COTTON SECTOR REFORM IN MALI: A FAILED REFORM?

The organisational foundations of the Malian cotton system were laid towards the end of the colonial period. The French, after failed attempts to scale-up indigenous cotton production by means of violence and coercion (Roberts Reference Roberts1996), established a new system based on economic incentives for small-scale farmers and an integrated industry model. The French cotton state company, Compagnie Française pour le développement des fibres textiles (CFDT), bought seed cotton from hundreds of thousands of farmers, processed it into cotton lint and exported it to international markets. The ginning firm later provided farmers with inputs on credit, extension, transport and other services (Fok Reference Fok1993). A few years after Malian independence, the State created a new parastatal to take over the monopoly/monopsony position in the cotton sector. This new company, the CMDT, became a joint venture between the Malian state (60%) and the CFDT itself (40%).

The CMDT played an indisputable role in the country's cotton success story (Tefft Reference Tefft, Bingen, Robinson and Staatz2000). Cotton production expanded four-fold between the mid-1970s and the mid-1990s, bringing along small-holder mechanisation, improvements in cereal production (grown in rotation with cotton) and food security, as well as development of rural roads, schools and health centres (OECD 2006). The sharp drop in international cotton prices during the agricultural year 1985–86 was the first major blow. The decision to increase farm-gate prices, despite unfavourable market conditions, amplified the financial losses for the CMDT and caused it to require state budget support. The 50% devaluation of the CFA Franc (or FCFA, Franc of French African Community) in 1994 provided a respite by increasing the local currency value of CMDT export revenues and boosting production. However, corruption and political diversion of funds increased after the 1991 democratic transition (Bergamaschi Reference Bergamaschi2011). Poor management practices over the years coupled with a further decline in international cotton prices led to a deteriorating financial situation in the late 1990s. In 2000, the CMDT had a deficit of US$ 60 million (equivalent to 2% of Mali's GDP) and it owed its creditors US$ 15 million (OECD/AfDB, 2002).

Reluctant to see donors' aid being used to cover these losses, international financial institutions mounted pressure for reforms (Hartmann Reference Hartmann1988). These reforms required aligning producer prices with international prices, reducing the degree of involvement of the CMDT in non-cotton function, opening competition to private operators, and privatising the CMDT. It was within this context of international pressure that the CMDT decided to lower, quite at the last moment, the producer price for the 1999–2000 agricultural season. Farmers responded by protesting en masse against CMDT corrupt management and calling for a national boycott of cotton production, which was quite successful, despite incomplete adhesion by peasant organisations (Roy Reference Roy2010). That year, cotton production almost halved (from about 460,000 to 243,000 tonnes). The boycott marked a political victory for cotton growers, who demonstrated their strategic importance and ability to harm state interests.

Squeezed between the opposing pressures from discontented farmer movements and increasingly impatient IFIs, the government called for a reform process and established a task force to restructure the cotton sector (Mission de Restructuration pour le Secteur Coton, MRSC). The MRSC mission was to consult stakeholders, evaluate reform options and make recommendations to the prime minister (MSRC 2001). Following a forum of cotton stakeholders in April 2001 — at which farmers' unions expressed their opposition to plans for privatising the CMDT — the government laid out the Cotton Sector Development Policy Paper (Lettre de Politique de Développement du Secteur Coton, or LPDSC), which espoused a gradual approach to reform (République du Mali 2001). At the end of 2005, the government adopted a revised timeline (Chronogramme Révisé du 28 decembre 2005), which deferred privatisation until after the 2007 general elections, but contained a more detailed indication of its modalities. The CMDT would be split into four subsidiaries (filiales), each operating in an exclusive cotton zone (thus generating four cotton regions), initially controlled by a CMDT holding company. Subsequently, the 2006 privatisation plan (Schéma Opérationnel de Privatisation, SOP) specified how the shares of each of the four subsidiaries were to be assigned: 61% to a private operator, 20% to cotton producers, 2% to company employees and 17% remaining with the State. The government's creation of the four subsidiaries was supposed to occur early in 2007 but it became effective only in December, since most of that year's work went into the elaboration of several studies commissioned by the MRSC to evaluate different aspects of the privatisation. The parliament eventually approved the draft bill for the privatisation plan in July 2008.

