Macroeconomic indicators¹

The economy’s strong growth continues, with real GDP growth an estimated 5.0% in 2018, down slightly from 5.3% in 2017, driven mainly by agriculture (cotton in particular) and services (financial activities and trade). On the demand side, household consumption is the primary driver. Real GDP growth is projected to slow in 2019 to 4.7% and remain there in 2020.

Inflation slowed to an estimated 1.7% in 2018 thanks to lower prices of foodstuffs and imported oil products. It is projected to be 1.7% in 2019 and 1.8% in 2020.

The budget deficit was reduced from 2.9% of GDP in 2017 to an estimated 2.5% in 2018. It is projected to shrink gradually from 2.4% of GDP in 2019 to 1.5% in 2020 thanks to consolidation

Public debt stood at 35.9% of GDP in 2018, up narrowly from 35.6% in 2017, but external debt declined slightly to 24.1% of GDP. Mali continues to face a moderate risk of debt distress.

In the external sector, the current account deficit rose slightly from 6.0% in 2017 to an estimated 6.5% in 2018, with import growth (9.3%) outpacing export growth (7.2%). It is projected to remain above 6% through 2020.

The economic outlook could be compromised by several factors, in particular security conditions related to delays in implementing the Peace and Reconciliation Agreement and exogenous shocks such as climate variability, the volatility of gold and cotton prices, and fluctuations in the euro/dollar exchange rate. The recapitalization of some commercial banks has contributed to banking sector stability, but the high ratio of nonperforming loans (16.5% in 2018) could threaten private sector financing.

¹Source: African Economic Outlook (AEO) 2019

Business environment and private sector development²

The Malian private sector is characterized by its lack of development. It was affected by the 2012 crisis following insecurity, changes in production capacity and accumulation of domestic arrears. Over 80% of private sector activities are informal. The sector accounts for 11% of GDP and is not very competitive for the following reasons: (i) weak entrepreneurship linked to the dominance of trading activities; (ii) a high level of corruption; (iii) an unfavorable business environment; (iv) lack of supervision of enterprises; (v) a banking industry that does not foster the emergence of SME/SMI; and (vi) lack of skilled labor. Energy infrastructure is weak and is about 40% responsible for the lack of competitiveness of Malian enterprises. Lastly, the sector is constrained by limited access to financial services (the rate of access to financial services, including those of microfinance institutions, is about 20%).  The 2019 ranking of Mali in the ease of Doing Business is 145 among 190 countries, with an average score of 53.5/100. This is a slight decline in the ranking compared to 2017, where Mali’s ranking was 141 and its score 52.9/100.  Despite the slight increase, the score of Mali has not significantly changed over the period 2017-2019.

In the energy sector, the regulatory environment is relatively favorable for energy investments in general. It is governed by the following mechanisms³:

1. the Rural Energy Fund created in 2000 to promote rural energy access;
2. Mali’s Industrial Development Policy (aimed at an orderly, rapid, sustainable, balanced and employment-generating industrial development);
3. public Private Partnerships (PPPs) Framework (in the form of BOOT schemes⁴);
4. the Investment Code (establishing a preferential customs and tax regime for the promotion of investments);
5. the role of the Investment Promotion Agency providing a one-stop shop for all business start-up procedures, assistance to investors and issuance of certification in accordance with the Investment Code; and the guidelines for an application degree guaranteeing open competition and
6. the guidelines for an application degree guaranteeing open competition and organization of the Public Electricity Service (including the role and skills of various sector actors, conditions of public electricity service management, conditions for delegating and operating a public electricity service, and tariff and accounting principles in the sector).

²Source : AfDB Country Strategy Paper for Mali 2015-2019
³Source: SREP Mali – Investment Plan, Scaling up renewable energy.
⁴Under the BOOT contract, a company or a consortium of companies, finances, builds, operates, and acquires a new project or system, which will then be transferred to the authorities after a predetermined period.

Key takeaways on the electricity sector

Electricity access

Mali’s total population access to electricity reached 43,1% in 2017. In urban areas, the access rate is about 87,2%. The rural area's level of access is still low at 11,7% in 2017, although increasing since 2013 (<1%). See table below.

