A survival economy

Malian TV has been showing a little educational piece at peak viewing times lately, urging all good citizens to pay their taxes. There is no question as to the actors talent, but it does seem reasonable to wonder about the efficiency of the campaign, given that bald exhortation pays off very rarely and in any case very few homes have TV sets. What people are asking now is when this insistent appeal to the citizen's civic sense is to be followed by more traditional means of coercing the recalcitrant tax-payer. For the State has no choice. Its coffers are empty. For many reasons, including embezzlement in the top echelons at the treasury, declining customs receipts and tax recovery problems, it was almost CFAF 8 billion short on the revenue side in 1992.

The Government has to shoulder some of the blame for the tax problem, at least, because of its rush to keep new President Alpha Konar election campaign promises and do away with the basic levy which was so unpopular in rural Mali. This tax, a legacy of the colonial period, brought the State some CFAF 3 billion annually, collecting it was always the opportunity for abuse and it has indeed been repealed... as from 1993. But how can the rural population, which is unused to such gifts but is now cashing the first dividends of change, be made to understand it has to pay one more time ? And how can tax officers, who may well have been called to account of late, be persuaded to redouble their efforts?

This is particularly difficult for them because they know that Malian peasants are feeling the pinch in early 1993. The cotton harvests, one of the only sources of foreign exchange, have been good, but the world price has collapsed. For the first time in years, CMDT, the Malian Textile Company, has been unable to pay the growers cash for their cotton fibre and has had to give out vouchers-which are exchanged, sometimes at half their face value, for goods from money-grabbing tradesmen.

The rice harvest was also good, but has sold badly and there are thousands of tonnes of it in Niger Office silos and rice-growers' barns awaiting customers who become more hypothetical as every day goes by. Here are the victims of the competition from the huge quantities of Asian broken rice which the Transition Government unwisely let in to amass customs duties to finance its policy.

So the CFAF 24.7 billion overall budget deficit not covered by grants or a moratorium on repayments has had to be revised upwards, which augurs ill for the improvements projected for this year. The State is on the brink of bankruptcy and everybody knows it except the Malians. It is for all the world as if they did not want to believe in the financial crisis or were convinced that the Government could always manage to get the money it needed from abroad. Malians have never made so many demands for material advantages before and there are apparently 3000 interest groups, which, fortunately for the Government, are not all out demonstrating in the streets (although they are not all as whimsical as the organisation which looks after the material and moral interests of... twins!).

The students and the civil servants, two of the prime movers in the collapse of the previous regime, got the Transition Government to make promises that the recently elected powers are finding very difficult to keep-and not just because money is short either. The new Government in fact told the IMF and the World Bank that it would keep the aggregate wage down to CFAF 42 billion in 1992, which it did, and to cut it to CFAF 41 billion this year, which will be more of a problem, particularly if voluntary retirements slow down as feared.

The study grants which are virtually wages for students in secondary and higher education cost CFAF 5.2 billion last year, CFAF 1 billion more than provided for in the structural adjustment programme, an effort which the students clearly find inadequate.

A shortage of resources also meant that last year's scheduled CFAF 1.2 billion civil service pay scale realignment on 1990 figures had to be dropped. But the most spectacular demonstration of anger in recent months was, perhaps surprisingly, not by the civil servants, but by the private sector (see also Souleymane Drabo's article). On 28 December, the economic operators - as the 23 477 people, many of them ordinary shop-holders, covered by the code of commerce are rather pompously called-triggered a 72-hour walk-out in support of a 66-point claim for tax and tariff reform, postponement or writing off of tax arrears, rescheduling of bank loans and economic rescue measures.

The tussle with the authorities only lasted 24 hours in the end, because the economic operators decided to stop what had in fact been fairly well-supported action. Many of their claims had in fact been met even before the dispute. On top of this, they engineered an end to the system of closing down firms which failed to pay their taxes and to the tax authorites' swoops on businesses.

Let us now take a look at the complaints of the private sector, which may have a decisive contribution to make to the success of the democratic process. It is generally agreed that it is on the economic field that the battle of democracy will be won or lost and the creation of a dynamic, enterprising private sector is at the heart of the economic strategy of every new democracy in Africa. State companies everywhere have proved to be inefficient and their structural adjustment programmes inevitably spell State withdrawal and economic liberalisation.

Mali's businesspeople lost a lot of money in March 1991, at the time of the riots which ultimately toppled the Moussa Traoregime. Factories were sacked and burnt down, shops were pillaged and stores were robbed-losses of an estimated CFAF 30 billion that the State does not have the means to pay for and the funders are unwilling or unable to cover. The deduction of arrears on tax penalties and the rescheduling of bank loans over 10 years and 1990/91 taxes over three years are two attempts at making up for the failure to pay compensation.

But what the economic operators want the State to do first is restore a climate of security conducive to good business by re-establishing its authority. They maintain that 'democracy has not been explained properly and Malians think it means freedom to do what they like, so they won't pay tax, they fiddle at the customs and they go on strike all the time'. They are very clear that 'liberty doesn't equal shambles' and deplore the fact that 'the fraud squad doesn't dare control fraud any more, because it would be beaten up and nobody would object'.

