DIGIT ECONO AL DIAGNOS MY MALI TIC © 2023 The World Bank Group 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbankgroup.org Some rights reserved 1 2 3 4 21 20 19 18 This work is a product of the staff of The World Bank Group with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank Group, its Board of Executive Directors, or the governments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; e-mail: pubrights@worldbank.org. 2 Mali Digital Economy Diagnostic TABLE OF CONTENTS ACKNOWLEDGMENTS ................................................................................................................................................ 6 FOREWORD................................................................................................................................................................. 7 ACRONYM LIST ........................................................................................................................................................... 8 EXECUTIVE SUMMARY.............................................................................................................................................. 11 INTRODUCTION ........................................................................................................................................................ 21 Background on Mali 21 Policy and Institutional Context of Digital Transformation 25 Legal and regulatory framework 27 Recommendations 28 CHAPTER 1 DIGITAL INFRASTRUCTURE .......................................................................................................... 30 1.1 Importance of Digital Infrastructure 30 1.2 Diagnostic Findings: Current State of Digital Infrastructure 31 1.3 Recommendations 47 FOCUS 1: FRAGILITY & DIGITAL ............................................................................................................................... 51 CHAPTER 2 DIGITAL PUBLIC PLATFORMS ....................................................................................................... 54 2.1 Importance of Digital Public Platforms 54 2.2 Diagnostic Findings: Current State of Digital Public Platforms 55 2.3 Recommendations 67 FOCUS 2: GENDER & DIGITAL .................................................................................................................................. 69 CHAPTER 3 DIGITAL FINANCIAL SERVICES ...................................................................................................... 72 3.1 Importance of Digital Financial Services 73 3.2 Diagnostic Findings: Current State of Digital Financial Services 74 3.3 Recommendations 85 FOCUS 3: REGIONAL INTEGRATION .......................................................................................................................... 86 CHAPTER 4 DIGITAL BUSINESSES .................................................................................................................... 88 4.1 Importance of Digital Businesses 89 4.2 Diagnostic Findings: Current State of Digital businesses 89 4.3 Recommendations 103 FOCUS 4: CLIMATE CHANGE & DIGITAL................................................................................................................. 106 CHAPTER 5 DIGITAL SKILLS ........................................................................................................................... 108 3 Mali Digital Economy Diagnostic 5.1 Importance of Digital Skills 108 5.2 Diagnostic Findings: Current State of Digital Skills 111 5.3 Recommendations 120 CONCLUSION .......................................................................................................................................................... 122 REFERENCES ........................................................................................................................................................... 126 APPENDIXES ............................................................................................................................................................ 130 LIST OF FIGURES Figure 1. Unique mobile broadband penetration for Mali and selected comparators, GSMA, 2021 ................................. 32 Figure 2. Coverage and usage gaps in Africa, WDR 2021 .................................................................................................... 33 Figure 3. Main access barriers Faced (% of respondents), 2020 household survey commissioned by AMRTP ............... 34 Figure 4 and Figure 5. Left: Average price of 1GB (% of monthly GNI), Cable.co.uk, 2021. Right: Minimum price of an entry-level smartphone (% of monthly GNI), A4AI, 2021, for Mali and selected comparators ............................................ 35 Figure 6. Average Broadband download speed (Mbps) for Mali and selected comparators, Cable.co.uk, 2021 ............. 36 Figure 7. Percentage of households being affected by harmful practices online, AMRTP survey, 2020........................... 37 Figure 8. The Broadband Value Chain (source: WB) .................................................................. Error! Bookmark not defined. Figure 9. Mali's access to international bandwidth and backbone ...................................................................................... 41 Figure 10. Role of the digital public platform pillar in the digital economy at the national and regional level .................. 55 Figure 11 and Figure 12. Left: Financial inclusion in Mali and WAEMU. Source : BCEAO 2020, %. Right: Financial inclusion in Mali. Source : BCEAO 2020,% ............................................................................................................................. 75 Figure 13 and Figure 14. Left: Gender gap in account access, Findex. Right: Gender gap in access to identification, Findex. .......................................................................................................................................... Error! Bookmark not defined. Figure 15 and Figure 16. Left: Growth of mobile money accounts in WAEMU region 2014-2020, in millions, BCEAO. Right: Share of mobile money account ownership per country, 2020, BCEAO. ................................................................... 76 Figure 17. Number of registered mobile money agent outlets per 1,000 km2. IMF FAS, 2020 ........................................ 76 Figure 18. Number of ATMs per 100,000 adults. IMF FAS, 2020 ........................................................................................ 77 Figure 19. Value of mobile money transactions as percent GDP. IMF FAS, 2020 .............................................................. 77 Figure 20 and Figure 21. Left: Type and volume of mobile money transactions in Mali (in millions), 2019. Right: Type and volume of mobile money transactions in Mali and Burkina Faso, Source BCEAO (in millions), 2019. ....................... 78 Figure 22. Mali and Global Frontier: Digital Business by Founding Years............................................................................ 90 Figure 23. Number of digital businesses per dollar of GDP per Capita (US current, 2019) ............................................... 90 Figure 24. Top 10 Digital Business Subsectors in Mali and in the SSA region .................................................................... 91 Figure 25. Doing Business in Mali and Selected Peers: Starting a Business and Paying Taxes ........................................ 94 Figure 26. Typical coverage of customer segments by finance providers in Mali ................... Error! Bookmark not defined. Figure 27. Top Ten Business Environment Constraints in Mali ................................................ Error! Bookmark not defined. Figure 28. Mapping and Proportion of Platform-based vs. Data-driven Businesses in Mali and in Selected Peers countries................................................................................................................................................................................... 96 Figure 29. Incubators, co-working spaces and other capacity development providers in Mali .......................................... 98 Figure 30. Global Entrepreneurship Index, Mali and Selected Peers, 2019 ....................................................................... 99 Figure 31. Firm Level Technology Absorption Index 2016, Mali and Selected Peers ....................................................... 101 Figure 32. Digital Skills Spectrum ........................................................................................................................................ 110 Figure 33. Harnessing Technology for More and Better Learning ...................................................................................... 114 LIST OF TABLES Table 1. Prioritized Recommendations .................................................................................................................................. 18 Table 2. Mali at a Glance ........................................................................................................................................................ 21 Table 3. Digital Economy Foundational Pillars ....................................................................................................................... 24 Table 4. Key digital infrastructure indicators ......................................................................................................................... 31 Table 5. Mali's Telecom Value Chain ...................................................................................................................................... 38 4 Mali Digital Economy Diagnostic Table 6. Mali's Telecom Operators ......................................................................................................................................... 38 Table 7. Current State of Digital Public Platforms ................................................................................................................. 56 Table 8. Formal and informal financial services. Findex, 2017. ........................................................................................... 78 Table 9. Risks of using DFS..................................................................................................................................................... 83 Table 10. Main Entrepreneurship Policies in Mali ................................................................................................................. 93 Table 11. Top 10 developing and transition economies, SSA ............................................................................................ 103 Table 12. Internet shoppers as a share of Internet users and of population, 2019 ......................................................... 103 Table 13. Human Capital Index and Sub-components Comparison: Mali and selected Peer Countries, and Sub-Saharan Africa ....................................................................................................................................................................................... 118 Table 14. Prioritized Recommendations .............................................................................................................................. 124 LIST OF MAPS Map 1. Mali .............................................................................................................................................................................. 21 Map 2. 3G coverage by operator (Orange: orange, MALITEL: red), AMRTP, 2021 .............................................................. 34 LIST OF BOXES Box 1. Impact on growth of increased mobile broadband penetration ................................................................................ 23 Box 2. Best practices for establishing an effective institutional framework ............................ Error! Bookmark not defined. Box 3. Government Telecommunications Network ............................................................................................................... 42 Box 4. Closing Digital Infrastructure Gaps in Mali ................................................................................................................. 48 Box 5. Sectoral digital initiatives and platforms – Spotlight on e-health ............................................................................. 63 Box 6. BCEAO COVID-related measures on digital financial services ................................................................................... 74 Box 7. Digital savings and insurance products ...................................................................................................................... 79 Box 8. Lenali – An innovative local social application ........................................................................................................... 92 Box 9. Digital Skills Pyramid .................................................................................................................................................. 110 Box 10. Education System Structure .................................................................................................................................... 112 Box 11. Orange Digital Center............................................................................................................................................... 117 5 Mali Digital Economy Diagnostic ACKNOWLEDGMENTS This report was researched and prepared by a cross-sectoral task team, led by Tounwende Alain Sawadogo (Senior Digital Development Specialist) and Maimouna Gueye (Senior Financial Sector Specialist), and comprised of experts from across the World Bank Group (WBG). Core team members included: Anne-Elisabeth Costafrolaz (Digital Development Consultant), Paul Viet-Minh Nguyen (Digital Development E.T. Consultant), Bouchaib Bounabat (Digital Development Consultant), Ebelechukwu Gloria Monye (Financial Sector Consultant), Ilias Hamdouch (Private Sector Consultant), and Momar Dieng (Education Consultant). The team is grateful for the support and leadership provided by the Ministry of Communication, Digital Economy and Modernization of the Administration of Mali (MCENMA) and the Malian Telecommunications Regulatory Authority (AMRTP), which made this report possible. The team would also like to thank Michel Rogy (Digital Development Practice Manager), Consolate Rusagara (Finance, Competitiveness and Innovation Practice Manager), Olivier Buyoya (IFC Country Manager), Diletta Doretti (Resident Representative), Emilie Jourdan (Senior Operations Officer), and Pierre Xavier Bonneau (Lead Transport Specialist, Program Leader) from the WBG for their input, guidance, and resources shared. Additional guidance and contributions were received from Sarah Zekri (Senior Financial Sector Specialist), Isabella Hayward (Digital Development Specialist), Heriniaina Mikaela Andrianasy (Senior Public Sector Specialist), Jeremy Robert Strauss (Senior Private Sector Specialist), and Alison Marie Grimsland (Senior Education Specialist) who kindly peer reviewed this document. Moreover, the report benefitted from technical inputs and feedback received from Gabriel Dedu (Senior Public Sector Specialist) and Christopher Tullis (Program Officer). 6 Mali Digital Economy Diagnostic FOREWORD ABOUT THE DIGITAL ECONOMY FOR AFRICA (DE4A) INITIATIVE Leveraging the digital economy can be transformational for Sub-Saharan Africa (SSA). Rapid digital transformation is reshaping the global economy, driving financial inclusion, closing information asymmetry gaps between buyers and sellers, and changing the way economies of scale are achieved. According to research from Google and the International Finance Corporation (IFC) (2020), Africa’s internet economy is poised to reach US$180 billion by 2025 (up from US$115 billion in 2020), accounting for 5.2 percent of the continent’s gross domestic product (GDP). The COVID-19 pandemic has accelerated this digital transformation, as many countries have been able to leverage digital technologies to ensure business and education continuity, prevent service interruptions, and otherwise cope with social distancing. Country-level policies and interventions have facilitated digital connectivity and the deployment of digital platforms to help citizens, governments, and businesses handle the pandemic. However, many SSA countries still lack the requisite enabling environment to capture a larger fraction of the global digital economy or benefit from its gains. In most countries, access to and affordability of broadband internet as well as access to electricity remain low, preventing Africans from being able to go online. Most public services remain offline, and many Africans lack a digital identity or mobile wallets to take advantage of digital financial or other services. Digital skills and literacy also remain weak. Finally, although venture capital investment on the continent continues to grow, structural constraints prevent businesses from taking greater advantage of the digital economy. To address this, the World Bank Group (WBG) has committed, through its DE4A Initiative’ 1 to undertake country-level digital economy diagnostics across the continent. These Digital Economy Country Assessments take stock of challenges and opportunities across five foundational pillars (digital infrastructure, digital public platforms, digital financial services, digital businesses, and digital skills) and then propose specific, actionable, and prioritized recommendations to support countries to develop vibrant, safe, and inclusive digital economies. The resulting synthetic country reports serve to highlight key policy reforms and investments needed for African countries to achieve their digital transformation ambitions while also mitigating the risks of digitization. These reports have contributed to structuring policy dialogue among the authorities, the WBG, the private sector, and other relevant actors in order to catalyze action toward implementation and achievement of digital economy goals. They have also directly informed WBG country strategy documents as well as downstream engagements. In this context, the WBG has undertaken a DE4A for Mali. Based on desk research and virtual interviews with a wide range of public, private sector, and nongovernmental stakeholders, the diagnostic analyzes the constraints identified under each of the five foundational pillars and puts forward actionable, short-term recommendations for improving performance. Recommendations are further detailed based on prioritization and sequencing in the report’s appendix. Overall, the report aims to inform the national dialogue as well as next steps for Mali’s digital transformation, a policy agenda in which the Government of Mali (GoM) has expressed a keen interest. 1 https://www.worldbank.org/en/programs/all-africa-digital-transformation. 7 Mali Digital Economy Diagnostic ACRONYM LIST AFD Agence Française de Développement (French Development Agency) AGEFAU Agence de Gestion du Fonds d'Accès Universel (The Agency for the Management of the Universal Access Fund) AGETIC Agence des Technologies de l'Information et de la Communication (Information and Communication Technologies Agency) AgTech Agricultural Technology AML/CFT Anti-Money Laundering and Combatting of Financing of Terrorism AMRTP Autorité Malienne de régulation des TIC et des postes (Malian Telecommunications Regulatory Authority) ANPE Agence Nationale de Promotion de l’Entreprenariat (National Agency for Entrepreneurship) APDP Autorité de Protection des Données Personnelles (Personal Data Protection Authority) API Application Programming Interface ASN Autonomous System Numbers ATM automated teller machine AU African Union B2B Business-to-business B2C Business-to-consumer B2G Business-to-government BCEAO Banque centrale des Etats de l’Afrique de l’Ouest Central (Central Bank of Western African States) BIC-UEMOA Bureau d’Information sur le Crédit dans l’UEMOA (WAEMU Credit Information Bureau) BUMDA Bureau Malien du Droit d’Auteurs (Malian Copyright Office) CAISFF Cellule d’Appui à l’informatisation des Services Fiscaux et Financiers (Fiscal and Financial Services Automation Unit) CBDC Central Bank issued Digital Currency CCS/SFD Cellule de Suivi/Systèmes financiers Décentralisés (Supervising unit for microfinance institutions) CDI Commission de Développement Institutionnel (Institutional Development Commission) CEMAPI Centre Malien de Promotion et de la Propriété Intellectuelle (Malian Center for Promotion and Intellectual Property) CFA Communauté Financière d’Afrique (Africa Financial Community) CGAP Consultative Group to Assist the Poor CNI Carte Nationale d’Identité (National Identification Card) CNSMO Cellule Nationale de Suivi de la Mise en Œuvre de la SNIF (National Committee for Monitoring the Implementation of the NFIS) COTS commercial-off-the-shelf CPSD Diagnostic du Secteur Privé (Country Private Sector Diagnostic) CR civil registration CREDD Cadre Stratégique pour la Relance Economique et le Développement Durable (Strategic Framework for Economic Recovery and Sustainable Development) CTDEC National Civil Status Center 8 Mali Digital Economy Diagnostic DE4A Digital Economy for Africa DFS Digital Financial Services DNEN Direction Nationale de l’Economie Numérique (The National Directorate of Digital Economy) DNPD National Directorate of Development Planning DTT Digital Terrestrial Television ECOWAS Economic Community of West African States EdTech Educational Technologies EGDI e-Government Development Index EMI Electronic Money Institution ESO Entrepreneurship Support Organization FDI Foreign Direct Investment G2B government-to-business G2G government-to-government G2P government-to-person GDP Gross Domestic Product GEI Global Entrepreneurship Index GIF General Interoperability Framework GIM-UEMOA Groupement Interbancaire Monétique GIZ German Agency for International Cooperation GNI Gross National Income GoM Government of Mali GSMA GSM Association HCI Human Capital Index HCR High Commissariat for Refugees HEI Higher Education Institution ICT information and communication technology IFI International Financial Institution IMF International Monetary Fund IMS Information Management System INS Institut National de la Statistique (National Statistics Institute) IOB intermediaries in banking operations IPR Intellectual Property Rights IPRI Intellectual Property Rights Index ISP Internet Service Provider ISPA Inter-agency Social Protection Assessments ITU International Telecommunication Union IXP Internet Exchange Point KYC Know-Your-Customer MaliRen Mali Research and Education Network MATD Ministry of Territorial Administration and Decentralization MCENMA Ministry of Communication, Digital Economy and Modernization of the Administration MDAs ministries, departments and agencies MEF Ministry of Economy and Finance MEFP Ministry of Technical and Professional Education MEN Ministry of National Education and Literacy MENIC Ministry of the Digital Economy, Information and Communication MESRS Ministry of Higher Education and Scientific Research MFI Microfinance Institution 9 Mali Digital Economy Diagnostic MIQRA Mali Improving Education Quality and Results for All MNO Mobile Network Operator MPOS Mobile Point of Sale MSPC Ministry of Security and Civil Protection MSME Micro, Small, and Medium Entreprises MVNO Mobile Virtual Network Operator NBFI Non-Bank Financial Institution NFIS National Financial Inclusion Strategy NINA Numéro d’Identification Nationale (National Identification Number) NREN National Research and Education Network P2G person-to-government PAFEEM Project to Promote Access to Finance, Entrepreneurship and Employment PFM Public Financial Management PKI Public Key Infrastructure PNDMF Programme National de Développement de la Microfinance (Microfinance National Development Program) POS Point-of-sale PRODEC II Programme Decennal de Développement de l’Education Deuxieme Generation (Ten Year Second Generation Education Development Program) QoS quality of service SaaS Software as a Service SCSE Electronic Certification and Signature Service SICA-UEMOA Système Interbancaire de Compensation Automatisée de l’UEMOA (Interbank Automated Clearing System in WAEMU) SIGMAP Integrated Public Procurement Management System SME Small and Medium-sized Rnterprise SMTD Société Malienne de Transmission et de Diffusion (The Malian Transmission and Broadcasting Corporation) SOGEM Société de Gestion de l'Energie de Manantali (Manantali Energy Management Company) SSA Sub-Saharan Africa STAR-UEMOA Système de Transfert Automatisé et de Règlement de l’UEMOA (Automated Transfer and Settlement System) TVET technical vocational education and training UAF Universal Access Fund UAS Unité d’Appui et de Supervision (Support and Supervision Unit) UNCTAD United Nations Conference on Trade and Development UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children’s Fund USSD Unstructured Supplementary Service Data VLP Virtual landing point WAEMU West African Economic and Monetary Union WASH Water, Sanitation, and Hygiene WEF World Economic Forum XOF Symbol of the West Africa Franc CFA 10 EXECUTIVE SUMMARY MALI: LEVERAGING THE OPPORTUNITIES OF THE DIGITAL ECONOMY TO CHART A NEW PATH TOWARD SHARED PROSPERITY, REDUCED FRAGILITY, AND GREATER RESILIENCE The growth of the digital economy would open up many much-needed opportunities for Mali and could be leveraged to address drivers of fragility. It can create jobs for Mali’s young population, reducing high youth unemployment, and provide opportunities to expand service coverage in a difficult geographical and security context. Digital financial services are an opportunity to expand digital inclusion and address the financial needs of the rural poor, many of whom depend on subsistence agriculture for their livelihoods, given the challenges of traditional brick-and-mortar approaches. Similarly, harnessing digital channels for service delivery offers government the opportunity to expand access to services in hard-to-reach areas through innovative and more inclusive solutions, starting with government-to-person payments, and can help improve the efficiency, transparency, and accountability of public service delivery. Social protection systems can be made more responsive to shocks (climatic and otherwise), thereby building resilience. Digital technologies also offer vast opportunities to improve service delivery in key sectors, such as health and education, for example through telemedicine and e-learning. In particular, digital technology can be a tool to bridge the vast educational gap and should be a central element in strengthening the education system. Furthermore, digital skills training and the expansion of digital services in rural areas, with a focus on the inclusion of youth, women, and vulnerable groups, can help reduce perceptions of inequality and exclusion and create the conditions for inclusive economic development. Finally, in response to a lack of inclusion in political life, digital tools can offer opportunities to support the engagement and participation of Malians by providing the platforms and channels through which citizens can provide feedback on their concerns to those in power. Against this backdrop, Mali's digital economy ecosystem appears to still be in its infancy, and the country has to step up its preparedness to face the rapidly changing global reality of the digital world. While the Government of Mali (GoM) has articulated a vision for digital transformation (Digital Mali 2020), significant challenges remain in operationalizing this vision. The implementation of Digital Mali 2020 has been hampered by weak leadership, poorly defined mandates, and limited interministerial coordination on digital transformation initiatives. Further, Mali’s landlocked geography, dispersed population, political instability, and conflict create significant structural barriers to digital transformation. As a result, Mali ranks relatively low compared to the rest of the world, including its regional peers, on measures of connectivity, e-government, network readiness, and information and communication technology (ICT) skills, and limited progress has been made on the country’s goals related to internet penetration and digital services. Meanwhile a substantial portion of Mali’s population is excluded from the digital economy due to significant digital divides. These challenges are not insurmountable but require creative responses and sustained engagement from public and private sector stakeholders. The following section details key findings by pillar, as well as some cross-cutting issues. Mali Digital Economy Diagnostic DIGITAL INFRASTRUCTURE Inclusive digital transformation requires universal access to affordable, quality broadband internet services. Although considerable progress has been made in recent years to extend the fiber-optic backbone and connect Mali to its neighbors, over two-thirds of the population still lack access to a broadband connection and are therefore excluded from the digital economy, with marked digital divides across geographical, gender, and socioeconomic lines. Low levels of broadband adoption (mobile broadband internet unique subscriber penetration rate of 30.0 percent in 2021 compared to a fixed broadband internet penetration rate of 1.1 percent) translate into limited digital impact on growth, job creation, and the expansion of service delivery. Mali faces major challenges in expanding digital connectivity. Serious insecurity issues (mainly in the northern and central regions of Mali) impact infrastructure deployment and maintenance, and are compounded by the country’s enormous size, limited access to electricity, low population density, and prominent level of rurality, all of which create persistent market failures in rural areas. Infrastructure sharing is also limited at present, and the performance of the Universal Access Fund, which has a key role to play in extending broadband service coverage, has so far been less than optimal. However, while there are still important gaps in coverage (3G+ broadband covers 71 percent of the population), the gaps in usage are more significant, with almost 60 percent of those covered, or about 8.3 million people, not appearing to use broadband services. Usage of broadband services is limited due to prohibitive costs relative to purchasing power, low levels of literacy and digital skills, and low perceived value of the proposition due to lack of relevant content and services. At the root of Mali’s poor affordability of broadband services is the country’s landlocked status, which makes it dependent on neighboring countries for international bandwidth, the cost of which is reflected in operators’ prices. Competition is also limited in the telecommunications market, which is compounded by the lack of effective regulation of significant market power, particularly in the wholesale markets, with a negative impact on the growth of Internet Service Providers, network coverage, and the quality and cost of services for end customers. On the other hand, the lack of demand by potential customers does not encourage further network deployment, resulting in investment gaps. As the digital usage gap in Mali is higher than the coverage gap, policies and priority interventions should focus on easing demand barriers and increasing the uptake of digital services in locations already covered by broadband networks. In particular, this implies that the GoM, in a first phase of interventions, should provide a more