Mali : background to urban and regional development

DRAFT THE WORLD BANK (RR 760q DEVELOPMENT EC ONOMICS DEPARTMENT URBAN AND REGIONAL ECONOMICS DIVISION URBAN AND REGIONAL REPORT No. 76-4 MALI: BACKGROUND TO URBAN AND REGIONAL DEVELOPMENT S. Ajiboye Agunbiade August 1976 These materials are for internal use only and are circulated to stimulate discussion and critical comment. Views are those of the author and should not be interpreted as reflecting the views of the World Bank. References in publications to Reports should be cleared with the author to protect the tentative character of these papers. DRAFT August, 1976 NLI: BACKGROUND TO URBAN AND REGIONAL DEVLOPENT Prepared by S. Ajiboye Agunbiade Urban and Regional Econæmics Division Developmet Econcnics Department MALI: BACKGROUND TO URBAN AND REGIONAL DEVEUOPMT Table of Contents PaFe Introduction i I. THE SEGTORAL STRUCTURE OF THE ECONOMY The Primary Sector: Agriculture and Livestock 1 The Secondary Sector 17 The Tertiary Sector 19 II. PLANNING PROB[ES, OBJECTIVES, AND PRIORITIES The Macro-Economic Problem 28 Planning Objectives and Strategies 28 III. SPATIAL ASPECTS OF THE MALIAN ECONOMY Spatial Characteristics of the Malian Economy 36 The Transportation System 44 IV. THE SETTLEMEIT SYSTEM IN MALI Background to Contemporary Trends 54 Population Demographic Structure 59 The Urban Population 60 Factors of Urban Population Growth 62 V. THE NEED FOR URBAN AND REGIONAL PLANNING IN MALI Critical Trends And the Basis for Spatial Planning 64 The Need for Urban Planning 65 Prioirty Urban Areas and Urban Priorities in Mali 68 VI. CONCLUSIONS The Economic Situation 73 The Spatial Economic System 73 DRAFT SAgunbiade: dh July 7, 1976 INTRODUC TION 1. Mali is a vast, landlocked West African country with an estimated 1975 population of between 5.67 million and 5.72 million, and a total area of about 1.2 million square kilometers. Its population growth rate lies somewhere between 2.3 and 2.5 percent per year. It is expected that by the year 2000 the country's population would lie between 10.11 million and 11-52 million. The population is about 87 percent rural and 13 percent jan, the urban population being about 50 percent concentrated in Bamako, the capital city. The urban population is expected to increase to about 23 percent of total by the year 2000, that is about 2.58 million. 2. The country's resource endowments are limited; only about one- third of its area can support agriculture, the remaining two-thirds being desertic. In the absence of sizeable commercial mineral deposits, Mali's present as well as foreseeable future development potentials are limited to agricultural and pastoral land, and to its human resources. The land resource potential is, however, undermined by erratic and low rainfall, and frequent droughts. All of these limitations constitute the physical dimen- sions of the development problem in Mali. There are, however, organizational and financial problems which are also more or less related to Thfe physical problems. 3. The aims of this paper are to provide a background to spatial economic deve[opment in Mali and to outline an approach to spatial planning in the country. The first chapter reviews the sectoral structure of the ecohcay and the factors shaping it while the second chapter outlines Govermnents a latest National Development Plan. Chapters 3 to 5 are devoted to analyzing the economy from a spatial perspective, the emphasis being on the relative utility of areas and the need for spatial planning. There is a concluding chapter in which the main arguments of the paper are summarized. I. -THE SECTORAL STRUCTURE OF THE ECONOMY A. General 1.01 Agriculture is the cornerstone of Malits economy. This fact, coupled with the shortage and unreliability of rainfall, and with generally poor soils rendezr the economy fragile and difficult to plan. 1.02 The secondary and tertiary sectors are relatively small and hitherto without a significant impact on changes in the economy. In fact, prospects in all other sectors depend largely upon what happens in the agricultural sector. 1.03 Population, like the overall pattern of economic activities is oriented towards the transportation system. All elements of economic activity are concentrated in the southwestern third of the country where rainfall and 1/ soils are comparatively more conducive. B. The Agricultural Sector 1.04 Agriculture provides a livelihood for about 85 percent of the population, accounts for virtually 100 percent of foreign exchange, and contributes "about 44 percent of the Gross Domestic Product. Accordingly, development planning in Mali, like in all other Sahel countries, is in essence hinged upon the prospects in agriculture. 1/ See attached maps of crop patterns. 2/ Bank Report No. 34Oa-MLI, "Appraisal of Integrated Rural Development Project: Mali," May 13, 1974, page 2. -2- Principal Characteristics 1.05 About 2 million hectares are currently under cultivation, 85 percent of which are devoted to food crops which consist mainly of millet, sorgham, and rice. Farm sizes range from 2 to 5 hectares per farm family. Cultivation is labor intensive and at low levels of technology, althcagh modernization through government promotion is increasing. Productivity is generally low: average aggregate farm output per cultivator is about 550 kilograms,for a relatively normal year. The following table gives an indication of productivity levels for the four principal crops in a normal year under traditional methods. As agriculture becomes more modernized, Table-1:- AGRICULTURAL PRODUCTIVITY UNDER TRADITIONAL METHODS a/ Expenditure on Return- Crop Kg/ha /kg- Revenue/ha Seeds and Tools per ha (MF) (MF) (MF) Millet/sorghum 600 35 21,000 500 20,500 Rice 700 25 17,500 500 17,000 Groundnut 500 30 15,000 500 14.,500 Cotton 400 50 20,000 500 19,500 Source: Table on page 3, Bank Report No. 340aNLI, op. cit. a/ Prices fixed by Government except for millet/sorghum whose price reflects prices in "unofficial trade." b/ Before labor costs. productivity is expected to increase. This has been demonstrated in a number of government-supported projects in various parts of the country, although supporting statistics are unavailable. -3- 1,06 Cotton and groundnut are the principal cash crops, the combined acreage in a normal year being about 300,000 hectares. Millet, sorghum, and rice are the principal food crops; about 85 percent of the 2 million hectares under cultivation are devoted to the three. Recent Trends 1.07 Recent trends in production indicate a decline in the output of food crops relative 'to cash crops, a situation directly attributable to government pricing policy which has tended to favor export/cash crops, and to an inadequate marketing system for food crops. While groundnut and cotton have benefited frnm well organized Government agencies which provide extension services and modern inputs at subsidized prices, food crops have suffered. 1.08 Even if one discounts for the effect of adverse weather conditions, the decline in food crop production contrasts sharply with increases in export/cash crop production. Thus, while seed cotton production rose from 39,000 tons in 1967 to 74,000 tons in 1971, and undecorticated groundnut production rose from 81,000 tons to 156,000 tons, millet/sorghum production declined from 830,000 tons to 750,000 tons during the same period. The in relative trends/marketed output have been similar. While marketed output of seed cotton rose 106.1 percent, and that of groundnuts 100 percent between 1967 and 1971, the marketed output of millet/sorghum declined 21.7 percent; there was hardly any increase in the amount of rice marketed. The tables below show the trends in gross production and marketed outputs between 1967 and 1972, and in official producer prices during the same period. Table 2: OFFICIAL PRODUCER PRICES FOR PRIMCIPAL COMMODITIES (Value: current MF/kg; Index 1964 = 100) 1967 1968 1969 1970 1971 1972 Millet/Sorghum V 16 18 18 18 18 20 1 145 163 163 163 163 182 White Paddy V 18 25 25 25 25 25 1 144 200 200 200 200 200 Groundnuts V 24 30 30 30 30 30 (unehelled) 1 184 230 230 230 230 230 Gotton v 40 40 45 50 50 50 (Grade 1) 1 117 117 117 132 147 147 Source: Annex 1, Table 2, of Bank Report No. 340a-MLI, . cit. 5- Table 3: PRODUCTION AND MARKETING OF MAIN CROPS, 1967 TO 1972 (1,000 ton) 1967 1968 1969 1970 1971 1972-a/ Millet/Sorghum Production 830 556 603 600 750 5o0 Marketed through official channel 60 8 26 10 30 5 Marketed on free market b/ 55 46 68 80 60 16 Tbtal marketed 115 54 84 90 90 21 Paddy Production 172 134 161 148 198 110 Marketed through official channel 28 18 29 40 52 30 Marketed on free market b/ 52 38 41 30 30 17 Total marketed 80 56 70 70 82 47 Seed cotton Production 39 50 51 60 74 70 Marketed 33 41 42 53 68 66 Undecorticated Groundnuts Production 81 99 133 156 152 151 Marketed 30 28 56 74 60 50 Source: Annex 1, Table 1 of Bank Report No. 340a-MLI, op. cit. a/ Preliminary b/ Estimat es -6- 1.09 The agricultural sector, which was most severely disrupted by the recent drought in the Sahel, is gradually recovering. The proportion of GDP attributable to the primary sector which had declined to 33.1 percent in 197)4 from 44.1 percent in 1970, rebounded to 38.2 percent in 1975, the bulk of the increase arising from increased livestock activity. Comparative figures for the various sectors are shown in Table 4. The figures also indicate relatively lower recovery rates for the tertiary and secondary sectors, mainly because they had been less sensitive to the drought in the first place. Despite its recovery, however, the agricultural sector's related contribution to GDP is still below what it was before the drought. 1.10 It has been noted earlier that within the agricultural sector export/cash crop production has increased faster than food crop production. The trend is indexed by increasing proportion of land allocated to the more lucrative export/cash crops. This trend constitutes a dilemma for the country. For it implies, if unchecked, that the country cannot hope to achieve the twin objectives of balancing its budget by maximizing foreign exchange earnings and producing enough food to attain self-sufficiency. By allocating more land and other resources to export/cash crops without corresponding increases in allo- cation to food crops, the country is going to have to import more and Tiore food for an ever-increasing population. The foreign exchange demand of such imports may exceed the marginal revenue gains arising from increased export. C. Government Policy psponses in the Agricultural Sector 1.11 The main problems -Acing Mali's agricultural sector include: (1) inadequate rainfall and frequent droughts; (2) low level of technology which implies an extensive use of land and depletion of soil fertility; (3) low 二 8 productivity arising from (1) and (2) above; (4) inadequate pricing of food crops which constitutes a disincentive to surplus production for marketing and leads to imbalance in the allocation of land and other resources to export/cash vis-a-vis food crops such that food crops producUon is inadequate; and (6) inadequate marketing organization. 1.12 The culmination of all these problems has been production of crops,, livestock and other primary commodities below potenti-al levels. To increase production generally_, govemment has set up. a number of 3-nstitutions which organize official agricultural- activity- and seek to enhance traditional farmers' production through pricing and extension services. The key institutions include the following: 1.13 The Ministry of Product-ion wbich, through its Direction General de la jeratj 9j9_ _.2eratio Pr6duction (DGP). controls the 0 ons de Devel ement (OD). TheO ns are financidUy autonomous agricultural management units,, 11 ... concerned essentially with a single cash crop such as groundnuts, cotton., rice., tobacco., and fruit, but subsequently usually diversify to food crops., grown traditionally by the farmer." (Bank Report No. 340a-IILI_, page 4) They are the vehicles for government direct intervention in agricultural production. Given tht. degree of management and financial support ito is little surprise that the ope.*: ations have It ... by and large.,..been successfiLl." (ibid.) 1.14 The Societe de Credit kEi le et d1kill2ement, Rural (SCAER) which is controlled by the Ministry of Finance and Trade. It finances farm equipment and inputs through credits to farmers participating in the 021rations de Dev2jMemMtD and sells similar equipment and:Lnputs to farmers not parti- cipating in the ODs. The details of SCAM's mode of operations andIts -9- problems are discussed in paragraphs 4.13 to 4.17 of Bank Report No. 340a-MALI. The Report's implicit evaluation of the SCAER seems to be that it has been successful and could be even more successful if its relations with the ODs, especially the Operation Groundnt were improved. 1.15 The Societe Malienne d'Import-Eport (SOMIE:), also controlled by the Ministry of Finance and Trade. It is the sole purchaser of groundnut produced by traditional farmers, the sole exporter of cotton and groundnut, and the sole distributor of a wide range of imports including sugar and cenent. SOMIZ balances its budgets through augmenting losses incurred through standard pricing of imported goods with profits generated by exported products, and by govermuent subsidies. 1.16 The Office des Produits coles du Mali (OPAM), controlled by the Ministry of Finance and Trade. OPAM has a monopoly on the local as well as external marketing of cereals. It is therefore wholly responsible for whatever marketing problems bedevil the cereal sector. OPAM has failed in its role to supply consumers with cereals at reasonable costs owing to "...the unrealistic producer price polides andp (Bank Report,:'o2. dit., page 5) Since farmers are unable to adjust their cereal production functions so as to reduce costs per unit of output, one expects production for the market to decline. This has been the trend lately and, despite recent price increases, the prices for cereals are still inadequate to induce farmers to invest in increased produc- tion. Furthermore, the availability of relief supplies in the wake of the drought might have exacerbated domestic cereal short supply. 1.17 The Societe Malienne du Betail et des Peaux et Cuirs (SOMBEPEC), a state livestock enterprise with monopoly over exports of livestock productsi it also manages the Bamako abbatoir. SOMBEPEG is riddled -with management - 1c - problems, and "...finds it difficult to compete with private entrepreneurs for its supplies," (Bank Report No. 538a-MLI, Appraisal of a Livestock Project, page 6), presumiably in its operations at Bamako. 1.18 The livestock Service which is essentially a veterinary service and has been little involved in assisting pastoralists in enhancing productivity for example, through better nutrition and pasture management. 1.19 Other livestock-related institutions include Office Malienne du Betail 6t de la Viande (011BEVI), a FAO-assisted agency which collects livestock marketing statistics and advises government on meat marketing; and lastly, Institut d'Economie Rural (IER), which is responsible for training and research. The IER's manpower training program is sufficiently comprehensive and large enough to cope with the count!r's requirements . D. Evaluation of Agricultural Policies and Progams 1.20 Govenment's dLrect and indirect interventions in the agricultural sector can be conceptualized as a stimulus-response process. The stimuli are the various policies and programs which candition the behaviors of producers and the responses are the manifest behaviors of the producers and the changes those behaviors induce in the space econony. The Crop Sector 1.21 Government policies and programs in the crop sector have failed to produce the intended results. If the objective is to attain self-sufficiency in crop production, a number of options are open: 1.22 (1) Under existing levels of agricultural technology and the constraints of rainfall and soils, adequate price incentives may induce farmers to produce more cereals; 1.23 (2) Under the constraints of rainfall and soils, and of price controls, the technology of production has to become more efficient in order to increase output; 1.24 (3) Since the consuming population is ever increasing, the objective of production for self-sufficiency implies that adequate price incentives have to be combined with increasing productivity and output per farmer. 1.25 In general, government has to manipulate both production and marketing variables in any comprehensive and internally consistent policy or program. Government intervention in the cotton and groundnut sector has been relatively successful precisely because of its internal jklconsistency. On the contrary government control of prices for cereals without adequate measures to reduce production costs has inadvertently led to decline in production. 