The new Government, it is often said, does not like the idea of using force and it is trying to dissociate itself from the muscular approach which led to the bloody repression of March 1991 under the old regime. The forces of order are carefully keeping a low profile, their newfound discretion an attempt to wipe out the memory of the part they played in the events of two years ago. Now they are unwilling to take any initiative for keeping order, as the Mayor of one Bamako district regretfully informed me, and they want written instructions from the civil authorities, if not their actual presence at the hot spot.

Security is nonetheless a genuine problem in Bamako today, and there have never been so many robberies. A large number of prisoners took advantage of the events of March 1991 to break out of prison-which may partly explain the reappearance of banditry. But denouncing mounting crime is one thing. Considering that exercising a basic right such as the right to demonstrate or strike helps weaken the State is quite another. Although the present leaders cannot safely allow the insecurity and anarchy which encourage the most uncontrolled behaviour to continue (and a day rarely breaks without the finding of two or three bodies, ostensibly those of thieves caught in the act and beaten to death by people never called to account for meting out this kind of rough justice), they have to be congratulated for their scrupulous respect for the freedoms guaranteed by the constitution.

The second big demand from the private sector in Mali is for the State to put an end to the widespread fraud which is throttling the economy, starting with the country's 30 or so processing industries. Over the past year, one of Bamako's biggest businessmen has stopped producing PVC pipes and his output of plastic bags and other articles is down to 10 % of capacity. Another has had to stop manufacturing insecticide because a similar product is available on the market at less than his cost price. The blame, of course, lies with the fraud at the customs when goods come in from Nigeria, where production costs have defied all competition since the currency collapsed. But the complainants are like the boy who cried wolf, because it is the businessmen themselves who are behind the fraud they are objecting to. The industrialists accuse the tradesmen of organising illicit imports to put them out of business and the tradesmen complain of unfair competition with industrialists flooding the market with the raw materials they need for their products without paying the customs duties.

They all belong to Mali's Chamber of Commerce and Industry. But instead of seeking the answer in that organisation, they have once again sent the ball back into the State's court and are querying the probity of customs and tax officers-as if they could hide the fact that there are no corrupt people without corrupters. The Government is not trying to duck responsibility for its departments either, for it is keenly rooting out the corruption which costs the public finances so much. But very little practical action has followed the verbal condemnation so far and the size and difficulty of the task, which reflection the extent of the social rot to he excised. no doubt have some thing to do with it, as does the failure of previous public moralising and anti-illicit wealth campaigns. But can a Government which wants to establish its difference on stringent, transparent management of public funds afford not to make the fight against fraud and corruption a major feature of its action programme? This is a major consideration now it has had its first scandal-in the Niger Office, a State company, which used grossly falsified bank papers in a CFAF 300 million rice deal with a notoriously shady tradesman. Although the ringleaders are in prison, there is no trace of the money from the rice, which was immediately sold for cash. What is worse is that it could happen again, which goes to show just what a state the administration is in. As the new Government team took over, evidence of breathtaking embezzlement was already found in high places at the treasury, when unscrupulous businessmen were paid large amounts of money in exchange for bouncing cheques or over-valued goods, with the connivance of senior officials. It cost the State CFAF 6.1 billion, of which barely CFAF 1.2 billion of an anticipated CFAF 2.7 billion have been recovered.

The Government is about to bring out a report on the state of the country when it took over and, of course, it will bring other skeletons out of the cupboard. At least, that is the theory of the top customs official, very involved with the previous regime, who says that there were 'levies' of 15-20% on public contracts worth tens of millions of CFA francs signed with individuals under the Transition, although the commission was in fact 5-7%.

Even if the Government does manage to do its share of the vital spring cleaning, can the private sector do the same, including in its management bodies? It is public knowledge that some of its leaders have things to reproach themselves for in the big financial scandals (the 55 billion hole in the Mali Development Bank, the 2 billion slate at the Postal Cheque Office, the recent treasury embezzlement and all the damage to State companies) which have rocked the country since independence.

But spring cleaning it has to do if it is to win back the confidence of the banks and be the driving force of a market economy, which is its rightful role and one for which it is qualified by many assets which it holds, particularly a class of rich traditional traders who are punctilious in their business dealings and have the confidence of their foreign partners. Many people hope to see men of this calibre move out of trade and property speculation and go into industry, particularly the sector of agricultural processing. The fact that Mali has the greatest potential for irrigated land in the Sahel, where food supplies are always precarious, is all too often overlooked.

These, briefly, are the things to bear in mind in any analysis of the present situation in what is one of the poorest countries in the world. Some people say that the ongoing democratic movement would have a better chance of success if Mali was richer and had a higher literacy rate. No doubt. But these are the very things which make Mali an example. Because if the process Mali has embarked on works despite all the constraints, then democracy can win through all over Africa. There is more to the Malian model than overturning a dictator.

Amadou TRAOR