enabling environment to make broadband internet more affordable and of better quality. This will need to go hand in hand with targeted initiatives to stimulate the adoption and productive use of broadband services and extend the associated socioeconomic benefits. However, care must also be taken to ensure that no one is left behind, so that the digital transformation does not reinforce or exacerbate existing exclusion or inequalities, which are important factors of fragility in Mali. A more enabling environment, as envisaged in the first phase of interventions, will help stimulate private sector investment for wider access in rural areas, while increased demand will create the necessary market incentives for further network rollout. However, beyond this, in a second phase of medium-term interventions, the GoM will need to support investment in areas where market failures persist. In the case of Mali, this also raises the question of how to ensure infrastructure security in areas with a fragile security environment. A combination of these reforms and interventions is needed to improve the accessibility of digital technologies for 12 Mali Digital Economy Diagnostic the greatest number of people in Mali, particularly in rural areas and for the most vulnerable populations. DIGITAL PUBLIC PLATFORMS The digital public platforms ecosystem is still nascent in Mali. Most of the digital platforms deployed by the GoM so far aim to digitize government back-office systems, such as information management systems, or core government functions, such as public financial management, which have inter alia proven to be key to resource mobilization and debt management. However, legacy systems and digital back-office systems have been developed in isolation and through different funding sources, limiting their interoperability, efficiency, and sustainability, thus preventing them from effectively exchanging data and providing integrated services. The nature of Mali’s digital public platforms is thus a long way from achieving the vision of a government-wide platform relying on a solid interoperability framework that can move from vertical structures to a networked and collaborative organization with reliable, transparent data exchanged between systems. Meanwhile, only a handful of user-facing government-to-business (G2B) and government-to-person (G2P) digital services have been deployed, including for tax declaration, university enrollment, and civil service exams. Consequently, Mali still ranks low in terms of global e-government at 171 out of 193 countries on the 2020 United Nations E-Government Development Index.2 The GoM lacks the foundational building blocks of digital government (shared and transversal frameworks, infrastructure, and platforms) needed to underpin secure delivery of digital public services at scale and extend their reach beyond urban areas. Firstly, most government offices lack basic access to broadband internet and the ability to exchange data on a secure closed network. Data are hosted by individual ministries, departments, and agencies (MDAs) rather than using shared solutions that could help to bring down costs and enhance data security. Systems are not being developed based on shared technical and security standards. A lack of leadership and whole-of- government coordination in building a digital government, lack of a change management culture for digitization, and limited digital skills among public servants to encourage uptake of digital services have all together contributed to a landscape wherein digital public platforms are limited in number, not people-centric, and developed in silos. A strong commitment from the GoM is needed to reinvigorate efforts to foster an enabling environment for building a digital government, particularly through a well-articulated vision and sequenced strategic action plans (as part of the next digital Mali strategy). Scaling up delivery of public services and enabling greater access via the use of digital technologies and platforms will require whole-of-government coordination and the accelerated development of national shared frameworks for data governance, data protection and privacy, cybersecurity, digital platforms’ development, and interoperability. Investment in shared solutions for securely exchanging public and private data, facilitating interoperability, and identifying and authenticating users is necessary in the short term. In support of public sector modernization reforms and the effective implementation of digital public platforms, the GoM will need to strengthen public sector capabilities by hiring or developing skills for a greater number of digital/IT specialists. Finally, the GoM should rapidly design and implement digitally enabled (partly digitized or facilitated with the use of digital technologies) government services in high demand among citizens, in order to create a demonstration effect as 2 https://publicadministration.un.org/egovkb/en-us/Reports/UN-E-Government-Survey-2020. 13 Mali Digital Economy Diagnostic quickly as possible, generate greater demand for digitalization, and ultimately increase adoption and usage. DIGITAL FINANCIAL SERVICES Globally, digital financial services (DFS) have helped to accelerate financial inclusion and improved economic gains and productivity by making payment transactions more efficient. The benefits of DFS are far-ranging and include lower transaction costs, increased speed of transactions, security, transparency, and the development of fintech products tailored to the needs of financial consumers. In Mali, mobile money transactions continue to grow, reaching 8.6 million users (about one-third of the population) in 2020. This surpasses the reach of banking and microfinance services, driving financial inclusion by providing accessible and affordable financial services to consumers. Nevertheless, actual usage remains low, with only 45 percent of users remaining active over 90 days. In addition, there are significant gaps in access to DFS, particularly for women and people living in rural areas. Cash remains king, and most government payments are yet to be digitalized. Efforts have been made at the regional and national levels to create DFS frameworks that promote digital financial inclusion. At the national level, the National Financial Inclusion Strategy (NFIS) approved in June 2022 aims to increase financial inclusion rates to 75 percent. One of the pillars of the NFIS focuses on increasing financial access through DFS uptake. At the regional level, Mali is a member of the West African Economic and Monetary Union (WAEMU), a group of countries that are working toward greater regional integration with unified external tariffs. Mali’s participation in WAEMU allows all banks within Mali to operate within the three regional payment systems including the Automated Clearing System (SICA-UEMOA), the Automated Transfer and Settlement System (STAR-UEMOA), and the platform of the Groupement Interbancaire Monétique (GIM-UEMOA). The WAEMU countries also operate under a Central Bank of Western African States (BCEAO), which serves as the common issuing institution of the member states. However, current legal and institutional frameworks do not sufficiently cater to adopting digital technologies in financial services. For instance, there is currently no decree in Mali that calls for digitalizing government payments. Furthermore, changes in technology and in the scope of DFS often expose consumers to data breaches as laws do not change as frequently as needed. Other limitations such as lack of interoperability between market players and between banks in Mali and the regional payment systems also limit the transactions financial consumers can make from one account to another. Finally, limitations in credit information often exclude the unbanked from accessing financial services, especially since information from major providers such as SOTELMA, EDM, and MALITEL is excluded from the credit bureau’s database. To address some of these challenges, key priorities include: introducing a formal decree digitalizing government payments, establishing a consumer protection agency to enhance quality and protect the rights of consumers, connecting the public treasury to the regional switch, including data from major providers in the credit database, using gender-disaggregated data to strategically target and increase financial inclusion for women, and extending the use of DFS to other sectors beyond the financial sector, such as agriculture. 14 Mali Digital Economy Diagnostic DIGITAL BUSINESSES Mali is a country with a strong culture of entrepreneurship; however, most micro, small, and medium enterprises (MSMEs) remain informal, young, and active, primarily in traditional sectors where digital uptake is in its infancy. Overall, Mali’s digital business ecosystem is still at a nascent stage of development, with 90 percent of digital companies and start-ups emerging in the past decade. This recent growth has been supported by entrepreneurship programs and entrepreneurship support organizations (ESOs), such as incubators, accelerators, fab labs, and co-working spaces, which have catalyzed and sustained entrepreneurial activity, culture, and ESO development, as demonstrated by the growth of ESOs from only 4 in 2015 to 24 in 2019. As a result, some promising digital start-ups have managed to carve out innovative solutions to address local needs. The growth of Mali’s digital business ecosystem has been boosted by the COVID-19 pandemic due to the need to rapidly shift to virtual interactions and online delivery methods, while at the same time hampered by the economic downturn and political instability. The adoption of digital technologies in the private sector offers several opportunities for Mali’s formal and informal firms (in particular, MSMEs) to spur economic growth. The adoption and use of digital technologies by businesses should enable them to revamp their core operations, improve productivity, adopt new business models, and expand customer reach, as well as enhance the delivery of goods and services. As highlighted in the WB 2021 Africa Pulse Report,3 employment and labor productivity have been shown to be higher in firms that use smartphones, digital transaction technologies, and digital management solutions. Yet, several constraints hamper creating more jobs through digital entrepreneurship. Key constraints to the growth and expansion of digital businesses include the weak business regulatory environment, the absence of an enabling investment climate, and the lack of a framework tailored to start-ups, as well as limited broadband connectivity, limited access to finance, low adoption of DFS, and weak digital skills. These constraints impact Mali’s performance on the World Economic Forum (WEF) Global Competitiveness Index, where Mali ranked 129 out of 141 countries in 2019, as well as the Global Entrepreneurship Index, where Mali ranked 123 out of 137 economies in 2019.4 In response to these challenges, the Ministry of Digital Economy initiated a dialogue with digital entrepreneurs in 2018 which resulted in the Startup Act adopted by the Council of Ministers in September 2019. An accompanying decree, which further detailed the operationalization of these measures, had been drafted but has not yet been adopted due to the recent government changes. As a quick win, the current government can swiftly implement this act in a modular and phased approach beginning with incentivizing the registration of new start-ups and small digital firms. This will allow for mapping and evaluating the digital entrepreneurship ecosystem to better inform and target future policies and sector specific use cases. In addition, Mali’s digital acceleration will require reskilling and upskilling of the workforce and boosting employability among youth and women. In the short term, a public and private collaboration is necessary to define a skills development program across the digital economy. Eventually, the operationalization of the Startup Act by the GoM will be necessary to lift many of the enabling environment constraints to attract private investment at various stages of business growth, including early-stage capital. 3 https://imagebank2.worldbank.org/Search/33471488. 4 https://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf. 15 Mali Digital Economy Diagnostic DIGITAL SKILLS Similar to other countries in Sub-Sahran Africa (SSA), the demand for digital skills in Mali currently outstrips supply, a gap that will further widen over the coming decade as digital acceleration initiatives in core economic sectors such as agriculture, manufacturing, and services become prevalent. The COVID-19 pandemic accelerated the demand for digital products and services, not only in health care and education, but also across the service sector. Given the cross-cutting nature of digital skills, shortages are likely to be pronounced across many vertical markets, creating a sense of urgency to strengthen Mali’s human capital base by improving the digital literacy of children, youth, and adults in order to reap the benefits of digitization across society, increase local businesses participation in the digital economy, support territorial development and foster regional and international trade. Mali’s ability to meet this demand is currently constrained by several factors, including weak foundational literacy and numeracy skills, which present major obstacles to the acquisition of digital skills. These barriers are more pronounced for women and girls, as their access to education (at all levels) and literacy rates are much lower compared to men and boys. Low teacher capacity is also a major constraint to improving foundational and digital skills. While some policy- level guidance exists on the development of a digital skills agenda in Mali, it has proved to be insufficient for the systematic development of digital skills, given a low tertiary education attainment rate and a limited number of highly skilled professionals. Other important constraints include limited broadband connectivity for education institutions and constant disruptions to education services resulting from the pandemic, political instability and conflict. Public coordination and private partnerships will be crucial as a quick-win to improve understanding of the nature of demand for and supply of digital skills and the roles of formal, informal, and self- learning skills attainment in key sectors of the economy. As part of the national push for broadband connectivity expansion, the education sector needs to remain a top priority in the medium term given the cross-cutting impact of digital skills on the digital economy and society at large. Although digital skills are a key component of Mali’s strategy for digital transformation, a high priority of the GoM will be to define and implement a comprehensive digital human capital development action plan and integrate digital skills into national education standards. This will reduce education and training institutions adopting siloed approaches when preparing and delivering digital skills and teacher training as part of education programs. Public sector engagement on digital skills development remains limited, while private sector engagement is far more significant, ranging from curriculum development to delivery of reskilling/upskilling programs, to identifying qualification frameworks, accreditations, and partnerships for tertiary institutions. Another high priority in a forthcoming national strategy on digital skills would need to strengthen public coordination and private partnerships to promote digital literacy, support reskilling and upskilling for youth employability, empower women, increase inclusion of marginalized groups in urban and rural areas, and build the capacity of civil servants. The last high priority would be to leverage digital technologies and support community programs that would improve education access, continuity, quality, equity, and general literacy rates. 16 Mali Digital Economy Diagnostic CROSS-CUTTING DIMENSIONS Several cross-cutting dimensions have been identified throughout the analysis. Addressing these dimensions would strengthen Mali’s ability to navigate and address the challenges identified under the five pillars. Improving the enabling environment. Anchoring long-term reforms and investments to develop the main elements and pillars of the digital economy on a solid analog (legal, regulatory, and institutional) foundation will be crucial for success and sustainability. Developing a common vision for digital transformation and improving strategic institutional oversight and coordination will be essential, as will the need to close existing regulatory gaps and update key legal and regulatory frameworks, in order to create and implement a legal environment that preserves citizens’ fundamental rights and secures digital transactions and safeguards against all illegal acts of ICT use. Closing the usage gap and supporting wider digital adoption and inclusion. The GoM should pursue its efforts to catalyze the development of digital literacy and skills among the general population, as they are necessary for any Malian citizens or residents to interact safely and benefit from digital social media services, e-commerce, and digital public services, while helping the digitally advanced workforce to drive productivity, innovation, and growth. Attractive use cases such as digital public services and the communication around them are essential to generate interest in digitalization and encourage widespread adoption by the general population. In the long run, a key priority for the GoM is to ensure that no Malian is left behind in the digital economy. This will require a multipronged approach that addresses affordability and quality of services, and skills barriers, as well as the perceived value of digital technologies, with specific interventions targeted at the most vulnerable groups, including women (see below Bridging the gender gap), poorest households, the elderly, people with disabilities, and so forth. Bridging the gender gap. Women lag behind in terms of digital skills, economic opportunities, and access to and consumption of digital services. This digital divide exacerbates inequalities and the ability to contribute to the economy through digital means. It is recommended that a strategic gender lens be applied to all digital efforts, and that projects are monitored for their gender performance to enhance learning and impact. Important areas include addressing starker barriers to access connectivity, for example, through community access points or device affordability schemes tailored for women; strengthening the capacity of business support organizations to support women along the entrepreneurial value chain; and investing in tailored programs to develop the digital skills of women and improve their access to digital devices. Stimulating private sector participation and partnerships. The GoM should seek to engage the private sector when it comes to increasing investment in broadband network expansion, building local business capacity through public sector projects, and deploying user-centric platforms and small business friendly ecosystems across the digital economy. Private partnerships will also be essential for skills development as the digital transformation of the Malian economy takes hold and accelerates. To achieve this, the GoM needs to provide an enabling framework that offers visibility and confidence to potential private investors, as well as the predictability and sustainability of long- term partnerships with the private sector to make the required investments. There should also be more coordination between the public and private sectors to determine how they can work together to achieve the objectives of the strategy. 17 Mali Digital Economy Diagnostic Strengthening regional integration. Mali's geographical location and small domestic market highlight the need for regional integration to benefit from the network effects of a regional market, access regional private investment, connect to regional infrastructure, and integrate into regional value chains. Achieving a Single Digital Market (SDM) in the region will require simultaneously supporting domestic development and cross-border integration of a single connectivity market, a single data market, and a single online market, which form distinct yet interconnected layers. Many challenges remain, such as extending the availability of broadband networks beyond regional capitals and across borders in a context of enhanced security, updating regulations to implement the WAEMU and the Economic Community of West African States (ECOWAS) electronic communications framework and improving the enabling environment, from financial services and digital payments to cybersecurity and personal data protection, and leveraging other neighboring entrepreneurial ecosystems to promote access to additional incubation/acceleration support as well as access to finance and markets. RECOMMENDATIONS The report includes more detailed recommendations across the five pillars of the digital economy based on the analysis of key strengths and weaknesses of each foundational pillar of the Malian digital economy. Recommendations are divided into �quick wins� and �high priority.� The quick wins include actions with immediate tangible results that can be implemented during the political transition within the next 10 to 18 months, while high priority recommendations are critical actions that could be adopted within a timeframe of two to three years, that is, after the political transition. It should be noted, however, that the space for reform during the political transition is likely to be limited as interim authorities have other priorities, and even though economic and financial sanctions have just been dropped off by ECOWAS, other sanctions remain (against the individual junta counterparts and Mali is excluded from the ECOWAS’s governance). Table ES.1 summarizes these recommendations across the five pillars as well as for the cross-cutting theme on policy and institutions. Table ES.1. Prioritized Recommendations POLICY AND INSTITUTIONS Quick ▪ Reinforce the newly established strategic interministerial coordination mechanism for digital Win transformation DIGITAL INFRASTRUCTURE ▪ Strengthen AMRTP’s implementation of the legal and regulatory framework to increase competition, Quick encourage private investment, and lower barriers to entry Win ▪ Operationalize the ICT market observatory ▪ Strengthen the transparency and governance of the universal service fund (AGEFAU) ▪ Design and implement targeted interventions to increase service and device affordability High ▪ Improve awareness of digital dividends and expand public access and digital literacy priority ▪ Establish a virtual landing point, accompanied by adequate governance and a mechanism to control tariffs, in order to improve affordability of broadband services ▪ Extend digital connectivity in �uncovered unprofitable areas,� such as through the use of the universal access fund based on public subsidies and public-private partnerships (PPPs) or demand Long aggregation/bulk purchase agreements for user groups (e.g., government/public institutions) to term incentivize private sector deployment of networks, with due consideration for ensuring infrastructure security in fragile areas and off-grid power needs 18 Mali Digital Economy Diagnostic DIGITAL PUBLIC PLATFORMS ▪ Design and implement digitally enabled government services considered as quick wins and which Quick would be of high impact to citizens to create interest in digitalization Win ▪ Elaborate a prioritized and sequenced action plan for the development of digital government and digital public platforms, based on a coordinated and inclusive approach ▪ Develop a national data governance framework and policy to lay down protocols and standards for how government institutions process, store, and share public and citizen data within the larger government ecosystem ▪ Hire or develop skills for more digital/IT specialists to strengthen public sector capabilities for the High development and management of digital public platforms and services priority ▪ Accelerate the implementation of interoperability between Malian public information systems to digitize sustainable government processes and facilitate public service integration ▪ Start to prepare the legal, regulatory, and institutional frameworks for the use of digital signature and digital authentication services to improve accessibility and quality of future digital public platforms $ DIGITAL FINANCIAL SERVICES ▪ Support the National Treasury in its vision to connect to regional payment systems and to acquire a national payment gateway to oversee and manage all public financial flows in order to accelerate Quick digitization of government payments Win ▪ Adopt a decree allowing the expansion of the BIC-UEMOA database in order to allow the incorporation of data from major billers (SOTELMA, EDM, MALITEL) ▪ Adopt a decree to mandate the digitalization of specific government payment flows in line with the 2002 regional directive on banking High ▪ Further extend DFS to sectors other than the financial sector to expand the range and adoption of DFS priority ▪ Establish a dedicated and autonomous agency for financial inclusion ▪ Ensure the creation, disaggregation and use of gender data to inform DFS product and policy designs ▪ Address fintech challenges and leverage opportunities to scale DFS DIGITAL BUSINESS ▪ Launch a start-up registration program to better qualify both new and existing start-ups Quick ▪ Launch a digital skills development plan in partnership with the private sector to reskill and upskill the Win workforce to prepare for Mali’s digital transformation ▪ Adopt the Startup Act operationalization decree ▪ Target specific use cases as part of a phased approach to the deployment of Fintech solutions High ▪ Provide female entrepreneurs increased assistance through entrepreneurship support programs that Priority consider women’s specific needs and challenges ▪ Establish dedicated funding instruments, credit lines, and capacity development programs adapted to digital start-ups and small firms DIGITAL SKILLS ▪ Improve understanding of the nature of demand for and supply of digital skills and the roles of formal, Quick informal, and self-learning in skills attainment in key sectors of the economy Win ▪ Collaborate with public and private stakeholders on the provision of data and advisory services to gain market intelligence on the alignment of workforce supply and demand ▪ Tackle critical connectivity challenges in education institutions ▪ Define and implement use cases to integrate the use of new digital technologies in education and to prepare a comprehensive digital skills curriculum and teachers training programs for primary, High secondary education, and technical vocational education and training (TVET) institutions Priority ▪ Expand partnerships with the private sector in the design and delivery of an emergency digital skills development plan in key sectors of the economy, including the public sector ▪ Leverage digital technologies and support community programs to improve education access, quality, equity, and general literacy rates with effective coordination, responsive curricula, equipped facilities, and quality assurance CROSS-CUTTING Quick ▪ Develop digital literacy and skills that will be necessary for citizens to interact safely and benefit from Win/High digital social media services, e-commerce, and e-government, while helping to support the Priority development of a digitally literate workforce to drive productivity, innovation, and growth 19 Mali Digital Economy Diagnostic ▪ Apply a strategic gender lens to all digital efforts and ensure that projects are monitored for their gender performance to enhance learning and impact. Important areas include strengthening the capacity of business support organizations to support women along the entrepreneurial value chain and investing in tailored programs to develop the digital skills of women and improve their access to digital devices ▪ Engage the private sector to seek solutions for broadband network expansion, building local business capacity through public sector projects, and deploying user-centric platforms and small business friendly ecosystems across the digital economy 20 Mali Digital Economy Diagnostic INTRODUCTION Table I.1. Mali at a Glance5 Map I.11. Mali Population (2021) 20.9M Income group Low-income GDP, current US$ (2021) 18.5 Mds GDP per capita, current US$ (2021) 887.2 Population density (2021) 17 per Km2 Rural population (2019) 57% International poverty rate ($1.9) (2021) 16.3 Lower-middle-income poverty rate ($3.2) 49.5 (2021) Upper-middle-income poverty rate ($5.5) 77.8 (2021) Gini Index 36.1 School enrollment, primary (% gross) 75.6 Life expectancy at birth, years 59.3 Literacy rate (2018) 30.3 BACKGROUND ON MALI Mali faces multiple structural and economic constraints that hinder its socioeconomic development. A landlocked territory in the Sahel region with a population of 20.9 million inhabitants, the country’s large size, low population density, and high level of rurality present serious challenges to providing infrastructure and public services such as social protection, health, education, or agricultural extension to the population. With an annual per capita income of US$887 in 2021,6 Mali is among the 25 poorest countries in the world. Its economy is undiversified and vulnerable to commodity price fluctuations, with agriculture and natural resource rents representing about 45 percent of the gross domestic product (GDP). Extreme weather conditions, food insecurity exacerbated by high population growth rates and climate change, few economic opportunities, weak state legitimacy and on-going insurgency, limited administrative capacity, inequitable and poor quality of public services, and vulnerability to exogenous shocks all constitute a fabric of complex and interconnected fragility drivers. Mali has been experiencing political instability, turmoil, and conflict since the military coup of 2012 and the occupation of the northern regions by extremist forces. Since 2012, Mali faces various types of violent dynamics that are increasingly intertwined— rebellion/insurrection; extremist violence, including continued attacks by armed groups; clashes between different self-defense groups; inter-communal and intra-communal conflict, often originating from disputes over access to resources; banditry; and competition to control smuggling and trafficking routes. Security remains especially fragile in the North and Central regions, hampering humanitarian access and leading to increased population displacement and vulnerability of conflict-affected communities (see Focus 1: Fragility & Digital).7 Mali’s political situation remains volatile with two coups d’état in nine months (August 18, 2020, and May 24, 2021). Under the transition agreement brokered by the Economic Community of West African States (ECOWAS) and supported by Mali’s regional and international partners, the government was expected to organize elections by end-February 2022. The 5 World Bank Development Indicators (WDI) and Worldometers, Macro Poverty Outlook, and official data. 6 World Bank national accounts data, and OECD National Accounts data files, 2020. 