1.26 Government must understand, too, that farmers are out to maximize their revenues. Hence, as long as they have an option between alternative crops, they will naturally allocate rore of their resources (mainly land and labor) to the more lucrative crops. What is not known yet, however, is what would farmers' responses be like under adequate stimuli for all crops. The answer to this probably lies "n the regional pattern of crop production. An adequate incentive structure for all crops will tend to produce or reirfr ree a pattern of regional crop specialization on the basis of intrinsic envi:'iamental conditions. The potentials and prospects for such a structure are discussed in Chapter I. We only note here that government institutional arrangements have not sufficiently utilized, let alone reinforced, existing regional patterns of crop production. - 12 - 1.27 The conclusion from the analysis of government institutions and their effects on the production of crops is that while there is no lack of institutions, certain critical institutions, e.g. OPAM, have either not been sufficiently effective or have in fact been counter-effective. The content of policies and programs need to be enriched so as to produce positive effects on producing farmers and producing areas. The Livestock Sector 1.28 Until recently, official intervention in the livestock sector has been limited, through SOMBEPEC and IER, mainly, to export marketing and manpower training for veterinary services. Until the recent drought (which decimated the stock by close to 20 percent) came no effort was made to control the numbers of stock or the mode of grazing. As the origins of present problems in live- stock production and management lie in variables controlling numbers of stock and grazing areas (these are outlined on pages 6-7 of Bank Report No. 538a-MLI) government efforts have to be re-directed. E&phasis in the past has been on extracting maximum revenue by monopolizing the export business and administering veterinary services to ensure fairly good quality production. 1.29 Given the emergency situation created by the recent drought and the need to ensure adequate supply for an increasing population, the livestock sector deserves better organization along the lines of Operations Cottoi and Groundnut. Besides, the biggest prospect for export revenues probably lies in the sector. 1.30 Government policies in the livestock sector are well articulated as follows: (a) to help nomads and semi-nomads make the best use of pasture land; -13- (b) to open up new grazing areas; and (c) to help farmers in higher rainfall areas take up beef and milk production. The only major efforts to implement these policies have been through external agencies. These include the international Drought Relief Fund Project (in which the IDA participated), the IDAs livestock Project in the 5th Region (see attached map), and the US-AID and FED (French Economic Development agency) programs for training, extension, and credit for cattle ranching and fattening by farmers. 1.31 The overall impression is that beyond outlining policy, government itself has been unable to promote development in the livestock sector. This is more a question of priorities, though, than of financial inability on the part of government. The fact that the sector has no institution similar to those in the crop sector is an indication of the low priority attached to it in the past. E. The Environmental Factor 1.32 After government, farmers, and traders have done their best to enhance agricultural productivity and output, there still remains the con- straint of the climate. Two-thirds of the country receives less than 400m rainfall in a normal year, and only about one-quarter receives more than the 500mm required to sustain rainfed crop cultivation. There are three broad climatic zones which traverse Mali: the Sahara Desert; the sub-desert which borders the Sahara to the south, termed the Sahel; and the Sudan savanna which which lies farthest south and is generally less susceptible to the wide rain- fall fluctuations and frequent droughts which afflict the other zones. Two -14 - major rivers, the Niger and Senegal, water the southern half of the country; both hold high, though yet only slightly tapped, potential for irrigated agric ulture. 1.33 Detailed discussions of water resources and the intricacies of their development for agriculture and livestock in the Sahel are available 1/ in a number of documents emanating mainly from French sources.- 1.34 The necessary and, in this connection relevant, conclusion from the various analyses of rainfall and general climatic conditions are: (a) that it is not yet indisputably established whether the history of droughts in the Sahel and the associated economic problems are part of a trend towards desertification, or merely a part of a normal, stable pattern of periodio, fluctuations; (b) that whatever the fundamental (if any) process is, there is need for greater investment in, and better manigement of, available water resources both for current domestic consumption and agricultural use; (c) that major long-term investments in the development of water resources in the Sahel will require inter-country programming because the river systems which need to be harnessed traverse international boundaries. Water Resource Development for Agricultural Use 1.35 As regards Mali, there is sufficient awareness about the agricultural potential of the river systems. A number of dams and canals for irrigation 1/ Among others: (a) "Outline of Water Resources Development in the West African Sahel," Technical Services of the (French) Ministry of Co-operation in cooperation with SCET-International, undated. (b) "Attempt to Outline An Anti-Drought Strategy in the French-Speaking Sahelian Countries of Western Africa: Summary of the Main Report," French Ministry of (Bilateral) Cooperation, 20, rue Monsieur, Paris-7 007, October, 1975. (c) "An Analysis and Synthesis of Long Term Development Strategies for the Sael," Organization for Economic Co-operation and Development (OEGI), 1976. 15 are either under operation or in plan. The Sansanding Dan on the Niger River has two canals which divert water southeast of Sansanding. If fully utilized this canal system could water about 950,000 ha. As of now, however, only 55,000 ha, or 5.8 percent of that potential is being utilized. This low utilization ratiois due mainly to the capital-intensiveness of irrigated agriculture. The average cost per hectare of preparing land for irrigation in the area, was about CFAF 500,000, or about US$1,090; which implies that, to fully harness the canals, about US$1 million extra capital would be required. 1.36 FTood plains have also been reclaimed for the cultivation of rice and groundnut. By 1964 63,000 ha had been reclaimed, By 1969, cultivatable, however, out of 58,000 ha still potentially only 18,000 ha, or 31 percent was under productive use. Further south in the Sikasso area only about 25 percent of the 4,000 ha reclaimed land is under productive cultiva- tion. 1.37 Besides the existing capacity for irrigated and flood plain agri- culture, additional capacity is expected to be created when the proposed Selingue Dam on the Niger River and the Manantali Dan on the Senegal River are completed. About 55,000 ha would be available for productive use from the Selingue Dam project alone. 1.38 The conclusions from this review of water resource development for agricultural use are: (a) that considerable potential for flood plain and irrigated agri- culture exist in iali; (b) that there,is still considerable excess capacity for further utilization; and therefore - 16 - (c) that further investment in irrigated or flood plain agriculture at this time will amount to inefficient allocation of capital. Problems in Modernized Agriculture 1.39 Despite the obvious advantages derivable from modernized agri- culture inMa.i, it has been difficult to attract enough settlers a keep those attracted on reclaimed and irrigated land permanently. For example, the Sansanding area irrigation project had about 38,000 settlers in 1960; by 1965, however, the population was down to 30,000. Of a sum of CFAF 3 billion (or about us$6,516) invested in settler production in 1970, Only CFAF 2.3 billion (or about US$4,996) was recovered in output. The same year also featured a further 10,000 ha in excess agricultural land capacity, 1.4O In general, then, modernization in agriculture is hampered by slow innovation adoption rates. Adoption rates are, however, determined by cultural factors and propagation techniques. It may be necessary to provide a set of inducements and incentives for potential adoptors of new farming techniques and environments in order to attract and retain them. 1.41 One approach may be to confer ownership rights of lots of land on settlers as long as such land was under cultivation with preferred techniques. This should, of course, be complemented with necessary price incentives and extension services. Attempts should be made to the extent possible to minimize the divergence between the socio-cultural milieus at the old and new the/settlements of adoptors. Importantly, the family structure and the design of residential quarters should not be radically altered, if at all, by change in locale. Mobility between the settlement projects and settlers' original homes should be facilitated so as to retain a sense of social continuity. -17 - 1.42 In sumary, we conclude that water resource developments for agricultural use have not yielded returns commensurate with current potential mainly because they were not comprehensively designed. The settlers have to be "prepared" just as much as the land. F. The Seconday Sector 1.43 After the decline of the 1960s the secondary sector appears to be picking up again. The following abstract is a description of trends in: the sector: 1.44 "From 1972 secondary production became the fastest growing segment of the economy. Simple processing of agricultural materials, like rice milling, cotton ginning, oil seed crushing, and agro-based industries like textiles and sugar, account for about half of the secondary sector's contri- bution to GDP. Therefore the performance of the secondary sector is partly determined by agricultural production trends. The output of cotton lint, vegetable oils, oil cakes and textiles declined in 1974 owing to bad harvests, but production of sugar, bicycles, motorcycles, water and power continued to expand. In fact, power generation has been the leading subsector within the secondary group. The production of electric power increased from 44.7 MWh in 1971 to an estimated 76.5 MWh in 1975 or by about 14.4 percent per annum. Production of agro-based industries rose again in 1975 and raw materials supplies increased...Production of cotton went up 13.0 million meters in 1974 to 14.7 million meters in 1975. However, textile output is now beginning to be constrained by inadequate demand and illegal imports. There were also significant increases in the production of cigarettes, bicycles, motorcycles and cement.nuI 1/ Draft Confidential Report No. 1134-I1LI: Mali Economic Memorandm, April 1976, parag. 5, Western Africa CP1. - 18 - 1.45 It must be quickly noted that the description of the role of power generation as "the leading subsector within the secondary group" refers only to the rate of increase in output between 1971 and 1974, not the absclute contribution of power generation to GDP. In fact, the contribution of energy to GDP, despite the implied rate of increase in output, remains at about 1.2 percent. 1.46 There was a significant increase in output in the secondary sector between 1969 and 1970 (15.3 percent). Output further increased by about 5.5 percent between 1970 and 1971; and as the above abstract indicated, the increase in secondary sector activity has been particularly remarkable since 1971. Because the industrial subsector comprises mainly agro-based industries, the vitality of the subsector augurs well far the agricultural sector. 1.47 The changes in energy production are not matched by corresponding changes in energy consumption, which implies wasteful production due to excess capacity. Far although production has doubled every six years since the mid-sixties, consumption has increased much less rapidly. In 1971, for example, total generated capacity was 22,500 KW producing 44.7 million KW/h of which only 33.5 KW/h was sold. Additional capacity is expected to be generated from the proposed Selingue and Manantali dams. Without corresponding expansions in energy consuming activities in all sectors, the energy sector will only become increasingly inefficient. 1.48 Public works and construction have been in phase with manufacturing, understandably because both subsectors are dominated by the public sector. There is also a discernible collinearity between the trends in transportation and construction and public works, both subsectors contributing almost equal amounts to total GDP. -19-V G. The Tertiary Sector 1.49 Trade, transportation, public administration and other service activities have remained on steady increase in the last decade despite the drought (see Table 5). Indeed, the tertiary sector became the highest contrf-butor to GDP from 1972 although it is not expected to retain that status for much longer.if the primary sector sustains its recent dynamism. Within the sector, trade is the dominant component and the modern subsector the principal actor. An inspection of Table 4 shows that trade has accounted for between 55.1 percent and 56.3 percent of total tertiary sector since 1969; and after a temporary decline between 1969 and 1972, it has climbed up to 55.9 percent of total tertiary sector contribution to GDP. The shares of the traditional and modern subsectors have diverged significantly since 1970; the split which in 1970 was 47:53 percent had become about 35:65 percent by 1973. The estimated split in 1975 was 30:70 percent. 1.50 Since the modern sector in Mali is dominated by the public sector, it is inferred that goverment participation in trade has increased and is likely to continue to increase. How this situation came about is explained later in the paper. Whether the level of trade would have been lower or higher without so much government participation remains conjectural, although quite contrary to the original expectations, most of the state enterprises which were involved in tertiary activities are still operating at a loss. Transportation which accounts for less than 10 percent of GDP attributable to the tertiary sector, and trade are the two culprits in this regard. The transportation subsector is further discussed later in the paper. 1.51 The main conclusion from this review of the secondary and tertiary sectors is that growth in the two sectors has been due mainly to public - 20 - Table 5: GDP AT CONSTANT 1969 MARKET PRICES BY SECTOR (Billions of MF) a/ a/ a/ a/ 1969 1970 1971 1972- 1973- 197h- 197- Primary Sector 58.7 63.3 64.7 65.7 54.0 50.3 61.7 Secondary Sector 18.9 20.9 21.4 24.3 27.9 29.2 32.1 Tertiary Sector 57.9 59.9 63.8 67.8 71.1 74.6 79.9 Gross Domestic Product 135.5 144.1 149.9 157.8 153.0 154.1 173.7 Product a/ Provisional. Source: Recent Economic Developments in Mali, IBRD., September 1973; mission estimates for 1972 and subsequent years. investments. But owing to a set of reasons (discussed below) significant inefficiencies remain. Government policies and programs in the two sectors therefore need to be streamlined so as to minimize, if not eliminate, the inefficiencies. H. The Process of Change in the Tertiary and Secondary Sectors 1.52 The history of French colonial rule in Mali is also the history of accelerated secondary and tertiary activities in the country. Formal sector employment began with the construction of the railroad linking St. Louis in Senegal to Bamako in Mali. Growth in major cities along the railroad--Kayes, Kita, and Bamako--was also contemporaneous with increased economic activity and trade which Fxench influence and the railroad generated and facilitated. 1.53 The tertiary sector originated with transport development which began in the late 1890's, and with the provision of power, water supply, and - 21 - housing needs of the colonial settlers in the major cities, namely Kayes, Bamako, and Segou among others. Once colonial administration and a rudimentary transport network were established, camercial crcp production and trade were vigorously promoted. A distribution system was established both for the collection of agricultural produce and the distribution of imports. In general, colonial administration created the economic climate which was conducive to commercial growth and, by implication growth in the tertiary sector which, until immediately after independence in 1958 was dominated by expatriates (mainly iench, but also Arabs). 