17.647 9.331 5.788 3.018 (0.000) (0.000) (0.000) (0.000) (0.000) Organic fertilizer -0.369 -0.115 0.045 -0.053 -0.041 (0.000) (0.000) (0.000) (0.000) (0.000) Phytosanitary -1.980 0.598 -0.214 0.732 1.035 (0.000) (0.000) (0.000) (0.000) (0.000) share of land under anti- 14.050 -2.540 -1.750 12.167 -0.949 erosion (0.000) (0.000) (0.000) (0.000) (0.000) share of ploughed land -6.406 0.108 0.671 1.707 1.616 (0.000) (0.104) (0.000) (0.000) (0.000) Constant 3,218.605 1,304.833 1,104.978 743.346 580.972 (0.000) (0.000) (0.000) (0.000) (0.000) Obs 234024 228080 232711 232799 233800 R-squared 0.516 0.571 0.170 0.280 0.315 MALI PUBLIC EXPENDITURE REVIEW >>> 199