The lifting of severe economic sanctions offers the Malian economy a much-needed relief after a half-year trade embargo that paralyzed many sustainable businesses in the country.
The Economic Community of West African States (ECOWAS) imposed sanctions after Mali underwent two military coups within a year and agreed to lift them after agreeing with the military government's proposal to hold elections by March 2024. Sjoerd Melsert and Mariam Niangado, who oversee the Malian portfolio of Cordaid Investment Management, have witnessed how challenging it was for the investee clients to keep businesses afloat during economic isolation. At the same time, both share confidence the resilient enterprises CIM supports in Mali will now have the opportunity to grow and flourish.
The sanctions had a devastating effect on the Malian economy, which was already hindered by decade-long armed group uprisings and the consequences of the COVID pandemic. Mali's debt default, followed by the cut-off from the regional central bank, has brought the country to the verge of a humanitarian crisis. "Mali is a landlocked country depending on its neighbours for imports, especially on ports in Senegal and Ivory Coast," explains Mariam, Investment Manager based in the Malian capital, Bamako. Without ocean access, transportation costs increase dramatically, driving the prices up.
Furthermore, during the trade embargo, some goods were impossible to get into the country, causing many value chains to collapse. For example, one of CIM's investees, Thilo Energie – a company involved in safe petroleum transportation in Mali, couldn't bring petrol cross-border or get high-quality trucks from Senegal. Another investee SOSAF, operating in the poultry sector, couldn't import fertile eggs to grow day-old laying or broiler chicks they sell to local farmers. SCS International struggled to buy carton boxes for the packaging of their mangoes. DGB, the enterprise producing tubes and pipes from recycled plastic, had no demand for its product as all the construction sights were shutting down in the country due to a lack of cement.
"All of our investees were heavily affected by the sanctions, as imports of supplies were limited, hampering some companies to produce, or affected their sales or delayed investments in growth. By allowing longer grace periods for both interest and repayments, we have supported our investees in this difficult period in an already fragile country," says Mariam.
Now that the economic pressure is lifted, our investee clients are gradually going back on track with daily operations. "The lifting of the sanctions will allow our investee companies to import supply needed for production and resume export to ECOWAS countries. In the meantime, Cordaid Investment Management continues with business as usual: adding more sustainable businesses to our pipeline and scaling the social impact of our investments. Despite all the challenges, Mali is a country buzzing with the entrepreneurial spirit - our investees prove it every day," says Sjoerd, who has just returned from a visit to Bamako.