The year 2010 marked some progress, as a tender launched in February led to pre-offers from six companies (all international except one Malian group). The only offer deemed acceptable was by the Chinese company Yue Mei for the purchase of two subsidiaries (Sikasso-Bougouni and Kita). The lack of further suitable purchasing offers coupled with the unexpected 2011 spike in international cotton prices lessened the domestic stakeholders' sense of urgency for reform. The spike had restored the CMDT's financial viability. The political crisis in Mali following the March 2012 coup d’état led to further delays in implementing the CMDT privatisation plan.Footnote ²

Despite its hesitancies regarding the CMDT privatisation, however, the government implemented other reforms previously agreed with donors, such as the downsizing of the CMDT extension personnel in 2003 and the privatisation of the oilseed crushing company HUICOMA, both of which encountered various problems and attracted critiques domestically (La Nouvelle République 2010). Even more controversially, in 2005 the government adopted a new price determination mechanism for three agricultural years, as a condition to receive a World Bank loan. In line with international experts' recommendations, the price mechanism linked producer remuneration to a share of the total profits accruing to the cotton value chain, using a formula based on expected international cotton prices (République du Mali 2005). The IFIs argument for price indexation was the need to increase producers' share of the international price (Badiane et al. Reference Badiane, Ghura, Goreux and Masson2002). However, Mali's price mechanism caused an abrupt decrease in producer prices due to a combination of low international cotton prices and the government's previous policy of subsidising, rather than taxing, farmers (Serra Reference Serra2012). This mechanism was thus strongly criticised by domestic experts and civil society for unduly penalising poor farmers, and, through evident disincentives to production, for jeopardising the very goal of economic growth that reform proponents vouched to pursue (Nubukpo & Keïta Reference Nubukpo, Keïta and Hazard2005; Oxfam, 2007).

Moreover, the government implemented institutional reforms that converted 7,177 village associations into fully fledged cotton producer cooperatives (Societés coopératives des Producteurs du Coton, SCPCs), and in 2007 established the National Alliance of Cotton Cooperatives (Union National des Societés Coopératives des Producteurs du Coton, UN-SCPCs), charged with the important task of representing cotton farmer interests during negotiations with the government, the CMDT and donors. However, the speed with which these cooperatives were created cast serious doubt on their institutional capacities. Also, traditional farmer unions resented these reforms, as the government used them as an opportunity to politically marginalise their more radical elements (Roy Reference Roy2010).

Donors and international experts have expressed disappointment about Mali's reform record, emphasising the lack of progress, mainly because of the frustrating delays in the privatisation process.Footnote ³ This paper argues that the reform progress was not as dismal as it is often portrayed, when less perceptible but relevant changes are taken into account; and that the ambiguous and difficult pace was due not just to lack of political will but also to fundamentally contrasting policy paradigms, which hindered dialogue between stakeholders.

EXPLAINING REFORM DELAYS

Several factors have been advanced in the literature to explain delays to economic reform in African contexts. The most widely cited explanation is elites' vested interests (Bates Reference Bates1987; Tangri Reference Tangri1999). State companies provide rents to elites, revenues to fund state programmes and sources for sustaining patronage relationships. Therefore, politicians and company bureaucrats adopt all sorts of resistance to fight privatisation and liberalisation. In the case of the copper state company in Zambia, for instance, delaying tactics served particular interests in the government, besides securing protracted high salaries for the officials involved in the reform process (Rakner et al. Reference Rakner, van de Walle, Mulaisho, Devarajan, Dollar and Holmgren2001).

Another explanation for reform hold-ups in African contexts is limited policy ownership, resulting from an insidious cycle of high aid-dependence, weak state capacity and donors' heavy use of conditionalities (for Mali, see Bergamaschi Reference Bergamaschi and Whitfield2008). In Uganda, an important reform of the agricultural extension system that had gained wide donor and farmers' approval subsequently unravelled, since ownership within the government was in reality much more limited than anticipated (Kjaer & Joughin Reference Kjaer and Joughin2011).

