Transparency of the Regulatory System
As reflected in agreements with the International Monetary Fund (IMF) and World Bank, the Government of Mali has adopted a generally transparent regulatory policy and laws to foster competition. The commerce, labor, and competition laws are designed to meet the requirements of fair competition, to ease bureaucratic procedures, and to facilitate the hiring and firing of employees. In practice, however, the regulatory system is not transparent and international firms have had trouble enforcing regulatory requirements to the detriment of their business prospects. The investment code simplifies the application process to establish a business, and favors investments that promote handicrafts, exports, and labor-intensive businesses. There is, however, no public comment period or opportunity for citizens or businesses to comment upon proposed laws. The World Bank’s 2016 Doing Business Report notes that it takes an average of five procedures and 8.5 days to establish a business in Mali. The GOM publishes the incorporation notices of new companies on the official website of the one-stop-shop, the Agency for the Promotion of Investments. The Mining Code encourages investments in small and medium mining enterprises, awards two-year exploration permits free of charge, and does not require a commitment from the exploring firm to lease the area explored thereafter. Mali is a member of Organization for the Harmonization of Business Law in Africa (OHADA) and implements the Accounting System of West African States (SYSCOA), which harmonizes business practices among several African countries consistent with international norms. There are no informal regulatory processes managed by nongovernmental organization or associations.
The Regulatory Authority for Public Transactions (Autorité de Regulation des Marchés Publics et des Delegations des Services Publics (ARMDS)) ensures transparency in public procurement projects and can hear complaints from businesses on public procurement related issues. It makes its decisions available on its website as well as the key laws relating to public procurement.
International Regulatory Considerations
The investment code allows a foreign company that has a signed agreement with the government to refer to international arbitration any case that the local courts are unable to resolve.
Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and has ratified the 1993 treaty creating the Joint Arbitration Court. OHADA has a provision allowing litigation between foreign companies and domestic companies or with the government to be tried in an appellate court outside of Mali. Mali has been a member of the World Bank Multilateral Investment Guarantee Agency (MIGA) since 1990.
Mali has been a member of the World Trade Organization (WTO) since 1995. Mali has not notified the WTO of any measures concerning investments related to trade in goods that are inconsistent with the requirements of Trade Related Investment Measures (TRIMs)
Legal System and Judicial Independence
Mali’s legal system is based on civil law. Mali uses its Investment Code, Commerce Code, Labor Code, and the Code on Competition and Price to govern disputes. Mali is a member of the Organization for the Harmonization of Business Law in Africa (OHADA, Organisation pour l’Harmonisation en Afrique du Droit des Affaires) whose member countries use a standardized accounting system and business law. Ownership of property is defined by the use, the profitability, and the ability of the owner to sell or donate the property. Disputes occasionally arise between the government or state-owned enterprises and foreign companies. Some cases involve wrongdoing on the part of companies and/or corrupt government officials.
Although Mali’s judicial system is theoretically independent, it has been subject to political influences. Numerous business complaints are awaiting an outcome in the courts. Judges and prosecutors’ careers depend on the Ministry of Justice, and hence their independence is compromised. The judicial system is infested by corruption leading to flawed decisions. The dispute resolution process can take multiple years.
In November 1991, an independent commercial court was established with the encouragement of the U.S. government to expedite the handling of business litigation. Commercial courts, located in Bamako, Kayes, and Mopti, can hear intellectual property rights cases. In areas where there is no commercial court, the Local Courts of First Instance have the jurisdiction to hear business disputes. Since its inception, the commercial court has handled cases involving foreign companies. The court is staffed by magistrates and is assisted by elected Malian Chamber of Commerce and Industry representatives. Teams composed of one magistrate and two Chamber of Commerce and Industry representatives conduct hearings. The magistrate’s role is to ensure that the court renders decisions in accordance with applicable commercial laws, including internationally recognized bankruptcy laws, and that court decisions are enforced under Malian law.
The Local Courts of First Instance have the jurisdiction to hear business disputes. The Courts of First Instance decisions are appealable in the Court of Appeal and/or in the Supreme Court.
Laws and Regulations on Foreign Direct Investment
The investment code gives the same incentives to both domestic and foreign companies for licensing, procurement, tax, and customs duty deferrals, export and import policies, and export zone status if the firm exports at least 80 percent of production. The government has reduced or eliminated many export taxes and import duties as part of ongoing economic reforms; however, export taxes remain for gold and cotton. Further information can be found in the 2000 Decree # 00-505 and in the Customs Code. The government applies price controls to petroleum products and cotton, and occasionally to other commodities, such as rice, on a case-by-case basis. During 2015, the Government of Mali decreased the price of petroleum in the Malian market per liter as a response to lower global prices. Incentives include exemptions from duties on imported equipment and machinery. Investors may also receive tax exemptions on the use of local raw materials. In addition, foreign companies can negotiate specific incentives on a case-by-case basis.
In most cases, foreign investors can own 100 percent of any business they create, except in the mining and media sectors. They can also purchase shares in parastatal companies the state has privatized or in other local companies. Foreign companies may also start joint-venture operations with Malian enterprises. The repatriation of capital and profit is guaranteed.
Despite having a generally favorable investment regime on paper, foreign investors face a myriad of challenges in practice. The most important of these include low access to financing, high level of corruption, poor infrastructure (including inconsistent electricity), a non-transparent judicial system, and the lack of an educated workforce.