Population Access to Electricity, 2013-2017

Source: WB Tracking SDG7

The National Institute of Statistics (INSTAT) conducted national surveys over the past years to determine the level of household’s access to electricity. According to the survey methodology, a household has access to electricity if it is connected to the EDM grid or if it uses a group generator or solar panels.  Based on these surveys, the access rates figures are the following:

Source: INSTAT and various EMOP⁵

Installed capacity

Installed generation capacity was recorded at 590 MW in 2018, of which thermal generation accounts for 45%, Diesel & HFO for 21%, Hydro for 31%, and Solar for 3%. The following table shows the breakdown of the generation capacity per technology and related power stations.

Installed Generation Capacity in 2018 (in MW)

Source: EDM SA, IRENA and various sources

Production

The evolution of electricity generation (in GWh) over the period 2013-2017 is shown in the table below.

Evolution of Electricity Generation, 2011-2018 (GWh)

Source: AFREC Database

Production costs

The average cost of electricity production, exclusive of VAT, has increased in recent years, from 110 CFA per kWh in 2010 to 130.3 CFA in 2017. During this period, the average cost peaked at CFA 134.2 per KWh. It is one of the highest in the West Africa region. For comparison, Cote d’Ivoire electricity average cost was 47,2 CFA/kWh in 2017. This level of cost is due to the high proportion of the thermal electricity source in the energy mix.

Maintenance

The maintenance and the extension of the network remain an investment challenge for EDM SA, estimated at CFA 868 billion⁶ between 2016-2025.

Downtime and efficiency

The country's electricity network has been marked by incidents that caused interruptions of up to 36 minutes on average per day in 2015. Of these interruptions, only 8.3% were programmed. Between 2005 and 2015, the overall energy loss rate has changed very little, ranging from 21% to 23.5%. This rate includes technical losses due to the performance of the network equipment and the non-technical losses, due to the non-recording of energy consumed.

Tariffs

The following table shows the evolution of average tariffs per consumer category over the period 2010-2017.

Average tariffs (exc. VAT) by type of consumer, 2010-2017 (CFA/kWh)

Source: EDM SA

⁵EMOP stands for « Enquête modulaire permanente auprès des ménages » which is a household survey per passage spread over the year to take into account variations in what affect some of the indicators included in the survey.
⁶Source : Commission de régulation de l’électricité et de l’eau (CREE)

Country strategy on the environment and climate change

Policy and regulation

Mali has ratified the majority of Multilateral Environmental Agreements (AME), including the United Nations Framework Convention on Climate Change, the Kyoto Protocol, the Convention to Combat Desertification, the Convention on Biological Diversity, the Biodiversity, etc.

Environment

The National Environmental Protection Policy (PNPE) was developed in 1998 following the ratification of the United Nations Framework Convention on Climate Change. The purpose of the National Environmental Policy is to ensure a healthy environment and sustainable development by taking into account the environmental dimension in any decision affecting the design, planning and implementation of policies, programs and development activities through the empowerment and commitment of all the actors.

Climate change

Various public research institutions are involved in the areas of climate change. Among these are the National Centre for Scientific and Technological Research (CNRST), the University of Bamako, the National Engineering School (ENI), the Institute of Rural Economy (IER). Moreover, there are about a hundred NGOs, associations working on climate change under the "Reso Climat Mali" network. There were also numerous consultants and consulting firms that have focused on climate change.

In view of the need to have a reference and coordination framework for a structured and more effective intervention from the multiplicity of public and private institutional actors and civil society in the various fields of climate change, the Government of Mali has adopted, in 2011, a National Policy to Combat Climate Change (NPCCC). The NPCC’s vision is to define by 2025 a sustainable socio-economic development framework that integrates the climate change challenges in all development sectors in order to improve population’s well-being. It will be developed around five operational pillars defined in Bali at COP13 in 2007: shared vision, adaptation, mitigation, transfer of technologies, and financing, while associating in an integrated manner all the programming and all the actors of national life.

Regional integration with the West African Power Pool (WAPP)

2018 Highlights

In 2018, the supply of electrical energy for export was marked by the following elements:

• Commissioning of the Ghana-Burkina interconnection in June 2018 via the 225 kV Bolgatanga (Ghana) - Zagtouli (Burkina) line;
• Improvement of the voltage withstand at the 225 kV Ferké substation following the commissioning of the 225 kV Laboa-Boundiali-Ferké line in December 2018. This line will also be used to decongest the 225 kV Taabo-Kossou-Bouaké artery which handles transport to Burkina Faso and Mali
• Since September 2018, energy exported to Burkina has fallen considerably compared to the targeted supply programme. This is due to the fact that the power system of Burkina Faso encounters difficulties to maintain the average transit beyond 60 MW, when 90 MW were targeted.
• A second 225 kV line from Ferkessédougou as part of the interconnection with Cote d'Ivoire, extended Mali's interconnected network to Koutiala and Sikasso by connecting them to the 150 kV Bamako-Fana-Ségou line in the town of Ségou.