7 380,000 are internally displaced as of mid-2021. Source: IOM. July 2021. Displacement Tracking Matrix Mali. 21 Mali Digital Economy Diagnostic government has signaled, however, that the agreed timeline would not be feasible, and proposed a new five- year timeline to ECOWAS. This timeline was rejected as unacceptable by ECOWAS in January 2022, which prompted sanctions from ECOWAS and the West African Economic and Monetary Union (WAEMU). The COVID-19 pandemic and sociopolitical crisis resulting from the 2020 coup tipped Mali into an economic recession in 2020, although real GDP growth rebounded slightly in 2021.8 Although the number of confirmed COVID-19 cases in the country remains relatively limited (30,950 cases and 733 deaths as of May 11, 2022),9 the economic impact of the pandemic (coupled with other crises) was significant. Real GDP contracted by 1.6 percent in 2020 (4.5 percent in per capita terms) due to the pandemic, the military coup, and dampened production of cotton and cereals as a result of lower cotton farmgate prices, localized floods, and insecurity in the Central region. Industrial activity slowed down particularly in textiles and agri-foods. Real GDP growth is estimated to have rebounded to 3.1 percent in 2021 driven by the recovery of key sectors (agriculture and services). The country underperforms on most living condition dimensions, and extreme poverty incidence, at 16.3 percent in 2021, is associated with low endowment of human capital. Mali ranks 184 out of 189 countries on the UN’s Human Development Index for 2020. While access to education has improved in recent years, the Malian education system faces a high level of learning poverty, with only one in ten Malian children able to read an age-appropriate text by the age of 10.10 The country’s poor live predominantly in rural areas and are mainly farmers who depend on low-productivity agricultural production systems. The great majority of the urban poor are workers in the informal sector who are engaged in low-productivity activities. Mali has a young population, growing at 3.1 percent a year, and youth unemployment is a major challenge, as the number of young people entering the job market is estimated at 300,000 per year, while the economy can only create a maximum of 50,000 jobs in the formal sector per year.11 These issues are exacerbated by current fragility, with the 2020/21 health, security, social, and political crises having led to a 5 percent increase in poverty. Socioeconomic vulnerabilities are expected to further rise, exacerbating the country’s fragility and social challenges, particularly in rural areas.12 RATIONALE FOR DEVELOPING A DIGITAL ECONOMY IN MALI Leveraging the digital economy can be transformational for Sub-Saharan African (SSA) countries. Rapid digital transformation is reshaping the global economy, driving financial inclusion, closing information asymmetry gaps between buyers and sellers, and changing the way economies of scale are achieved. Africa’s internet economy is poised to reach US$180 billion by 2025 (up from US$115 billion in 2020), accounting for 5.2 percent of the continent’s GDP.13 Broadband deployment in developing countries can boost economic growth (see Box ).14 There is increasing evidence of the positive impact of access to internet and mobile technologies in SSA on growth, 15 jobs, 16 innovation, 17 firm productivity, 18 agricultural productivity, 19 and, critically, household consumption levels. 20 These “digital dividends� can include (i) greater inclusion thanks to an 8 Malian National Institute of Statistics. 9 COVID-19 Data Repository by the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University. 10 91 percent of children in Mali at late primary age today are not proficient in reading, adjusted for the Out-of-School children. UIS and World Bank as of October 2019. 11 World Bank, 2021. 12 World Bank, 2021, https://www.worldbank.org/en/country/mali/overview. 13 Google and IFC, 2020. 14 World Bank, 2016, World Development Report: The Digital Dividend. 15 Katz and Callorda, 2019 16 Hjort and Poulsen, 2019. 17 Georges, Mensah, and Traore, 2021. 18 Karim Abreha et al., 2021. 19 Ordu, Cooley, and Goh, 2021. 20 Bahia et al., 2020. 22 Mali Digital Economy Diagnostic expansion of the information base, (ii) greater efficiency thanks to lower information costs, and (iii) greater innovation as information goods help bring transaction costs down toward zero.21 The growth of the digital economy also has the potential to address fragility issues. The World Bank’s Strategy for Fragility, Conflict and Violence 2020–2025 highlights the powerful impact of digital technologies and platforms in fragile settings, such as Mali, as they strengthen local and national public services, promote private investment, and help civil society build community networks. Given the significant connectivity role in reducing socioeconomic exclusion and polarization, developing an enabling inclusive environment that promotes enhanced digital connectivity and digital public platforms’ growth while ensuring equitable benefits for vulnerable groups could considerably help the country’s efforts to address many of its fragility drivers, including corruption, inequality, and youth marginalization. Digital development can also help increase the resilience of the state, services, and financial systems in the face of a worsening security situation. Box I.1. Impact on Growth of Increased Mobile Broadband Penetration A study from the International Telecommunication Union (ITU) 22 focused specifically on Sub-Saharan Africa and measured the impact of broadband, digital transformation, and policy and regulatory frameworks on growth in the continent. It analyzed the economic contribution of broadband and digitization between 2010 and 2017 for 34 countries in the Sub-Saharan Africa region, including Mali. This ITU study identifies several levers that have direct or indirect impacts on growth for African countries: � Mobile broadband has a significant impact on GDP growth in Africa: ▪ An increase of 10 percent in mobile broadband penetration yields an increase of 2.5 percent in GDP per capita. � Affordability remains a key enabler for the adoption of mobile broadband technology in Africa: ▪ A 10 percent drop in prices will boost adoption by more than 3.1 percent. ▪ Increasing the average disposable income (proxied by GDP per capita) by 10 percent yields a 2.1 percent increase in fixed broadband adoption. When applied to Mali, increasing unique mobile broadband penetration by 20 points (from 30 percent to 50 percent) would increase GDP by 5 percent, which is equivalent to about US$925 million, far in excess of the investment cost.23 The COVID-19 pandemic has accelerated the digital transformation worldwide, as many countries have been able to leverage digital technologies to ensure business and education continuity, prevent service interruptions, and otherwise cope with social distancing. Country-level policies and interventions have facilitated digital connectivity and the deployment of digital platforms to help citizens, governments, and businesses cope with the pandemic. According to the World Bank’s Business Pulse Surveys, shortly following the shock of COVID-19, one-third of firms increased or started to use the internet, social media, and digital platforms for business purposes.24 The COVID-19 pandemic has highlighted the need for accelerating digital adoption as a means of boosting resilience in Mali. While digital technologies offer businesses, governments, and individuals the opportunity to ensure business and educational continuity, prevent service disruptions, and cope with social distancing, Mali is ill-equipped to leverage digitally enabled solutions at scale. For example, shifting social transfers from cash to digital payments to adhere to social distancing guidelines proved difficult given a lack of payment structures and mobile money accounts among program beneficiaries. Similarly, the delivery of information and accompanying measures (usually done in person) was first suspended and then shifted to delivery through community radio. Likewise, during the pandemic, Mali had to close more than 23,000 schools, with an impact on access to education and training for more than 3,900,000 students. While Digital Terrestrial Television (DTT), an education channel in Mali, as well as public radio broadcasting were set up to allow the continuity of basic education, the crisis has shown that the lack of affordable and reliable connectivity hampered many 21 World Bank Group, 2016. 22 Katz, Raul, and Fernando Callorda .2020. “The economic contribution of broadband, digitization, and ICT regulation: Econometric Modelling for Arab States region.� Geneva: International Telecommunication Union (January). 23 Based on the GDP estimated at 18.5 billion in 2021. 24 https://www.worldbank.org/en/data/interactive/2021/01/19/covid-19-business-pulse-survey-dashboard. 23 Mali Digital Economy Diagnostic from accessing distance learning, exposing the huge digital divide between the connected and unconnected. Moving forward, prioritizing measures that increase digital adoption across the government, and the private sector, and by the general population will help boost Mali’s resilience to future crises. THE WORLD BANK’S DIGITAL ECONOMY FOR AFRICA INITIATIVE This diagnostic of Mali’s digital economy is part of the WBG’s Digital Economy for Africa (DE4A) initiative,25 stemming from the WBG’s recognition that the digital economy can help accelerate achievement of the Sustainable Development Goals (SDGs) and the World Bank Group’s (WBG’s) twin goals. Through the DE4A, which supports the operationalization of the African Union’s Digital Transformation Strategy for Africa (2020- 2030), the WBG has committed to undertaking country-level digital economy diagnostics across the continent in order to take stock of challenges and opportunities across the five foundational pillars of the digital economy and then propose specific, actionable, and prioritized recommendations to support countries to develop vibrant, safe, and inclusive digital economies. The resulting synthetic, country reports serve to highlight key policy reforms and investments needed for African countries to achieve their digital transformation ambitions while also mitigating the risks of growing digitization. These reports have contributed to structured dialogue between authorities, the WBG, development partners, the private sector, and non-state actors around concentrating efforts, catalyzing action, and enabling progress toward implementation and achievement of digital economy objectives; they have also directly informed World Bank systematic country diagnostics and country partnership frameworks, as well as downstream engagements. This diagnostic is based on a widely tested methodology focused around the five foundational, building-blocks of a vibrant, inclusive, and safe digital economy. These pillars are briefly described in Table ’. The report includes a chapter for each of the pillars of the digital economy— digital infrastructure, digital public platforms, digital financial services, digital businesses and digital skills— and examines the strengths, weaknesses and areas for improvement in each of these dimensions. In addition, areas of interest have been highlighted between chapters— fragility & digital, gender & digital, regional integration, and climate change & digital. Finally, the last chapter, the conclusion, reflects on the cross-cutting issues that have been identified by the analysis and which, if addressed, will improve Mali’s ability to cope with the various constraints of the digital economy., Table I.2. Digital Economy Foundational Pillars Pillar Definition Digital Provides the way for people, businesses, and governments to get online and link with local and global digital infrastructure services, thereby connecting them to the global digital economy Digital public Offer public products and services through digital channels for all aspects of life, allowing for access to public platforms services and supporting increased efficiencies of core government operations Digital financial Allow individuals and businesses to conduct transactions—such as paying, saving, borrowing, and investing— services electronically or online, thereby expanding financial inclusion Digital Enable the creation of a digital economic ecosystem and allow traditional “offline� businesses to adopt new businesses technologies and business models Enhance the adoption and use of digital products and services, as economies require a digitally savvy workforce to Digital skills build digital economies and competitive markets The diagnostic is based on interviews with senior policy makers and technical experts in key government agencies and ministries. Additional interviews were also conducted with private sector actors, such as mobile operators and Internet Service Providers (ISPs), as well as with nongovernmental organizations and development partners. These interviews were complemented by a review of existing literature and data sources (GSMA, ITU, TeleGeography, A4AI, etc.), as well as a study of policy documents, laws, and regulations, and a background of recommendations and international experiences from various developing countries that 25 https://www.worldbank.org/en/programs/all-africa-digital-transformation. 24 Mali Digital Economy Diagnostic have successfully implemented various digital transformation initiatives. Due to the pandemic context of COVID-19, all interviews were held virtually, which made the search for information more complex. In addition, data gaps are a major limitation that must be acknowledged. Some statistical data may be outdated, with some dating back to 2019, 2018, or even 2017, as some international indicators have not been updated since then. Data accuracy issues also persist. Additional statistical surveys would be welcome in Mali to address these issues. However, for the purpose of this report, the statistics have been triangulated with more qualitative information, so the team has no doubt about the validity of the issues and trends highlighted in this report. POLICY AND INSTITUTIONAL CONTEXT OF DIGITAL TRANSFORMATION Digital transformation has been presented in Mali’s development plans as a means to unleash the country’s potential for growth and societal transformation, and yet has remained largely aspirational. The Government of Mali (GoM) developed a National Digital Economy Development Policy document in 2016, called the Mali Numérique 2020 (Digital Mali 2020) strategy. The policy document proposed an ambitious vision for the development of Information and Communication Technologies (ICTs) as �a vector of sustainable human development; a source of productivity and added value for other economic sectors and for public administration; an important lever of the national economy; and a real industry in Mali by 2020.� The main priority areas were (i) broadening access to digital networks and services; (ii) developing digital production and content; (iii) diversifying digital uses and services; (iv) strengthening the existing legislative framework; (v) developing human capital; and (vi) developing the local digital industry. The first axis on expanding broadband internet access was accompanied by clear and quantified objectives, including for mobile Internet penetration, which was intended to reach 50 percent of the population by 2020. However, progress toward achieving the strategy’s objectives was limited, particularly as the strategy lacked a clear and actionable roadmap, financing, and supporting governance arrangements to become effective. Over the past two decades, the GoM has established a number of dedicated agencies and initiatives to advance the country’s digital transformation: ▪ The Ministry of Communication, Digital Economy and Modernization of the Administration (MCENMA) has been the highest public body for the supervision of the sector since 2014 and has expanded its mandate from telecommunications and posts to the broader digital sector. The MCENMA prepares and implements the national policy in the fields of ICT and posts. Among other responsibilities, the ministry works to fill gaps in the enabling legislation, in coordination with various sector bodies. ▪ Malian Regulatory Authority for Telecommunications and Posts (Autorité Malienne de Régulation des Télécommunications/TIC et des PostesAMRTP) has regulated the telecommunications and postal sector since 2011. AMRTP’s mandates include, among others: (i) compliance with the obligations for operators in terms of territory coverage and quality of service (QoS); (ii) compliance with conditions of fairness and proportionality governing the interconnection of networks open to the public, particularly in relation to interconnection agreements, and the sharing of infrastructure necessary for the provision of electronic communications services; and (iii) the power to regulate service rates.26 ▪ The Personal Data Protection Authority (Autorité de Protection des Données Personnelles—APDP) was created in 2013 to regulate personal data management. ▪ The National Directorate of Digital Economy (Direction Nationale de l’Economie Numérique—DNEN) was created in 2017 with the mandate of supporting the design of national digital policies, the control and monitoring of the overall implementation of the digital economy development strategy, and the evaluation of progress. The DNEN is therefore supposed to define sectoral strategies and policies. 26 AMRTP has all the powers necessary to regulate tariffs, including wholesale tariffs. The authority may conduct an analysis to determine relevant markets, has investigative powers, may impose the modification of interconnection and access agreements when operators practice �excessive tariffs,�, etc. (Marpij study for AMRTP, 2019). 25 Mali Digital Economy Diagnostic ▪ The Information and Communication Technologies Agency (Agence des Technologies de l'Information et de la Communication—AGETIC), created in 2005, is responsible for the modernization of the Malian administration as well as the development and maintenance of ICT for public services and local communities, state interconnectivity, and provision of hosting services for ministries, departments, and agencies (MDAs) through the data center they manage. ▪ The Malian Transmission and Broadcasting Corporation (Société Malienne de Transmission et de Diffusion—SMTD), created in 2015, is responsible for broadcasting services and manages the state’s telecommunication infrastructure, including the state-funded backbone and data center, and a national government call center (not yet operational). ▪ The Agency for the Management of the Universal Access Fund (Agence de Gestion du Fonds d'Accès Universel—AGEFAU), created in 2016, is mandated to promote universal access to telecommunications services and ICTs, by helping to mobilize financing for the development of universal access. The financing of the Universal Access Fund (UAF) comes from the contributions of telecommunications operators. ▪ The Unit for Digitization of Financial and Fiscal Services (Cellule d’Appui à l’Informatisation des Services Fiscaux et Financiers—(CAISFF) was created by the Ministry of Economy and Finance by Decision No. 00111/MFC-CAB of July 20, 1994. The CAISFF is intended to coordinate all activities relating to digital financial and fiscal services27 and fulfill the GoM’s ambition to promote the usage of ICTs by the Ministry of Economy and Finance. As presented above, multiple dedicated MDAs and initiatives support the country’s digital transformation; however, suboptimal coordination and overlapping mandates have led to a limited impact so far. The DNEN within MCENMA was created to design and execute the digital transformation strategy as well as to coordinate multi-sectoral digital projects. To help advance the delivery of services beyond Bamako, AGETIC is supposed to collaborate closely with the DNEN and the Institutional Development Commission (Commission de Développement Institutionne—lCDI), responsible for modernization of state functions and services, but this has not always been the case. Although the legal mandate of the AMRTP is limited to the regulation of telecommunications, ICT, and postal sectors, it has also been supporting other initiatives, such as the development of the cybersecurity strategy, due to its stronger capacity, more significant financial means, and the absence of an authority in charge of national cybersecurity. Identity management is spread across the Ministry of Territorial Administration and Decentralization (MATD), Ministry of Security and Civil Protection (MSPC), and local governments, which manage the National Identification Number (NINA) system, the national ID card, and birth registration, respectively. Overlapping mandates of some of these MDAs and limited coordination have led to the proliferation of siloed digital initiatives by line ministries and a limited impact of digital transformation overall. For instance, there are no clear institutional and operational roles and mandates, nor is there an overarching roadmap to allocate resources and capacities across government entities to enable the implementation of a whole-of-government approach, or to encourage investment in core shared infrastructure and services that can support transactional and integrated digital services development. Although DNEN is charged with the design and implementation monitoring of digital policies and digital government projects, each agency executes its own strategy with little coordination. As a result, various digital policy initiatives do not follow common technical standards and have been launched by MDAs independently. Some of the ministries have developed strong centers of expertise which could be scaled up across all MDAs. For example, the Ministry of Economy and Finance (MEF) has developed in-house expertise for IT development (CAISFF IT unit), cybersecurity, and hosting. To address this issue of interministerial coordination of the national digital transformation agenda at a strategic level, the GoM recently established an interministerial committee under MCENMA (Le Comité Interministériel, Decision n°00039/MCEN-SG of April 22, 2021), but it is not yet operational due to the national political crisis. 27 Interview with the Ministry of Finance. 26 Mali Digital Economy Diagnostic LEGAL AND REGULATORY FRAMEWORK The GoM has taken steps toward adopting the required legal and regulatory framework needed to support the ambitious Mali Digital 2020 strategy for digital transformation. ▪ Telecommunications—The legal and regulatory framework is relatively conducive to the establishment of an ICT market. In particular, the Telecom Law, Law 2017-015 of 2017, promotes liberalization and increased competition, with greater autonomy for the regulator. However, a number of limitations remain (i) the legal and regulatory framework is not sufficiently comprehensive to allow new entrants, such as infrastructure operators, towercos, or mobile virtual operators, as well as to then regulate them; (ii) the Telecom Law does not sufficiently cover transparent access and interconnection, the evolution of the telecommunications industry and emerging technologies such as 5G, and the protection of critical infrastructure, information, and assets; (iii) the enabling environment fails to promote sufficient competition in the retail market; (iv) the licensing regime is complex; (v) spectrum management could be optimized and the cost of spectrum is high; and (vi) incentives to promote infrastructure sharing are insufficient (see the Digital Infrastructure chapter for more details). ▪ Electronic transactions—There is a comprehensive law on electronic transactions, exchanges, and services (Law 2016-012 of May 6, 2016) that allows electronic communications and signatures to hold the same status in law as their written counterparts so long as some limited conditions are satisfied. The legislation provides that a service for certification and electronic signatures will be put in place under the control of the Minister of Technology and the Minister of Communication for the promotion and management of electronic certification and electronic signatures. ▪ Digital finance—The Central Bank of West African States (BCEAO) has established the digital finance services (DFS) frameworks to promote digital technology in financial transactions. Among them is Regulation no. 8 of May 2015, which aims to encourage the development of electronic money. Laws also exist to regulate credit information bureaus in the Western African Economic and Monetary Union (WAEMU) member states including Mali. However, current financial regulations do not sufficiently address recent changes in financial technologies, exposing consumers to financial risks, despite attempts by the GoM to adopt legislation for personal data protection, cybersecurity, and electronic transactions (see the Digital Financial Services chapter). ▪ Data protection—An overarching data protection law (Law 2013-015 of May 21, 2013) exists and contains many of the principles and concepts found in the ECOWAS Supplementary Act on Data Protection, Convention 108+, and the EU’s General Data Protection Regulation. These include data subject rights; data minimization, purpose limitation, and provisions for penalties for noncompliance; powers for enforcement by a regulator; and provisions relating to international transfers of personal data. An active data protection authority is established through this law (APDP). However, there is no clear indication of what lawful bases would justify data processing and there are numerous derogations without clear boundaries when it comes to data processing and the right to information related to public security, national defense, the investigation and prosecution of criminal offences or state security, including those associated with an economic or financial interest of the state. The overarching law is partially amended by Law No. 2017-070 of December 18, 2017 and the cybercrime law. ▪ Cybersecurity and cybercrime—Overall, cybersecurity 28 is not yet covered. There is no national cybersecurity strategy or cybersecurity incident response team that could help manage security breaches in key public systems. There is a cybercrime law (2019-056) that protects against a broad range of offences which, if adequately enforced, could provide a great support for the digital ID ecosystem. However, there is a lack of clarity on the scope of some offences (e.g., offences to �moral standards“). 28 Cybersecurity is an important trust prerequisite of a vibrant digital economy to protect policy makers, businesses, consumers, educators, students, and citizens in the online realm. 27 Mali Digital Economy Diagnostic ▪ Consumer protection—Consumer and supplier protection is covered by Law No. 2015-036 of July 16, 2015. This law covers to a certain extent the digital realm by providing consumers with appropriate and clear information on the goods and services they buy or use; ensuring the conformity of goods and services and consumer safety with the required standards; and determining the criteria and procedures for repairing injury or prejudice suffered by consumers. Within the Ministry of Industry and Commerce, the Directorate-General responsible for trade draws up national regulations on trade, competition, and consumer protection. Based on the guidelines29 of the United Nations Conference on Trade and Development (UNCTAD), the Consumers Association of Mali is proactive in consumer protection rights awareness and advocacy to address evolving issues, including digital policies, and proposes appropriate measures and regulations. ▪ Intellectual property—Intellectual property rights (IPR) are covered by the 2008 Intellectual Property Act and the Trade Act, and the country is part of both the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literacy and Artistic works. The Bureau Malien du Droit d’Auteurs (BUMDA) and the Centre Malien de Promotion et de la Propriété Intellectuelle (CEMAPI), which are associated with the Ministries of Handicraft, Culture, Hospitality Industry, Tourism and Industry and Commerce, oversee intellectual property issues in Mali. However, the IPR protection legal structure remains weak due to the lack of experts in the country and the lack of reported IPR crimes. Mali’s score on the 2021 IPR Index30 decreased by 2.471 to 4.164, placing it 19 out of 30 countries in the Africa region and 113 out of 129 countries in the world. However, for the implementation of these laws to be effective, the adoption of regulatory instruments and the effective operationalization and empowerment of the newly created agencies are essential over the coming years. Furthermore, legal and regulatory gaps remain in critical areas, such as cybersecurity, e-commerce, data privacy, interoperability, and access to open data, which can ensure that digital transactions are legally accepted and are done in a secure and protected manner. With more and more online transactions, the volume of data and information exchanged will increase, and without the proper legal and regulatory framework, government, people, and businesses are left vulnerable to security breaches. RECOMMENDATIONS R1 [High priority]. Adopt a new “Digital Mali� strategy. The new “Digital Mali� strategy should be developed as part of an inclusive process to help ensure wider buy-in and maximize the impact of the strategy as well as chances for successful implementation. Strategy development should convene government MDAs, industry players, civil society, and development partners. This will ensure that the strategy is sensitive to government- wide priorities as well as private sector needs. Moreover, by engaging development partners, the government can ensure that key initiatives are adequately financed and implemented. Finally, the strategy should include a clear roadmap for implementation and a monitoring and evaluation (M&E) framework to ensure that the implementation of key priorities is effectively mapped out, roles and responsibilities for key actions are clearly defined, and progress can be tracked using measurable metrics and milestones that allow key stakeholders to be held accountable. Once the strategy is adopted, the GoM could consider its continuous revision and improvement to keep it up to date, with an emphasis on integrating global developments during its implementation, as digital development evolves very rapidly. There could be an ongoing observatory of sector practices, comparing Mali with aspirational peers. R2 [Quick win]. Reinforce the newly established strategic interministerial coordination mechanism for digital transformation. Based on successful international experiences, the newly established interministerial committee should follow an organization model composed of representatives from the public sector (ministers and leaders of agencies), the private sector, and civil society in order to provide high-level coordination and 29 https://unctad.org/topic/competition-and-consumer-protection/un-guidelines-for-consumer-protection. 