Studies emphasising the challenges intervening during the policy implementation phase provide a further key for understanding policy delays and reversal. Even if the president and the political elites adopt and endorse a particular intervention, it can get stalled at a later phase because the bureaucrats and civil servants in the state administration may be against it and may find it more advantageous to boycott it or try to modify it along the way (Thomas & Grindle Reference Thomas and Grindle1990). In West African contexts, where state bureaucrats carry out their tasks in a kind of impenetrable bubble, often operate through informal channels and are rarely sanctioned for misconduct (Olivier de Sardan Reference Olivier de Sardan, Blundo and Le Meur2008), the challenges of implementation are quite distinct from those of policy adoption. During implementation, state bureaucracies can thus thwart policy decisions previously undertaken by the government.

The new political economy literature has emphasised the role of underlying political and economic factors. Formal models of interaction among self-interested political actors explain opposition to economic reforms in terms of the type of government, the quality of political institutions, the size and power of opposition groups, and the degree of uncertainty on future economic gains and their distribution (Swinnen Reference Swinnen2010).

When examining the challenges specific to policy environments in Francophone West Africa, a weak political-party system emerges as a distinctive feature (Bleck & van de Walle Reference Bleck and van de Walle2011). The absence of programmatic differences between political parties and the unwillingness of opposition parties to challenge the government on substantive issues, such as economic reforms, have implied weak parliaments, and limited real debates in the formal institutional arena. Furthermore, the predominant elitist nature of the governing class, composed of highly educated and urban elements espousing westernised and secular values, leads to policies that are more aligned with donors and external partners than with the values and priorities of the wider population.

All the factors just mentioned are applicable to the Malian case. There is no doubt that the prospect of losing private rents induced CMDT bureaucrats to block the privatisation process; while opposition from powerful domestic groups and highly uncertain benefits explain the government's initial resistance. Adhesion to reform was thus at first mainly opportunistic (or imposed, according to one's preferred interpretation), as the country badly needed to resume negotiations for new IFI loans. The political party system was also very weak under the two terms of Amadou Toumani Touré (2002–2012). His ‘politics of consensus’ demanded unanimity at the expense of political debate and of healthy confrontation in the formal institutional sphere (Bergamaschi Reference Bergamaschi2011).Footnote ⁴ The disconnect between government and civil society is evident in the fierce attacks on the government (and on the IFIs) from the press, farmer organisations and prominent social activists. Much of the initial reform debate was actually not between domestic actors, but between the World Bank and the French development agency (AFD), with the latter disagreeing on the advantages of liberalising and breaking up the monopoly system.

Nonetheless, these traditional political economy explanations are better at explaining opposition to reform, but do less well in accounting for more nuanced situations (Birner & Resnick, Reference Birner and Resnick2010). Some literature simplistically assumes that reform is either accepted or rejected; and that political actors are self-interested and have defined goals (Grindle Reference Grindle and Meier1991). In reality, however, governments and other domestic actors may have mixed, and conflicting, objectives; national policy processes are murky and complex, and new preferences emerge that shift actors' choices and affect political dynamics.

I argue that the Mali cotton sector reform does not really resemble a pure case of failed or delayed reform. Not only did the government implement a number of reforms, facing at times significant domestic opposition, it also spent considerable time and resources in seeking ways in which privatisation reform could become acceptable within Mali – and genuinely supported it for a given period.

For a deeper understanding of the complex political and social factors underlying the cotton sector reform process in Mali, we need to recognise the role of ideas and cognitive frameworks (Birner & Resnick Reference Birner and Resnick2010), and in this instance, the co-existence of markedly differing views about how the cotton sector should be run. That external donor influences and a different framing of the issues can hinder policy implementation was a point already demonstrated in the case of a soil fertility initiative in Mali by Keeley & Scoones (Reference Keeley, Scoones, Keeley and Scoones2003). Though the reality is more complex, it is useful from an analytical standpoint to discuss two main paradigms. According to the first, the Malian cotton industry should be turned into a financially viable economic sector that does not rely on the state budget. Reforms within this ‘sector approach’ aim to maximise cotton profitability by reducing market distortions and promoting efficient farmers, all while encouraging marginal, unprofitable farmers away from cotton. According to the other paradigm, that I call the ‘holistic’ approach, the cotton sector represents one fundamental component of the wider rural economy, generating enhanced food security, poverty reduction and infrastructure. The main goal of reforms should be to ensure the development, stability and cohesion of this wider economic system, inclusive of marginal farmers, rather than just the profitability of the cotton sub-system.