1.54 The primary actors in pre-independence commercial development were private-profit motivated, in addition to being expatriates. Which is why, when the indigenous government embarked on a sustained policy of representing "...the will of the Malian people to consolidate their political independence by control of the strategic sectors of the national economy....," in a way that "intinidated" the expatriates, a process of capital and entrepreneural migration began. Capital inflow mainly from the Soviet Union and China which followed was directed at the secondary sector, which hardly existed at the time of independence. 1.55 Before 1959, non-Malians, mainly Europeans and Lebanese controlled commerce in Mali. Most products were imported by large companies and retail trade was conducted through small (Lebanese) traders based in the national and regional capitals. The.first attempt at regularizing trade was made by the Government with the institution of the "Office de Cereales" which was responsible for price controls, permits, and general supervision of the rice market. 1/ Quoted in Valerie Plave Bennett, "Military Government in Mali", The Journal of Modern African Studies, 13, 2 (1975), pp. 255-256. - 22 - 1.56 The greatest reform, however, started in 1960 with the creation of SOIEE (Societe Maliene d'Importation et d'Exportation). SOMIE imports all conmodities and redistributes them to stores andlocal middlemen, the objectives being to ensure that the local population is adequately supplied with essential consumer goods at reasonable prices, and to furnish government with the bulk of the profit. The overcentralization and concentration of functions in SCMIE made it so inefficient as a retail distribution enter- prise that the Government had to decentralize it and re-define its role in the country' s c ommercial system. 1.57 Now, SOMIEX is mainly responsible for commercial and trade policy making. It has six agencies and 16 regional offices distributed among the major urban centers. The six agencies each have responsibilities fkr the purchasing and ex*ort of the country's major export commodities, e.g. rice, cotton, groundnuts, and butter. Other enterprises, although controlled by the state, maintain a quasi-autonomous status, e.g. the pharmacy, publishing, and hotel businesses. The hotel business, for instance, is now controlled by the state through the Ministry of Tourism. There is also a cooperative distribution system which is coordinated by the Union des Cooperatives. The system was started in 1964 and, in 19.6 the Union des Cooperatives was formed as a virtual monopoly enterprise handling imports and wholesale distribution of food, textiles, hardward, electric appliances, etc. By 1968, about 70 percent of all food purchases were made via the cooperatives. 1.58 The objective of state enterprises in the tertiary sector was to systenatically replace expatriates by creating and protecting an indigenous camercial system whose profits could be rechannelled into the economic - 23 system for developnent purposes. This objective, though sound and patriotic, was pursued with strategies which produced negative results. 1.59 Government policy has also been the principal factor conditioning developments in the secondary sector which emerged only after independence. Prior to independence, it was the policy of France not to establish manu- facturing or processing industries whose products would be competitive with imports from France. And as long as the colonial administration received subsidies from France for balancing the trade deficits, there was no real need to promote import-substituting industrial growth. But with independence came a desire by the indigenous governent to "modernizen (i.e. industrialize) the econom and make it less dependent on, and vulnerable to, external factors. Translated into an economic policy, it implied growing an import-substituting (if not exporting) industrial base and promoting export earning production (i.e., agricultural production). 1.60 Quite contrary to the original expectations, most of the state enterprises which were established in pursuit of the above nationalist objectives are still operating at a loss. They have been unable to cushion the treasury as was envisaged; rather "the state enterprises continue to be a 1/ drain on public revenues." The main culprits are the trade and transport enterprises which have tended to charge prices and tariffs below costs. In the processing and manufacturing subsectors, the problem has been idle capacity and hence production below capacity levels due to shortages in the supply of agricultural inputs. 1/ Bank Report No. 233a-]MI, September 5, 1973, page 12. 1.61 The military government that took over in Mali in 1968 inherited an ailing economy strongly controlled by a poorly managed public sector. The new government inherited 27 state enterprises with a total labor force of some 20,000. The inefficiency of these enterprises was so obvious that it was tempting to have expected the military government to overhaul the policy underlying their creation and the management which produced the inefficiency. But in principle, there was nothing wrong with "the will of the Malian people to consolidate their political independence by control of the strategic sectors of the national economy-.- Moreover, Itthe junta faced a serious conflict with regard to the future of these public corporations: on the one hand, it intended to safeguard them because they represented 'the achievements of the Malian peoplef; on the other, it had pledged itself to honor the franco-Malian economic agreements, which would have required closing down any unprofitable state enterprises. Traore (i.e. the leader of the junta) was unwilling to take this step, particularly as regards the state trading corporation, believing that this would mean a return to excessive French economic influence within Mali. He also discovered that the _2ployees (who were highly concentrated in and around Bamako) were a powerful pressure grup....If the Government closed the state enterprises there would be imediate demands for their reopening because each employee supported 5-10 other persons. The MNCL (Military Council for National Liberation) hoped that the state enterprises could be made more profitable through reorganization, increased 1/ Quote from Valerie Plave Bennett, 'Military Government im Malit, The Journal of Modern African Studies, 13, 2 (1975), pp. 2_-256- itself quoting from le Mniteur african du Commerce et de l'Industrie (Dakar), 27 December 1973, p.. efficiency, and new management. Almost a third of the total labor force employed under Modibo Keita was fired, and new managers were hired. For example, the inefficient technical director of the fruit juice factory near Bamako was removed; his tenure had previously been secure, in spite of heavy absenteeism, since he was the nephew of Keita (the ousted President). - 1.62 The above passage suomarizes the more political dimensions of the problems of the state enterprises. But, as in all other Sahelian countries, the political and economic problems are not independent of each other. The political instability which necessitated the military coup di-etat of 1968 was precipitated by economic problems indexed by rising prices and falling 2/ standards of living, especially in the key urban centers.- Perhaps the best description of the process of interaction between the Government and the secondary and tertiary sectors is the following abstract from Dirck Steyker's article: The rapid expansion of demand for beef in sane of the coastal regions of West Africa has recently caught up with the available supply from the interior, and cattle prices have increased dramatically. This price rise has been accentuated by the effects of recent drought which seriously depleted the herds. Consequently, there is enormous incentive for interior regions to find new ways of increasing production which, at the same time, take pressure off their overburdened range-lands. 1/ Ibid., p. 256. 2/ See J. Dirdk Stryker, "The Malian Cattle Industry: Opportunity and Dilemma," in The Journal of Modern African Studies, Vol. 12, No. 3, pp. 441-457 for a review of the political crisis generated by an economic opportunity. - 26 - Mali is fortunate in having aresource endowment which has considerable potential in this respect. At the same time the Mali Government is faced with a precarious situation in which the real income of its employees, whose support is vital for political stability, has steadily eroded since independence in 1960 because of rising prices. From the ruling elite's point of view, then, the expansion of demand to the south is seen more as a threat than as an opportunity, since it has caused cattle to be shifted from Mali's urban markets towards the export trade. As a result, there is the danger that action taken to solve the immediate problem of meat shortages and high prices by controlling and restricting trade may well inhibit 1/ development over the longer term.- 1.63 The process within the two sectors could be conceptualized as follows: (a) The political and economic aspirations of the immediate post- independence era evolvelinto a set of economic policies characterized by government control; (b) The policy of government direct participation in)and control of) the strategic sectors of the economy produced a new economic situation which was less desirable than target objectives and, probably, was worse than what existed before; 1/ Ibid. -27- (c) The new econanic situation, though inefficient and undesirable from a social viewpoint, benefitted a powerful class of people--the workers and managers--whose influence became a barrier to effective and adequate changes in economic policy. As long as that barrier remains, the economic aspirations and objectives, with the corresponding policies and institutions will have to be reformulated; otherwise the political barrier has to:yield in the light of the econanic situation. 1.66 One cannot escape the conclusion that the situation in the secondary and tertiary sectors, to the extent that they are relatively independent of environmental factors (both physical and external economic), have been created by Government policies. Those policies are changing gradually; but further changes, both political and economic, may be necessary before the current situation can improve. - 28 - II. PLANNING PROBLEMS, OBJECTIVES, AND PRIORITIES A. The Macro-Econamic Problem 2.01 The fundamental macro-econanic problems of Mali remain two-fold, namely, mounting trade deficits and imbalance between current revenues and expenditures. The two problems are, in Mali's case, very closely related. Trade deficits keep mounting partly because Government revenues from domestic sources are not sufficient to finance its expenditures, the difference being met by foreign transfers. Despite the military Government's efforts, by 1973: fThe official budget deficit was running at a level of about 3. billion Malian tranes (US$7 million). Of this France covered about 2 billion, and the rest was subject to deferred payment." The situation between 1969 and 1974 is shown in Table 6. 2.02 The balance of payments picture between 1969 and 1972 was as indicated in Table 7. 2.03 The two tables reveal that the mercurial measures adopted by the new Government in 1968 showed their effect only for a very short period, namely 1970-71. As from 1972, whatever measures had been adopted to combat the economic problems became ineffective in achieving the macro-economic objectives. The drought has been the major factor. But there are economic and political factors too, as has already been explained. B. Planning Objectives and Strategies 2.04 Against a background of worsening economic problems the Mali Government in 1974 launched an ambitious Five-Year Economic and Social Development 1/ J. Dirck Stryker, c. cit., page 447. -29- Plan whose objectives and strategies have been well summarized as follows: "The Five-Year Econanic and Social Development Plan aims essentially at meeting the basic food and waterrequiranents of the population and at correcting, as much as possible, the structural weaknesses of the econagy. The general strategy of the Plan is to promote agricultural development on a priority basis so as to achieve self-sufficiency in food, to generate adequate supplies of materials for the expansion of processing industries and to ensure increasing surpluses of primary products for exports. Large investments in transport, dams and power are expected to provide the infrastructural under- pinning for the targeted expansion of primary and secondary sectors of the econemy.1- 2.05 With little or no elbow room in its options, it is clear why the Goverment places such high priority on the agricultural sector. 2.06 Overall GDP is expected to grow at 7.3 percent per year during the Plan period, reaching a target of 269.3 billion MF (in 1972 prices) in 1978. 2.07 The forecast total investment outlay over the 1974-1978 period in 1974 prices is 395.2 billion MF of which the allocation to the primary sector is 133 billion MF., or 33.7 percent. Agriculture accounts for about 75 percent of the primary sector allocation. 2.08 The secondary sector claims the second largest share with 110.6 billion MF. About one-third of this amount is earmarked for the Selingue and Manantali dams on the Rivers Niger and Senegal respectively. Textiles and food processing are the top priorities in manufacturing. The sectoral allocations in the Plan are shown in Table 8. 1/ Bank Draft Confidential Report, op. cit., paragraph 25. Table 6: GOVERNMENT FINANCIAL TRANSAGTIONS (Billions of MF) Actuals Budget 1969 1970 1971 1972 1973 1974 1971 1972 1973 1974 197 1976 Budgetary Operations Revenues 17.14 19.95 21.50 22.47 25.05 26.2 22.79 26A6 28.88 24.66 28.13 4m_ Expenditures 22.21 22.17 24.00 26.67 29.79 32.97 25.o4 28.88 31.30 31.82 38.12 49.27 Budget Deficit -5.07 -2.22 -2.50 -4.20 -4.74 -6.15 -2.25 -2.32 -2.42 -7.16 -9.99 -9.15 Extra-budgetary Operations (net) -1.24 -1.30 -1.00 1.89 -0.70 -1.50 -- -- -- -- -- -- Total Deficit -6.31 -3.52 -3.50 2.31 5.4 7.65 -- Financing of the Deficit External Sources· 5.48 2.21 2.00 2.00 5.01 6.58 -- 1.58 2.42 7.16 9.99 9.15 L oans 0.5" . - -- --079- Grants 5.00 1.72 2.00 2.00 5.01 6.58 1.72 1.58 2.42 7.16 9.99 9.15 Domestic Sources 0.83 1.31 1.50 0.31 0.43 1.07 Central Bank Gredit 097 0.[h9 0.27 0.50 -0 ..- -3 -0 Deferred payTrents -1 .28 0.93 1 .35 -- -- -- -- -- -- -- -- -- Others 1.14 -0.11 -0.12 -0.19 0.73 -0.38 -- -- -- -- -- -- Total Financing 6.31 3.2 3.50 2.31 5.44 7.65 -- -- -- -_ Source: Abstract from Statistical Annex Table 14, Bank Draft Confidential Report No. 1134-MLI, o. cit. Table 7: BALANCE OF PAMENTS (Billions of MF) 1968 199 17 91 1972 193 1974j l97" _ Merchandise exports, f.o.b. 2/ 8.84 13.33 19.20 21.80 22.70 23.29 30.80 29.60 Merchandise imports, f.o.b. 2/ 15.04 19.91 23.49 27.36 32.20 47.34 62.10 500 Trade balance -7.20 -6.58 -4.29 -5.56 -9r.30 -24.05 -31.30 -23.40 Feight and insurance on merchandise -4.66 -5.16 -5.79 -6.47 -7.40 -8.64 -23.76 -20.20 Other transportation -0.68 -0.66 -0.66 -0.35 0.10 -0.14 -3.06 -2.93 Travel -2.08 -2.90 -2.44 -2.31 -3.54 -4.48 -6.98 -7.22 Investment income -0.74 -1.06 -2.94 -3.18 -2.70 -3.89 -4.05 9.55 Government, n.i.e, -4.10 -3.06 -o.65 -0.72 -2.73 0.35 -1.78 -2.5 Other services 0.18 2,60 2.25 0.22 2.88 0.46 -2.44 -1.75 Net services -12.08 -10.24 -10.23 -12.81 -13,39 -16.34 -42.07 -44.20 Net private transfers 3/ 2.50 1.88 2.90 5.45 $.65 3.91 4.79 4.35 Net gooda, services and private transfers -15.78 -14.94 -11.62 -12.92 -17.04 -36.48 -68.58 -63.?5 Net government transfers 3.94 8.95 7.96 7.66 10.61 21.71 48.17 37.24 Balance on current account -11.84 -5.99 -3.66 -5.26 -6.43 -14.77 -20.41 -26.01 Private capital (net) -6.64 -2.97 0.03 -0.20 -0.74 -4.32 -2.22 -0.67 Medium- ard long-term ( 0.06 ( -- ) (-0.01) ( 0.12) ( 3.04) (-0.73) ( 1.92) ( 3.59) Short-term (-6.70) (-2.97) ( 0.04) (-0.32) (-0.74) (-3.59) (-4.14) (-4.26) Government loans and credits (net) 9.34 2.46 0.79 2.77 6.12 4.88 7.98 8.54 Net capital 2.70 -0.51 0.77 2.57 5.38 0.56 5.76 7.87 SDR allocation -- -- 1.59 1.31 1.28 -- -- -- Net errors and omissions 0.22 -1.30 0.70 1.62 -2.83 3.51 -0.19 -8.16 Change in reserves -8.92 -7.80 -0.60 -3.00 -2.60 -10.40 -14.50 -26.30 1/ Provisional. 