30 https://www.internationalpropertyrightsindex.org/country/mali. 28 Mali Digital Economy Diagnostic political orientation. Such a committee should advise on the best institutional framework for the long-term digital economy development and take the lead on developing the next digital transformation strategy, as well as provide oversight of technical subcommittees for its implementation. An inclusive committee with a clear mandate would at least, in the short term, contribute to strengthened digital governance and increase the potential for better strategy design and implementation. R3 [High priority]. Update key legal and regulatory frameworks to promote trust and security in data transactions. As the digital economy develops further in Mali, it will become imperative to create and implement a legal and regulatory environment that avoids or limits harm arising from the misuse of data, including infringements on data privacy and cybersecurity. Specifically, this could start with the modernization of the data protection law by including clear lawful bases; providing for accountability mechanisms; adding security-related provisions such as pseudonymization and anonymization; and providing limits to existing derogations that may benefit state surveillance. Further consideration for human rights could be included in cybercrime law. A national cybersecurity strategy and related implementation agency should be adopted. Further technical assistance is required to ensure that domestic authorities can adopt regional provisions and ensure their effective application, as well as effectively operationalize any new legal and regulatory frameworks introduced. 29 Mali Digital Economy Diagnostic CHAPTER 1 DIGITAL INFRASTRUCTURE Key messages: � A large portion of Mali’s population is still excluded from the digital transformation due to significant digital divides. Low levels of broadband adoption (mobile internet penetration rate of 30.0 percent in 2021, fixed penetration rate of 1.1 percent) result in limited digital impact on growth, job creation, and expanded service delivery. Ensuring wider access to affordable, high quality broadband is essential to unlock digital transformation and prevent reinforcing social divides and weakening the most vulnerable households in the most rural and isolated areas. � There is insufficient competition between operators, with a detrimental impact on network coverage and on the quality and cost of services. In addition, the lack of significant market power regulation on wholesale markets prevents the growth of Internet Service Providers (ISPs) and impacts the cost of services for end consumers. � In addition, key constraints to connectivity expansion include (i) security challenges that impact the rollout and maintenance of infrastructure, (ii) persistent market failures in rural areas due to low profit margins, (iii) the unavailability of electricity, and (iv) limited infrastructure sharing. The Universal Access Fund has a critical role to play in expanding service coverage, but its performance has been suboptimal so far. � A number of demand-side barriers also explain low service adoption and low demand for digital infrastructure and services expansion. Affordability of services and devices is a key barrier, given low purchasing power. Low levels of basic digital literacy are also a significant barrier, as is the low perceived value of digital technologies given the lack of relevant content and services. 1.1 IMPORTANCE OF DIGITAL INFRASTRUCTURE Numerous studies have demonstrated that increased broadband penetration is associated with a high impact on economic growth, especially in low- and middle-income countries.31 The estimates for Africa are at the higher end, with 2.5 percent additional GDP growth for every 10 percent increase in broadband penetration (see Box in previous section). In line with these findings, reaching the African Union’s (s) 2030 “Digital Transformation for Africa� goal of universal and affordable internet coverage combined with appropriate human capital investment is estimated to raise real GDP growth per capita by 5.0 percentage points per year, while reducing the poverty headcount by 2.5 percentage points per year across Sub-Saharan Africa (SSA).32 Digital connectivity can shape countries’ development paths through several interrelated channels: (i) it can bridge information gaps, alleviating asymmetry problems, and improve communication; (ii) it promotes inclusion and is the most cost effective and fastest means of connecting all citizens, especially those living in 31Briglauer and Gugler 2019; Czernich et al. 2011; Katz and Callorda 2018; Koutroumpis 2018; Minges 2015; Endquist et al. 2018, ITU 2020. 32Choi, J., Dutz, M., and Usman, Z. 2019. The Future of Work in Africa: Harnessing the Potential of Digital Technologies for All. Washington, DC: World Bank 30 Mali Digital Economy Diagnostic remote areas, to markets and services; and (iii) it increases productivity, lowers transaction costs, and optimizes supply chains.33 Broadband infrastructure can also increase employment while enabling digital enterprises.34 For example, the arrival of fiber-optic submarine cables in Africa has had positive effects on employment from the entry of new firms, greater productivity, and higher exports.35 These effects would in turn help grow the Malian economy. The first step to unlocking digital transformation and the associated digital dividends is to ensure universal, affordable, and reliable access to internet through greater connectivity. The COVID-19 pandemic amplified the critical need to close existing digital infrastructure gaps and the importance of affordable and reliable access to internet through greater connectivity to ensure continuous availability of vital services. In the context of various pandemic waves, lockdowns, and mitigation measures, digital technologies have allowed governments, enterprises, and individuals to limit service disruption while adhering to social distancing requirements. However, in Mali, weak and uneven digital infrastructure access and use, coupled with the unreliable quality of broadband services, underscored difficulties in ensuring the continuous provision of public and commercial services, distance education, and economic activity. Without significant efforts to reduce the digital divide, digital services and content cannot reach the entire population, especially the poor and the most vulnerable. As highlighted by the World Bank’s 2020 Africa Pulse Report,36 urgent and significant efforts are needed across SSA to avoid further excluding already marginalized segments of the population from the benefits of digital connectivity. 1.2 DIAGNOSTIC FINDINGS: CURRENT STATE OF DIGITAL INFRASTRUCTURE 1.2.1 Adoption of Broadband Services Despite progress in terms of broadband connectivity in recent years, Mali ranks relatively low compared to the rest of the world and the African continent in terms of connectivity and accessibility of broadband services. Table 1.1. Key Digital Infrastructure Indicators37 Mali SSA average Penetration: Mobile cellular subscriptions, % (2020) 125 94 Unique mobile broadband subscriptions, % (2021) 30 33 Fixed boadband subscriptions, % (2019) 1.1 1.6 Affordability: Price of mobile broadband 1GB, % of GNIPC (2021) 6.0 6.2 Quality: Average mobile broadband download speed (Mbps) 4.72 5.89 (2021) Coverage: 3G population coverage, % (2019)* 71 80 4G population coverage, % (2019)* 41 49 *Note on data points: More recent data are available for coverage; according to the GSMA, in 2022, 3G coverage is 99 percent and 4G coverage is 93 percent. However, these data points simply do not match the reality on the ground, and therefore cannot be used. There is a big jump between 2019 and 2020 in the data set, where 3G coverage is supposed to have increased from 71 to 96 percent, which cannot be explained by investments made by operators. The latest data from the regulator are from 2017. Therefore, the team decided to continue using 2019 data for coverage. 33 Aker and Blumenstock, 2015; Bertschek and Niebel, 2016. 34 Shapiro and Hassett, 2012. 35 Hjort and Poulsen, 2019. 36 World Bank, 2020. Africa Pulse: Charting the Road to Recovery. Available at: https://www.worldbank.org/en/publication/africa-pulse. 37 GSMA, ITU, Cable.co.uk, AMRTP, AGEFAU. 31 Mali Digital Economy Diagnostic 1.2.1.1 Penetration of Broadband Services Access to high-speed internet services remains limited and uneven. Mali’s mobile internet penetration rate was 30 percent in 2021,38 which means that over two-thirds of the population still do not have access to a broadband connection. At the household level, a 2020 survey commissioned by the Malian Telecommunications Regulatory Authority (AMRTP) reveals that 55.5 percent of households have at least one household member that has access to the internet. Mali thus ranks below many of its peers in SSA in terms of mobile broadband penetration, as depicted in figure 1.1. While broadband penetration rates are modest, uptake does appear to be growing quickly, as the mobile internet penetration rate was only 11 percent in 2018. Service usage is also increasing rapidly. The COVID-19 pandemic has reinforced this trend, with the overall monthly average of mobile data subscriptions rising to 10 million GB by the end of 2020 from 4.5 million GB in 2019, an increase of over 100 percent in data subscriptions in one year. Marked digital divides mirror historical social inequalities, especially between urban and rural areas and between men and women. Digital exclusion is primarily an issue of poverty and socioeconomic factors. Women, the elderly, rural populations, and those with lower levels of income or education are less likely to access mobile internet. Access to broadband internet is mainly in urban areas, and there is a very large digital divide between Bamako and the rest of the country. For example, 31 percent of the population in urban areas report using internet services regularly, i.e., at least once a week, compared to only 5 percent in rural areas.39 Similarly, 17 percent of men report using internet regularly, compared to only 5 percent of women.40 Without complementary policies, new digital technologies and internet-based services could simply amplify existing inequalities, as the economic and social value of being digitally networked increases exponentially.41 Figure 1.11. Unique Mobile Broadband Penetration for Mali and Selected Comparators, GSMA, 2021 Ghana 48% Nigeria 43% Côte d'Ivoire 42% Mauritania 40% Gabon 39% Senegal 37% Togo 34% The Gambia 33% Mali 30% Cameroon 26% Burkina Faso 26% Niger 16% Chad 16% In addition, broadband is almost exclusively accessed via mobile as in most countries in SSA. 42 Fixed broadband penetration is extremely low, with a penetration rate of 1.1 percent.43 Seventy percent of high- 38 “Unique� subscribers. GSMA, 2021. This contrasts with the statistic compiled by the AMRTP, which reports a mobile broadband p enetration of 49 percent in 2020. Note, however, that multiple SIM cards drive penetration for the AMRTP statistic, while the GSMA statistic measures single subscriptions. 39 Afro barometer Surveys, 2018. A survey was conducted in 2020, but the data are not yet available online. 40 Afro barometer Surveys, 2018https://afrobarometer.org/sites/default/files/press- release//ab_r7_pr3_africas_digital_gender_divide_may_be_widening.pdf. 41 Policy Paper Series No. 5 After Access: Paper No. 7 (2018) After Access 2018: A demand-side view of mobile Internet from 10 African countries https://researchictafrica.net/2019_after-access_africa-comparative-report/ April 2019. 42 Out of all total mobile broadband subscriptions, 99 percent are 3G/4G smartphone subscriptions. AMRTP, 2021. 43 AMRTP, 2020. 32 Mali Digital Economy Diagnostic speed broadband fixed access is through XDsl versus 30 percent through FTTH.44 3G or 4G box offers are also being developed and largely available across the country, offering an alternative to more expensive fixed broadband offers. While increasing digital access through mobile broadband is a priority for Mali’s digital transformation, increasing the use of fixed broadband is also necessary in order to fully take advantage of the digital economy, especially for businesses and public administration in the main cities. Mali is marked by a very large usage gap preventing widespread access to broadband, due to a combination of supply-side and demand-side constraints. A recent analysis undertaken as part of the 2021 World Development Report reveals that in Western Africa, coverage gaps are relatively large in comparison to other regions of the world, but utilization gaps are much larger (see 2).45 This rings particularly true for Mali, where 3G+ broadband covers 71 percent of the population (see 1.2.1.2), but where around 60 percent of those covered, or around 8.3 million people,46 do not appear to be using broadband services. This usage gap highlights the existence of underlying factors other than the unavailability of the network hindering internet usage, as reflected in the findings of the 2020 household survey commissioned by the AMRTP. Other supply-side constraints include the insufficient quality of telecommunications infrastructure and services and the lack of content relevance and security, while demand- side constraints include low purchasing power that renders the cost of broadband services and devices unaffordable, and low levels of literacy and digital skills, as well as low perceived value of services, as highlighted in Figure’ and further described in the rest of this section. This highlights the need to address a range of supply-side issues, while implementing specific demand-side interventions to foster the adoption and productive use of digital technologies. 44 AMRTP, 2021. 45 World Development Report. Data for Better Lives; World Bank Group, 2021. 46 Author’s calculations, based on GSMA data, 2021. 33 Mali Digital Economy Diagnostic Figure 1.2. Coverage and Usage Gaps in Africa, WDR 2021 2 Figure’ 1.3. Main Access Barriers Faced (percent of respondents), 2020 Household Survey Commissioned by AMRTP 1.2.1.2 Availability of High-Speed Broadband Networks 34 Mali Digital Economy Diagnostic Incomplete network coverage still limits access to broadband services in parts of the country. Out of 704 communes, 366, representing 71 percent of the population, had 3G or higher coverage in 2019,47 which is lower than the average for SSA (80 percent), while 4G deployment covers 161 communes, or 41 percent of the population. Spatial inequalities in digital infrastructure provision are marked, with a significant urban-rural divide. Access to 3G and 4G broadband is concentrated in Bamako, the country’s main cities, and certain areas of specific economic interest (e.g., mines) (see map 1.1 for the 3G coverage map by operator).48 The northern areas, especially above Mopti, are particularly underserved due to security issues and the lack of supporting infrastructure such as electricity and roads, as is further detailed in 1.2.3.3 below. 1.2.1.3 Affordability of Broadband Services Despite a downward trend, the high price of internet services and devices, in relation to the purchasing power of the population, is a major obstacle to their widespread adoption. According to Cable.co.uk, the average price of a 1GB mobile data plan based on 42 data plans measured (US$3.3 in 2021) is cheaper than the SSA average (US$6.4). Yet, as Mali’s population suffers from a relatively low purchasing power, this price represents 6 percent of the monthly Malian gross national income (GNI) per capita, which is much higher than the 2 percent recommended by the United Nations Broadband Commission, and places Mali 137 in the world out of 150 surveyed countries in terms of data affordability in relation to income 49 (see Figure 3). The unaffordability of services is thus a main barrier to access for 59 percent of households.50 To address this, operators have launched several initiatives to reduce prices, such as �education passes� that provide data at more affordable prices for educational contents, packages with price reductions at night, or flexible price bundling. The AMRTP also recently launched a study to develop the tools to determine the information and communication technology (ICT) services price index and measure progress on affordability. Added to this is the price of smartphones needed to access mobile broadband services, which is prohibitive relative to purchasing power. A low-cost entry-level smartphone on the market costs XOF 18,000 Map 1.1. 3G Coverage by Operator (Orange: orange, MALITEL: red), AMRTP, 2021 (US$30), which although relatively cheap for such a product, represents 45.4 percent of monthly GNI per capita, placing Mali 145 out of 167 surveyed countries for device affordability in relation to income 51 (see figure 1.5). More advanced broadband-enabled devices are simply too expensive for the majority of Malians, and 63 percent of households consider that this is a critical barrier to access. 52 Further, only 4 percent of the population owns a computer.53 Figure 3 and Figure 4. Left: Average Price of 1GB of Mobile Data (perceent of monthly GNI), Cable.co.uk, 2021. Right: Minimum Price of an Entry-level Smartphone (percent of monthly GNI), A4AI, 2021, for Mali and Selected Comparators 47 GSMA, 2019. More recent data from GSMA is available for 2020 and 2021, but it differs significantly from the regulator's estimates, and it implies near-universal 3G coverage, which seems quite far from the reality on the ground. 48 The coverage figures reported by AMRTP are lower: 50 percent of the population covered by a 3G network and 20 percent by a 4G network. 49 Cable.co.uk (https://www.cable.co.uk/mobiles/worldwide-data-pricing/), August 2021. 50 AMRTP Household Survey, 2020. 51 A4AI, 2021, prices and affordability of smartphones and feature phones by country. 52 AMRTP Household Survey, 2020. 53 Afrobarometer Survey, Mali, 2018. 35 Chad 42.4% Niger 95.9 Gambia, The 8.2% Niger 7.3% Burkina Faso 73.2 Mali 6.0% Togo 61.4 Togo 5.9% Burkina Faso 3.8% Mali 45.4 Mauritania 3.4% Nigeria 33.3 Senegal 2.8% Cameroon 2.2% Senegal 27.1 Côte d'Ivoire 1.7% Cameroon 26.8 Gabon 0.8% Nigeria 0.8% Gabon 21.1 Ghana 0.5% Cote d'Ivoire 11.5 1.2.1.4 Quality of Broadband Networks Generally speaking, the quality of services provided by telecommunication operators is considered unsatisfactory by households and consumer associations. In particular, the poor quality of network deployment and operation, frequent outages, and slow connections are to blame. Mali ranks 117 out of 182 countries in terms of speed (see Figure ).54 In addition, there are regular and unpredictable internet outages due to security issues and untimely power cuts due to periods of high heat, flooding, and overloading, which weaken consumer confidence. Thirty-seven percent of households consider connections too slow and a barrier to accessing services.55 Figure 1.6. Average Broadband Download Speed (Mbps) for Mali and Selected Comparators, Cable.co.uk, 2021 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Despite an increase in the use of international bandwidth, the bandwidth available is too low for Malians to take advantage of the full range of digital content and services worldwide. Mali ranks among the lowest in the 54 https://www.speedtest.net/global-index/mali. 55 AMRTP Household Survey, 2020. Mali Digital Economy Diagnostic world (164 out of 200 countries) in terms of available bandwidth per connection (fixed or mobile).56 The quality of services for active users57 is generally suitable for simple applications as opposed to the more complex and data-consuming services necessary for the digital transformation of the economy. According to the International Telecommunication Union (ITU), the international bandwidth access rate per internet user is about 6Kbps, which is about one-half of the continental average. 1.2.1.5 Demand-side Barriers to Access Recent research has shown that in addition to infrastructure gaps, which have been the main focus of many developing countries, and low purchasing power, which makes the cost of data services and devices one of the biggest constraints to uptake, demand-side barriers are of critical importance.58 Although Mali-specific data on barriers to access remains scarce, trends can be extracted from research on similar contexts across Sub-Saharan Africa and from the recent AMRTP survey. The lack of awareness and skills on how to use the internet account for the large numbers of people who remain offline. Among households aware of the internet but not using internet services, 46 percent indicated that a lack of confidence or lack of digital literacy and skills was the reason for not coming online, and this figure increases to 56 percent in rural areas.59 However, measuring digital skills in Mali remains a challenge due to the lack of high quality comparable data (for more details, see the Digital Skills chapter). This is further compounded by the low perceived value of digital technologies due to the lack of, or limited availability of, local content in local languages. Thirty-five percent of Malian households do not see the need for internet access as they do not understand the value and benefits that can be derived from digital technologies, while those who do have access to services mostly only use WhatsApp, Facebook, and YouTube, and therefore have limited productive use of services.60 According to local stakeholders, a key reason for low internet adoption rates is the lack of locally developed and relevant digital content. The 2021 Network Readiness Index ranked Mali 118 out of 130 countries overall, and 114 in terms of digital content, reflecting the scope to improve local content and app development.61 Relevant content could span widely from digitally enabled public and financial services, e-commerce, online education to social networks, and content that preserve and help share local traditions, especially in the post-COVID-19 pandemic context, and should be available in local language.62 56 Cable.co.uk, 2021. 57 The average mobile data subscriber consumes only 1.5 GB per month, which is insufficient for effective consumption of services. 58 A Demand-Side View of Mobile Internet Adoption in the Global South, Background paper for the WDR 2021, Rong Chen, 2021. 59 AMRTP Household Survey, 2020. Consistent with data across Africa. See: GSMA, The State of Mobile Internet Connectivity, 2019. 60 AMRTP Household Survey, 2020. 61 https://networkreadinessindex.org/country/mali/. 62 Internet Society Policy Brief. Available at: https://www.internetsociety.org/policybriefs/localcontent/. 37 Mali Digital Economy Diagnostic Concerns about privacy and security also limit adoption, as many people fear financial fraud or misrepresentation online. Twenty-four percent of Malian households share these concerns. 63 The AMRTP survey reveals that harmful practices are indeed common (see Figure ), with the most frequent issues relating to money transfer scams and harassment online. This prompts the need to further develop customer protection 30 26.1 mechanisms. 25 21.6 20 Lastly, skewed perceptions of internet content and social 15.2 15 11.9 and cultural norms further limit internet use. Fourteen 8.4 percent of Malian households think that digital content 10 4.7 3.3 3.3 2.6 1.8 may be harmful or not in line with their values or morals64 Figure 1.7. 5 1.2 Percentage of Households Being 0.7 2.4 2.1 1.7 Gendered issues of patriarchy and power relations Affected0 by Harmful practices online, AMRTP between men and women also impair internet use and survey, 2020 are perceived, in some cases, as interfering with their relationships. 65 Until these demand-side issues are addressed, and there is a critical mass of people online who are able to use the internet intensively for the multipliers to be felt throughout the economy, expectations of the internet contributing directly and Urban Rural Total indirectly to economic growth and job creation will not be realized. 1.2.2 Market Structure and Competition The telecommunications sector’s contribution to GDP, at 3 percent in 2019, 66 is growing but limited in comparison to Mali’s peers (e.g., 10 percent in Nigeria, 8 percent in Togo). As the mobile and internet customer base has grown, the total turnover has increased over the past few years. It was estimated at XOF 519 billion (US$832 million) at the end of 2020 against XOF 479 billion (US$769 million) in 2015.67 The sector is still not very competitive. Its development initially revolved around the incumbent operator SOTELMA. A process of liberalization was initiated in 1999, with the privatization of SOTELMA effective in 2009 (now partly owned by Maroc Telecom), followed by the entry into the market of Orange in 2003. A third license was granted to Atel in 2013, but it was not until 2018 that its services were launched under the Telecel brand. To date, the number of players in the various market segments is limited (see Table 1.21). Table 1.21. Mali's Telecom Value Chain68 Wholesale market Retail market 64 AMRTP Household Survey, 2020. 64 AMRTP Household Survey, 2020. 65 Internet use barriers and user strategies: perspectives from Kenya, Nigeria, South Africa, and Rwanda, Chenai Chair, Beyond Access Public Policy Paper series, 2017. 66 AMRTP Activity Report, 2019. 67 AMRTP Annual Report, 2020. 68 The value chain is divided into four links: (i) access to the subscriber (also called service or local loop) where different technologies are used, namely wireline technologies (xDSL, FTTx), radio (GSM/UMTS/4G, WiFi, WIMAX . . .); (ii) collection, which connects the access nodes to the national backbone, generally using optical fiber, leased lines, or microwave links (FH); (iii) national backbones that provide the National Bandwidth or National Leased Lines, connecting the main cities to each other and providing access to neighboring countries; and (iv) international backbones that provide International Bandwidth, allowing access to international nodes of the Global Internet, via terrestrial and submarine cables. The service that packages the International Bandwidth from Bamako to the border to the International Bandwidth is called IP Transit. This is the service that ISPs are buying today. 38 Mali Digital Economy Diagnostic International Domestic Mobile Fixed Collection network bandwidth bandwidth broadband broadband Orange, Sotelma, Orange, Orange, Sotelma, Orange, Orange, Telecel, Internet SMTD (by relying on Sotelma, Sotelma, SMTD Service Providers Sotelma, Telecel international players) ISPs (ISPs) Table 1.3. Mali's Telecom Operators69 Operator Ownership Services SOTELMA- 51% Maroc Telecom, the remaining 49% being Mobile and internet operator, fixed-line, ADSL, MALITEL-Moov owned by the State of Mali (19%), the CDMA and low-speed, 4G/3G, mobile Wifi, Africa operator's employees (10%), and local corporate offer for optical fiber, electronic investors (20%) money (Mobicash) Orange Mali 70% Société Nationale de Mobile and internet operator, fixed, high and low Télécommunications du Senegal (SONATEL speed, 4G/3G, mobile Wifi, optical fiber, itself 42% owned by the Orange Group) and electronic money (Orange money) 30% other investors and staff ATEL/TELECEL 100% Planor Afrique SA through Alpha Cell phone operator, internet 2G/3G, mobile Télécommunications Mali Wifi 1.2.2.1 Broadband Wholesale Market The wholesale market for international and domestic bandwidth in Mali is oligopolistic in nature. On the one hand, the two main operators (Orange and SOTELMA) own their own fiber-optic infrastructure, including up to the borders with coastal countries. On the other hand, the Société Malienne de Transmission et de Diffusion (SMTD), created in 2015, manages the government's optical fiber. The SMTD is a state-owned enterprise (SOE) in charge of broadcasting and managing the state’s telecommunication infrastructure and provides the public with several related services such as the data center, optical fiber, DTT, call center, and pylons. Currently the SMTD operates without an infrastructure operator license. The status of SMTD as an infrastructure operator should be clarified, and clear specifications should be issued for SMTD in accordance with the existing regulatory framework to avoid confusion and a situation in which SMTD competes unfairly with wholesale operators (by offering bandwidth to the market) or ISPs (especially by offering services to businesses). 1.2.2.2 Mobile Broadband Retail Market Three operators (Orange, SOTELMA/MALITEL, and Telecel) share the mobile broadband retail market, but the duopoly between Orange and SOTELMA/MALITEL has structured the market over the past two decades. Orange Mali is the leader, particularly in the mobile and wireline broadband segment thanks to fiber and has 59 percent of the internet market share for mobile broadband as of 2020.70 SOTELMA/MALITEL (marketed since 2021 as Moov Africa) comes second, with 39 percent of the market share, with a mobile broadband offer and a range of solutions on wireline networks (fiber, ADSL, CDMA for more remote areas), both for residential and business customers. Orange Mali launched its 4G offering in August 2017 and 69 Adapted from UEMOA, Evaluation des usages numériques et politiques nationales en matière d'utilisation de masse du numérique dans l'espace UEMOA, 2020. 70 AMRTP Activity Report, 2020. 39 Mali Digital Economy Diagnostic SOTELMA/MALITEL followed in late 2018. 5G was tested by Orange in July 2021. Telecel launched its services later, in 2018, and focused its initial deployment efforts on the capital and the South of the country (Kati, Sikasso, Segou, Kayes, Koutiala, and Koulikoro). However, it struggles to gain market share. The entry of the third operator, Telecel, was expected to contribute to an erosion of Orange Mali’s and SOTELMA/MALITEL’s market shares, but so far has had a limited impact on competition and service adoption. In 2015, the Government of Mali (GoM) began examining the possibility of granting a fourth mobile network operator license to further animate the market. In 2018, the Malian government launched the procedure for awarding the fourth license through an international tender. The award procedure is still ongoing. 71 The Minister of Communication, Digital Economy and Modernization of the Administration recalled in May 2021 that the prospect of awarding this license will remain under consideration if data prices do not decrease.72 1.2.2.3 Fixed Broadband Retail Market The fixed broadband retail market is also dominated by Orange Mali and SOTELMA/MALITEL. The operators have deployed ADSL, FTTB, BFWA, WIMAX, and CDMA services mainly in Bamako, but also in Kayes, Sikasso, and Segou. There are only a few ISPs such as Afribone and Kiwi. Once the exclusive holders of internet distribution licenses, ISPs in Mali have been struggling for several years to evolve in the competitive environment. As a result, a good number of players in this segment have ceased their activities. Concluding Remarks on Market Structure Therefore, even if the telecommunications/broadband market is liberalized, the competitive dynamics are weak, and there is market concentration in all segments of the network. Both Orange Mali and SOTELMA/MALITEL operators are active in the wholesale and retail markets. There is therefore a twofold risk in the wholesale market of a lack of competitive activity (due to the small number of providers) and of vertical restraint (due to the integrated nature of the providers), which could drive other operators (in particular the third and possibly fourth mobile operators and ISPs) out of the retail market to the detriment of consumers in Mali.73 1.2.3 The Broadband Value Chain This report organizes the technical value chain of digital infrastructure around four “miles� or segments: (i) the �first mile� concerns access to the international internet, in particular through international terrestrial backbones; (ii) the “middle mile� concerns the national backbone, where the internet passes through the country; (iii) the “last mile� focuses on the local loop, where internet reaches the end user (in particular the mobile local loop for rural and remote areas); and finally (iv) the “invisible mile� concerns the enabling environment and different types of supporting digital infrastructure necessary for broadband deployment. Large gaps remain across all segments of the value chain, and significant investments are thus needed to achieve universal coverage. Network investments by operators have been increasing in recent years. Operators’ investments have reached almost XOF 92 billion (US$147million) in 2020, up by 20 percent compared to 2019. Cumulative investments between 2015 and 2020 amount to CFAF 465 billion (US$746million), with an average growth rate of 4 percent per year.74 Orange Mali has mainly invested in mobile networks, while SOTELMA has focused on investment in the fixed networks. However, current levels of private capital are largely insufficient to meet financing needs; according to an A4AI estimate, private sector 71 The call for tenders may have to be declared“unfruitful� because of the delay. 