Major donors and international consultants supported the first logic, while the CMDT, the government, producers and other civil society organisations shared the second paradigm. The divide was not just between foreign and domestic actors. Within the government, officials from the Ministry of Economics and Finance were sympathetic to the first approach, while the Ministry of Agriculture supported the other. Among donors, international NGOs such as Oxfam identified with the second paradigm, in contrast to the World Bank and the IMF. The French moved in between, initially defending the benefits of sector integration, but subsequently supporting the case for enhancing competitiveness and sector efficiency. Finally, Malian farmers' interests and perspectives also differ, with only the few large-scale farmers possibly supporting a more competitive system, while small-scale farmers (by far the majority) have traditionally welcomed agricultural parastatals (Moseley Reference Moseley, Moseley and Gray2008).

While this type of ideological division applies to many other sectors and countries across the continent, I would argue that it is particularly distinctive of the Malian cotton sector. Cotton is a strategic productive sector in Mali, not just as a coveted source of rents to elites (politicians and bureaucrats), but also as a resource for development and poverty reduction (CMDT 2009). What distinguishes cotton from other rent-producing economic sectors, such as gold (which recently became the country's primary export), are its diffuse benefits. Cotton is the main source of livelihood for a quarter of the Malian population. Cotton production has funded infrastructural development and interventions in the populous southern regions, including road maintenance, schools, health centres, wells and literacy classes. Over time, cotton has become much more than an economic sector (Koenig Reference Koenig, Moseley and Gray2008), and is instead elevated to an object of national pride and a basis for village social organisation, as well as a source of symbolic and cultural capital in southern Mali. The unique position of cotton in the Malian context has led to the emergence of an important constituency sensitive to the developmental impact of the cotton sector, one that cuts across various sectors of society including elements of the government and the political elite.

By embracing a narrow view of reform objectives, based on notions of economic efficiency and state budgetary balance requirements (IMF 2010), the donors and experts pushing for cotton sector liberalisation and privatisation showed their inability (or unwillingness) to take into account these broader social and cultural considerations. Malian actors' defence of the CMDT, with its vertically integrated cotton sector structure and its capillary presence in the rural social landscape, were dismissed as either the product of rent-seeking behaviour or unrealistic and out of touch with the exigencies of international markets. It was common in my interviews with donor representatives and international experts to hear suggestions that Malian stakeholders and farmers needed to change their minds and attitudes, and dismiss old practices and entrenched modalities of running the sector.

This gap in cultural understanding and political language among key stakeholders in the reform process provides us with an additional explanation for the reform delays. If the gulf between actors' positions was so large to start with, and the government needed to obtain a minimum policy consensus before acting, then investing in lengthy policy consultations and negotiations may have made sense. Key actors within the government, the producer association and even the CMDT did revise their initial stance and truly endorsed the privatisation plan. In other words, the policy process had an impact on actors' assessment of the reform benefits, even if it did not result in the privatisation outcome (for reasons later explored).

The Mali case thus provides important insights into actual political dynamics and the limits and possibilities for policy change, while reminding us that policy changes may not occur in discreetly perceivable ways, but subtly and unpredictably (Center for the Future State 2010).

THE CMDT PRIVATISATION SAGA

This section advances the hypothesis, supporting it with carefully collected evidence from fieldwork observations, documents and interviews, that the lengthy debates about CMDT privatisation during 2006–2010 were not just the result of the government's delaying game with donors, but a strategy to deal with the multiple and opposite policy pressures, and to identify possible avenues for consensus. With CMDT's political influence looming large, the government initially possessed limited autonomy in the reform process. Over time, however, the slow process of stakeholders' negotiation paid off, by giving the government greater margins to strike a compromise on the CMDT privatisation plan, which was arguably achieved during the late 2000s. The consultation process was led by one small unit within the government, which had sufficient cultural and political capital to lay the basis for reforms that were more acceptable domestically than those originally proposed by the World Bank.