Mali started to import electricity from Cote d’Ivoire in 2012. The following table shows the trend of Mali’s electricity import since then.

Mali’s import of Electricity, 2000-2018

Source: AFREC Database

Integration challenges

According to Sédiko Douka, energy commissioner of the Economic Community of West African States (ECOWAS), West African nations face an energy crisis and individual state energy sectors are disadvantaged by local circumstances such as limited access to energy, poorly performing electricity companies, expensive tariffs, while challenges include the need to overcome a reliance on hydrocarbons and the development of renewable sources of energy. More will need to be done if regional progress towards electricity integration (via projects such as the recent commissioning of the Bolgatanga-Ouagadougou interconnection linking ECOWAS members Burkina Faso and Ghana) is to continue in the medium and long term. With access to electricity hovering between 40% and 52% of the population, and brownouts and blackouts averaging about 80 hours a month, the 15 ECOWAS member states need to confront a chronic lack of access to electricity across the region and persistently high prices. A lack of historical infrastructure planning and poor implementation contribute to enduring poverty and have led to an engrained reliance on emergency rental plants, which inflates power costs even more. Complicating the challenge of extending power supply infrastructure is the fact that several of the group's landlocked states, including Niger, Chad, Mali and Burkina Faso, are located in the Sahel region—an arid zone that will experience significant desertification as global temperatures rise over the course of the 21st century, according to forecasts by climate scientists. ECOWAS estimates that more than 75% of the population of member states are already affected at least once every two years by natural phenomena whose effects are becoming increasingly damaging because of climate change.

Clashing imperatives

Besides supporting the mandate for immediate power demand, the role of the West African Power Pool (WAPP) extends to driving long-term climate-proofing strategies recommended under the framework of the Paris Agreement on climate change, which is due to be implemented by 2020. This regional body is mandated to translate overarching public policy guidelines into sectoral investment schemes that favor relatively new green technologies. The schemes include encouraging the installation of diversified sources of renewable energy, creating off-grid generation and storage technologies and nurturing regional power networks and new trading mechanisms. Although these initiatives are complex, require close co-operation between member states and are expensive to implement, they will secure long-term electricity supply security for West Africa if they succeed. Domestic power utilities are at the forefront of electrification efforts, and their mandates to increase nationwide electricity production frequently lead to conflicts with the WAPP over the type of power generation used. The WAPP is concerned that regional pressure on states to increase electrification could lead to an oversupply of inefficient, fossil fuel-intensive or environmentally damaging generation that relies on coal or hydropower, which would be counterproductive to the WAPP's climate-proofing aims. Indeed, new research by the US National Academy of Sciences suggests that similar large-scale electrification projects in Western countries in the past have had a disastrous long-term effect on the environment . At present, domestic demand in West African countries is often too low to attract investment in such large-scale projects, but this is changing. Several countries are set to increase their reliance on hydrocarbons as a result of developments in the West African basin, especially in Senegal, Ghana, Côte d'Ivoire and Nigeria (the last being an established oil producer). But the countries involved argue that the resulting power generation from these developments will mostly be gas-fired, which would provide significant low-emission generation gains to the power market.

West Africa’s energy situation

Network integration

If the installation of new power generation capacity remains largely a domestic state-based prerogative, the integration of existing networks is firmly in the WAPP's remit. The continued involvement of third-party donors and financial institutions such as the African Development Bank and World Bank is likely to ensure that the focus on regional integration remains at the forefront of electricity stakeholders' concerns. In 2016, with the African Development Bank’s help, the WAPP accelerated the construction of a 330 kV double circuit high voltage transmission line from Erukan (Nigeria) to Sakete (Benin) and help meet the needs of the ECOWAS region in suppling reliable electricity supply at affordable cost. The Project, a WAPP key priority, will ensure stable integration of the national electricity networks in the ECOWAS Region and facilitate the accessibility to economic energy resources to all member states of the region. The realisation of this 330 kV WAPP Nigeria–Benin Project will facilitate optimal power exchanges and trading between the Member States. It seeks to establish a robust transmission link from Côte d’Ivoire to Nigeria passing through Prestea, Aboadze, Volta in Ghana, Lomé in Togo, and Sakete in Benin. In 2017, with the World Bank's help, the WAPP launched a regional off-grid electrification project which aims to increase access to electricity in rural areas through innovative solar power solutions, and a regional electricity trading market, which was launched in July 2018. A number of transmission interconnections have already been completed or are under way, such as the 225-kV exchange line between Burkina Faso and Ghana, a 225-kV transmission project linking Côte d'Ivoire, Liberia, Sierra Leone and Guinea and the OMVG interconnector, which will link Senegal, Gambia, Guinea-Bissau and Guinea. A second 225 kV line from Ferkessédougou as part of the interconnection with Cote d'Ivoire, extended Mali's interconnected network to Koutiala and Sikasso by connecting them to the 150 kV Bamako-Fana-Ségou line in the town of Ségou. It is estimated that the entire region will be connected by the start of the next decade.