72 https://www.agenceecofin.com/telecom/1205-88180-mali-un-4e-operateur-telecoms-sera-envisage-si-les-prix-de-la-data-demeurent-peu- abordables. 73 Xavier Decoster, World Bank, 2019. 74 AMRTP Annual Report, 2020 40 Mali Digital Economy Diagnostic financing capacity in Mali will only cover about 50 percent of the total financing needs to achieve near universal coverage over the next 10 years. 1.2.3.1 First Mile: International Connectivity The country’s landlocked situation makes it dependent on neighboring countries for international bandwidth, the cost of which is reflected in operators’ prices. International connectivity is achieved through cross-border links (12 terrestrial fiber-optic cables) that connect Mali through seven outlets to submarine cables crossing the coasts of six countries (Côte d'Ivoire, Burkina Faso, Senegal, Guinea, Mauritania, and Morocco) (see figure 1.8).75 Orange Mali has deployed a fiber optic network to the borders of Senegal, Côte d'Ivoire and Burkina Faso for access to the SAT3, ACE, and MainOne submarine cables. The Orange Group’s West African regional network, consolidating existing terrestrial fiber networks combined with submarine cables, now connects all major capitals in the region, including Bamako, Dakar, Abidjan, Accra, and Lagos. SOTELMA/MALITEL has deployed a fiber optic network towards the borders of Senegal, Côte d'Ivoire,and Mauritania for access to the SAT3, ACE, WACS, and Maroc Telecom West Africa submarine cables. The SMTD has deployed a fiber-optic network to the borders of Côte d'Ivoire and Guinea. Lastly, the TransAfrican cable interconnects several existing backbones to link Morocco to Burkina Faso and Niger via Mauritania and Mali, and improves broadband connectivity for Maroc Telecom subsidiaries (including SOTELMA/MALITEL) in these countries by connecting them to the region's submarine cable systems, including the Maroc Telecom West Africa submarine cable. Overall, Mali’s international bandwidth has significantly increased over the past few years, from over 10Gbps in 2016 to over 80Gbps at the end of 2020.76 Connectivity prices remain high due to the cost of international and domestic IT transit. Orange and SOTELMA, being subsidiaries of international groups, have no difficulty in obtaining the provision of international bandwidth in different countries. On the other hand, the situation is more complicated for Telecel and ISPs due to their small size, which weakens their bargaining power due to low purchase volumes, and the fact that they do not have infrastructure up to the borders.77 Thus, ISPs are forced to source their bandwidth supplies on the wholesale markets from suppliers (Orange, Sotelma, SMTD), of which Orange and Sotelma are also their competitors on the retail market. According to estimates given during interviews conducted as part of this diagnosis, the cost of “international� IP transit, which includes the submarine part (5,000 km) and the crossing of coastal country borders (between 400 and 1,000 km depending on the border) is around CFAF 4,000 (US$7)/month/Mbps, while the national portion of the link (between the border and Bamako, between 500 and 700 km depending on the border) is invoiced at around XOF 16,000 (US$27)/month/Mbps. 75 Claude Jacquelot for the WB, map from 2018, updated in 2021. 76 ARMTP, 2021. 77 Stratégie Nationale de l’Accès Universel au Mali, 2020. 41 Mali Digital Economy Diagnostic Figure 1.8: Mali's Access to International Connectivity 1.2.3.2 Middle Mile: Backbone Networks Mali has a fiber-optic network of approximately 10,000 km (not including internal loops). This network has made it possible to connect the country’s main Figure 5: Mali's Backbone as of 2019 cities (Bamako, Kayes, Koulikoro, Sikasso, Ségou and Mopti) and to connect Mali with five of its seven neighbors, namely Burkina Faso, Côte d'Ivoire, Guinea, Senegal, and Mauritania (see 42 Mali Digital Economy Diagnostic ). The infrastructure installed was mainly built thanks to investments by SOTELMA and Orange Mali, and by an ISP, AFRIBONE. Three thousand two hundred km were also laid by the state (SMTD). As highlighted in figure 1.9, there is a significant level of redundancy between the backbones of Orange, Sotelma and SMTD. Private operators rely on the SMTD infrastructures to serve certain areas where it does not have the very high-speed infrastructure via an agreement or a service contract. The operators also use alternative technologies to fiber optic such as microwave links for their national transmission and/or redundancy needs, as well as VSAT/satellite links, which can affect the quality of service (QoS), but allow them to connect with isolated localities and secure existing fibre-optic links. Notably, SOTELMA has a network of VSAT collection points and also operates international satellite links in C band. SMTD also operates a VSAT system (with a hub in Bamako and about 50 connected sites). The other operators also have satellite security schemes for the routing of their electronic communications.78 The three operators and the SMTD operate metropolitan networks, consisting of fiber-optic and microwave infrastructures, enabling them to interconnect their urban points of presence and certain mobile transmission sites. Finally, an access network for the provision of intranet services to the public administration has been set up by AGETIC (see Box 1.1). Box 1.1. Government Telecommunications Network79 The Government of Mali made efforts to develop a dedicated and centrally managed government network equipped with IP technology and acceptable connectivity. The Administration’s Intranet Network (RIA) is a shared network across the Malian government that facilitates communication among public institutions. It is managed and operated by AGETIC. Over the last 15 years, AGETIC, in partnership with the private sector, has interconnected more than 500 state agencies. It has installed a base station in Bamako and in each regional capital except Ségou. The northern regions (Gao, Timbuktu, Kidal, Taoudéni, and Ménaka) are connected by satellite, while all the other regions are connected to the central site in Bamako by a dedicated link from SOTELMA. As a result, several MDAs were able to develop interconnections between their core back-office systems. The MaliREN Microwave-based Interconnection plans to offer services80 for the National Agency for Telemedicine and Medical Information (ANTIM), a Research Center for the fight against sickle cell disease, the AGETIC, and 14 public higher education institutions. SMTD also operates 4G sites used 78 Stratégie Nationale de l’Accès Universel au Mali, 2020. 79 National Strategy for Universal Access in Mali, 2020. 80 High-speed Internet, Innovation projects, Development Program, Domains' registrars, Consulting Services, Data Centers services, Training Network Services, Community building, Communication Services, Identity Management Institutional Applications, Security Services Data Management, Anti- spam filter, Web hosting, Mail Relay Email, Eduroam, and CSIRT services. 43 Mali Digital Economy Diagnostic by the Ministry of the Interior. Within the framework of the connection of the post offices (E-Post Project), a hub which was to serve as a connection of the post offices of Mali was installed at the AGETIC. However, many institutions remain unconnected, especially at the provincial (decentralized/deconcentrated) level, or the level of bandwidth provided is insufficient to cater to the growing needs. There are frequent downtimes, some lasting up to a few days. At present, the government struggles to assess the state of connectivity of public institutions, including schools, hospitals and health centers. The GoM has ambitious plans for the extension of the fiber-optic backbone, especially to connect Mali to its neighbors. In particular, the GoM launched the Mali Optical and Information Network Modernization Project in 2015 with a first phase of construction of fiber-optic networks in Bamako, as well as the deployment of national backbones on the Bamako-Sikasso-Ségou and Sikasso-Zégoua routes (915 km), built by Huawei. As part of the Digital Mali 2020 strategy, an intercity fiber-optic backbone was also constructed (with a total length of 817 km), combined with the installation of an urban GPON network and some 50 GPON terminals allowing interconnection of government institutions. This project was financed by a non-concessional loan agreement granted by the Export-Import Bank of China at the end of 2018 for US$174 million,81 carried out by the China International Telecommunication Construction Corporation (CITCC), and monitored and piloted by the SMTD. In addition, the Société de Gestion de l'Energie de Manantali (SOGEM) has received technical assistance for the implementation of a public-private partnership (PPP) for the resale of excess capacity available on its fiber-optic network. SOGEM announced in 2021 that it would lease its excess capacity to the Envol Technology/SONATEL consortium (Orange Sn Group). Apart from SOGEM, there are no other non- telecom network companies that can provide digital infrastructure. Despite these advances, the existing backbone remains insufficient to bridge the digital divide. In particular, a large number of “circles�(administrative unit below the region) and secondary administrative cities are still not connected (29 out of 57, and 130 out of 704, respectively). 82 Quality problems are also reported, especially on some sections of the SMTD backbone where the fiber has been laid in the ground, generating frequent outages. Significant investments are needed to support the extension of digital connectivity to all the circles and communes of the country. While the SMTD has been instrumental in advancing the deployment of the backbone, it faces significant challenges. Overall, since its creation, the SMTD has been faced with numerous financial and technical challenges, in particular the mobilization and diversification of resources, the reliability and optimization of the fiber-optic network, and the growing obsolescence of equipment, suggesting the need for a restructuring of the entity and associated reforms. The impassability of access roads to certain sites and regions of the country, travel difficulties linked to security constraints, and the lack of logistical means are a hindrance to the conduct of the SMTD's activities.83 1.2.3.3 Last Mile: End-user access Map 1.2. Distribution of Communes by BTS type 81 The size of the loan may seem surprising given: (i) the cost of building the fiber, which is about US$200 per meter, well above the usual range of US$1050 per meter; and (ii) the availability of funds from the Universal Service Fund, which stood at about CFAF 25 billion (US$42 million) at the end of 2018 (Xavier Decoster, World Bank, 2019). 82 Analysis by Claude Jacquelot, a consultant commissioned by the WB based on data from the AMRTP, 2021. 83 UNCTAD, 2020. 44 Mali Digital Economy Diagnostic Last mile coverage suffers from chronic underinvestment in rural areas. In addition to the 2G/3G/4G coverage of the operators, the SMTD operates a Code-Division Multiple Access (CDMA) network of about 30 sites. Two hundred forty-five out of 704 communes do not have a base transceiver station (BTS), and of those communes with BTS, 93 do not support HD (3G4G) transmission (see map 1.2).84 Regions in the north and central parts of the country are particularly underserved. However, the impact of 4G licenses and the renewal of 3G licenses has had a very significant effect: in 2016 only 65 communes had HD BTS (3G), compared to 366 (3G or 4G) in 2021.85 Orange has recently embarked on an ambitious plan to expand last mile access through satellite connectivity. 86 It has selected Intelsat to bring 3G and 4G connectivity to hard-to-reach areas in Mali. The agreement marks the first successful deployment of 4G networks over satellite in Francophone West Africa. Key constraints to connectivity expansion include: - Security challenges have hampered the development of infrastructure. The security of telecom operators has become a major concern in the North and Center of the country, and current insecurity disrupts not only the deployment of infrastructure but also its maintenance and therefore the quality of the networks. 87 Since 2018, Orange, Moov, and Sotelma have regularly suffered attacks. Destructive raids against installations (mostly telecom towers) have cost the country’s three main operators more than CFAF 1.8 billion (more than US$3 million) over the past three years.88 In some cases, residents are completely cut off for days and weeks at a time. In a context of great political instability and intensified attacks by jihadist groups in the Sahel strip, operators must redouble their efforts to guarantee the safety of their employees and protect their infrastructure. - Remote and rural areas suffer from persistent market failures from an economic point of view, that is, private operators do not consider investing in these areas due to low profitability. Telecom operators may be reluctant to expand their network in rural areas for fear of not being profitable enough due to high infrastructure deployment and maintenance costs, low levels of income, and weak consumer demand. - The availability and capacity of the infrastructure needed for ICT development, most notably electricity, are additional barriers to infrastructure deployment. Mali faces a serious energy access deficit, despite major improvements in recent years. Although access to electricity has doubled over the last decade, this still leaves only 25.6 percent of the country connected. In rural areas, this drops to just 11.9 percent, while just over one-half the population (50.4 percent) is connected in urban areas.89 The lack of a reliable power grid in rural areas increases deployment costs. Operators must provide their own 84 UNCTAD, 2020. 85 UNCTAD, 2020. 86 https://africanews.space/orange-mali-sa-selects-intelsat-for-3g-and-4g-connectivity/. 87 Most incidents targeting the infrastructure and employees of telecommunications companies are criminal and economically motivated. However, some incidents are orchestrated by terrorist organizations. Tragically, employees of the Huawei company in charge of laying fiber optics were shot in the Timbuktu region in December 2017 (Malijet, online article, December 11, 2017). In August 2021, for more than 10 days, people in the regions of Gao and Timbuktu were partially deprived of communication following disruptions linked to acts of vandalism against the technical installations of telephone operators Orange and Moov Africa Malitel. In January 2022, the Orange antenna in Barapireli (central Mali, near the Burkina Faso border) was blown up by a group of armed individuals on motorcycles, cutting off all telephone and internet access to the inhabitants. 88 https://www.jeuneafrique.com/1302722/economie/mali-burkina-comment-les-operateurs-telecoms-font-ils-face-a-la-menace-securitaire/. 89 Lighting Africa, 2021. 45 Mali Digital Economy Diagnostic energy solutions with either an oil-fired generator, the fuel for which can be diverted in transit, or a solar panel, which can be stolen. The lack of robust roads in parts of the country is another barrier. - Network sharing is limited. Despite the opportunities provided by the regulatory framework in terms of infrastructure sharing and mutualization,90 actual sharing of infrastructure is not significant enough to advance digital inclusion due to limited incentives. In particular, the lack of sharing of last mile transmission and distribution infrastructure forces existing players to focus their investments on their existing footprint, creating redundancies. Some level of sharing had been initiated between some operators, including Orange and Telecel, but stopped due to delays in payments from some of the involved parties. - The Universal Access Fund (UAF) has a critical role to play in expanding service coverage, but its performance is currently suboptimal. In recent years, the Agency for the Management of the Universal Access Fund (AGEFAU) has built universal access centers in 67 underserved areas and has equipped some priority localities with universal service (2G/3G) through 31 sites and a satellite hub. However, most of these infrastructures are not yet operational and/or used, due to the poor quality of infrastructure, poor project management by certain service providers contracted, and the installation of centers in low-density populated areas without a previous socioeconomic study to support the relevance of the investments.91 In addition, it has installed 100 WiFi Cases providing IT centers in public schools, established the Virtual University of Mali project providing distance learning, and constructed three universal access centers.92 However, despite the significant resources available to the UAF (operators holding a license to operate telecommunications/ICT networks and services open to the public must contribute 2 percent of their revenues net of interconnection charges to the fund), disbursements remain low for rural connectivity projects. In 2019 (latest data available), XOF 24.1 billion (approximately US$45 million) in revenue was mobilized. In contrast, a large portion of these funds were not used. Expenditures amounted to CFAF 2.5 billion (approximately US$4.7 million) against a forecast of XOF 20.7 billion (approximately US$38.9 million)—a low 12 percent execution rate, when funds are badly needed to help the private sector expand digital access and adoption in rural areas.93 The capacity to monitor and evaluate the fund’s activities is insufficient, and there is little public information available on the management of the UAF by AGEFAU, which has yet to publish an annual report, and there is a lack of transparency regarding the allocation of funds. 1.2.3.4 Invisible Mile Enabling environment Mali has progressively reformed the telecommunications sector since 1998. The legal and regulatory framework has improved and become relatively conducive to the establishment of an ICT market. In 2011, the government issued two new decrees: Decree 2011-023/P-RM governing the general conditions for operating telecommunications and ICT services, and Ordinance 2011-024/P-RM on the regulation of the telecommunications sector, which made significant improvements to the existing framework. Further, Law 2017-015 of 2017 promoted liberalization and increased competition with greater autonomy for the regulator, AMRTP. These elements have allowed Mali to progress on key international regulatory indices. For instance, according to the 2019 ITU Regulatory Tracker, Mali ranks 91 out of 194 countries, and is among 17 countries 90 Decree N°2011-0872/P-RM on the sharing of passive infrastructure and Decree N°2016-0975/P-RM determining the procedure and modalities for the interconnection of telecommunication/ICT networks. 91 Analysis shared by AGEFAU. 92 For the National Federation of Artisans of Mali, the Aoua Kéita center, and the Maison des Jeunes. 93 Information reported at the 5th session of the Board of Directors for the year 2021. https://afrimag.net/mali-lagefau-vote-budget-milliards-fcfa/. 46 Mali Digital Economy Diagnostic in SSA where telecom regulations are considered to have evolved to the level of Third Generation94 as they support investment, innovation, and access.95 However, based on the Regulatory Watch Initiative (RWI) and additional analyses, significant gaps remain in the regulatory framework for the telecom sector.96 - The regulator's ability to regulate wholesale rates has so far been limited, although there has been a marked improvement since 2020. As described above, the AMRTP has the regulatory authority to regulate prohibitive wholesale rates. AMRTP undertook an analysis of the relevant markets in 2014 and concluded that Orange and SOTELMA had significant market power (SMP) in the market for international and domestic bandwidth, including leased line terminating segments and long-distance segments as well as wholesale broadband internet access. This analysis was repeated in 2017 with similar results. Yet, the regulator has not exhausted regulatory mechanisms for reducing wholesale prices. The regulatory framework requires operators identified as having SMP to provide reference and access offers, but these reference offers are not published on the regulator's website (operators are, however, required to publish these offers on their websites). Following a formal complaint from ISPs in 2018, AMRTP then launched a study to estimate the cost elements of operators’ current wholesale internet and leased line offerings. This study showed that rates could be seriously revised downwards, and as a result, the regulator issued a decision in 2020 to frame wholesale rates (initially providing for a rate decrease of around 80 percent, eventually revised to around 50 percent, after pressure from operators). Despite this decrease, wholesale rates remain excessive, as noted above. - The licensing regime, while relatively flexible and compatible with the regional framework, is complex and can hinder market entry for new players. There are three regimes for the provision of telecommunications services: (i) the global license, necessary for telephony (including internet), granted after a bidding process; (ii) the general authorization issued by AMRTP, sufficient for the establishment or operation of independent networks and the use of scarce resources such as frequencies or numbering; and (iii) the declaration regime issued by AMRTP, which is mandatory for the provision of value-added services, the provision of internet access services (excluding voice traffic), and the resale of telecommunications services (excluding voice services). However, the extensive application of the licensing regime could hinder the emergence of alternative operators or niche players independent of vertically integrated national operators. - The legal and regulatory framework is not sufficiently complete to allow the entry of new entrants and innovation. This particularly concerns infrastructure operators, towercos, or Mobile Virtual Network Operators (MVNOs), for which the legal framework is not defined. Likewise, there is no special provision for over-the-top (OTT) services. - Spectrum availability is still too low to allow large-scale deployment of mobile broadband. The country lags its SSA counterparts in terms of 13Ghz spectrum allocation. The cost of spectrum is also high. A 2020 GSMA study revealed that Mali is among the 10 least affordable African markets for the annual cost of 480 MHz of spectrum as a percentage of market revenue.97 The national frequency plan is also not available on the regulator's website. In addition, emerging evidence suggests that instead of progressing through cellular generations sequentially, it might be more cost-efficient to ‘leapfrog’ to providing 4G or 5G connectivity. As more spectrally efficient technologies become available, the cost per bit provided decreases, as fewer sites are required for newer generations relative to older ones 94 The Tracker tracks countries’ progress from “first-generation�(G1) regulation, whereby regulated public monopolies take a command-and-control approach, to “fifth-generation�(G5) regulation whereby different regulatory agencies are collaborating with a wide variety of stakeholders to form a harmonized approach across sectors now dependent on ICTs. (G3) countries are countries that are making steady progress in strengthening policy and regulatory frameworks but are enabled to unlock the full potential of ICT markets. 95 https://app.gen5.digital/tracker/metrics?_ga=2.23157690.1279061594.1647427201- 1804794283.1647427201&_gl=1*5tkbqd*_ga*MTgwNDc5NDI4My4xNjQ3NDI3MjAx*_ga_27GW57NRWK*MTY0NzQyNzIwMS4xLjEuMTY0NzQyNz IxNS4w. 96 Based on author’s analysis and Mali profile of the Regulatory Watch Initiative (RWI), W orld Bank, ECOWAS ICT Regulatory Watch, 2019. 97 GSMA, Efficient Spectrum Pricing in Africa, 2020. 47 Mali Digital Economy Diagnostic (e.g., 5G relative to 3G).98 This would need to be reflected in spectrum planning and management as operators will need different bands. - Data on the sector remains scarce, limiting the visibility of players and an effective decision-making. A data observatory has been placed under the AMRTP. However, on the regulator's website, most of the data are only available up to 2017, and some data have not been updated since 2014.99 AMRTP plans to develop infrastructure mapping, based on regular and enriched updating. - Monitoring and controlling of the QoS is insufficient. In recent years, the AMRTP has been better positioned and has new equipment to monitor network quality. The AMRTP also follows up on complaints, although a system of sanctions has not yet been put in place. However, the lack of information on the performance of sector actors makes it difficult to assess performance. The regulator launched a tool for measuring the quality of service of mobile operators in February 2022 to better diagnose network problems. Lastly, recent developments point to issues of political interference. The sentencing in November 2021 of Orange and Moov to pay some FCFA 177 billion (around US$300 million) to a consumer association for the “crime� of billing their customers for answering machines seems to be based on a flawed legal basis and may have been politically motivated.100 The astronomical amount could mean bankruptcy for the two major cell phone operators. At a minimum, this case risks breaking the investment momentum of the two telephone operators, who promised to invest nearly FCFA 100 billion per year to improve the quality of their networks. IXPs, Data Centers, and Cloud Environment High-speed, cost-effective data services require the development of domestic data infrastructure that allows local storage, processing, and exchange of data so that data need not travel through distant overseas facilities. Mali inaugurated an Internet Exchange Point (IXP) in 2018. This allows national operators and ISPs to exchange traffic locally through mutual peering agreements, thereby offloading the international bandwidth. Mali is the second landlocked country in the subregion to have an IXP after Burkina Faso in 2015. With five participants (MALITEL, Orange, Telecel, Afribone, and SMTD), the IXP is temporarily housed within AMRTP and has a traffic volume of about 500 Mbps,101 but there is little information on the impact of the IXP at this stage. Developing local content and having Google, Apple, Facebook, Amazon (GAFA) caches at the point of exchange would boost the usage of the IXP. Mali also possesses several data centers, the main ones in terms of numbers of websites hosted being those of Orange Mali, Afribone, and Malitel.102 SMTD also has a data center, which was built to host the public administration data and all the critical government platforms and increase public services security levels including IT disaster recovery arrangements. It offers several services, including colocation services consisting of hosting IT equipment (servers, storage, network, and security), as well as dedicated servers on a private basis. Several Malian agencies have also implemented their own data center projects, including the IT unit of the MEF (CAISFF) for backing up MEF’s servers and applications, the National Civil Status Center (CTDEC) for hosting population registry (NINA) data, and the Ministry of Higher Education for the storage of data from four public universities (see chapter on Digital Public Platforms for more information). Despite a proclivity toward physical data hosting, the cloud industry in Mali is growing rapidly, with a number of international groups with a cloud computing consulting practice covering Mali, large or mid-sized domestic consulting companies, or Mali–based boutique and niche consultancies that are specialized in cloud computing consulting and implementation services. 98 An important caveat, however, is that to benefit from this more advanced connectivity, users would need to have 4G- or 5G-enabled smartphones, the affordability of which remains a significant adoption barrier. 99 The data are currently being updated, with support from the World Bank. 100 https://www.maliweb.net/economie/telecom/revelations-dans-laffaire-de-condamnation-dorange-mali-et-moov-africa-malitel-a-payer-177- milliards-fcfa-au-remacotem-lex-dg-de-lamrtp-dans-lembarras-choguel-contre-choguel-2967317.html. 101 AMRTP. 102 The Orange Mali data centers host 298 websites, Afribone 85, Malitel 55, SMTD 3, and Atel 1. Source: https://ipinfo.io/countries/ml. June 2022. 48 Mali Digital Economy Diagnostic Autonomous System Numbers (ASN) and IP v4-6 The digital transformation of economic actors in Mali is not yet well underway. While the number of ASN— which are needed by an operator to control routing within their networks as well as exchange routing information with other network operators—increased from 3 to 7 between 2018 and 2021,103 no economic actor other than operators, ISPs, and SMTD have an ASN and hence have started their digital transformation. 