A NEW VISION AND BETTER-OWNED POLICIES?

In order to support the interpretation whereby the government accepted the CMDT privatisation intentionally, rather as an act of pure pretence, this section demonstrates that this was part of a broader and more ambitious attempt by the MRSC to re-orient cotton sector interventions. The window of opportunity opened up in January 2010 when the government and the CMDT reached a consensus about the company's privatisation. Another significant factor was the easing of tensions in the relationship with the key donors.

Whether due to frustration with the government's slow response or instead the sense that the government was moving in the right direction, or simply due to the global economic crisis, the IFIs softened their stance. The World Bank demonstrated a renewed willingness to back up the government's own reform efforts, by providing resources (about US$ 7·6 million) to pay arrears due by the CMDT to producers, and thus helped to re-launch cotton production (World Bank 2011). In 2009, it withdrew from direct cotton sector intervention, opting for a more general budget support. The IMF ceased to request the CMDT privatisation as aid conditionality (Les Afriques, 9.10.2010). The privatisation in 2009 of the former French state cotton company, now GEOCOTON, created the conditions for the French development agency, which had encountered moments of anxiety and frustration with the Malian government (as illustrated by Cavana Reference Cavana2008), to adopt a more hands-off approach.

Taking advantage of these greater margins, in 2010 the government adopted two new documents: the national strategic framework for the development of the cotton sector for 2010–2015 (Cadre Stratégique National de Développement du Secteur Coton), approved in May, and the Policy Document for Supporting the Cotton Sector (Lettre de Politique de Soutien au Secteur Coton), approved in August (République du Mali 2010a, 2010b). A careful analysis of these documents reveals a significant change in language and tone with respect to the 2001 strategic document, the LPDSC. While the latter follows the narrow logic of cotton sector restructuring in line with donors' prevailing discourse, the strategic framework reclaims the need to approach reform ‘within a holistic, global and inter-disciplinary approach’ and ‘to promote an agriculture, which is sustainable, diversified, modern and competitive … which can favour the emergence of a true centre of development in Southern Mali’ (République du Mali 2010a: 8, 9; author's translation).

Although policy documents do not necessarily translate into actual policy, their analysis is nevertheless useful to detect actors' shifting motivations and new tendencies. It is impossible not to notice here a new recognition of the cotton sector's strategic role for the country's overall economic policy, as delineated in the 2007–2011 Strategic Framework for Growth and Poverty Reduction (Cadre Stratégique pour la Croissance et la Réduction de la Pauvreté). Consistent with the MRSC attempt to re-cast the role of the state, this new phase highlights the state guidance and coordination function, precisely at times when some cotton sector functions were devolved to other actors.Footnote ¹²

The new policy course involved a renewed government interventionist stance during 2009–2012. This included a fertilizer subsidy programme for three consecutive cotton seasons, pro-active efforts to pay farmers on time and new hiring of extension agents. With donor support, the government also established a programme for condoning cooperatives' debt. Government and CMDT representatives intensified their visits to rural areas to persuade farmers to plant cotton. In February 2011, Mali adopted a law creating a Cotton Regulatory Authority. Production increased again, and the quality of services provided along the cotton value chain was generally considered much higher. Hopes of reviving the Malian cotton sector were high (maliweb.net 2011).

The relevant question is why the privatisation project stalled. Although it is legitimate to doubt the state's real commitment to its implementation (Traoré Reference Traoré2007), it is equally reasonable to argue that the emergence of new factors delayed privatisation. The sharp rise in international cotton prices during 2010–2012 (ICAC 2011) helped rebalance the CMDT's financial accounts, which not only reduced the pressure to privatise, but also increased the company's purchase value. As a consequence, the identification of adequate offers for the remaining two cotton zones became more difficult to come by. Then came the March 2012 coup d’état, which delayed any kind of structural policies. The democratic elections in July 2013 have opened a new phase of negotiations with donors. It remains to be seen whether the new government will continue the previously agreed upon reforms.