7/ Rocorded trade. / Includes Malian workers' remittances since 1970. Source: Statistical Annex Table 8, Bank Draft Report No. 1134-MLI, o cit. - 32 - Table 8: FIVE-YEAR PLAN 1974-78 INVESTMENT OUTLAYS Billion MF (1974 prices) Percent Rural Development 133.0 33.7 Agriculture and forests (109.3) (27.7) Animal husbandry ( 23.7) ( 6.0) Seconda7 Sector 110.6 28.0 Power and water development ( 63.9) (16.2) Industrial development ( 33.5) ( 8.5) Mines ( 13.1) ( 3.3) Tourism and Communications 91.1 23.0 Traniport ( 78.9) (20.0) Posts and telegraph, telecommunications ( 12.2) ( 3.0) Social Services 60. 15.3 Education and culture ( 27.4) ( 6.9) Town planning, housing and public works ( 22.8) ( 5.9) Health and social affairs ( 10.3) ( 2.6) Total 395.2 100.0 Source: Bank Draft Confidential Report No. 1134-MLI., p. 18. 2.09 It is noteworthy that about 85 percent of total investment is to be financed through external loans and grants. This fact coupled with anticipated shortfalls in domestic resource availability is expected to lead to "a further deterioration in the balance of payments and a larger budgetary deficit.1-! A fairly comprehensive appraisal of the Five-Year Plan's objectives and strategies vis-a-vis the required investment spending could be found in paragraphs 30-43 of the above reference. 1/ Bank Draft Confidential Report, op. cit., paragraph 27. - 33 - 2.10 The Ministry of Planning is itself currently undertaking an appraisal of the Plan targets and it has been indicated that (a) in the event of inadequate financing or other constraints, the investment program will have to be pruned, and spending on low priority sectors or on projects with least input-output linkages postponed; (b) it would be desirable now to alter priorities and allocations within and between sectors on the basis of comparative advantage of different activities and cost-benefit ratio estimates of social investment projects. 2.11 While it might be desirable to aspire to high targets in planning the economy, Plan targets should be as realistic as possible. In this regard, the Five-Year Plan targets are largely not feasible. The investment is too dependent on external resources and too optimistic about domestic resource potentials. For instance, although the Plan envisaged that 80 percent of total investment would be externally financed by early 1976, only 38 percent has aotually been obtained. There is no need for further proof that investment targets should be pruned, and immediately too. Even if the balance of expected external financing were subsequently available, the timing of investments would have been out of step with Plan targets. 2.12 Moreover, ihe results of a recent study of Domebtic Resource Cost (ERC) structure- for agricultural and industrial production in Mali provide a basis for intra- as well as inter-sectoral investment allocation. The study showed (what might have been intuitively obvious) that Mali enjoys much greater comprative advantage in primary products than in manufactured products, and that 1/ The results for Nai were part of those for four West African countries including Senegal, Ghana, Ivory Coast, and Mali. -34 - within the agricultural sector, livestock, cbtton, and_groundnut oil, vegetable, and fruit processing.have comparatively low DRCs. C. Policy Implications 2.13 It will therefore appear that a policy of attaining self-sufficiency in cereal production is not a necessary condition for guaranteeing adequate food supplies as long as production for exports outweighs imports of focd. And the simultaneous expansion of exports and imports does not necessarily hinder improvement in the balance of payments provided the export sector expands faster than imports. 2.14 Does this therefore imply that the Government pricing policy which favors growth in export crop production is not necessarily a bad policy? Perhaps yes. If yes, then policy with regard to food supply may need to be restated such that guarantee of supply, rather than self-sufficiency, becomes the objective. But to the extent that stable international market prices and supplies of food (mainly cereals) cannot be guaranteed, the current statement of food supply objective remains adequate, especially in the light of the recent experience of the country. 2.15 But in terms of inter-sectoral linkages, the DRC structure suggests the following set of policies: (a) promoting increased production of export items, especially livestock, cotton, and groundnuts; (b) strengthening the linkages between the primary and secondary sectors by caqplementing (a) above through promoting sugar, cotton textiles, and groudaut processing; meat processing should also be vigorously promoted since livestock production not oly has low MC, but also because it is one way to winimd e the illegal across-border trade in live cattle which is currently hurting Mali's external trade. 2.16 The sensitivity of Mali's external trade to transport costs should not deter progress in promoting exports along the lines suggested. What would be required is corresponding improvements in the vital transportation networks linking different parts of the country, and the country to the outside world. The special features of the transport network as they affect resource and population mobility within the country and between Mali and its neighbors are discussed in the next chapter. -36- III. SPATIAL ASPECTS OF THE MAIIAN ECONOMY A. Definitions 3.01 Spatial economic development refers to two processes, namely: (a) the process of economic development as expressed in changes in the economic characteristics of geographic space; and (b) the development of human and natural resources distributed in geo- graphic space, according to natural as well as economic laws. In discussing the spatial economic development of Mali, therefore, we are concerned with the ways in which natural and economic laws have operated and might operate to induce desirable changes in the economic characteristics of people and resources in geographic space. Desirable changes in geographic space include all those changes which fulfil the objectives of rational economic and social development. B. Spatial Characteristics of the Malian Economy The Spatial Distribution of Economic Activity 3.02 The existing distribution df population constitutes the most strategic framework for analyzing the space economy because the distribution, to the degree that it is stable over the long-run, indexes the distribution of natural resources, the types of economid activity engaged in by the population, and the most probable future trend in the country's spatial economic development. 3.03 The most striking characteristics of the Malian space econany are its orientation to the ecologically more stable southern third of the co=bry, particularly to the river systems, and to the integrated transportation systen ihich includes road, rail, and river subsystems.- This pattern has evolved 1/ See attached maps of geographical distributions of crop cultivation, of population density, and of the transportation network. -37- from the interactions between physical, p-olitical and economic factors later discussed in this paper. Agriculture and Livestock 3.04 A careful inspection of the geographical distribution of crop culti- vation and livestock husbandry :%eveals als'o that four of the six administra- tive regions, namely, Yopti, Skasso, Segou, and Bamako are the most versatile. They are for that reascri the potentially most economically secure parts of the country. It is also Signiffcant that livestock husbandry is an ubiquitous activity - even Gao region has its own sizeable stock. 3.05 The regional distributions o' the macor crops and livestock as of 1967 are shown in Tables 9, 10, and 11. Table 5 Regional Production Figures, 1967 Cotton Pearuts (ginned) (unshelled) Cattle Sheep/Goats Rice Millet (000 tons) ('000 heads) ('000 tons) Kayes - hh 2LA 189 8 103 Bamako 7 30 219 158 16 133 Sikasso 10 25 329 224 15 188 Segou 6 28 232 3:'0 6 165 Mopti 1 1 419 540 119 Gao - - 228 476 10 38 TOTAL 21 117 1691 1948 99 825 Table 10 Regional Crop Productivity, 1957 Cotton Pr qnuts Rice Millet ( Tons/Ia.) Kayes - *.76 0.89 0.99 Bamako 0.47 0.30 0.84 0.70 Sikasso 0.29 1.1h 0.83 0.92 Segou 0.60 1.0) 0.67 1.08 mopti 0.33 1.00 0.69 0.70 Gao - - 0.67 0.85 Table 11 Rank-ordering of Regional Distribution of Prduction, 1967 Four Diriant Producing Regions Product in Descending Order of: Out)>uIt Yield/ha Cotton Sikasso Segou Bamako Bamako Segou Mopi;, Moptmi Sikasso Peanut Kayes Bamako Bamako Sikasso Sikasso Segou, Mopti Segou Kayes Rice Mopi Kayes Bama:,o Bamako Sikasso Hopti Gao Segou Millet Sikasso Segou Segou Kayes Bamako Sikasso mopti Gao Cattle Mopti Sikasso Segou Gac Sheep and goats Morti Gac Segou Siasso Source: Derived from Table No. 4, page 52, of "Notes et Etudes Documentaires: Le.Mali," La Documentation Francaise, April 1974. 3.06 Table 1 is very useful for Gmerment agricultural and livestock policy purposes, particularly if it could be generated over a time series. But if we assume that 1967 was a normal year, and that the 1967 pattern has been restored after the recent Irought, then the following points can be made about agricultural anq9 li4estock p-oduction. 3.07 1) Otput of all the major itens of production is concentrated in -39- Mopti (rice, lives-;ock), Sikasso (cotton, millet), and Kayes (peanut). Between them the three regions control the bulk of cereals as well as export items. Although not leading in the prodction of any crops or livestock, Bamako and Segou regions are strong seconds in the production of cotton, peanut and rice, and millet respectively. So also is Sikasso with respect to cattle, and Gao with respect to sheep and goats. 3.08 2) The leading producing regions are generally not the highest yielding regions. Comparative advantage in crop production is thus not matched by actual production. Average yield per acre of ginned cotton, for instance was highest in Segou although actual acreage sown was second to that in although Sikasso. Similarly, Bamako has highest comparative advantage in peanut production, Kayes is the leading producing region. And Kayes region which leads in the production of peanuts actually has highest comparative advantage of in rice production. AllAhis suggests that it is highly probable that agri- cultural land is being suboptimally utilized. 3.09 If we assume that there is no such land shortage as could limit the possibility of reallocating land among crops, the following regional crop production pattern, based on both recent aggregate outputs and average yields per hectare emerges as a more efficientl pattern. Table 12 Crop Two Productioi Optimizing Regions Cotton Sikasso, Segoa Peanut Kayes, Bamako Rice Hopti, Kayes ~illet Sikasso, Segou 1/ Efficiency is defined here in terms of optimizing for aggregate output sdbject to the condition that no crop is cultivated in more than two regions, and that each region specia-izes only according to its current position as the leading and/or highe.-t yielding producer. 3.10 With respect to livestock, spe-ialization could be promoted to the extent that mixed farming is possible in any of the six regions, given the ubiquity of livestock husbandry. In. general, Mopti, Gao, and Sikasso are the leading livestock regions. Implications of Government Policy and Implications for Government Poli2y 3.11 It was emphasized earlier in this paper that Government farm price policy has tended to favor export crops. Which implies, in regional terms, that Government policy has tended to benefit Sikasso (cotton, peanut), Kayes (peanut), and Bamako (cotton, peanut) more than other regions. The greatest disadvantage of this policy to the whole economy is that it has the effect of reinforcing an inefficient pattern of production. For example, farmers in Kayes region who are now intensifying peanut production might, in fact, otherwise produce cereals more efficiently. 3.12. The Operationsde Developient which are charged with promoting modernization in agricultural production and marketing should find the comparative advantage structure useful in determining where to promote which crops,for m&ximnu yields at least costs. And at this point, part o:' the Bank's own agricultural development program in Mali should be evalu,te,. It appears that the Integrated Rural Derelopment Project-/ which se-k- to enhance the productivity and output of peanuts wherever it is produced in Mali ignored or was not informred by comparative advantage data for the regions, for the project extends across five of Mali's six regions. 3.13 Government agricultural policy has had some positive effects: better land management and agricultural techniques have reduced the adverse effects of prolonged drought cn export crops and, by implication export crop producing regions, particularly Bamako, Sikasso, and Kayes. Recent joint efforts 1/ See review and evaluatfon ef this pro,ect in the Annex on Bank Projects in Mali. by IDA and the Mali Government in developing polders in Mopti and Segoui, both in the Sahel proper, and in Sikasso are beginning to yield results. Average annual output of millet and Sorghm in tho.e regions increased (thanks to improved rainfall too) from 600,000 tons between 1968 and 1972 to 800,000 tons in 1975. Rice production increased from 158,000 tons in 1971 to 250,000 tons in 1975. 3.14 The need for spatial planning in agriculture, as in other spatial economic activities, derives from the following axioms; a) useful space is limited; b) investment resources are linited: c) given a fixed amount of useful land in different regions, and a fixed amount of resources to be invested in the fixed amount of useful land, the expected outputs vary according to the intrinsic qualities of the pieces of Land (i.e. comparative advantage). It is therefore reasonable to allocate investment resources according to those qualities. For Mali this is particularly necessary considering the scarcity of agricultural investment resources. Location of Secondary Sectcr Activiy 3.15 Mawufacturing and tertiary activities are, by definition, closely associated with the urban sector. This is particularly so in Nali where the secondary sector is of recent development, having begun only about 1 AI * shortly after the country's indepen.lence. 3.16 There are three categories of manufacturing: 1) those with direct backward linkages with the agriculttral sector; 2) those which are inxort-intensive bat purportedly I!Vrt- :F ttuting; and 3) those whidch are imoort- substituting, but less import-intensive !and are using local non-agricultural resources. Generally, the most characteristic feature of t'Ae industries is their transport and raw material orientation. Bcth fac.-rs - raw rrterials and transport - ensure that the indusries oriented to teia are relatively dispersed. 3.17. There are two 'cc'-,: industria .s both aligned to the Niger river, namely, the Bamako-Koulikoro and Segou-4iarkala industrial zones. The Bamako-Koulikoro 'Complex' is the larger of the two, although dissaggregated statistics are not available to indicate how much larger it is. Thdustries in the zone include Textiles, Tobacco, hides and skins, and soap and chemicals. Those at the Segou-4arkala 'Complex' are the more direct1y linked to local raw materials. They are in fact complementary to the considerable irrigated agricultural activities and hy&o-eectric power generated from a small dam on the Niger ,river upstre:mi fron Mlarkala. Industries in the area include the Rice works (at Dogofi), the Sugar Mills (at Dongabougore), and the first and largest textile mills in Mali (at Se,ou). 3.18 A new textile fac.ory, manufacuring Jute sacs and using locally produced jute has recently been established at San about 120 miles east of Segou. San also has a rice ill. 3.19 The other major idustries belong in the import-intensive and import- substituting category and are strictly raw material-oriented. They are the cement works at Dianou southwards from "ayes, and the Phosphate plant at Tlemci, an enclave north of the RiverNiger, between Timbuctu and Gao. Relative Capacities of the Industries 3.20 Total employment in the secondary sector in 1974 was about 19,000, 12,000 or 63" of which was in the state sector. EmploNyment in the industries was distributed as follows: rood 2 Textiles 37%5 66w Power _ Metallurgy 24, Chenicals, Soap, & Tobacco 10% Between them, food products and textiles accounted for 66% of industrial employment (and presjably, of' industry's contribution to GDP). This dis- tribution augurs well for Mali's industrial sector considering that Domestic Resource Costs (discussed earLier) are generaliy lower in the food and textiles -43- subsector than in other industrial subsectors. Evaluation of the Spatial Distribution 3.21 If M4alian Manufacturing industry can be criticized for its economic spatial inefficiency, it cannot be criticized for/inequity. For it is spatially equitably distributed. To the extent that there is association between the location of natural resources (raw materials), the distribution of economically active population (labor), and the siting of industries, Malian industry is rationally spatially well distributed. The spatial equity reflected in the distribution of industries and the underlying economic rationality (t) is also matched by spatial efficiency.