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Mali: Compliance Risk Assessment Tools in a High-Risk Environment

A high-risk political and economic situation, along with a difficult business environment in Mali, can have a significant impact on corporate payment behavior, resulting in a very high default probability. The country’s poor business climate and unreliable financial information make it challenging to manage intercompany transactions.

Despite these challenges, Mali has some strengths:

  • Substantial natural resources such as agriculture and mining
  • International assistance
  • Membership in the West African Economic and Monetary Union (WAEMU)

However, the country faces significant weaknesses:

  • An economy vulnerable to weather and commodity price fluctuations
  • Extreme poverty
  • Geographical isolation
  • Poor security situation
  • Dependence on international aid
  • A poor business environment

Recent trends suggest sustained growth in 2022, driven by increased cotton exports and a robust gold sector. The agricultural sector, which accounts for 40% of GDP, is expected to recover, supported by international financing and a good agricultural season.

The budget deficit is expected to narrow but persist, with revenues from gold mining and cotton production increasing. Public debt will continue to rely on international lenders, including the World Bank and African Development Bank.

However, political instability and increased security risks pose significant challenges for investors:

  • The country has faced repeated coups since 2012
  • The latest coup in May 2021 led to economic sanctions from ECOWAS and UEMOA

The current account deficit is expected to narrow slightly due to improved trade earnings from gold and cotton exports. However, the services account will remain in deficit due to increased demand for project-related services and freight transport.

In this challenging environment, compliance risk assessment tools are essential for companies operating in Mali:

  • Help identify potential risks
  • Ensure businesses comply with regulations
  • Mitigate potential threats

Overall, Mali’s complex economic and political landscape makes it crucial for investors to carefully assess compliance risks and take proactive steps to manage them effectively.