Overall, the evidence presented in this paper suggests that, through a long gestation process, Malian actors came to genuinely agree on a privatisation plan; and were on the path of turning a reform initially perceived as externally imposed into a more endogenous, albeit imperfect, process, striving to compromise between opposite policy pressures.

IMPLICATIONS FOR POLICY: REFORM PROCESSES IN EMERGING DEMOCRACIES

Weak democracies such as Mali face challenges to their ability to devise and implement policies that improve economic development in a sustained way, due to the limited institutional capacity of democratic institutions, and high levels of aid dependence. We know the problem is neither the democratisation process, which per se is not inimical to economic reform (van de Walle Reference van de Walle1999), nor the type of government (Kelsall & Booth Reference Kelsall and Booth2010), nor even the precise content of policies (Rodrik Reference Rodrik2007). What are then the lessons that can be drawn from the Malian cotton case, and what do they tell us about the limits and possibilities of economic reforms in emerging, but institutionally weak, African democracies?

Productive sectors that have a potential overlap of interests between politicians and wider sections of the rural population need to be tackled in a politically and culturally sensitive manner. Higher cotton volumes in Mali not only generate important economic rents for the government through export taxes,Footnote ¹³ but also typically reduce poverty (Oxfam, 2007; Delarue et al. Reference Delarue, Mesple-Somps, Naudet and Robilliard2009). The reforms initially proposed by donors, such as the 2003 cut to non-cotton extension and the 2005 price mechanism, tended toward downsizing the sector by encouraging inefficient and marginal farmers to abandon cotton (Nubukpo & Keïta Reference Nubukpo, Keïta and Hazard2005). The donors' insistence that the cotton sector become viable, by shedding its wider development functions, was controversial and divisive.

Instead, the nature of state and politics in Mali is one in which reaching a modicum of national policy consensus is required to obtain legitimacy. The institutional capacities of opposition parties and the parliament may be weak (Bleck & van de Walle Reference Bleck and van de Walle2011), yet the government is exposed to opposition from informal and spontaneous means of civil society mobilisation. Although rarely employed, these forms have proven to be damaging to state interests, and corrosive of its overall legitimacy.Footnote ¹⁴ Examples of these instances are the role of farmer organisations in the popular protests that toppled the one-party illiberal regime of Moussa Traoré in 1991, and the 2000 cotton boycott, which led to sizeable decreases in government tax revenues. To the extent that the government wants to minimise such threats, it cannot afford to implement policies without some form of support from below.Footnote ¹⁵ In order to avoid painful confrontations, which may decrease their legitimacy and electoral acceptability, such governments may need to undertake formal processes of reflection and consultation, however long, costly and uncertain the outcomes might be.Footnote ¹⁶

In order to fruitfully engage with national policy processes, donors and external experts should go beyond their inherited policy paradigms, and instead let the local social, political and economic context inform their policy approach to countries' reform. Many influential policy documentsFootnote ¹⁷ were mainly governed by the sector approach to cotton policy-making, which, despite its impeccable logical appeal, is not suited to the particular institutional and market features prevalent in Mali. The IFIs' adherence to this paradigm explains at least part of the Malian resistance to undertaking reform. Due to the difficulties of not only understanding, but also acting upon, the local institutional context,Footnote ¹⁸ donors and international experts failed to appreciate the extent of the challenges, and brushed aside intervening difficulties by generic reference to corruption and lack of political will. One should add that the imperative to identify reforms that are more respectful of national priorities should prevail even if the main obstacle to progress is simply a lack of state capacity. Precisely because balancing contradictory pressures from multiple angles is beyond the capacity of any single actor in Mali, donors should contribute to reducing, not enhancing, such demands. Supporters of reform should be humble, and realise that the best outcome of a reform process may be difficult to know in advance, especially when it comes to content. Given the unpredictable nature of policy processes, donors have a better chance to positively contribute to reform by supporting the learning process within existing institutions and processes, accepting the inevitability of trials and errors,Footnote ¹⁹ and being open-minded about possible outcomes.