The following websites provide additional more information relating to investments in Mali:
Competition and Anti-Trust Laws
The Ministry of Industry and Commerce is in charge of reviewing free competition in the Malian market place. Order 2007, Decree 2008, and the WAEMU 2002 rules on anti-competition are the primary judicial documents that govern competition. The Tribunal of Commerce and the Regulatory Authority for Public Transactions (Autorité de Regulation des Marchés Publics et des Delegations des Services Publics (ARMDS)) are the primary judicial bodies that oversee competition-related concerns.
Expropriation and Compensation
Expropriation of private property other than land for public purposes is rare. The Malian government has not unfairly targeted U.S. firms for expropriation. By Malian law, the expropriation process should be public and transparent and follow the principles of international law. Compensation based on market value is awarded by court decision.
The government may exercise eminent domain in various situations including: undertaking large-scale public projects, in cases of bankrupt companies that have had a government guarantee for their financing, and when a company has not complied with the requirements of an investment agreement with the government. In 2000 and 2012, the government expropriated land near the Bamako city airport for air safety reasons. Notifications of the expropriation were sent via direct mail and published in public and private media, and prior owners were compensated according to Malian law. In 2010 and 2011, the government expropriated private land on the outskirts of Bamako for the construction of low and medium income housing. The prior owners have initiated a legal case against the government, arguing that housing projects should not be considered large-scale public works projects. The government settled the case by compensating previous owners. In cases of illegal expropriations, Malian law affords claimants due process in principle. However, given the vast corruption in the land administration sector, fair court cases are rare.
ICSID Convention and New York Convention
Mali is a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). Mali also signed and ratified the Convention of the Recognition and Enforcement of Foreign Arbitrage Awards (1958 New York Convention).
Investors frequently highlight that bureaucratic burdens, bribery, and rent undermine their efforts to implement concrete projects. Since 2008, the Tax Office and a mining company transferred several cases relating to six fiscal years (2008-2013) to the International Centre for Settlement of Investment Disputes (ICSID). The ICSID ruled in the mining company’s favor. However, the GOM then started investigating other years and reassessing the company’s tax bill for those years, whether as retaliation or as part of a government-wide tightening of tax collection it is unclear. In October 2016, the situation worsened when the GOM closed the mining company’s office in Bamako as a result of the company protesting the new tax bills. Under pressure by the Tax Office, the mining company finally agreed to pay a part of the assessments claimed by the Tax Office in order to reopen its office, but continues to contest the legality of the decision and still might transfer the case to the ICSID.
Investor-State Dispute Settlement
Mali is a member of the African Organization for the Harmonization of Business Law (OHADA) and has ratified the 1993 treaty creating the Joint Arbitration Court. OHADA has a provision allowing litigation between foreign companies and domestic companies or with the government to be tried in an appellate court outside of Mali. Mali has been a member of the World Bank Multilateral Investment Guarantee Agency (MIGA) since 1990. It has concluded numerous bilateral investments treaties and investment protection guarantee agreements. The U.S. Government concluded an agreement with the GOM on Private Investments Guaranty in 1964.
Despite the official agreements, U.S. investors complained about unfair practices. In 2013, an American company that was contracted to complete the MCC-funded airport renovation filed a case against the Government of Mali at the Paris Arbitration Court regarding an alleged breach of contract. The case is pending.
After 5 months of negotiations regarding a contract of 30 MW electric generation project to be implemented by a U.S. company, the Malian state-owned utility company cancelled the project in January 2017 with neither any justification nor the authorization of the Malian Public Procurement Regulatory Office. While the details of this case appear suspicious, it is one of numerous unfair treatments U.S. companies have faced in Mali.
In 2015, a U.S. company’s bid for an engineering oversight project regarding the renovation of the airport was unjustly disqualified. The Authority of Regulation of Public Procurements (ARMDS) also rejected the U.S. company complaint, stating the company did not wait a requisite 72 hours before contacting the authority. The company elevated the complaint to the Administrative Chamber of the Malian Supreme Court, where the case now rests indefinitely.
Another U.S. energy company has spent three years trying to negotiate a power purchasing agreement with the GOM regarding a 15 MW hydroelectric plant in Markala. When the government changed, the new Minister involved with the project requested a new impact study which was redundant, costly, and unnecessary. The GOM has since reissued the tender which the U.S. company had believed it had won and the U.S. company may give up the project. Stories of such delays are commonplace. Many companies have spent considerable time developing relationships with high level government officials, time that felt wasted once the government reshuffled itself, as it does frequently.
International Commercial Arbitration and Foreign Courts
At the first instance, the companies are supposed to undertake amicable negotiations before engaging the Authority of Regulation of Public Procurements (ARMDS) or the courts. Failure to reach an out-of-court agreement will lead to the case being transferred to the court of first instance, the court of commerce, or international arbitration. The decisions of foreign courts are enforced as long as specified and recognized by Malian Laws. In 2016, the government of Mali paid $26 million to a foreign mining company pursuant to ICSID’s decision. Court decisions are frequently based more on corruption and political interference rather than legal merit.
Mali’s bankruptcy law is part of its Commerce Code, which does not criminalize bankruptcy. According to data collected by the World Bank’s 2017 Doing Business Report, resolving insolvency takes 3.6 years on average and costs 18.0 percent of the debtor’s estate. Generally, the company will be sold piecemeal. The average recovery rate is 24.8 cents on the dollar.