(-N-) 3.22 The greatest need of industry in Hali, then, is not in further pro- liferating plants but rather in improving the efficiency of, and expanding as the need may arise, the existing ones. The necessary backward (sectoral) linkages already exist; there may, however, be need for further improvements in the transport network to enhance the flow of commodities and people. (*) Rationality refers to rhe siting of industries such that it is jointly determined by consideration-s for rawi mat7.rials, transportation, and power. (%t) S2atial efficiency refers to the degree of concentration of similar industries and the agglomeration economies deriving from that concentration; it also refers to the degree of transport savings or cost reduction attributable to industry's transport orientation. C. The Transportation System Structure of the System 3.23 Mali's land transportation system is essentially tri-modal; it is an integrated system consisting of road, railway, and river transport. All three subsystems have important outlets into the surrounding countries theough which Mali' s external trade flows. The breakdown of the infra- structure is as follows: Roads 13,200 kn, of which 3,300 km are all-weather; Railway 640 km, being the Mali segnent of the Senegal- Mali line which terminates at Koulikoro in Mali and Dakar in Senegal; River 1,650 km of inland waterways, mainly on the Niger River which is navigable only seven months of the year. Besides these, there is an air transport network with an international airport at Bamako and about 12 local airfields spread out across the country. 3.24 Both the river and railway subsystems are unilinear; there is, however, a road network whose components are classified as shown in Table 13. 3.25 About 87 percent of all roads are maintained by the national government although only 43.5 percent of total road mileage is classified "national." Paved roads are essentially the responsibility of the Central Government which has direct control over 97.3 percent of total paved mileage. 1/ IBRD, "Mali: Appraisal of a Third Highway Project," West Africa Projects Department, Highway Division, August 1975. 45 - Table 13: ROAD NETWORK, 1974 (in kilometers) Administrative Technical Classification Total Length Classification Paved Gravel Tracks of Network National 1,987 1,110 3,09 5376 Regional .3 328 5,178 5,741 Local 9 40 ,9664 1,713 Total 1j631 1 9,89< 13,200 Total maintained by the Department of Public Works 113536 Average daily traffic (number of vehicles) 139 3 10 Source: Third Highway Appraisal Report, Table 1, op. cit. The bulk of rural roads, or tracks (52.4 percent) are controlled by regional governments, although the central government also controls about 31 percent. The overall responsibility for road construction and maintenance, therefore, rests with the central and regional governments. Between them, they control 74 percent of total road mileage, 94 percent of paved roads, 97.6 percent of gravel roads, and 83.2 percent of tracks. Traffic, oi the System 3.26 Internal circulation on the system is conducted through a variety of vehicles--passenger cars, trucks, vans and pick-ups, buses, and trailer trucks. The distribution of vehicles between 1970 and 1974 was as shown in Table .14. Investment expenditure during the corresponding period increased by about 36.3 percent while current expenditure increased by 68.3 percent. Total expenditure on highways increased by 46 percent, indicating that current expenditure increased more than investment expenditure. h6- Table 14: NUMBER OF VEHICIES AT THE EID OF THE YEAR Percentage Type of Vehicle 1970 1974 of Increase Passenger cars 8,779 11,870 35.2 Vans, pick-ups 3,617 3,968 9 .7 Trucks 2,734 2,620 -4.4 Trailer trucks 262 419 59.9 Buses 114 98 -16.3 Total Fleet 15 1897 22.0 Source: Thid Highway Project Appraisal Report, Table 2, op. cit. 3.27 The data in Table 14 show an overall increase of 22 percent in total vehicle fleet (excluding military and police); trailer trucks increased the most, followed by passenger cars. There was a decline in the fleet of buses and trucks, and slightly less than 10 percent increase in vans and pick-ups. In general, there was a positive correlation between change in highway expenditure and change in vehicle fleet although highway expenditure increased faster than did the *rllicle fleet. 3.28 Exactly what these trends mean Id12respect to changes in spatial economic activity is not very clear. Does the increase in the trailer truck fleet for example indicate a 59.9 percent increase in Mali's external goods trade?-' And since the bulk of the bus fleet and passenger cars are deployed within the urban areas, do the respective statistics indicate a trend toward inter-modal substitution between cars and buses? What does the decline in truck fleet imply for domestic Comnodity (if not passenger) movements--a decline in trade or 1/ Considering that trailer trucks have become the predominant medium for transporting export catnodities since the decline of the railway. 4 ~7 - simply more efficient utilization of existing stock and a tendency towards obsolescence? 3.29 The trend in the trucking industry is particularly important, for although it accounted for only 13.8 percent of total vehicle fleet in 197, it accounted for 45 percent of total traffic during that year. The industry was described in the Third Highway Appraisal Report as follows: Trucking efficiency is low. The industry is faced with such problems as poor management and organization and a seasonal work cycle based on the agricultural calendar, all of which have resulted in a low average load factor. Part of the efficiency problem also seems to stem fran the low truckers' rates which the Goverment kept fixed fran 1967 until October 1974, when it awarded carriers a 43% interim rate increase. This adjustment, however, covered only the hike in operating costs which resulted fran the increase in fuel costs and overall high inflation rates. One of the purposes of the trucking industry study scheduled to start soon...is to determine how far these fixed low rates have: contributed to a situation in which truckers lack incentives for new investments; and how much inadequate management, brganization, and maintenance, or the lack of liquidity of the state trucking enter- prises, are responsible for the difficult trucking situation. Under the Second Highway Project the Government agreed to implement as appropriate, and according to a timetable satisfactory to the Association, the study's recommendations. (Appraisal of a Third Highway Project, op. cit., page 6.) it is therefore clear that government transport policy has something to do with the decline in the trucking industry and by implication, the consequences of that decline on the economy as a whole. International Traffic 3.30 No matter which route or mode is considered, commodity flows between Mali and the surrounding, mostly coastal countries)are highly sensi- tive to transport costs. The distance between Mali's border to each of Abidjan and Dakar is about 1,200 km. Prior to 1960 the main traffic flow had been on the Mali-Senegal railway and through the Dakar port. But consequent upon the break-up of the Mali-Senegal Federation in 1960 the pattern of traffic was completely transformed. The process of systematic change which followed 1/ the change in traffic pattern was described by Meillassoux as follows: With the breakup of the Mali Federation in 1960, the pattern of traffic was mompletely transformed. Abidjan became the main source of supplies, and the north-south traffic assumed overwhelming importance.. .Bamako lost its central position as a distributing center. The Southern part of the country, Mopti and all the down- stream Niger Valley, could be supplied cheaply directly from Abidjan without depending on Bamako...This situation accounted for a business slump in Bamako while Mopti, directly geared to the rich markets of Ivory Coast and 1/ Claude Meillassoux, pp. 21-22. Ghana and less customs controls, enjoyed a greater prosperity. In a way,=then, the diversion in traffic was a blessing for "Iopti and all the downstream Niger Valley and the overall impact on the country sumned up to zero, if not greater. The Transportation Problea 3.31 There are two dimensions to Mali's transportation problem--the external and the internal. Being landlocked, Mali faces high freight costs in shipping its commodities to the ports or to markets in surrounding countries. The country's situation makes it very vulnerable to political and economic changes in surrounding countries. Hence, Mali governments have tried to keep both the Abidjan and Dakar options open, particularly after the problem with the Mali-Senegal railway which disrupted the trade through Dakar. 1/ The External Problem- 3.32 From a strictly economic viewpoint, Mali could make considerable transport cost savings by utilizing the Mali-Senegal railway more than presently. For not only is transport cost per ton km about one-third less on the route than on the land routes to Abidjan, but also the distance between Dakar and Mali's European markets is shorter. The argument is not that traffic should now be wholly re-diverted to the railway line, but that the full potential of the Mali-Senegal route be more efficiently utilized. The Mopti, Gao and Sikasso regions presently benefitting from the existing traffic pattern need not lose anything, because greater utilization of the railway line will in fact amount to a relief from the pressure imposed on the roads by increased freight 1/ There are detailed analyses of related subjects in 1H. Levy, "The Inter- national Transport Corridors of Mali," Second draft of mission report, March 12, 1976 (West Africa Projects Department, Highway Division). movement. Greater utilization of the railway line especially if comple- mented with improvements on rural roads in the Kayes region also promises to stimulate greater economic activity in that region in general and in Kayes, Bafoulabe and Kita, in particular. 3.33 One other key problem is the illegal traffic across Mali's borders with her neighbors, particularly Upper Volta, Niger, and Ivory Coast. Livestock which is so vital to Mali's foreign exchange earnings is transported on the hoof freely across borders. This is partly due to the large area of the country relative to its meagre resources to monitor and control border movements, and partly to the tendency for herdsmen to place priority on availability of forage for their herds and ignore ( if at all aware of) international borders. One way the,Mali government could enhance its ability to monitor and probably control these movements is to develop rangelands close to border control posts and/or livestock markets. Such a strategy will minimize "leakage" of potential foreign-exchange earnings and thereby increase official trade. This proposal does not detract from, but is rather comple- mentary to, other efforts to improve livestock production and marketing such as the IDA's Livestock Project in the 5th (i.e. Mopti) region. The Internal Problem 3.34 The overriding iarera problem is that of poor maintenance of existing infrastructure; the country is so vast and its towns are so far apart that realized current and investment expenditures are not enough to ensure adequate main e of the extensive transport network. Tr=k roads linking the principal urban centers, and agricultural feeder roads need to be recon- structed and better maintained. Similarly, the railway line needs to be rehabilitated and modernized after the disuse and disrepair it fell into during the 1960s. 3.35 There are management problems too,bearing on manpower shortages a the need to streamline the responsibilities of the several Ministries which have control over transport policy making and planning. As the Appraisal Report on the Third Highway Project noted, "the transport responsibilities of these Ministries overlap to a considerable extent, and there is need to improve coordination, especially in the fields of investment planning and intermodal transportation, and to develop closer association between physical and financial planning." The inefficiency characterizing the handling of the railroad import/export traffic between Bamako and Dakar is also a major problem although the roots of the problem actually lie in "delays in the port 2/ of Dakar and on the Senegalese railroad."- Transport Investments 3.36 Investments in transport are geared to Government objectives in the transport sector. Those objectives are: (a) to develop the local transport infrastructure in support of overall development; (b) to foster economic integration among the country's regions; and (c) to reduce Mali's severe foreign trade handicap. Foreign assistance has been a critical factor in the Government's ability to approach these objectives. The IDA, US-AID and UNDP are the leading agencies in this connection. The IDAs operations in the transport sector are reviewed in the Annex. 1/ Third Highway Appraisal Report, ap. cit., p. h. 2/ Ibid. 5 2 - 3.37 About 20 percent of estimated total expenditures during the 1974-78 national plan has been earmarked for the transport sector. This amounts to about NF 16 billion (US$4O million) per year at 1974 prices. The breakdown according to modes is: Roads 75 % Railway and air transport 21 % River navigation 4 % 3.38 As a basis for planning in the transport sector, the Government comissioned a Belgian consulting firn (Tractional) to conduct a transport survey; the survey, which was financed by UNDP, was ready by 1969 and was the basis of the World Bank's first and second transport projects in Mali. The Goverment has asked the Bank to finance an updated survey on which a new transport plan will be based. The consultants for the survey are expected "to look closely at both theoverall size and the soundness of this distribution (i.e. of proposed investment among modes), and the country's ability to finance 1/ and maintain the transport network."- these. 3.39 We feel the second part of terms of reference is redundant; for it is quite clear from available data on the country's revenue daa that it is unable to "finance and maintain the transport network" at US$4O million per year. Furthermore, in the light of the spatial distribution of agricultural investments in the country, it should be clear even before the consultants set to work, that there is need to reinforce the transport infra- structure of the Mopti region either by increasing the allocation to river navigation, by allocating more road construction funds to the delta areas, or both. In the long run, the road network in this important region will hare to 1/ Appraisal Report, ibid., paragraph 2.06. be improved as the population and agricultural and livestock activities increase. Enphasis should be placed on opening up the relatively isolated parts of the country, for example, the Kayes region. The only important is - transportinode in the region is the railway line which/hardly lnked to the areas bordering it. The response of the Government to the problems with the railway has been to propose a road parallel to the railway, linking Mali to Senegal and the Dakar Port. The UNDP has provided funding for the proposed road, and the IDA has consented to execute the project, though with quiet reservations. The IDA, of course, realizes that such a road is "potentially inconsistent with maintenance of an efficient railroad." 3.40 What is required in the region bordering the Banako-Kayes segment is a systen of secondary roads penetrating the agricultural areas and linked to the railroad through Kita, Kayes and/or Bafoulabe, in other words an extension of the Second Highway Project in the Kayes region. If the problem with traffic flow on the railroad lies outside Mali and mainly at the Dakar port, it is futile to try to solve it from Mali. The strategy now should be to facilitate increased production and marketing within the region, and to utilize in the meantime the line of least friction in conducting international traffic flow, i.e. the Abidjan route. With regard to the IDA's alternative proposal for a road "considerably to the north," it should be pointed out that competition between the railroad and a parallel road to the north is inevitable anyway, given the snall size of the area involved. 