Regional electricity market

Assuming that regional states can overcome the obstacles identified earlier, the integration of West Africa's growing power-generating capabilities could create the region's first true power market. Currently, only about 7% of the electricity produced in West Africa is traded. However, in July 2018 the WAPP launched a trading market (with its headquarters in Cotonou, Benin) that will allow ECOWAS member states to trade their surplus electricity. The World Bank estimates that an integrated power-trading system in the region could bring operational and power-generation cost savings of USD 5bn-8bn a year by allowing countries to import cheaper and more cleanly generated electricity. However, the potential new market throws up several complex political and technical challenges, which will require close cooperation and determination among policymakers, regulators and utilities if they are to work. Throughout much of the region, local power utilities are expected to hinder the conclusion of trading agreements, and low capitalization, ongoing supply problems, poor domestic collection capacity and corruption are likely to result in poor collection of payments, making it difficult to enforce international contracts. Such problems have already been reported in pre-existing projects operating on a smaller scale, such as the West African gas pipeline system linking Nigeria, Benin, Togo and Ghana. After force majeure was declared on the supply of gas by Nigeria at the start of the project in 2011, the pipeline underperformed, and the Ghanaian authorities consequently underpaid for supply. The WAPP will need to instigate measures to improve the power sector's creditworthiness, provide guarantees and involve regional institutions, if it is to take the lead in ensuring that the region's electricity infrastructure stands a chance of succeeding, once it is built.

⁷Source: Electricity from renewable resources – Status, Prospects and Impediments, The National Academies of Sciences, Engineering and Medicine, 2010.
Accessible here: https://www.nap.edu/catalog/12619/electricity-from-renewable-resources-status-prospects-and-impediments

Mapping of current stakeholders across agreements

Source: Mali SEforALL & various sources

Electricity Regulatory Index

Regulatory Assessment

The Electricity Regulatory Index for Africa (ERI) is a flagship publication of the Power, Energy, Climate Change and Green Growth Complex of the African Development Bank, which seeks to empirically evaluate the performance of African utility regulators, benchmark their performance against international best practices as well as a peer-to-peer comparison of their performance. For the first time, Mali participated in the ERI survey 2019, which is the second edition of the study. Over 34 participating countries in the 2019 study, Mali ranked 19th with an overall score of 0.579, which denotes that some elements for a supportive regulatory framework are established, although with weaknesses that do not permit the regulator to have strong capacity, legal and institutional structures.

The results are displayed in the table below:

ERI 2019 insights

• On regulatory governance, Mali’s high score is attributed to it having established an electricity sector regulator by law, with its functions, duties, and responsibilities clearly laid out in the relevant legislation. Deviations from best practice on regulatory governance are observed in respect of the regulator’s independence from government and other sector stakeholders, as well as its ability to set its own budget. The regulator exercises little control over approving its own annual budget despite the fact that it generates income from fees levied on the regulated utility. 
• On regulatory substance, Mali scores high on sub-indicators of economic regulation, mostly owing to the fact that the regulator has developed sound tariff-setting guidelines and methodologies and has a team of capable and qualified staff dealing with economic issues as it relates to electricity regulation. Despite high scores on this sub-indicator, Mali scored poorly on the sub-indicator of commercial quality of service given that the regulator undertakes little oversight or regulation of the commercial quality of electricity delivered to end-users. Likewise, Mali’s score on regulatory substance was also negatively impacted by the regulator’s performance in the area of technical regulation.  The regulator performs few assessments, if any, on the quality of electricity provided by the utility it oversees and lacks technical staff to address issues regarding grid and utility performance. Technical regulations for off-grid systems and mini-grids are also non-existent, which also contributed to Mali’s low score on regulatory substance. The regulatory authority thus far has issued no directives or regulations on technical quality standards for either type of system.
• On the regulatory outcome sub-index, Mali performed sub-optimally on nearly all sub-indicators, particularly as it relates to its promoting electrification (on which it received a score of zero for the relevant sub-indicator – the only regulator in the sample to receive such a score amongst the sample). Below average scores were also registered on sub-indicators, measuring the ability of the utility to deliver on the technical and commercial quality of electricity supplied to end-users, which is considered reflective of the regulator’s capacity to enforce sound regulation over the sector. 