92,216 IPv4 addresses are allocated to Mali, while 75,520 are associated with ASNs. This means that economic actors are mostly exclusively linked to the IPv4 addresses of operators and ISPs, which poses problems of routing, confidentiality, and cybersecurity. SOTELMA with 7,680 IPv4 addresses is most likely not able to control the growth of digital services as there are no more IPv4 addresses available in AFRINIC. The exhaustion of IP addresses of version 4 makes migration to Ipv6 urgent, but quite worryingly, only SOTELMA and Afribone have undertaken IPv6 migration, which in the short term will pose problems in terms of international connectivity and hardware compatibility. The effeteness of the addresses pool in the IPv4 protocol, and simultaneously, the practically unlimited addressing capabilities of the IPv6 protocol and its new functionalities make the transition from IPv4 to IPv6 necessary for Mali if it wants to fully enter the digital area. 1.3 RECOMMENDATIONS As the digital usage gap in Mali is higher than the coverage gap, policies and interventions should first focus on easing demand-side barriers and increasing the uptake of digital services in places already covered by broadband networks. In particular, this implies that the GoM, during the first phase of interventions, should provide a stronger enabling environment to help make broadband internet more affordable and of better quality. This will need to go hand in hand with targeted initiatives to stimulate the adoption and productive use of digital technologies and expand associated socioeconomic benefits. However, care must also be taken to ensure that no one is left behind, so that digital transformation does not reinforce or exacerbate existing exclusion or inequalities, which are important factors of fragility. A stronger enabling environment, as envisaged in the first phase of interventions, will help stimulate private sector investment in favor of wider access in rural areas, while increased demand will create the necessary market incentives for further network rollout. However, beyond this, in the medium term, the GoM will need to support investment in areas where market failures persist. In the case of Mali, this also raises the question of how to ensure infrastructure security in areas with a fragile security context. A combination of these reforms and interventions is needed to improve the accessibility of digital technologies for the greatest number of people in Mali, particularly in rural areas and for the most vulnerable populations. Intervention area A: Create a better enabling environment to increase affordability and quality of services and foster private sector investment R1 [Quick win]. Strengthen the AMRTP’s implementation of the legal and regulatory framework in the following areas: • (i) Fully implementing the electronic communications framework of the West African Economic and Monetary Union (WAEMU) and the Economic Community of West Africa States (ECOWAS). Emphasis should notably be placed on how to allow the entry of new entrants/innovative players, e.g., through a review of the licensing framework in order to provide competitive, flexible and consistent licenses/authorizations and lower barriers to entry (see Box ) or through the implementation of liberal and dynamic spectrum management policies to give additional means to alternative operators for increased deployment in rural areas and to bring down rural deployment costs. The legal and 103 https://bgp.he.net/. 49 Mali Digital Economy Diagnostic regulatory framework should also enable testing and deployment of emerging technologies, such as low-cost satellite deployment, in order to expand connectivity even in rural areas characterized by security constraints. • (ii) Strengthening wholesale and retail regulation, with a focus on SMPand wholesale tariff regulation. At the wholesale level, this includes updating AMRTP’s analysis of the relevant markets in order to determine any significant market power, setting up an observatory of wholesale and retail internet and leased line tariffs in order to assess the existence of price squeezes, requiring that the reference offers of operators for access to national and international capacity be published, and then implementing appropriate remedies when rates are not aligned with costs, such as imposing changes to interconnection and access offers, or asymmetric regulation to counter significant market power. At the retail level, this means implementing mechanisms to boost competition, which could include assessing number portability and local loop unbundling. • (iii) Enhancing QoS monitoring in order to improve the quality of services. • (iv) Promoting the pooling and sharing of infrastructure to lower deployment costs across the technical value chain. It could be useful to study the possibilities of sharing agreements at the level of passive and active layers of the last mile, and the possibility of developing towercos and infracos in the country. Similarly, rights of way and exploitation rights could be strengthened to facilitate the deployment of infrastructure in the country. • (iv) Accelerating IP v6 migration as the number of IP v4 addresses is very low and not able to support broadband access growth. • (v) Licensing SMTD as an infrastructure operator, clarifying its specifications, upgrading the governance/business model for the operation of the SMTD backbone through a public-private partnership (PPP), and ensuring that the new SMTD capacity is made available to all telecom operators in Mali at affordable prices that reflect costs. Box 1.2. Closing Digital Infrastructure Gaps in Mali To encourage investment across the value chain and close remaining digital gaps, Mali would benefit from the entry of the following innovative players: - In the first mile, pan-African power grid operators, such as SOGEM, that could market their excess capacity on their fiber optic ground wire and thus provide additional capacity on cross-border routes. - In the middle mile, “operators of operators� investing in national or metropolitan fiber networks and then providing connectivity on the wholesale market to retail operators. - In the last mile, “towercos,� providers deploying “micro sites�(sometimes called “micro-bits�or “micro-RAN�) in rural areas at their own expense, and then “renting�connectivity to these sites from traditional telecom operators (through a local roaming contract), as well as Telecom Energy Service Companies (TESCOs), that can tackle the dual problem of limited power access and connectivity in rural areas. These initiatives are emerging on the continent to reduce capital expenditure (CAPEX) and maintenance (OPEX) in order to cover rural areas. A study by the GSMA and Roland Berger commissioned by the International Finance Corporation (IFC) recently confirmed that Mali is an attractive market for TESCOs due to its size. Likewise, low-cost satellite deployment is showing increasingly promising results, and would be particularly adapted to Mali’s security conditions. Additional examples and learnings can be found in the report Innovative Business Models for Expanding Fiber-Optic Networks and Closing the Access Gaps.104 R2 [Quick win]. Operationalize the ICT market observatory as a prerequisite for effective regulation. This would include developing an ICT services price index and models for analyzing pricing structures and significant market power, as well as regularly updating geographic information system (GIS) infrastructure and service coverage maps. 104https://openknowledge.worldbank.org/bitstream/handle/10986/31072/132845-7-12-2018-17-20-11- InnovativeBusinessModels.pdf?sequence=1&isAllowed=y. 50 Mali Digital Economy Diagnostic R3 [Quick win]. Strengthen the transparency and governance of the universal service fund (AGEFAU) to ensure faster disbursements for rural connectivity projects and more effective use of public resources. This would include increased transparency on financial statements and appropriate accountability procedures for managing, reporting, and allocating UAF funds, and program management capacity building to address delays in project implementation, as well as stronger incentives for operators to participate in the development of UAF projects, including through “pay or play� mechanisms whereby operators expand coverage commitments in lieu of making contributions to the fund. Overall, with evidence that many UAFs in Africa remain inactive or have limited activity, the following key principles must be adopted for a universal service fund to succeed – all the more in fragile contexts such as Mali: good governance, alignment with the national regulatory and policy framework, technological neutrality in project design and implementation, and a focus on market orientation and sustainability. Intervention area B: Address demand-side barriers that hamper greater access to and demand for digital tools and services R4 [High priority]. Design and implement targeted interventions to increase service and device affordability. Interventions should focus on: • (i) Improving the affordability of 3G+ compatible smart devices (smartphones, tablets, and computers, depending on the target beneficiaries) critical to connecting more users to broadband. This could be achieved through reviewing terminal taxation policies, targeted subsidies for lowest-income households or target groups such as students, low-cost smartphones with cheap up–front costs for consumers, and as the financial market will progressively mature, market-based approaches such as low- or zero-interest loans for handset purchase, including a pay-as-you-go financing model for smartphones, etc. • (ii) Improving the affordability of data, for example, by providing special data bundles for use on e- commerce platforms and zero-rating for some public digital services (e.g., online learning platforms). R5 [High priority]. Increase awareness of digital dividends and expand public access and digital literacy. Digital adoption requires knowledge about how to access digital technology and how to best use it. Large campaigns could be rolled out to raise awareness of the benefits of digital technologies and enhance digital literacy, which are needed to enable basic usage of smart mobile devices and digital applications. Instruments such as the UAF can also support adoption through provision of local community access points/public Wi-Fi spots with complementary education/training programs for the local population, and other initiatives encouraging access to internet services in educational institutions, libraries, or other points of community interest. Likewise, post offices could be used for the deployment of access centers to offer citizens accessible multimedia services at a reasonable cost. The development of the other pillars of the digital economy will also be critical to fostering the adoption and productive use of digital technologies in order for Mali to gain the critical mass of internet subscribers needed to build its digital ecosystem and kickstart its digital transformation, as is further described in the rest of this report. Related recommendations, such as developing a local content ecosystem, developing digital businesses able to deploy relevant digital services, incentivizing more complex use cases for connectivity such as e-commerce platforms, expanding access to digital finance, incorporating ICT skills into the education curriculum for all age groups, and accelerating digital skills and entrepreneurship initiatives outside the education system, will also be crucial to boost usage. Intervention area C: Stimulate investment in digital infrastructure R6 [High priority]. Establish a virtual landing point (VLP), accompanied by adequate governance and a mechanism to control tariffs, in order to develop international connectivity and improve affordability of 51 Mali Digital Economy Diagnostic services. A VLP would allow economic actors (operators, ISPs, SMTD, etc.) to purchase international bandwidth by pooling together in order to have competitive prices that would allow them to significantly reduce costs and offer consumers economically reasonable offers. Many actors would have an interest in being customers of the VLP, including ISPs and government institutions, as this would allow them to be autonomous from the wholesale offerings of Orange and SOTELMA. The implementation of a VLP must include the establishment of an adequate governance and management structure, followed by the launch of effective tenders for the acquisition of international bandwidth capacity. R7 [Long term]. Extend digital connectivity in “uncovered unprofitable areas,� with due consideration for ensuring infrastructure security in fragile areas. This should be done through: • The use of the UAF to expand rural coverage on the basis of catalytic public subsidies and the search for innovative PPPs. Following the reforms to AGEFAU (see above), the institution should accelerate disbursements for rural connectivity by launching open, transparent, and nondiscriminatory tenders for the extension of digital infrastructure based on open access principles. This could be based on PPP frameworks with the competitive allocation of subsidies to private operators through “least cost subsidy auction�bidding processes to subsidize private deployments of digital infrastructure in unprofitable rural and remote areas, on the basis of open access to all other market players. Public funding should address areas where there is a persistent market failure for economic reasons. • Demand aggregation/bulk purchase agreements for key user groups (e.g., government offices, other public institutions) to incentivize private sector deployment of networks, particularly in rural areas. This incentivization arrangement would help de-risk private sector operator infrastructure investments in less commercially viable areas by guaranteeing demand for broadband services for a specified period, with the government acting as an anchor tenant. This could be done through pooling connectivity needs of public service providers, for example health institutions, schools, and universities, hence also improving public access to connectivity. While doing so, the operational risks and challenges impacting the deployment and maintenance of digital infrastructure in fragile areas characterized by security issues should be assessed. Lessons from other contexts on how to make digital infrastructure resilient to insecurity highlight the need to adopt agile approaches and technological solutions to mitigate these identified risks, such as the use of satellites. Attention should also be placed on off-grid power needs to feed telecom towers in rural areas, for example, through joint government tenders in the field of telecommunications and electricity to address the lack of a reliable electricity grid in rural areas and/or increased support to operators willing to develop their own energy solutions with solar panels. 52 Mali Digital Economy Diagnostic FOCUS 1: FRAGILITY & DIGITAL Mali is a fragile country and conflict-affected state.105 The North of Mali—in particular the Kidal region—has progressively become a nerve center of violent extremism in the Sahel, from where attacks are planned in Central and Southern Mali, in various parts of Burkina Faso, in Niger, and other West African countries. Central Mali has become the epicenter of violence in Mali, under the dual influence of violent extremist groups and the deterioration of relations between communities. These two dynamics feed each other. On the one hand, the aggravation of these community tensions promotes protection and self-defense dynamics, with a search for support either from violent extremist groups or from the state. On the other hand, the growth of violent extremism feeds the commitment of self-defense groups to the fight against terrorism and exacerbates community violence, culminating in mass killings in 2019. In such a fragile context, digital transformation can be used to tackle drivers of fragility. One key fragility driver identified in Mali is the high perception of inequality, marginalization, and exclusion from resources and opportunities for large parts of the population. Digital skills training, expansion of digital financial services in rural areas and other interventions to foster digital inclusion, focusing on the integration of youth,106 women, and vulnerable groups, can help develop human capital in an equitable way, foster social inclusion, and create the conditions for inclusive economic development. Another fragility driver is the perceptions of stark regional disparities in public service delivery and the crisis of trust in state institutions. Digital technologies offer innovative solutions to deliver critical services more inclusively, for example, through telemedicine and online learning, and can help improve the effectiveness, transparency and accountability of government. They can also help bring critical services closer to citizens through decentralization. This will in turn help restore trust, which is central to rebuilding the social contract. Finally, in response to a lack of inclusiveness in political life, digital tools can offer opportunities to support Malians’ engagement and participation, by providing the platforms and channels through which citizens can provide feedback on their concerns to those in power. Over the medium term, digital tools and technologies, combined with an increasing reliance on digital platforms, could support Mali’s transition from fragility to stability.107 They can be used to support monitoring and information gathering, provide early warning of potential trouble, coordinate and monitor government and donor activities, facilitate relief efforts, and spread information campaigns that challenge prevailing conflict narratives and instead encourage national integration. They can help sustain conflict transformation by enhancing channels and possibilities for communication, as has been done with the Info-Share platform in Sri Lanka, which supports the creation of “shared spaces� in the public and private media to help cross the ethnic and political divides in the country. More broadly, connectivity and digital technologies can act as catalysts for reducing poverty and promoting inclusive economic and social development in Mali, by growing and integrating economies and connecting at-risk populations, which will make the propagation or return to violence less likely. Digital tools and technologies are also critical to help build Mali’s resilience. Given the number of poor, conflict, and displacement-affected populations in Mali, advancing social protection is of paramount importance, and technology can support the strengthening of the Adaptive Social Protection (ASP) program in Mali. Digital tools, 105 Risk and Resilience Assessment, World Bank, 2020. 106 Young people are often excluded from the benefits of the country’s resource wealth in the form of employment or improved basic services. Without connections and access to credit and technical know-how, they have little hope of forging an entrepreneurial path. They may become vulnerable to recruitment into criminal gangs or extremist groups or operating in the illicit economy. By focusing on their digital and social integration, the project will reduce risks of radicalization. 107 United Nations and World Bank. 2018. Pathways for Peace: Inclusive Approaches to Preventing Violent Conflict. Washington DC. 53 Mali Digital Economy Diagnostic such as mobile payments, can help make social protection systems more agile and shock responsive, both in terms of increasing household resilience prior to a crisis and in protecting household well-being after a shock. Likewise, mobile money is a suitable option for reducing the transport of cash, which is particularly relevant in conflict-affected regions, and acts as a coping mechanism in case of shocks, as households can more easily receive remittances or cash transfers. The case of Somalia is a good example of the role that mobile money can play in a fragile country to increase financial inclusion and build greater resilience to shocks. Humanitarian response to the 2016/17 drought largely used mobile money to transfer cash to those most affected, channeling key resources and income and supporting critical purchases, thereby helping people to be less acutely affected by the drought.108 However, the introduction of digital technologies in Mali also entails significant implementation challenges. As noted in the Digital Infrastructure chapter, security issues create risks to digital infrastructure, with frequent destruction of equipment and infrastructure. Cutting off communications allows extremist groups to carry out raids undetected, distort the economy and reduce the ability of people to contact others and to receive or transfer money. Operators must recruit private security companies or work with the army that provides security for sites deemed critical. A proactive national approach to deploying digital infrastructure in fragile areas must thus be developed to (i) mitigate the risks and decrease the operational challenges impacting the deployment and maintenance of digital infrastructure, and (ii) identify possible technological solutions that could be used in Mali in volatile environments, such as satellites. Similarly, public sector bodies, operators of critical infrastructure, and other businesses or organizations can be subject to various cyberthreats, which can cause significant disruptions to public service delivery and/or interrupt business operations. Mali thus needs to establish relevant context-specific security or regulatory measures to cope with these threats and protect its digital assets. Moreover, digital technologies in Mali may create new fragility risks, which also need to be carefully mitigated. Indeed, as Mali contends with low social cohesion, political and economic instability, and a frayed social contract between citizens and the state, the introduction and uptake of information and communication technologies (ICTs) may have harmful consequences that increase vulnerability and exacerbate crises. First, uneven access to and capacity to use ICTs can reinforce existing social inequalities or create new ones. During the World Summit on the Information Society held in Geneva in 2013, the Geneva Declaration of Principles and Plan of Action was adopted, acknowledging the risk of a growing “digital divide� between those who can use digital technologies and those who cannot, which could create a new class of “digital poor� and exacerbate rather than reduce inequalities and social divides within countries, and in turn increase tensions in local communities. Second, women’s access to, and use of, digital technologies can challenge gender-based power relations. In some settings, this has provoked a backlash, including in ways that increase women and girls’ insecurity and subordination.109 Third, social media can also fuel tensions and conflict, as it can create echo chambers that further polarize groups and spread fear- and shock-inducing information, regardless of its truth, which may drive perceptions of threat and related pre-emptive intergroup violence, and reinforce biases. Further, social media can easily be appropriated by those who are hostile to reconstruction and reconciliation and act as spoilers in a peace process. Elite and others seeking power can use these tools to organize for purposes of political manipulation, weaponization of information, disinformation and information warfare, partisan propaganda, and even recruitment and violence. One study concluded that in Africa, “the availability of cell phone coverage significantly and substantially increases the probability of violent conflict.�110 The speed with which digital communications disseminate content further elevates the potential impact of these communications, especially in already fragile contexts. In Myanmar for instance, Facebook was used to spread 108 Mobile Money Ecosystem Survey in Somalia, WB, 2019. 109 Digital development and the digital gender gap, Herbert, 2017. 110 Jan H. Pierskalla, and Florian M. Hollenbach. Technology and Collective Action: The Effect of Cell Phone Coverage on Political Violence in Africa; The American Political Science Review. 54 Mali Digital Economy Diagnostic hate speech and misinformation/disinformation about the Rohingyas, contributing to violent sectarian tensions. The promotion of digital technologies in Mali thus needs to navigate the complexity of fragility, conflict, and violence dynamics to ensure that the many opportunities emerging as a result of digitalization can be captured, and that associated risks are appropriately mitigated. Digital interventions in Mali should thus consider how to best serve vulnerable populations and reduce inequalities between groups in underserved areas. This could be done by (i) ensuring that the needs and voices of vulnerable people are heard through inclusive participation and community engagement in the design of interventions; (ii) taking into account personal, dispositional, generational, and cultural variables that may influence participation on the part of vulnerable people in order to better design digital inclusion schemes; (iii) balancing more or less advanced digital modes of delivery with face-to-face modes of delivery (e.g., blended learning environments for EdTech, digital services that can be accessed through the web, but also other channels such as USSD, Interactive Voice Response, etc.) so as not to exclude socially disadvantaged groups who lack digital skills; and (iv) designing digital inclusion schemes around use cases that specifically address the needs of low-income and marginalized groups. Lastly, there is also a need to monitor opportunities for citizen engagement through digital tools in fragile environments to ensure that they are inclusive and do not become vehicles for advocating renewed conflict. 55 Mali Digital Economy Diagnostic CHAPTER 2 DIGITAL PUBLIC PLATFORMS Key messages: � Mali lacks many of the building blocks needed to implement a whole-of-government approach to develop digital public services. Such deficiencies hugely contribute to fragmentation of efforts in digital government projects and achievements. � Many digital initiatives in the Malian public administration have so far been implemented at the sectoral level, by individual ministries, leading to a weak use of shared systems, integrated services and common standards. � Mali lacks many enablers needed to develop digital public platforms. These include an enabling strategic and regulatory environment, virtual and physical enablers, as well as market and behavioral enablers. Key among them—a centralized digital ID, affordable connectivity, interoperability, data governance, cybersecurity, and wide digital literacy to ensure universal access. 2.1 IMPORTANCE OF DIGITAL PUBLIC PLATFORMS This chapter covers digital public platforms offered by the government and public institutions that have the potential to transform the way the public sector provides its services, and interacts with people, businesses, and civil society. Digital platforms developed for the public sector can modernize administrations’ functioning, connect people and things, as well as facilitate digital transactions (see Figure ). Digital public platforms, built on interoperable systems and following a once-only principle of digital government service delivery, can leverage shared services that have the potential to revolutionize governments’ internal processes and government-to-government (G2G), government-to-people (G2P) and government-to-business (G2B) services for better outcomes to people, institutions and businesses. These platforms are heavily dependent on ID systems, trust services, secured data exchange, and shared repositories, to increase transparency, reduce leakage and fraud, and ensure intended beneficiaries’ or suppliers’ access to relevant public services. 56 Mali Digital Economy Diagnostic Figure 2.1. Role of the Digital Public Platform Pillar in the Digital Economy at the National and Regional Levels 2.2 DIAGNOSTIC FINDINGS: CURRENT STATE OF DIGITAL PUBLIC PLATFORMS 2.2.1 Strategies, Policy, and Institutional Framework 2.2.1.1 Policy Underpinnings Weak interministerial coordination on digital government initiatives has resulted in fragmented and siloed approaches to the design and implementation of digital policies, as well as the delivery of digital public services and platforms. Today, there is currently no overarching roadmap or government enterprise architecture to enable the implementation of a whole-of-government approach, or to encourage investment in core shared infrastructure and services that can support transactional and integrated digital services 57 Mali Digital Economy Diagnostic development. Several sectoral digital initiatives developed information systems or applications to automate their own processes without complying to national technical standards. However, the lack of synergy and adequate coordination between minsitries, departments, and agencies (MDAs) has caused digital solutions fragmentation, cost inefficiencies and data registers multiplication. For example, the Ministries of Territorial Administration and Decentralization (MATD), of Economy and Finance (MEF) and of Health have developed their own digital transformation plans in silo. To address this issue, the Institutional Development Commission (CDI) proposes the elaboration of a national IT master plan (“Schéma Directeur de l’Informatique de l’État�), but this activity has been in the pipeline since 2020 and has received little interest from other digital stakeholders. 58 Mali Digital Economy Diagnostic Table 2.1. Current State of Digital Public Platforms Core Indicators: Current Status Previous Status Benchmark (latest ranking available) Digital Public Year Rank Year Rank Ghana Senegal Togo Mauritius Platforms E-government 2020 171 2018 178 101 150 147 63 ranking (and (0.3097) (0.3214) (0.5960) (0.4210) (0.4302) (0.7196) score) in global survey (United Nations, 2020) E-participation 2020 155 2018 159 82 126 106 80 ranking (and (0.2424) (0.2416) (0.6310) (0.4405) (0.5119) (0.6429) score) in global survey (United Nations, 2020) Corruption 2021 136 2018 120 73 70 128 49 Perceptions (29/100) (32/100) (43/100) (44/100) (30/100) (54/100) Index (Transparency International, 2021) GovTech 2021 Group C NA NA Group B Group C Group C Group B Maturity (Medium: (High: (Medium: (Medium: (High: Index111 (World some significant some some significant Bank, 2021) focus on focus on focus on focus on focus on GovTech) GovTech) GovTech) GovTech) GovTech) In this context, Mali is left with a dismal 171 ranking on the 2020 UN e-Government Development Index (EGDI) (see Table ). Mali’s composite score is well behind Sub-Saharan Africa (SSA) leaders such as Mauritius (ranking 63) but also behind most of its peers, such as Togo (147) and Senegal (150). Mali is banded into the Group C of the GovTech Maturity Index (2021), indicating a medium-level focus on GovTech as the Government of Mali (GoM) has made efforts to integrate digital practices within the public sector. While Mali’s ranking on e - government and e-participation improved from 2018 to 2020, its ranking on the Corruption Perceptions Index declined from 120 in 2018 to 136 in 2021. 2.2.1.2 Digital Identification and Trust Services Mali’s digital transformation requires secure and inclusive ways to ensure that the onli ne identity system is trusted by government and private sector providers—however, existing legal ID systems require reforms to be able to serve as a foundation for digital service delivery. Although trusted digital ID is grounded in people’s real-world identities, the legal ID landscape in Mali needed to underpin digital ID remains fragmented across multiple ID systems (see Box ) at varying levels of maturity. Past reforms have attempted to improve coherence among these systems and reduce duplicative investments by employing the National Identification Number, or NINA, as the main identifier used on the main legal ID credentials, such as the national ID card and birth certificate, to ensure uniqueness. While the NINA offers a robust unique identifier assuring using automated biometric deduplication, currently only 76.8 percent of the Malian population have a NINA. In addition to limited coverage, the legal ID landscape in Mali is also hampered by a lack of digital ID authentication 111The GovTech Maturity Index: The State of Public Sector Digital Transformation, was published in September 2021. It examines the progress of public sector digital transformation in 198 economies. Using 48 key indicators to measure digital transformation across four key areas —core government systems; public service delivery; citizen engagement; and GovTech enablers—each country is banded into one of four categories based on its average score, from A (GovTech leaders) to D (minimal focus on GovTech). 