1/ Appraisal Report, ibid., paragraph 2.09. -54 - IV. THE SETTLEMNT SYSTEM IN MALI A. Background to Contemporary Trends Historical Perspective 4.01 Although Mali is still predominantly rural, one cj. its cities, Timbuctu, has an urban tradition that dates back more than 800 years. Timbuctu, which today has become peripheral to the mainstream of Kali's econcmic life, had thtived as a multi-ethnic commercial, political, and intellectual center in sub-saharan Africa beforc French colonial rule set in. Prior to the French conquest of the city in 1804, Timbucta had survived many battles for its control by various empires in the surrounding region. But after its subjugation by the French it became part of the new nation of Mali, whose territories embrace much of the old Mandingo Empire 1/ of the same name,- and part of a new administrative/political system focused on Bamako. 4.02 Gao, the capital of the sixth region, was also the capital of the Songhai Empire. Like Timbuctu it was harnassed into the Mali region which the French created; and, similarly, became part of a new political/adminis- trative system. The New Urbanization 4.03 With the decline of Gao and Timbuctu and their integration into the Mali nation, an era of urbanization had ended. The new era began wfth the creation of new administrative, political, and commercial systems by the French after successive conquests of all existing power centers. One process 1/ Horace Miner, "The Primitive City of Tirbuctu," Doubleday Company, Inc. Garden City, New York, 1965_, p. 10. was cmmon to all the contemporary dominant centers in their emergence-- the building of a military outpost, the establishment of a subservient indigenous elite system, and the construction of essential administrative and economic infrastructure all oriented towards French standards. 4.04 Thus, writing about Kita Town, Nicholas Hopkins wrote, "Kit- Town can be said to have begun when the French established a fort there in 1881, though its initial growth and urban character were due to an infl ux of African traders...Today Kita consists of seven quarters, or wards, each with its own tradition, bound together by the economic and administrative functions of a small town. There is an active market surrounded by a ring of workshops and stores. On the eastern edge of town there is a large area in which the offices of the administration are scattered; the offices of the 'cercle', the agriculture service, the police, the judge, the post office--and so on. A little bit further in the same direction is the railroad station, the majdr symbol of Kita's connection to the rest of Mali." 4-O5 Similarly, Bamako was chosen "as the main outpost to be created an the ri#er (Niger) when the French decided...to push in toward the Niger River and the Eldorado they believed was behind it.... Bamako was occupied in 1883 by a battalion of French soldiers led by Colonel Burgris-Desburde who, in Yebruary of that year, "started building a fort at Bamako." The French officials maintained as chef de Canton, the Niare, a clan which had sided with them in their battles against the invading armies of the Moors and Samory, the Guinean King. The growth of Bamako, which had been stifled during the war 1f Nicblas S. Hcpkins, Popular Government in an African Town - Kita, Mali, The University of Chicago Press, 1972, page 4. 2/ Claude Meillassotx, TIUrbanization of an African Camunity: Voluntary Associations in Bamako," University of Washington Press, Seattle and London, 1968, p. 6. with neighboring Guinean and Moorish kingdoms, began in earnest in 1898 when the two enemies were defeated. "A railroad was being built fran Saint Louis to Bamako, and workers were recruited in large numbers 2roa the Nineties to the time the railroad reached the town in 1901. The first train entered the station in 1904. The same year a steamship compan; started to operate 6n the river from Koulikoro, the end of the railro,_d line,.. .this same year (i.e. 1904) the colony of French Sudan was created, 1/ and Banako was designated its future capital.- Prior to 1904 and until 1908, the French had maintained the administrative headquarters at Kayes. In 1908, the government was transferred to Bamako. This transfer also marked the beginning of physical development and vigorous commercial activity in the new capital. The factors behind the pattern and process of growth in the city and the scope for its further development are discussed later in the paper. 4.06 Just as French policies conditioned the process and pattern of pre- independence urbanization, urbanization has been conditioned by indigenous government policies. The major change in pattern is the greater functional linkage that now exists between the urban and rural sectors. And this pattern is the outcome of a process of organizational changes initiated unde- th, Modibo Keita government whose policies emphasized industrial development based on agricultural production and import-substitution, and intimate govern- ment supervision of all stages of economic activity. 1/ Ibid., page 7. B. Population Growth Trends 4.07 Mali's population was estimated at 5.56 in 1974, the second largest among the Sahelian countries. Its rate of growth has tended to be unsteady owing to climatic and economic fluctuations in the past two decades. Between 1950 and 1960 the population grew by only 11.8 percent or at about 1.1 percent per year whereas between 1960 and 1970, the rate of growth had increased to 2.9 percent per year. There has been a slowdov;l in overall population growth since the late 1960s and early 1970s. The increase in population between 1970 and 1974 for instance was 10.1 percent, or &t a mn*--* 2.0 percent per year. World Bank population projections give the average rate as 1.9 percent, while the corresponding UN figure lies between 1.8 percent and 2.0 percent. These figures compare very well with similar figures for other countries in the Sahel except, perhaps, Senegal where the average growth is higher. 4.08 These trends have been influenced by a multitude of interacting factors. In general, fertility rates have tended to be higher than mortality rates, although there are differences in these rates as between different groupi- and areas. Urban areas, for instance, have tended to grow faster than rural areas, and the population of pastoralists has tended to grow slower than that of-sedentary cultivators. (See Table 15.) Spatial Distribution General 4.09 Population is generally concentrated in the southernmost five regions and in the river basins. The 1972 estimates of total population indicated that four of those five regions had about 73.5 percent of the total -58 - Table 1 q: OFFTCIAL POPULATION ESTIMATES Kid-Year Growth Rate Populationa Annual Ten-Year Average (millions) (percent) 1950 3.40 1.1 1960 3.80 1963 4.39 1964 4.49 2.3 1965 4.58 2.0 1966 4.65 1.5 1967 4.74 1.9 1968 4.83 1.9 1969 4.93 2.1 1970 5.05 2.4 2.9 1971 5.14 1.8 1972 5.26 2.3 1973 5.38 2.3 2.1 1974 5.56 b/ 3.3 2.2 a! "Of questionable reliability4l (quote fran footnote, Table 1, "Mali Econanic Hemorandm," Bank Report No. 113442LE, April 5, 1976). b/ IN Population Division estimate. Sources: Table 1, Bank Report No. 1134-MLI, April 5, 1976. Table 1, Notes et Etudes Documentaires, Le Mali (22 Avril, 1974) No. 4081-82-83. population. Mopti had about 21.2 percent, Bamako 18.6 percent, Sikasso 18.5 percent, and Segou 15.2 percent respectively of total total population. (see Table 13). 4.10 Excluding Kayes and G½ the pattern of population distribution is fairly uniform, densities ranging from 11.0 to 14.2 persons per square kilometer. Except for Timbuctu and Gao in Gao region, the population is mainly nomadic, and the density very low. Table 16: MALI POPULATION BY REGIONS, 1972 Population Percent Density 2 Total Urban Urban (Persons per Km) (000) Mapti 1109.5 39 3.5 12.5 Banako 978.0 215 22.0 11.0 Sikasso 967.9 27 2.8 12.6 Segou 794.0 36 4.5 14.2 Kayes 751.8 34 4.5 6.3 Gao a/ 641.4 n.a. n.a. 0.8 Total 5243.2 351 6.7 a/ The urban population for Gao was not available. Source: Direction Nationale du Plan et de la Statistique. C. Denographic Structure 4.11 The male-female ratio as of 1970 was about .099 to 1.00, indicating a balance in population. The population of the "active" age group (15-60 years) was 47.2 percent of the total; only 3.2 percent were 60 years and above, and 49.6 percent between 0 and 14 years. The theoretical dependency ratio then was about 1.12 to 1.00, or 112 "dependents" to 100 working people. It is widely known, however, that the situation in the Sahel is such that this ratio has no econonic meaning. Children become economically active as soon as their parents decide they are physically fit enough, and those above 60 years retire from their trades (mainly farming and livestock husbandry) only when they are absolutely physically unfit. The Mali population, therefore, is a very active population. - 60 - D. The Urban Population 4.12 The 1972 data contain no clear definition of what is urban; subsequent urban population estimates by WHO consultants for a water supply project in 1973-/, however, use 5,000 as a cut-off point in its classification of settlements. 4.13 Thus, by 1972 Mali's population was about 6.7 percent urbaz- the most urban region being Banako region (22 percent) and the least being Sikasso (2.8 percent), Gao excluded. 4.14 Between 1950 and 1973 the number of towns with 10,000 or more inhabitants increased fran 5 to 15, and the corresponding population grew from 130,000 to 524,000, or at an average annual rate of about 6.3 percent. With Bamako excluded, the rate of growth of the population in cities with 10,000 or more people during the period was about 7.2 percent, with their number increasing from four to 14. The increase in the population of towns, therefore, was due partly to an increase in the number of such towns and partly to an acceleration in the rate of growth of some of the older towns. 46.15 The capital city of Bamako is really a primate city. Its current 2/ population is estimated at about 350,000,- growing at 7 percent a ye.,ar. Between 1950 and 1970, the city's population grew at about 5.4 perce-t a year 1/ Projet D'Eau et D'Assainissement au Mali, Rapport sur 1'Etude Sectorielle D'Eau; prepared for WHO by D. Balfour and Sons, Ingenieurs-Conseils, London in association with Associated Consultants for Water Affairs, London, 10 September 1973, Table h.4. 2/ Desmond McNeill, "Bamako: The Provision of.Urban Services," June 1976, P. (i)* - 61 - the corresponding figure for the rest of the urban population in cities with 10,000 or more people was 6.8 percent. By 1973 Bamako had 41.2 percent of the total urban population, and 43.9 percent of the population of cities with 10,000 or more people. With its current population, Bamako is seven 1/ times the size of Segou, the next largest city. Structure of the Urban System 4.16 The primacy of Bamako in the urban system has been noted. The size distribution of cities in the country is presented in Table 17, the 1988 figures being projections. At present there are only two cities besides Bamako with 40,000 people or more--Kayes and Segou. Below them there are four cities with 20,000 or more people; these include Sikasso, San, Mopti, and Gao. Thus there are now only six cities, other than Bamako, with 20,000 people or more. The WHO water supply project study anticipates the most dramatic increase in urban population will occur in the small and intermediate-sized cities, i.e. in the ranges 10-20,000 and 20-40,000. From evidence about their comparative growth rates in the past, the projections are not unreasonable. Within bhose two classes of cities, Mopti, Gao, and San are expected to grow most rapidly, and Sikasso and Segou a little less rapidly. Bamako ;tself is expected to grow even more rapidly than the smaller cities. (See Table 17. 4.17 From 654,000 in 1973 the total urban population is expected to increase to 1.475 million in 1988, or at an annual rate of 3.3 percent. 4.18 In general, while the primacy of Bamako is expected todecline of total urban (its population in 1988 is expected to be about 37.4 percent/vis-a-vis 41.2 percent in 1973), the proportion of the largest cities in total urban 1/ For a detailed description of Bamako's population characteristics and analysis of their implications for urban services, see Desmend McNeill, ibid. - 62 - Table 17: POPULATION STRUCTURE OF THE URBAN SYSTEM No. of Places Population Implied Rate of Go 1973 1988 1973 198 (pe nteryr 50,000 or more 1 5 230 837 5.3 40 - 50,000 2 2 80 90 0.e 20 - 40,000 4 8 106 209 2.8 10 - 20,000 8 21 108 290 4.o 5 - 10,000 21 7 130 49 -4.0 Total 36 [3 654 1,475 3.3 Source: Table 6.5, Projet D'Eau et D'Assainissement, op. cit. population is expected to increase fram 35.2 percent to 56.8 percent. Both the number and population of the smallest cities are expected to decline drastically. E. Factors of Urban Pqpulation Growth 4.19 The basis of contemporary urbanization in Mali was French colonial (econamic and political) power. The French influence underlies the process and pattern of pre- and immediate post-independence urbanization. W[aat we are witnessing today is an accentuation of what colonial spatial economic strategy had established since the turn of the century. The accentuation is the integration of climatic conditions and national planning (economic, political). The climate defines the limits and potential densities of the settlements, while national planning (or what amounts to it) determines where and how much within the habitable zones, human settlements and activity will be. Increasing growth of population in urban areas is in fact a second degree derivative of climatic and national planning factors, both of which affect - 63 - natural rates of increase and migration which jointly account for urban growth. 1/ Some Implications of the Urban Population Trends 4.20 The trends discussed above will imply both spatial expansion and/or increasing densities in the existing large and medium-size cities. li, both cases, there will be corresponding increases in the demand for "urban" employment, land for housing and other uses, and urban services in general. Inter as vell as intra-city mobility would ordinarily increase with rising urbanization, which would put further pressure on the already strained transportation situation. 4.21 Quite significantly, the shift from overall primacy of Bamako to the primacy of the large urban centers as a group may signal a. shift in the spatial configuration of secondary sector activity which itself is shifting in phase with agricultural, livestock, and related industrial activities (see paragraphs 3.15-3.19, in particular). Before, the near-absolute primacy of Bamako reduced the task of urban planning (to the extent that it existed) to planning for Bamako. Now and henceforth, however, the Government will need to increase its planning effort in cities like Sikasso, Mopti, and Segou, among others. These towns are expanding, if only in absolute terms, in their gross populations and in their secondary and tertiary service roles. Their vitality in these roles will be enhanced by pre-emptive comprehensive planning which will avoid some of the most severe constraints now imposed on Bamako. 1/ The special case of Banako has been treated in fair detail in Desmond McNeill, "Bamako - The Provision of Urban Services," op. cit. V. THE NEED AN GSR FOR URBAN AND REGIONAL PLANNING IN MALI A. Introduction 5.01 The need for planning in any context arises whenever, given a set of goals and objectives, there are constraining conditions which other-- wise would limit the ability to attain the goals and objectives. The essence of planning, then, is to relate the goals and objectives to -e7pvanu real conditions, thereby increasing the chance of attaining the goals and objectives as efficiently as possible. B. Critical Trends and the Basis for Spatial Planning 5.02 Mali is experiencing and is expected to continue to experience a reduction in the relative proportion of people living in rural areas, and an expansion in the urban population. By the year 2000, according to UN medium population projections, the population would be about 22.9 percent urban; in absolute terms, there would be about 2.6 million urbanites. The rural population at that time would be about 8.7 million, implying a national total of about 11.3 million. Of the projected total urban population, Bamako would contain about three-quarter million, and at least two other cities, namely M:opti and Segou, would each contain abodt 100,000. The three of them . lie on the River Niger and the highway which runs through and literal1y bisects the most agriculturally productive regions. 