The ERI 2019 report is under preparation. The first edition of the study is available here.

The ERI 2019 regulatory index

National utility

General profile

Energie du Mali (EDM-SA), created by the Malian Government on 14 October 1960 by ordinance No. 26/PGP, under the Act No. 60-22 of 28 July 1960, is the Malian company in charge of the production, transmission and distribution of energy in the country as well as water distribution. EDM-SA was privatized on December 21, 2000 after signing with the state of a concession agreement, and it owns production, transportation and distribution facilities, at the exclusion of hydroelectric facilities, whose legal ownership remains with the State. The capital of the company was opened to a strategic partner who held until 2005, 60 percent of the shares. On October 14, 2005, the Company experienced a change in its shareholding structure and a recomposition of its share capital. The Malian government now holds 66% of the shares and International IPS WA (Industrial Promotion Services West Africa) 34%. The reform led to the disengagement of the state from operational activities. Following institutional reform starting in 2006, EDM-SA refocused its mission on the sole activity of electricity since 2011.

The electricity company EDM-SA is the main and historical operator in the electricity sector. Through its 10-year concession, it is responsible for production, transport and distribution, import, export and marketing of electrical energy throughout its entirety perimeter covering 99 localities (among which mainly the district of Bamako and the 10 regional capitals). As part of its concession, EDM-SA was the central buyer for independent producers. At the end of the concession in 2010, the CREE may, based on a decree issued by the Council of Ministers, authorize third party access to the national network. EDM-SA currently supplies electrical energy from three different and not interconnected electrical systems: the interconnected grid (RI), the mini-grid centers (CI) and the interconnection with Cote d’Ivoire.

Policy and strategy

Pursuant to the agreement and in accordance with the Electricity Sector Policy Letter, EDM-SA intend to implement a strategic action plan within three years structured around the following main points:

• Audit, inventory to draw lessons from previous management and identify areas for improvement;
• Measures to strengthen EDM-SA's management to improve economic and financial performance.
• Institutional study with the aim of deepening the process of reform and restructuring of the electricity sector. The objective is to adopt a viable public-private partnership scheme for the management and development of the electricity sector; and
• Tariff studies to improve access to electricity, ensure the sustainability of installations and improve the efficiency of investments, among other things.

EDM-SA key figures

Production (MWh)

Source: EDM-SA

Transport Network (Kilometers)

Source: EDM-SA

Distribution Network (Kilometers)

Average tariffs (CFA/kWh)

Source: EDM-SA

Mapping of ongoing power programs and projects

Source: Mali SEforALL

Investment opportunities for the private sector

The act No. 2012-016 of 27 February 2012 on the Investment Code is a window open to national and international investors in the energy sector. This text, although general, offers the opportunity for capital and investors to seize the opportunities of the energy sector. The following selected projects are consistent with the existing national framework and priorities of the State and which have an advanced level of maturity or an innovative character. They were selected following a call for projects and consultations with many project leaders, using a multi-criteria evaluation method and classified into five pipelines:

• Pipeline 1 - Networked generation, transmission and distribution
• Pipeline 2 - Off-grids (Mini-Grids and isolated networks, autonomous systems, solar kits, Solar Home System)
• Pipeline 3 - Bioenergy and sustainable cooking projects (improved stoves, alternative fuels, biofuels, etc.)
• Pipeline 4 - Energy efficiency (ESCOS promotion, LBC diffusion, LED, LSP; energy audits; energy efficiency of buildings, etc.)

The projects selected in this investment prospectus are presented below with a summary of the project title, its promoter, its estimated cost and its financing needs.

Pipeline of projects and investment opportunities

Source : Mali SEforALL

About opportunities in the country

About private sector participation