59 Mali Digital Economy Diagnostic functionality to facilitate access to services and inadequate interoperability with other government databases to facilitate secured data exchange.112 The paper-based records of the civil registry and lack of systematic backup copies, as well as the weak institutional capacity and disaster recovery arrangements for the digitalized NINA system, also make these systems vulnerable to physical and cyberattacks, data breaches, and destruction from conflict or natural disasters, putting people’s data and critical public assets at risk. The Malian government has a range of planned projects and reforms to extend and improve the legal ID ecosystem, including the use of the NINA as a general unique identifier, plans to mainstream its inclusion on all government identification documents, and on delayed birth certificates issued to adults using the supplementary judgment procedure. Efforts to develop ID systems that are hard to counterfeit and allow verification of users’ identity are important to fostering trust in the transactions undertaken both in person and online. Box 2.1. Specific Legal ID Systems in Mali and Reforms Currently Envisioned The specific legal ID systems in Mali are the civil registration system, the national ID card system, and the NINA system. • Civil registry. Civil registration (CR) is principally paper-based and decentralized in its current form. It is not possible to build digital links between it and other legal ID systems, limiting its functionality and ability to underpin and expand access to other ID credentials that can be used to access services. To obtain a birth certificate, it is necessary for the individual to make such a request from the competent civil registration officer (usually the mayor) at their place of birth. Furthermore, due to the ongoing conflict, the CR system is particularly vulnerable since CR archives are specifically targeted for destruction by militants due to the perception that birth registration may be contrary to certain interpretations of Islamic law. 113 In 2018, the government adopted a national civil registration strategy aiming to overcome many challenges, but despite support from partners, there remains a large financing gap for its implementation. The CR system is managed jointly by local governments and the Ministry of Territorial Administration and Decentralization (MATD) and has achieved a high birth registration rate of 87 percent (compared to the SSA average of 43 percent).114 • National ID card. The national ID card (carte nationale d’identité, CNI), managed by the Ministry of Security and Civil Protection (MSPC), is a paper-based booklet issued manually with handwritten biographic data and is not underpinned by any digital database record. While there are plans to replace the current obsolete CNI with an electronic card compliant with the Economic Community of West African States (ECOWAS) specifications, the timeline for this reform is unclear and financing has not been confirmed. Once the CNI program is modernized, the government vision entails refocusing the NINA system on its original purpose of providing the foundational unique ID system underpinning and assuring the uniqueness of both the CNI and also functional IDs. Due to these shortcomings, the national ID card is universally recognized to be obsolete, and in practice was superseded by the NINA card. • NINA system. To address the shortcomings of the CR and CNI, between 2009 –2011, Mali created a new ID system managed by the Civil Registration Data Processing Center (CTDEC) —an entity that reports to MATD—and populated with data collected during a biometric census. This resulted in a unique National Identification Number (NINA, or Numéro d’identification nationale) being issued to 89 percent of the 2011 population, 115 with uniqueness assured using automated biometric deduplication. In the absence of a modern CNI, Malians have come to rely on the NINA and the accompanying NINA card (carte NINA) for most transactions requiring proof of ID. 116 However, despite the increasing reliance on the NINA, coverage has decreased substantially over time due to a lack of adequate continuous registration mechanisms to keep the database updated following the 2009 census, with 2018 coverage estimated to have decreased to 71 percent of the adult population, and with a large gender gap persisting 112 A comprehensive analysis of the legal identification ecosystem in Mali can be found in a forthcoming ID for Development (ID4D) Diagnostic Report: Mali, World Bank, 2022. 113 "Nord du Mali: La carte d’identité nationale malienne, cible des jihadistes ,� Malizine, December 17, 2017. Accessed February 15, 2021. https://malizine.com/2017/12/17/nord-mali-carte-didentite-nationale-malienne-cible-jihadistes/ 114 DHS 2018 (latest available data). 115 International Criminal Court, “Registry’s Report on Proof of Identity Documents Available in Mali and Transmission of Proposed Application Forms for Rule 85(b) RPE Victims and Groups of Victims: Annex I� No. ICC-01/12-01/18, May 18, 2018. 116 The NINA card’s de facto role as the legal ID credential used most commonly by Malians has come to be recognized in a 2016 decree which recognized the NINA card as the legal equivalent to the CNI. Décret n°2016-0041/P-RM du 15 février 2016 conférant valeur de Carte nationale d’identité et de Carte consulaire à la Carte du Numéro d’identification nationale (NINA). 60 Mali Digital Economy Diagnostic (63 percent coverage of women versus 79 percent of men). 117 The NINA card has also become increasingly inaccessible over time, in part due to high production costs, and in recent years the NINA card has been substituted by a paper slip with the NINA number (NINA slip or “Fiche individuelle descriptive�), which is used as a proof of identity by many in the absence of a NINA card, despite its limitations. In addition to Malian citizens, residents and refugees are also able to obtain a NINA.118 Currently, there are neither digital ID authentication services in Mali, nor any strategy to adapt the current legal ID ecosystem for use in the digital economy. The NINA system currently does not feature a module that allows for digital identity authentication.119 The main physical credential issued by the system, the NINA card, has been phased out, and no adequate replacement has been introduced. Its de facto replacement, the NINA slip, was not designed to be used for authentication or service access and does not provide an adequate level of authentication assurance. For those who have a NINA card (now defunct), the template for one index finger is encoded in the barcode of the card. This is encrypted and no service has been made available to service providers to decrypt this data for biometric match purposes to permit access to online services, and/or adequate interoperability with other government databases. Future reforms would entail refocusing the role of the NINA system around maintaining the uniqueness of the NINA number, while leaving the issuance of physical credentials to other systems, such as the national ID card; the uniqueness of these credentials would, in turn, be assured by association with the NINA number. While this division of roles and responsibilities is a good first step to avoiding the fragmented and duplicative investments that have plagued the legal ID ecosystem in the past, additional reforms will be needed to ensure that individuals in Mali can effectively prove their identity—including through digital means that are not necessarily based on a plastic card. This gap in the legal ID landscape is particularly stark in the short term, between the phaseout of the NINA card and before the new national ID card has been launched, leaving much of the population—including those who have a NINA number—without any way to show proof of their legal identity. In terms of interoperability, the National Civil Status Centers (CTDEC) capacity to securely exchange data with other national platforms is weak. The lack of formal arrangements for data exchange within the government as well as standard protocols for database interoperability mean that current data-sharing arrangements are often ad hoc and insufficiently protected. In general, access permissions are not well defined and data sharing authorizations are not risk-analysis based. Expansion of the CTDEC’s technical capacity is needed to allow the NINA to securely interoperate with other government IT systems. The GoM has recognized that reforming the existing legal ID ecosystem and creating digital ID authentication capabilities are key prerequisites to facilitate the delivery of digital services. Going forward, greater use of digital identity verification and authentication can support improved service delivery and greater efficiency in public administration, on the condition that priorities are carefully defined and safeguards are strengthened. The Public Key Infrastructure (PKI) underpinning trust services and providing digital certification services is absent. The PKI120 is a catalyst for the development of digital government, e-banking, and e-commerce, as it increases users’ trust in the digital environment and can enable them to authenticate and sign electronic transactions securely. The law on electronic transactions (2016-012) gives the qualified electronic signature the same legal value as the handwritten signature. The term “Trusted Service Providers� is framed in the same way it is used in international laws and regulatory frameworks related to electronic identification and trust 117 World Bank, 2018. ID4D-Findex Survey Data. 118 The CTDEC collaborates actively with, respectively, the National Refugee Commission (Commission nationale chargée des réfugiés, CNCR) to enroll refugees, and with the National Social Development Directorate (Direction nationale de développement social, DNDS) to enroll internally displaced persons (IDPs) and returnees. 119 While discontinued since 2018, the NINA card is still used by many who are in possession of it as their primary ID credential. The NINA card is a PVC card with some basic visual security features and a 2D bar code. The data displayed visually on the face of the card includes some basic biographic data (name, place and date of birth, place of residence, parents’ names, profession), some biometric data (facial phot o, visual image of right index fingerprint), the cardholder’s NINA number, a document number, and a date of issuance. The data are also encoded in encrypted form in the 2D bar code on the reverse of the card. Due to the encryption, these bar codes can only be read centrally by the CTDEC; the bar codes are not widely used for document authentication. 120 It is a set of physical components (computers, cryptographic software or hardware), human procedures (verifications, validation) and software (systems and applications). 61 Mali Digital Economy Diagnostic services, such as the EU eIDAS framework. To implement this legal framework, the GoM created in 2019 the electronic certification and signature service (SCSE) within the Ministry of Digital Economy. Since its inception, the SCSE launched the development of the Mali PKI Framework, in collaboration with the International Telecommunications Union (ITU). The PKI framework aims to define all the components necessary to implement a national PKI system. The Information and Communication Technologies Agency (AGETIC) and SCSE will need to plan the progressive integration of all state’s digital applications with the National PKI once it is in place. However, in the absence of any improvement in the recognition and assurance of digital ID credentials, the progress for the digital certificate services deployment will be held back. 2.2.1.3 Digital Systems in Social Protection Although digitizing social payment programs can be a quick win for financial inclusion and livelihoods’ resilience among the most vulnerable groups, social protection programs cannot be securely delivered without a reliable way to identify beneficiaries and to ensure proper protection of their personal data. To support the implementation of the Jigisemejiri121 (and other social protection programs), the government is putting into place a national social registry (registre social unique, RSU) that includes all beneficiaries of this program. This registry will eventually have its scope expanded to become a shared platform including eligible beneficiaries, not only of Jigisemejiri, but more generally of the government’s social protection portfolio. Currently, social assistance beneficiaries can open accounts with their program functional ID (Jigisemejiri Beneficiary Card) based on an agreement with certain payment providers (a sort of temporary know-your-customer [KYC] exception allowing payments). However, this temporary arrangement is not sustainable, and eventually legal ID would be required to make social payments. There are indications that these exceptions will eventually be revoked. Once this happens, programs would either require redesign or there would be significant exclusion of beneficiaries who do not yet have NINAs. Increasing NINA coverage among social assistance beneficiaries could therefore avoid this exclusion issue and enable them to open accounts with a wide range of payment providers. For many social assistance recipients, who oftentimes lack basic digital skills and financial literacy, digital social payments present the first interaction with a formal financial system. Deployment of digital payments can improve financial inclusion and reduce leakages and administrative costs (see the chapter on Digital Financial Services). It also enables government’s social protection systems to respond more rapidly to shocks, thereby preventing households from engaging in negative coping strategies, which have long-lasting implications for human capital accumulation. 2.2.1.4 Government Back-Office Systems (G2G) Government digitalization initiatives in Mali have mainly focused on the development of core back-office systems. The GoM has deployed an array of back-office systems aimed at supporting central and core government functions including public financial management (PFM) and human resources management, thanks to relatively strong/well-equipped internal IT staff and increased investments in information and communication technology (ICT) infrastructure and connectivity by the GoM and its development partners (AFD, AfDB, IMF, EU, Canada, World Bank, etc.). Despite challenges to build some critical prerequisites (such as public sector ICT skills, sufficient resources earmarked for recurrent costs, digital infrastructure, and interconnectivity), the implementation of digital (G2G) public platforms has made some progress in Mali. For instance, the MEF through its IT unit (CAISFF) has implemented several fully operational digital applications, which are mostly commercial off the shelf, and a few software programs were developed in-house. While the government has developed policies to facilitate digital connectivity and deployment of some digital G2G platforms, gaps exist in the regulatory framework, particularly concerning IT procurement and technology choices. This has resulted in or accounted for individual MDAs selecting and managing vendor contracts 121Since 2013, the "Jigisemejiri" (Tree of Hope) social safety net program has provided social assistance payments to poor Malians, with coverage standing at over 90,000 beneficiary households. The Jigisemejiri program is implemented by the Technical Unit for the Management of Social Nets (Unité Technique de Gestion de Filets Sociaux, UTGFS) under the supervision of the Ministry of Economy and Finance (MEF). Malian social registry website: https://rsu.gouv.ml/portail/jigisemejiri/ 62 Mali Digital Economy Diagnostic without following common standards and practices (see Table for considerations). The GoM’s recently launched project in May 2022 to implement an Integrated Human Resources Management System for the Public Service of the State and Local Authorities would highly benefit from new ICT policies and frameworks for interoperability and computability purposes, among others. Furthermore, there is no inventory on the number of digital government services and solutions that have been developed or acquired. Table 2.2. Summary of the Key Attributes of Digital System Acquisition Approaches (including implementation of Software as a Service (SaaS), commercial-off-the-shelf (COTS), or a custom-built solution)122 SaaS COTS Custom built Attribute 1: Quality � System based on an already tested and used digital platform. � Software is owned by government. � Vendor has know-how on analyzing, configuring, and rolling out � Software is built for purpose. digital system. � Mature product as a foundation for a system that can be � System development know-how would maintained virtually. be accumulated. � Lower risk of technological obsolescence. � Government may have difficulties in retaining IT experts in its team since the private sector can offer more competitive salaries. � System may impose functional constraints as it is already pre- � The possibility of risks to the success of built. system development. � Lack of proven skills (offset by including foreign specialists). � System may adopt standards incompatible with existing � Potential of fragmented developments government systems and/or infrastructure. between agencies unless carefully managed by the steering committee. � Risk of lock-in by module vendors, mitigated by simplicity and � Moderate risk of lock-in by local serviceability of module. developers, mitigated by systems portability. Attribute 2: Time � Core system functions are already available in the vendor’s � Time required for the development of digital platform. from-scratch implementation can be expected to be more than for a COTS- based system. � Vendor may require more time than in-house staff to understand � If government has proven internal ICT the country-specific requirements. capacity, analysis, development, and rollout of the system can be achieved in reasonable time; otherwise, excessive time may be required. Attribute 3: Cost � Economies of scale created by a shared service often make it a � Maintenance/evolution of the system very cost-effective choice. will be cost efficient, since all required � Purchase would only be for the functionality for which there is expertise related to the system capacity to utilize. architecture will already exist. � Low initial implementation costs. � Low-risk system development and maintenance costs. � At the end of the contractual term with the vendor, process for contracting and migrating to a new digital system may be costly. � Government will be contractually bound to the vendor and � Government may need to make special system; if a clear financial arrangement is not defined right from financial arrangements for retaining the start, maintenance/evolution cost may be large. 122 Based on the forthcoming background paper by the World Bank “Adoption of eGP in Africa,� which is applicable to any digital system acquisition. 63 Mali Digital Economy Diagnostic experts for the development and maintenance/support of the system. Attribute 4: Security and access � Solution must be hosted in � Solution can be hosted on-premises or in domestic cloud to control vendor’s IT environment, which access and conform to national data privacy laws. often resides outside of client country’s geographical borders, which may violate security or data privacy laws. A dozen digital systems are currently in use by the Ministry of Economy and Finance, which address different aspects of Public Financial Management, and a handful of them can be found at the sectoral level: • On the expenditure chain: o SIGD, the Integrated Expenditure Management System, is a system designed for budget preparation and execution. It is based on the budget and accounting nomenclature. The system was adapted in 2018 to budgeting by programs. The modules include, among others: budget preparation, reorganization and notification of credits, budget execution, and production of reports. These modules were developed separately to address each specific units’ needs, resulting in a silo-based system. o AICE, the Integrated State Accounting Application, is the software for carrying out accounting operations of the state’s assets. It covers 13 senior accounting posts. It has been customized to fit the needs of the National Directorate of Treasury and Public Accounting. The software is available in all ministerial departments, more than 80 bodies and independent administrative authorities. A new version of the application (AICE 2) will soon offer functionalities allowing it to manage all the banking operations of the state on a unique management window, whatever the amounts and the banking channels used (central bank or commercial). o SIGMAP, the Integrated Public Procurement Management System, is the public procurement management tool for the contract control phase since 2016. It is available for all actors involved in the management of public procurement starting from XOF 5 million. It is only a portal for e-procurement planning, e-publication and notification, which does not make SIGMAP a true “e-GP system,� that would have wider functional coverage, such as e-Tendering and e-Evaluation/Awarding at pre-awarding phase, contract management at post-awarding phase). o SIGIP the Integrated Public Investment Management System, is an application developed by the National Directorate of Development Planning (DNPD) with the technical support of CAISFF. It allows for the automatic management of the portfolio of public investment projects/programs in accordance with the three-year planning of public investments on domestic and external financing. It is operational at the DNPD and in the ministries' planning units (CPS). • On the revenue side: o SIGTAS, the Integrated Tax and Income Tax Management System, is a computerized management tool for collecting tax revenue. o ASYCUDA World, the United Nations Conference on Trade and Development Automated Customs System, became a customs clearance IT system in 2014. It is a web-based system allowing for real-time transmission of information with interconnection across 44 customs offices. The system enabled the customs administration to process hundreds of thousands of waybills, manifests, import/export declarations, and transit procedures. • Some other nascent digitized back-end management information systems (MIS) exist at the sector level, including those for ID management (as described in 2.2.1.2 Digital Identification and Trust 64 Mali Digital Economy Diagnostic Services), Information System for Education Management (SIGE), Higher Education Information Management System (PGI cocktail123), Integrated Digital Health Information System (SNISI124) and Hospital Information System (SIH). However, these systems are yet to be leveraged to serve citizens more directly through the expansion of front-facing digital service delivery (offering direct public services online or at distance for end users such as citizens, students, patients, and businesses through the telemedicine and distance learning platforms). • Finally,- intragovernmental digital applications were developed and deployed in some public institutions by AGETIC, including the governmental intranet, the “Office Manager�application (management of personnel, invoicing, and activity programs), the mobile application for administrative procedures, the e-advice platforms (for the Councils of Ministers and meetings of their cabinets), “CoRe� (for the management of public contracts), “eGESCO� (for mail management), and “AGIC� (for electronic archiving), and a governmental electronic messaging system. 2.2.1.5 ICT Skills in the Public Sector The GoM faces a shortage of digitally skilled personnel to implement and manage e-/digital government initiatives. The issue of attracting and retaining digital/IT specialist talents and the lack of classification or recognition of IT jobs in the Malian public administration are both serious challenges for prospering development of the public sector’s capacity for digital transformation. Although AGETIC is trying to support the state services upgrading of digital skills,125 there are no government plans to support the development of specialized IT skills and general IT skills among civil servants.126 Ad hoc trainings are only organized whenever a platform is being deployed, with the support from external partners (donors and consulting firms). Most IT competencies lie in the MEF and AGETIC. Critical skills in domains such as cybersecurity, data science, and information systems development remain very scarce in other public entities. Notably, CAISFF is the most digitally skilled department (44 agents127) within the Malian administration, enrolling qualified people in IT systems development and management. The locally trained IT specialists/engineers (primarily men) are often hired below their grade (compared to the ones trained abroad) and often migrate from the public sector to the private sector for higher wages. The Malian administration also suffers from a lack of national digital skills training offerings. Very few universities and national institutes offer specializations, certifications, and/or teaching programs in ICT, (even fewer at the master’s level) (see the chapter on Digital Skills for more information). Significant investments in digital skills development and innovation in the public sector are crucial to support the transition to a data-driven culture and to build strong technical skills to meet challenges induced by the development of a digital government. 2.2.1.6 Digital Service Delivery (G2B and G2P) The GoM has a limited but increasing presence online through numerous government websites. Many MDAs are now operating websites; however, they are often down and/or provide outdated information, mainly due to poor code management, poor maintenance, and lack of central coordination/management. Most of these websites are characterized by a one-way information flow. Government websites do not have a unique format to make the GoM’s web presence uniform. Their basic functionalities limit their scope to fac ilitate digital 123 The Progiciel de Gestion Intégrée (PGI) Enseignement Supérieur (PGI Cocktail) is an integrated global resources management information system that gives real-time data to the decision-makers while also offering various stakeholders’ services. Its function includes (i) training and teaching management; (ii) research management, (iii) administrative management/support, (iv) management of common information, (v) human resources management, (vi) financial management, (vii) asset and inventory management, and (viii) steering. Financed by the World Bank project, The Projet d’Appui à l’Enseignement Supérieure (PADES) makes it possible to present a dynamic online exhaustive, complete, and detailed training offer to the community. It is accessible via campusmali.ml. 124 For more information, a description of the SNISI is available here: https://snisi.sante.gov.ml/about. 125 AGETIC supports the various state services by providing continuing training at different levels to government officials and local authorities (around 3,000 per year). It also offers very advanced specialized training intended for IT specialists in collaboration with the private sector on disruptive technologies. 126 There are no statistics on the number of IT competencies within the 110,000 government employees. 127 However, this number is insufficient, and sometimes CAISFF needs to hire external consultants to support its internal teams. 65 Mali Digital Economy Diagnostic interaction with users. In 2017, the CDI with the support from AGETIC set up a web portal “demarchesadministratives.gouv.ml,� but this portal is merely descriptive, providing information on how to access about 100 administrative services. This was a promising start, but the online informational procedures have not been updated since their publication in 2017, leaving the portal with inaccurate information. Only a handful of digitally enabled public services are available to people and businesses, but none of these services have reached a significant level of adoption and usage, nor do they enable two-way service transactions. The total number of digital services currently offered is unknown, as MDAs lack a centralized monitoring system to track digital services and related usage. The GoM through AGETIC and CAISFF has so far been able to develop a few partially digitized public services that are people centered, such as for tax declaration, university enrollment, and civil service exams. Others are under development, such as telemedicine (see Box ) and the digitization of civil registration, judicial, and penitentiary processes. None of these services integrates the functionality of interactive/transactional requests for services or the online provision of services. Most of the services are informational and allow at most declaration/registration type operations. While this is encouraging, in practice the services offered still rely predominately on paper-based processes that require end-users to physically access services. This applies to most used services, such as the obtention of civil registration documents, requiring the applicant to visit the center in person where the birth declaration was made to obtain a certificate (the same applies for extracting criminal records). There is ample scope for digitizing and improving the efficiency of the most frequently requested public services through process reengineering. Such developments could also demonstrate the benefits of using shared digital infrastructure and systems, and reusable applications that yield much larger benefits in terms of economies-of-scale, as well as time and efficiency gains when launching new digital services. Box 2.2. Sectoral Digital Initiatives and Platforms—Spotlight on e-Health Numerous pilot projects in the health sector have been launched with the support of external technical and financial partners, but they suffer from a lack of sustainable funding and/or the absence of an implementation mechanism. A flagship e-health project at the national level is that of telemedicine ( teledermatology), which allows Malian patients to benefit from specialized dermatological care at a distance thanks to telediagnosis through an application (a 3G connection is all that is needed). This is also the case for pilot projects (Mali Health Data Project) aiming to digitize patient files within a few community health centers, develop the “electronic health record� on cell phones, or carry out the “digital vaccination record coupled with an alert system� with the support of external technical partners, but which have not been able to succeed due to a lack of funding and institutional support. A national digital health plan (e- Health) has been developed, technically validated, and is awaiting political validation, which could allow for the renewal of certain e-Health projects, but above all to create a solid and sustainable institutional mechanism. Finally, there is a strong demand from users for the launch of more telemedicine projects, particularly for the treatment of cardiovascular diseases (tele-cardiology), maternal and child health (tele-ultrasound), and noncommunicable diseases. 