5.03 The growth in population implies increasig densities and pressure an productive land. There are already indications that unless adequate measures are taken, outputs of crops per unit area of agricultural land will decline; considering that current average production levels are barely above subsistence levels, increasing rural population densities dill spell disaster. There is, of course, the compounding factor of a harsh climate, particularly in the Sahel zone. 5.04 Despite Government efforts to stem the mounting trade and budget deficits, the deficits continue to increase from year to year, mairly because the primary sector (which is the principal source of foreign exchange earning and domestic revenue) has Pfailed to behave as anticipated.I The way out of the financial crisis has tended to be external assistance in on folm or another. This may not necessarily always be the case in the future. C. The Need for Urban Planning 5.05 Mali is comparatively lucky in having its population so well spatially adjusted to the distribution of natural resources. Upper Volta, for instance, 2/ is not so lucky. 2 The major cities are all located centrally in relatively productive agricultural regions. But the populations of those cities are expected to at least double in the next 20 to 25 years. Urbanization will be unable to fulfil its historical function of promoting occupational speciali- zation and the associated increases in productivity and incomes unless growth in urban population is matched by corresponding growth in absorptive capacity. Urban Absorptive Capacity in Mali 5.06 Broadly defined, urban absorptive capacity refers to the aggregate volume or set of opportunities available for urban residents to produce and consume goods and services. The situation in Mali may not be as critical as 1/ The associated problems have been reviewed in chapter one. 2/ See S.A. Agumbiade, "Background to Urban and Regional Development in Upper Volta," Divisional Report, Urban and Regional Economics Division, World Bank, February 1976. - 66 - in the faster growing cities of the coastal West African countries, but that fact is merely an opportunity to plan better for Mali's cities, not an excuse for less planning. Malits other constraints are, however, more severe than those of the coastal countries where resource endowments are greater and urban absorptive capacities are more self-generating. Employment 5.07 Productive employment for an increasing proportion of urban labor supply is the key to positive changes in other aspects of urban absorptive capacity. Despite the lack of recent statistical data to support the fact, it is true that urban employment in Mali is very small compared to total employment. If we assume that 90 percent of the total active population are engaged in agriculture, another 3 to 5 percent in livestock husbandry, and 2 percent in various modes of training, clearly less than 5 percent of total active population are employed in the urban sector. Government service and employment in various state enterprises dominate the urban employment base which, despite all its shortcomings, is still far more productive than agricultural employment. 5.08 But Government, which has always been the employer of last resort categories) (for secondary and higher education is under pressure to reduce its salary overheads as part of an attempt to reduce deficit-generating spending. In the absence of a sizable and vigorous private sector, this situation constitutes a dilemma for policy makers and planners as well. There io, therefore, clearly a need for a new urban employment policy which will enable Government to simultaneously provide for the expected increase in urban population and reduce the proportion of the budget going to salary overheads. - 67 - Self-employment and employment in the private formal sector will have to be vigorously promoted. 5.09 As long as the absorptive capacity of the modern sector is so small, and as long as the inflow of rural migrants into the cities c ontinues, it seems that a policy of agricultural employment in urban fringes is inevitable. For such a policy to be effective, the potential constraints must be relaxed. These constraints, most of which are currently epitomized in Bamako, include: (1) inadequate incentives for self-employment through private investment, e.g. in transport and manufacturing; (2) inadequate incentives for surplus production of food crops; this is particularly important because the increases in urban population will generate shifts in demand for food which may further drain the country's foreign exchange. (3) an urban land policy which outlaws (at least in theory) "squatter settlements" and, by implication, squatter employment in urban areas; there may be need for a reformulation of the policy such that, in fact, agricultural settlements on the fringes of cities can spring up under "controlled" conditions, 1/ in a modified Von ThUnen- framework. 5.10 The strategy of such a policy is to use urban areas, not only as urban labor markets and hubs of secondary and tertiary sector activities, but also as population magnets and a device for maximizing Government access to sources of revenue and citizens' access to urban goods and services. Since 1/ See J. Heinrich Von Thiinen, Der Isolierte Staat in Beziehung auf Landwirtschaft und Nationalokonomie; Third Edition (Berlin). - 68 - Government does not ordinarily need to encourage people to migrate to urban areasy its role should be directed at facilitating the settlement of the migrants in desired locations around the cities; this is in addition to providing for the needs of erstwhile urban residents along the lines suggested (for Bamako) by McNeill./ 5.11 It will require a considerable planning and implementation effort on the part of Government to pursue the policy outlined above; hence, it may be necessary to select priority areas and to phase a new urban settlement program according to priority areas. D. Priority Urban Areas and Urban Priorities in Mali Priority Goals and Objectives 5.12 The goals and objectives of urban development as determined by available resources should form the basis of priority setting. What then are the goals and objectives of urban planning and development in Mali? We have not yet come across an eplicit statement of them; but we believe they must be closely related to the long- term goals and objectives of national development in Mali and regional develop- ment in the Sahel. The priority goals of the Five-Year National Economic and Social Development Plan are (1) to meet the basic food and water requirements of the population and (2) to correct, as much as possible, the structural weaknesses of the economy. The specific sectoral objectives and strategies designed to achieve those goals are contained in the Plan document, and we not shall/delve into them. 1/ Desmond McNeill, op. cit. 96 - 69 - 5.13 Translated into the urban context, meeting the food and water requirements of the population, and correcting the structural weaknesses of the econoay imply four priority urban goals: (a) providing adequate income-earning opportunities for the maximum possible number of urban residents; (b) providing adequate water supply both for drinking and other human needs; (c) improving the urban local goverment system in a way that facili- tates the productive activities of urban residents; and (d) providing as efficiently as possible adequate urban economic infrastructure like transport and telecommunications. 5.14 The long-term region-wide objectives of the Sahelian countries were set forth by those countries' leaders in March 1974- as follows: (a) to reduce the consequences of emergency situations in the future; (b) to insure self-sufficiency in staple foods (cereals and meat); and (c) to accelerate economic and social development, particularly in the least developed countries of the region. Two of these objectives have direct implications for urban development and priorities in Mali, namely, the first and third. In emergency situations in the past, urban centers were the collection and distribution points for external relief supply, and the solace for thousands of victims of climatic disaster who had no alternative choice. The implication for the future is that 1/ See Report to the United StateA Congress, "Proposal for a Long-Term Comprehensive Development Program for the Sahel: Major Findings and Programs," April 1976, p. 7. - 70 - the closer people arelto urban centers and/or to transportation routes, the less will be their exposure to the consequences of emergency situations which ian be salvaged from urban centers. One objective urban development should therefore be to maximize the accessibility of the population to urban services both by stimulating increased economic activity and population expansion in urban areas and by improving the transportation system. 5.15 Being one of the least developed countries of the Sahel, and being particularly dependent upon agriculture and other primary activities for its survival, Mali's urban centers have a particularly challenging role in national ec onmic development. Their role in promoting accelerated economic development consists in providing employment in jobs with strong linkages with the rural economy and with high potential for public revenue generation. In this connection the series of agro-industries controlled by Government will need to become more efficient, and to expand their output in response to shifts in demand for final and semi-processed products (e.g. carcass meat). Urban Priority Areas 5.16 Priority areas are identified here on the basis of four main criteria, namely- (a) population distribution by region; (b) past and present trends in urban growth; (c) present and future needs of the major urban centers; and (d) distribution of secondary sector (manufacturing and agricultural processing) activities. 414 t 71 The questions to be answered in selecting priority areas are: (a) where can the objectives of urban development be best achieved? (b) in what areas are urban planning and needs most urgent? Banako-Koulikoro Urban Area 5.17 This is the number one priority area. Located in Bamakc region, which is the most urban (22 percent) and second most populous (18.7 percent) in the country, the area is also central to the rest of the urban system. Between then the two cities share more than 50 percent of Mali's total secondary sector capacity and about 25 percent of the country's total inter- urban motor vehicle traffic. With Bamako's own population accounting for over 40 percent of total urban population and growing at 7 percent per yeaz, the Banako-Koulikoro urban area if any in Mali, deserves priority attention in urban planning and development. Segou-Markala Urban Area 5.18 This area lies at the center of Segou region which is the fourth most populous but most densely populated region. It is the second largest industrial area, the manufacturing and processing activities there being based upon the capital-intensive agriculture and hydroelectric power source in the area. Segou itself, with about 50,000 people is the second largest city in Mali. The importance of this area lies both in its strategic location in a comparatively productive region (see Tablws9-11), the concentration of secondary sector activities, and its intermediate location between the emerging Mopti region to the northeast and the more established Bamako-Koulikoro region to the southeast. -- ~ rc-2s e rj- r -72- Mopti-Sevare Emierging Urban Area 5.19 This area lies in the most populous and third most densely populated region. It is surrounded by an internal delta area of the River Niger in which intense livestock and irrigated agricultural activity are currently taking place. Owing to the population and economic potential of the region, trans- portation links between this emerging urban area and its hinterland needo to receive priority attention. And in anticipation of population growth in the 1/ area, the intervening area between Mopti and Sevare7 may need to be zoned according to future urban land requirements. 5.20 The three priority urban areas identified above may not necessarily remain the top three for all time; nor are the criteria used in identifying them binding on decision makers. But both the criteria and the priority areas provide a basis for a first iteration attempt at urban and regional planning in Mali. 1/ There is little or no room for physical expansion4 the area around Mopti being mootly marshland. VI. CONCLUSIONS A. The Economic Situation 6.01 The economic situation in Mali has been well reviewed in a recent Bank ecenaonic memorandum.- The major finding of that study was that despite Goverrment efforts to improve its financial position, and despite the substantial rise in output levels, the country's resource gap remains wide and the economy unstable. Enormous foreign assistance will be needed in the foreseeable future in the Governmentts investment program. B. The Spatial Economic System Agriculture 6.02 In spite of the recent increases in crop output, there is still considerable excess capacity in agricultural land in Mali. Irrigated pieces of land which could become highly productive have not been fully utilized owing to poor design of pioneer settlement projects. The operations of the "Operations de Developpement," (see Page h0) which have been mainly responsible for the recent increases in marketed agricultural output do not appear to be utilizing the comparative advantages of the regions in the production of crops. As is indicated in paragraphs 3.04-3.10 and Tables 9-12, greater outputs could be derived from a shift in regional crop patterns such that each region allocates the greatest proportion of land to the crops it produces most efficiently. Table 12 gives an indication of how crops could be allocated to regions on the basis of their comparative advantages. 1/ See Mali Economic Memorandum, op. cit., pp. i-iv. Manufacturing 6.03 Manufacturing activity still forms only a small, but increasingly significant part of national economic activity. It is highly raw material oriented and hence strongly linked to the agricultural sector, 66 percent of total industrial capacity (see page 42) being in agro-based industries. The spatial distribution of the industries exhibits on one hand, concentration in two areas, and dispersal on the other. The agro-based industries are concentrated in a capital-intensive raw material producing area (Segou-Markala ccmplex) and around Bamako (Bamako-Koulikoro complex) which is the largest urban population concentration and the economic nerve center of the country. On the other hand, cotton ginning, the two mineral-processing industries (cement works, phosphate plant), and the country's only sugar mill are dispersed at disparate locations. 6.04 The industrial location pattern therefore reveals a sound spatial- economic rationality, although most of the industries still exhibit considerable inefficiencies. Population and Urban Growth 6.O Trends in population growth have tended to be unsteady owing to climatic fluctuations and perhaps economic instability. The regional patterns of growth and density are uniform, but the distribution of urban population is not. Urban population is concentrated in the Bamako region and in Bamako itself. By the year 2000 that city's population will be near the 1 million threshold although its proportion in national total urban will be less than its present 41.2 percent. Lower in the hierarchy there will be at least two cities, Segou and Mopti, in the 100,000 threshold. 6.06 Comparatively, the urban situation in Mali will remain manageable for the foreseeable future if growth in urban population can be matched with policies conducive to expansion in the absorptive capacities of the emerging urban centers. Given that the economy will continue to rely on agriculture for a long time to come, the role of urban centers has to be cast in the context of agricultural development. The concept of "agro-towns" should therefore be seriously considered especially in planning far the saall and intermediate cities. Government urban land policy wbich in the past sought to restrict urban land use to building and perhaps, recreation, may need to be recast so as to allow the use of urban fringe land for agricultural purposes. 6.07 The greatest proportion of expected urban growth in the next 25 years will occur in the already important urban areas. Among them, the priority areas include Bamako-Koulikoro, Segou-Markala, and Mopti-Sevare; for it is around and between these areas that economic activity is most intense. 6.08 Finally, it is our view that urban areas and the transportation system in Mali provide the best strategic framework for designing policies intended to achieve the objectives of economic development and security in the country. ANNEX Page 1 BANK GROUP INVESTMENTS IN MALI Composition The Bank Group has been involved in ten projects in Mali, total comiitments being about US$74.9 million. Of the ten projects, six ha.e been in economic and social infrastructure, three in agriculture and in+- grated rural development, and one for drought relief. After a period of relative concentration in the economic and social sectors (1966-1973) there has been a shift in emphasis to agricultural projects, a reflection of realignment in government planning and investment priorities. Economic Infrastructure Projects These include two railway projects, two highway maintenance and rehabilitation projects and one telecommunication project. The first rail- way project was approved in 1966, and a second one in 1973. Both projects were directed at easing the liquidity position of the Mali railway organi- zation Chemin der Fer du Mali (CFM), and improving the role and efficiency of the railway in Mali's transport sector. Specifically, the projects were designed to facilitate international trade traffic between Mali and Dakar, Senegal's main port and Mali's cheapest access to external trade. CIMts 1973-1976 investment plan, which "consists of continuation of track improve- ments and provision of locomotives and rolling stock to meet the forecast traffic," forms the basis of the Bank Group's ongoing railway project. The objective of railway investment is to minimize the amount of traffic diverted to the more costly Abidjan route by increasing capacity on the Bamako-Dakar line. ANNEX Page 2 Evaluating the first railway project, the appraisal report on the second project states, "Benefits from the first railway project... have been achieved more slowly than originally anticipated." The physical program, now about complete, lagged three years behind schedule; and "progress toward the financial and traffic targets has also lagged.." Payments of past debts by CIM to Senegal railways have been held respon- sible for the poor financial showing. Although the failure to reach traffic forecasts was not explained, one obvious reason was the decline in exports:due to the drought. Another reason is the fact that since the breakup of the Mali Federation (of Senegal and present-day Mali) in 1960 and the subsequent diversion of traffic from Dakar to Abidjan, road trans- portation of import and export goods had become competitive with railway transportation.. Abidjan became the main source of supplies as well as the main outlet for export goods. The loss in rail facilities, which would have paralyzed the country's external trade traffic, was quickly compen- sated for by a fleet of huge trucks bought from Germany. This diversion of traffic had a depressing effect on the local economies of cities like Kayes, Kita, and Bamako which lie on the railway and, in contrast, a vitalizing effect on the southern as well as downstream River Niger parts of the country which now had cheaper access to import goods from Abidjan. The adversly affected cities have adjusted to the situation, and there is now a clear-cut regional modal split between railway transport in the west, road transport in the south, and a combination of road and water transport northeastwards from Segou. ANNEX Page 3 Road Projects Highway maintenance and rehabilitation have been major aspects of Bank Group operations in Mali. The first road transport proj.)ct was a US$7.7 million, four-year (1970-1974) feeder road maintenance project which was designed to improve about 1,450 kn of rural roads and integrate isolated agricultural areas with principal highways, the railway line, and the major market centers. The project also included a feasibility study and detailed engineering for the rehabilitation of segments of Malits two main tr%I roads, namely, the Bamako-Bougowli and the Faladie-Segou segments. The Second Highway Project was, in essence, the implementation of the recommendations of the feasibility studies component of the first project. Under the project, the Bank Group is financing the rehabilitation of the Bamako-Faladie segment and the construction of 13 bridges between Faladie and Bougouni. A credit of US$8.3 million was also granted to the government to finance the cost over-run on the Faladie-Segou segment for which the bid price was 68% higher than appraisal estimates. A Third 1,ighway Project has been appraised. It follows and builds upon the first two projects in all their aspects; in addition, a transport plan is to be prepared by consultants "...to reassess transport prioritLes, examine the problems affecting the sector, and recommend solutions." The transport plan study and recommendations were expected to "contribute to more realistic objectives, more rigorous resource allocation, and substantial 2/ savings in investment outlays over the next plan period." 1/ West Africa Projects Department, Highway Division, "Mali: Appraisal of a Third Highway Project," August 26, 1975, pp. 12-13. 2/ Ibid., p. 18. ANNEX P.qge 4 Telecommunications Project The Bank Group is financing about 84.% of the overall cost of the government' s 1972-1 975 telecommunications rehabilitation and development program. The four-year project to be implemented by the Office des PoStes et Telecommunications du Mali (OPTM) is expected to cost US4$.3 million. Components of the project include: (1) the rehabilitation and expansion of existing local networks; (2) the expansion and modernization of local and long-distance switching facilities in the principal towns; and (3) the installation of a modern microwave system on the Bamako-Segou-Mopti route. It is hoped that the project will facilitate the economic and administrative requirements of the country's key econcmic centers. In practical terms, the telecommunications project was a inter-urban (or regional) project in Mali, considering the urban focus and central place specificity of it. Among centers to benefit from the project are Bamako, Mopti, Segou and Kayes, four of the country's six regional canitals, and ionlikorn and Kati, both within the Bamako urban field. Education Project In tailoring educational development to overall development objec- tives, the government faces considerable budget allocation constraints imposed by the need to scale down traditional allocations to education relative to other sectors. There is also a problem of the proper balance between alloca- tions to education catering to the modern sector manpower requirements, and to "programs addressing the basic education/training needs of the vast majority of the population." 1/ Bank Report No. 140a-MLI, page 2. ANNEX Page 5 The Bank's first education project which was appraised in 1972 was designed to "complement the programs of bther ...agencies in higher education, teacher training, extension agent training, functional literary programs, and rural training." In addition, the project would aid the Ministry of Education in education planning and management, and provide equipment and funding to assist secondary and primary education programs. Besides the education project, the only other social project was the 1973 Drought Relief ftnd project which was part of an international emergency nutrition and health response to the effects of the Sahelian drought in Mali. More directly related to Malis development objectives, however, are a series of agricultural development projects, four of which the Bank is financing wholly or in part. Agricultural and Livestock Projects The IDA's first agriculture project in Mali was an irrigated rice production project, the Mopti Rice Project, for which US$6.9 million was approved via Credit 277-MLI of January 6, 1972. A subsequent increase of US$2.6 million was recommended by the President on January 28, 1975 to offset the impact of currency realignments and price increases, and to help finance certain essential complementary works. Besides the government and the IDA, the FYench government's Overseas Development Agency, FAC, is providing financing to the tune of 8% of total cost compared to 73% and 19% respectively by IDA and the Mali government. The project is reported to be "progressing satisfactorily," and "disburse- 2/ ments are ahead of appraisal forecasts," essentially because of improved climatic conditions, increased demand and better prices for paddy rice. 1/ President's Recommendation as per IDA Document No. IDA/R75-10 of January 28, 1975 on "Mali: Proposed Supplementary Financing for Mopti Rice Project (Credit (277-MLI)," Page 1. 2/ Ibid., page 2. . ANNEX Page 6 When originally appraised the project was expected to yield a 1h% economic rate of return; however, subsequent world market price for paddy went up to about 2.5 times the appraisal estimates, and paddy yields in the project area at full development in 1978 are expected to be at least 20% higher. The success of the Mopti Rice Project in terms of income benefits to farmers and regular supply of rice to urban areas has served as further incentive to both government and the Bank for further investment in agri- culture. Preparatory to a second stage of the Mopti Rice Project a feasi- bility study of about 40,000 hectares was integrated into the first project. Components of the study include topographic mapping, soil studies, and socio-economic studies encompassing the project area. As the headquarters of the 5th Development Region, a principal focus of agricultural investment and marketing, and with its location as a break-of-bulk point on the River Niger, Mopti deserves special attention from urban and regional planners in Mali. Increasing agricultural produc- tivity in the region will soon translate into decreasing demand for agri- cultural labor; and the effect of improved health services will be to in- crease population growth rate (in the absence of birth control). Finally, the growth of commerce and a bureaucracy in Mopti coupled with increasing accessibility to its opportunities will necessitate investment in the city's economic and social infrastructure. The IDA's second agricultural project is the five-year Integrated 2 Rural Development Project (1973-74-1977/78) which covers about 125,000 aa (about 10% of the country's area and about 50% of the agriculturally productive area), stretching across three of Mali's six development regions. ANNEX Page 7 The government had sought the IDA's financial partnership in extending and intensifying its "Operation Arachide" (OA), a project originally aimed at "improving the productivity and incomes of farmers for whome groundnuts are the main cash crop." Groundnut is Mali's third most important export item after cotton and livestock. Since the commencement of "Operation Arachide" in 1967, the share of output from government supervised production in total marketed has risen from 38% in 1967 to 80% in 1973. Groundnut production has tended to be erratic, a trend induced partly by unstable world market prices, partly by erratic climatic conditions, and partly by farmers' variable allocation of land between food crops and cash crops. One effect of "Operation Arachide" has been to beef-up market output, which ordinarily would have declined in relative terms. The trend suggests two things: (1) increasing linkage between groundnut production and its pro- cessing in domestic industries; and (2) increasing domestic consumptioh of groundnut as a food item. It is also part of the project's aims to improve yeilds of millet and sorghun in the project area through new inputs of fertilizer and seed dressing, and the use of ox-drawn equipment. At full development, the project is expected to benefit about 107,000 farming families and about 1 million people in all, with average income per capita in the project area rising from US$22 to US$38. Net cash surplus accruing to government via the project is expected to increase from US$0.3 million in 1973/74 to US$2.3 million in 1977/78, with a long-run average of US$2.0 million per year. 1/ Later renamed Operation Arachide et Cultures Vivrieres (OACV).with the commencement of the second phase of OA and the participation of IDA in it. ANNEX Page 8 A third agricultural project, the Livestock Project, covers Mali's .1/ 5th Development Region and is aimed at "the rational use of land and water in Mali's most important and high-potential livestock area." The area had been ravaged by the 1972/73 drought. The bank is providing about 77% 2/ (US$13.3 million) of the total cost (US$17.3 million) of the project whose components include extension services and grazing control, improvement of animal health services, construction and management of an abattoir, hyde- drying facilities, and five livestock markets, establisbment of a '150 hectare livestock and pasture trial station, and preparation of a second phase livestock project. Livestock is a key ccmponent in Mali's agricultural economy. In 1972, livestock accounted for 4C$ of total agricultural output, coming second after farming (49%). The sector's share of GDP reached 20% in 1969 before declining to 17% in 1972, owing to the drought. Export statistics for 1972 were as follows: 220,000 live cattle and 210,000 live sheep and goats, representing 30% of livestock production and 40% of exports. At full development (in 1979) the project is expected to be yeilding about US$7.8 million worth of livestock annually (in 1974 terms); 100,000 pastoral families would increase their average cash incomes from livestock from US$144 to US$222 per year. About 400 new jobs will be created, mainly in the Mopti- Sevare urban area. The Issues Paper on a fourth IDA agricultural project has been 3/ drafted it presents the facts relating to a proposed Mali-Sub Agricultural 1/ Namely, the Mopti Region. 2/ To be carried out over 5 years 1975-1979. 3/ Attachment of January 9, 1976 memo fram Mr. Jean-Louis Ropiteau to Xr. Ralph Wadsworth. ANNEX Page 9 Development Project, and raises the issues arising fran the facts. The proposed Mali-Sud project takes account of Mali's rapid recovery from food deficits, and accordingly directs attention to export and cash crops, namely cotton and kenaf. The proposed project includes a small rice development component. Impact on the Economy With the fairly well-developed institutional structure in Mali, the established linkages between agriculture and the industrial sector, and the latent demand for agricultural outputs, goverrment/IDA partnership in agricultural investment is suceeding in achieving the country's development objectives. This success, however, may be constrained by erstwhile as well as newly created economic, political, and environmental problems. Except indirectly through the Education and Telecmmunications Projects, the Bank has not been directly involved in urban development in Mali. But both the Bank's and Mali government's every investment to date has an impact on and is influenced by developments in the central place (urban) system. While an independent case could be made for urban investment in Mali, such a case will be strengthened by a consideration of the linkages between the urban and non- urban sectors of the country's economy. Thus because they usually are sectorally conceived, Bank projects have had a significant impact on sectoral economJic growth in Mali. Agricultural projects in particular have been the most successful. And the fact that such projects are set in specific areas must be having an impact on regional development. The Kpti Rice, and Livestock Projects are the best cases in point. T*ansportation investments which to date have been oriented ANNEX Page 10 improve towards the rural sector are also expected to/the performance of the economy through increased population mobility and cotrmodity flows. Besides, all the social components (education and health in particular) are bound to have significant impacts on the economy if only in the long run. 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J � ц�, �"� �л � ., у,. ....+.�--�.�.+..-,,.�.... .`.. _ �._. � р 1п`� . г ыкнп......,а.--_�.....,-.._._...-.У.,...�-�......-... ........ �..,_..._..____ _...�..._....._:.} .е..�...` .. _.. �в.��.s -_ ' _ 1 _ � ггt! �.:,. - . �..._ т.� �-.. ...n,�..�.,..,.._.. ��,_... - 2G`7CR? MALI: POPULATION DENSITY jøp Tówns Densities Persons/kml > 2b0 000 > 20 .IaL. itants > 20 habillants ø > 10 9130 115bKails < Lød 9,0"VoNorthern l-Lnits Of sedentary occupa-bion Source: Figure Notes et Etudes Documentaires, Le Mali., -Apr*il 1974. .......... -