2.2.1.7 Civic Tech and Transparency Civic tech has not yet taken hold in Mali. The previous Digital Mali 2020 strategy did not flag citizen participation as key. Therefore, the GoM has taken limited steps to date to ensure broader consultation and more inclusive decision-making through digital means. The only relevant initiative in this respect was the setup of an e-participation portal (dialoguenational.ml) in the form of a digital forum accessible through any ICT equipment (tablet, PC, smartphone) allowing people of Mali to express opinions online on various themes and access the public consultation (“consultations populaires�) publications. Moderated by experts in the framework of the inclusive national dialogue, this website has reached 5 million Malians online in all local languages. The forum is still open and allows anyone to express their opinions, but the moderation is inactive, and the underlying accountability framework does not seem to have been fully implemented, demonstrating a real void in the tools deployed for citizen expression. Apart from this first initiative, no other digital public platforms are available for people and businesses to voice grievances against the government, although the GoM uses social media platforms such as Facebook and Twitter to disseminate information and interact with people. 66 Mali Digital Economy Diagnostic Mali has neither policies nor initiatives specific to open government data. Efforts to launch an open data initiative covering the collection, storage, and sharing of publicly available information are absent, despite civil society lobbying. There is no Open Data Portal. As of now, there are only two private sector–led initiatives (mali.opendataforafrica.org and mali.openstreetmap) working to open up both government and public data in Mali, with currently some basic up-to-date socioeconomic, demographic, and high-level sector statistics. However, the use of privately established data platforms remains limited, partly due to limited knowledge of their existence among key contributors and user groups, and partly due to the low quality of publicly available data. There is currently no open data policy at the government level, due mainly to the absence of dedicated legislation to support “Open Access to government Information,� although Law No. 2017-062 enshrines the principle of equal access to available networks and resources. In addition, there is no clarity on which agency would oversee the application of open data policies. 2.2.1.8 Interoperability Layers and Shared Services There is no interoperability framework in Mali, leading to siloed and embryonic interoperability projects and initiatives. There is no General Interoperability Framework (GIF) defining norms and standards to ensure sustainable and efficient public service integration. Indeed, existing interoperability initiatives have been on a voluntary basis and lack a strong governance structure for launching, monitoring, and evaluating such inter- department projects. Although several registers are currently digitized within the Malian administration (see “data governance� section below), their data are not shared between different departments and are currently kept in siloed digital back-office systems. Certain MDAs, such as MEF, intend to invest in interoperability between its internal information systems, especially for the expenditure and budgeting chain integration. Another interoperability project underway is led by AGETIC for the implementation of a paperless administrative process platform. This initiative is currently in the testing phase, but still lacking basic registers, an inter-administration gateway, and all the essential enablers (digital ID, digital signature, etc.) to be operational on a larger scale. All these embryonic projects are siloed in sectors and not connected to a more general approach. In addition to technical fragmentation, there are no standards in place governing data exchange and sharing. A more holistic approach to data exchange within government would improve administrative and cost efficiency, reduce errors, help prevent vendor and technology lock-in, and ensure that adequate governance arrangements are in place to appropriately protect citizens’ data when shared and their privacy. 2.2.1.9 Data Management, Sharing and Secure Access Existing public service arrangements in Mali exclude vulnerable groups and put personal data at risk. Many vulnerable groups are excluded from vital public services necessary for human development and combating poverty. This includes groups in remote and conflict-affected areas where there is limited state presence, such as IDPs, as well as underserved populations in poor and rural areas, and women in particular. In a Fragility, conflict, and violence (FCV) state, this represents a significant missed opportunity to combat drivers of fragility. For Malians who are able to access public services, service levels are low, accessibility and user experience are poor, and the systems are expensive, inefficient, and unreliable. Moreover, various governance and technical shortfalls mean that personal data are unduly put at risk. A lack of suitable legislation and institutional arrangements means that there are insufficient safeguards to prevent misuse of personal data by public authorities. Existing digitized databases containing personal data are not adequately protected against cyberattacks, further compounding the risk that data will be compromised. Given the GoM’s objective to pursue a digital transformation strategy, these risks will only grow as more and more personal data are collected and stored in digitized databases. Current systems are inefficient and siloed, resulting in a duplication of efforts that needlessly waste resources. These issues have a common root cause, which is the lack of foundational building blocks of digital government that underpin the secure and trusted delivery of public services. 67 Mali Digital Economy Diagnostic A comprehensive vision and policy regarding the management of data infrastructure is yet to be developed. As mentioned above, a Personal Data Protection law (2013-015 and 2017-070) was enacted in 2013 and amended in 2017. A law on Freedom of Access to Information is pending preparation. However, the policy framework for data security, data archiving, and digital preservation (collection, storage, processing, analyzing, archiving, and destroying data) is not available yet, although it is embedded in the law. Similarly, policies or standards for data quality, including its provenance, accuracy, timeliness, and completeness, as well as policies on the ownership and licensing of government data, are missing. In this context, the processes of data archiving and preservation currently used do not conform to international standards and best practices. There are no common data frameworks/data sharing protocols in place yet and data are not hosted centrally, with each MDA keeping its own data within their own databases. Data backup and disaster recovery arrangements are not centralized. A framework will be needed for classifying data and information by sensitivity to determine the level of protection required, and the access control policy to be implemented. The lack of standardized data exchange between government entities reduces the efficiency of public administration and puts citizens’ privacy further at risk. There is no national data governance framework in Mali guiding the establishment of a necessary set of coordinated and consistent policies, legal guidelines and mechanisms, and specific rules and responsibilities on the appropriate storage, treatment, management, security, quality, and exchange of data between and within the public administration. Numerous challenges to national data governance include the multiplicity of actors, fragmented and unharmonized legal frameworks, absence of a data exchange framework and data sharing protocols, limited technical skills and capacity, inadequate infrastructure and low capacity of storage and hosting rates. Moreover, a proclivity toward physical data hosting makes enabling and scaling data sharing in an agile and efficient way difficult. While AGETIC manages the existing government network and the Malian Transmission and Broadcasting Corporation (SMTD) aims to centralize the hosting of government IT systems and data, at present many MDAs operate their own infrastructure and data centers, making intragovernmental data exchange difficult. Yet MDA-specific data centers are not designed to ensure data security, data archiving, and digital preservation, increasing the risks to government’s digital data. The national data center currently hosted at the SMTD is not fully operational (under development to become a Tier III data center) and there are no service-level agreements in place to ensure operational efficiency. The SMTD data center is used by only a few state agencies.128 As noted in the Digital Infrastructure chapter, several Malian agencies have implemented their own data center projects. The GoM has yet to make strategic decisions regarding institutional arrangements, the role of the private sector, the financing model, the role of cloud architectures, and data governance arrangements, including data sovereignty. All these unaddressed gaps will limit public trust in digital transactions. Lack of a clear and comprehensive data governance framework and policy can harm not only the development or the overhaul129 of government’s back-office systems, but also strategic digital projects such as PKI systems, which must be hosted in a physically secure data center. Although some progress has been made on digitizing data registries, there is still a long way to go. Several administrative and functional registers are currently digitized and maintained within the Malian administration. These include among others: the population register, civil registration register, NINA register, tax register, land and domain register (in the process of digitalization), unified social register (national database on social protection beneficiaries), and individual CANAM130 and ANAM131 registers. Certain hospitals in Mali have also digitized their patients’ registries and have registries for vaccinations DHIS2 monitoring. However, most administrative registries are not digitized, and the citizen CR/ID management system, which should be the basis for the development of numerous online public services, faces numerous challenges including lack of complete data and multiple fragmented actors. As a result, the user is obliged to provide personal data and 128 Presidency, Budget and Tolmali (web hosting), API-MALI (backup as service), AGETIC (entire rack), AMRTP (server colocation), and AFRINET and MDATA (routers colocation) 129 Several overhaul information systems projects are planned, especially in education and the MoF (SIGMAP: total dematerialization of public procurement) 130 Caisse Nationale d'Assurance Maladie, or National Health Insurance Fund. 131 Agence Nationale d’Assistance Médicale, or The National Agency for Health Insurance (ANAM). 68 Mali Digital Economy Diagnostic information on several occasions to various public entities that sometimes already have this information. Moreover, the current quality of data handled by governmental systems constitutes a genuine obstacle to digital government development in Mali. It is mainly due to differences between standards, formats, codifications, and semantics of data handled by administrations, with possible risks of disturbance to operational functioning, published data nonconformity, and errors in public strategies. Ideally, documents, data, or information needed for the provision of administrative services would have to be provided or made available free of charge by their government entity owner. 2.2.1.10 Constraints to Digital Public Platforms Development Government still lacks the foundational building blocks of digital government needed to underpin secure delivery of digital public services and extend their reach beyond urban areas. Despite a strong commitment from the GoM, there is a need to reinvigorate efforts to foster an enabling environment for Mali’s digital transformation, particularly through a well-articulated vision and strategy. Lack of leadership and whole-of- government coordination in building a digital government has contributed to a landscape wherein digital public platforms are limited in number, not people-centric, not based on a “once-only� principle, developed mainly in silos, and most often only present in the pockets of strong leadership, budgets, and skills. The key constraints to digital public platforms development are summarized below. • Lack of a digital government operational action plan to guide policy making and complex institutional arrangements. There are no clear institutional and operational roles and mandates, nor is there a comprehensive plan to allocate resources and capacities across government entities. AGETIC, which acts as the de facto lead agency for digital government, is often unable to provide strategic guidance across multiple institutions with different needs and priorities, and coordination between AGETIC, digital economy ministry, and other MDAs is deemed weak. • Lack of wider and secure access to connectivity among public institutions and at public service access points. In particular, the lack of connectivity at the provincial level and of interconnectivity between MDAs and even among government offices of the same institutions remains a major foundational obstacle to the development of effective, efficient, integrated, and interoperable digital public platforms. There are frequent downtimes, some lasting up to a few days. • Absence of a national interoperability framework and gateway to support Mali’s digital public platforms data/information exchange. The lack of interoperability of public sector platforms is mainly due to institutional, legal, organizational, technical, and financial constraints. The current legal and regulatory framework does not include provisions establishing the principles of “single entry� and “re -use of public information,�,- as well as laying down obligations and rules for digital project implementation and public data exchange between departments. Numerous platforms are housed in different MDAs and developed separately, mostly without utilizing standardization protocols or considering linkages with external platforms. To date, most MDAs have independently procured new ICT infrastructure and software solutions. As a result, most of these solutions are not geared toward a common objective of interoperability, integration, and information exchange. Integration requirements are subsequently siloed and often do not result in a seamless user experience. • Absence of a coherent change management strategy to support the uptake of digital services, coupled with limited ICT skills needed to support them. By and large, IT/digital skills are not present or are extremely difficult to attract and retain in the public sector. There is no change management plan aimed at promoting the uptake of the digital government agenda. For instance, there are delays observed in the documentation and simplification efforts of administrative procedures, due mainly to slow change management and strong resistance to the opening up of public information systems and interoperability. Government capacity is viewed as insufficient, resulting in overreliance upon international technical expertise. 69 Mali Digital Economy Diagnostic 2.3 RECOMMENDATIONS While there are multiple reasons why the maturity of digital public platforms in Mali is low, critical constraints appear to be linked to the gaps in the current enabling environment, which the recommendations below seek to address. R1 [High priority]. Elaborate a prioritized and sequenced action plan for the development of digital government and digital public platforms, based on a coordinated and inclusive approach. In the short term, the GoM needs a strong and reaffirmed leadership to accelerate the development of digital government and build a whole-of- government approach to modernizing and digitizing its public sector through a concerted interagency action framework. There is a need for a specific user-driven and costed digital government strategy with prioritized SMART objectives that can: catalyze change based on a national IT master plan, support the building of interoperable systems across government departments, ensure cost inefficiency among government IT infrastructures, and implement the new strategic vision for digitization in a sequenced and coordinated way. R2 [High priority]. Develop a national data governance framework and policy to lay down protocols and standards for how government institutions process, store, and share public and citizen data within the larger government ecosystem. A national data governance policy would allow government and government departments to better design and target efficacy of public spending programs, be it in infrastructure or in service delivery. This should include a set of coordinated and consistent policies, legal guidelines, regulations, protocols, and mechanisms establishing specific rules and responsibilities on the appropriate storage, exchange, security, openness, and preservation of data (including personal data protection) flowing between and within the public administration. This framework should prevent the proliferation of local data centers with a government cloud strategy and strengthen the development of integrated government back-office systems, as well as strategic digital public platforms as single interface and PKI. Moving forward in terms of data hosting, it is important to consider a hybrid cloud model132 to ensure cloud-based functionalities and higher-level data security at much lower costs. R3 [High priority]. Accelerate the implementation of interoperability between Malian public information systems to digitize sustainable government processes and facilitate public service integration. In the short term, the GoM should adopt a general interoperability framework (GIF) defining technical norms and standards at the interministerial level. Its focus should give equal consideration to technology, governance, business models, people-centricity, and change management issues, which are all cornerstones of interoperability. Then, the GoM should define priority use cases for how targeted common standards and norms will be deployed within the government based on a common architecture (public financial management [PFM] reforms might be highly considered given their importance and the existence of other proven integrated financial management information systems worldwide). Meanwhile, significant investments should be made to set up the necessary equipment and digital connectivity. Considerable efforts should be made to accelerate the documentation and simplification of administrative procedures. R4 [High priority]. Start to prepare the legal, regulatory, and institutional frameworks for the use of digital signature and digital identity authentication services to improve the accessibility and quality of future digital public platforms. The GoM should develop a clear and detailed set of policies and strategies to provide clarity on the purposes and features of the ID and PKI systems, with a stronger emphasis on use cases, digital ID credentials and authentication. To begin with, the GoM can develop a sequenced and budgeted action plan 132The hybrid cloud is a combination of an internal private government cloud with public cloud solutions offered by external providers of commercial cloud services, such as Amazon Web Service, Microsoft Azure, Google Cloud Platform, IMB Cloud, etc. (or eligible internal cloud providers, if such exist). Following private sector examples, governments around the world are adopting the Hybrid Cloud model to store, process, and interact with protected, extremely sensitive, or regulated data on a Private Government Cloud, while continuing to leverage cloud-based functionalities and resources from Public Cloud services. The Hybrid Cloud does not refer to a single cloud with public and private features, but rather represents a technological symbiosis of the two approaches, aimed to create a reliable, easily available, and protected virtual environment, which can be scaled up quickly and flexibly at the government’s demand at a much lower cost. 70 Mali Digital Economy Diagnostic for integrating digital ID and signatures into key public services and prepare a capacity building program for their future users. Furthermore, an adequate national PKI framework is necessary to guide the delivery and integration of government services to citizens in a safe environment before any investments in the infrastructure and services. R5 [High priority]. Hire or develop skills for more digital/IT specialists to strengthen public sector capabilities for the development and management of digital public platforms and services. The implementation of digital transformation in the public sector requires availability of fit-for-purpose skills across the government. The public sector in Mali needs more business process analysts, information system architects, user experience specialists, cybersecurity experts, and data scientists, as well as specialized staff to oversee ICT procurement and vendors. Furthermore, vertical IT specialists are needed to support different sectors of the economy, such as financial services, public financial management, and sectors such as health care and education. Therefore, it becomes necessary to launch relevant development and capacity building programs to help government agencies absorb and manage ICT and reinforce capacities of universities and national institutes to offer specializations, certifications, and/or teaching programs in ICT. Finally, efforts are needed to support the development of communities of practice and knowledge sharing systems for public ICT professionals and raise awareness among policy makers to establish professions for digital, data, and technology with higher job level grades in the civil service as well as prepare a broader digital staffing program for the public sector looking at issues of planning, recruitment, retention and sustainability of jobs. R6 [Quick-win]. Design and implement digitally enabled government services considered as quick-wins and which would be of high impact to citizens to create interest in digitalization. Offering services online and simplifying forms (while providing guidance on how to complete them) can provide a significant boost to user satisfaction. Given the large number of services that the GoM needs to digitize, investment in modular design and low-code development capabilities can pay off fast. In the short term, a single online portal could be the launch pad for unifying the government’s online presence and centralizing all public service information, as well as progressively integrating transactional digital government services. The GoM can prioritize high frequency service requests and focus on key services first to reengineer and digitize, including those already available (registrations, the CivicTech platform, etc.). Additionally, this requires greater focus on User Experience (UX)/User Interface (UI) from the standpoint of local populations that can benefit the most from such digital applications (including women, the illiterate, rural populations, etc.). Numerous pilot projects for digital public platforms based on the implementation of community-based virtual networks could constitute real quick-wins, aiming at sharing, via smartphone applications, various useful information. For example, platforms that enable searching for information on proactive management of weather hazards, market prices, improving the quality of agricultural products and livestock, best practices in terms of pest and disease treatment, and connecting with potential buyers could be highly beneficial for farming communities. The development of such digital public platforms can ultimately have an impact on adoption and usage and can open the doors wide to private sector initiatives as well as multiply the possibilities of collaboration between the state and the private sector, which can materialize in public-private partnership (PPP)-type contracts. 71 Mali Digital Economy Diagnostic FOCUS 2: GENDER & DIGITAL The situation of women and girls in Mali is characterized by deep inequalities, including in terms of access to education, health care services, economic opportunities, financial services, and political participation. Mali ranks 149 out of 156 countries on the 2021 Global Gender Gap Index. Boys still progress faster through school and have higher literacy rates (46 percent versus 26 percent for females).133 Women participate in the labor market at a lower rate than men (49 percent for women versus 75 percent for men), 134 and their participation in business and entrepreneurship activities is also underrepresented. 135 Societal norms, combined with the heavy requirements faced by women to access credit lines, make it particularly challenging for them to start their own businesses. As a result, women have lower per capita income (US$1,516) than men (US$3,019), which means they benefit less from training and financial education initiatives since they have less to save and invest. Gender gaps also exist in access to proof of legal identity (ID), with 79 percent of men having an ID versus just 63 percent of women,136 as well as in financial inclusion, with 45 percent of men owning an account at a financial institution versus 26 percent of women.137 Digital technologies and tools offer huge opportunities to reduce gender inequalities. For instance, to reduce gaps in human endowment, ensuring basic digital literacy and skills for women and girls is critical, while educational technologies (EdTech) can help improve learning outcomes for girls. Digital technologies can act as a pathway to economic opportunities, especially through online work that provides flexibility and opportunities to overcome challenges to women’s mobility, and by increasing women’s participation in information and communication technology (ICT) employment. Lastly, technology can be an enabler of greater inclusion (e.g., digital financial inclusion), help women entrepreneurs and women-led micro, small, and medium enterprises (MSMEs) start and grow businesses, and connect to markets. However, gender inequalities in Mali translate into deep digital gender gaps, which means that women are largely left out of the digital economy and fail to receive the digital dividends associated with being online. Being overrepresented among the poorest and the most vulnerable, women face starker demand-side barriers to full participation in the digital sphere. For instance, lower socioeconomic positions of women compared to men, especially in rural and remote areas, make access and usage costs prohibitive for women. Women also face cultural and ethnic norms, gender roles, biases, and stereotypes, which often dissuade and even prevent women from accessing the internet and gaining digital literacy. Key digital gender gaps (not exhaustive) are outlined below, with recommendations on how to reduce these gaps. Gap in broadband access: Mali has a high gender disparity in Internet use. Seventeen percent of men report using internet regularly, compared to only 5 percent of women.138 Measures to boost women’s access to broadband include (i) promoting affordability of internet use through policy/market reforms to achieve lower retail data and device prices (see the chapter on Digital Infrastructure); (ii) developing outreach and communication activities targeted at women on the benefits of digital access; and (iii) encouraging expansion of public free Wi-Fi access points to reach women, particularly in remote and rural communities, while ensuring adequate opening hours of locations/services for women and availability of female intermediaries/staff. 133 Only 37 percent of girls enrolled in secondary education vs 44 percent for boys. Less than 33 percent of women being able to read a simple sentence, compared nearly 80 percent of men. Source: UNESCO, Data for Sustainable Development, 2018. 134 ILO Indicators, 2020 figures. 135 WB Women Business and the Law report, 2021. 136 Identification for Development (ID4D), Global Findex, 2017. 137 ID4D Global Findex, 2017. 138 Afrobarometer survey conducted in Mali in 2018. 72 Mali Digital Economy Diagnostic Gap in digital literacy and skills: A high gender gap persists in digital literacy levels in Mali based on qualitative insights. Countries with high levels of gender inequality overall (such as Mali) are also those with the largest differences in digital skills between men and women. 139 A GSMA study showed how providing training to accelerate digital literacy among women can improve female users’ access to mobile Internet and their general empowerment.140 Measures to increase digital skills levels among women include (i) organizing digital literacy trainings tailored to women, with relevant content/curricula for women and female trainers, to ensure women feel safe and comfortable actively participating in sessions; (ii) leveraging nongovernmental organizations (NGOs), ‘women in technology’ networks and associations, such as “Femmes et TIC� or “MusoDEV Girls� to ensure trust by women, and to eliminate social and cultural barriers; and (iii) promoting training opportunities to women through awareness campaigns. In a conservative social context such as Mali’s, the need for women- centric digital public platforms is critically heightened and can be catalytic to enhancing basic digital literacy and the overall participation of women. This would imply developing a comprehensive communications strategy to boost uptake of digitized services, and robust women feedback mechanisms within all digital public platforms to improve public service delivery and assist in soliciting feedback from women and women-led businesses. Gap in usage of digital financial services: Recent data released by Findex (2021) shows that Mali has made significant strides in closing the financial service gender gaps witnessed in the 2017 survey. Most of this growth is because mobile money account ownership for Malian women increased by 15 percentage points in this time. This supports evidence that digital financial services (DFS) helps reduce gender inequalities in access to finance. According to the 2021 Findex Global survey, 46 percent of men over the age of 15 had access to formal financial services compared to 41 percent of women; 3 percent of women over the age of 15 had a mortgage, compared to 5 percent for men; 6 percent of women owned a credit card, compared to 6 percent for men; 37 percent of women said they had made or received digital payments during the year, compared to 40 percent of men. Mali still has some gender gap in access to mobile money adoption, with mobile money account rates at 26 percent for women and 33 percent for men, albeit it a 6 percentage point increase from 2018 values. In addition, the literacy level is also considerably lower among Malian women at 25.7 percent compared to 46.2 percent among men.141 Finally, women’s per capita income is US$1,516 compared to US$3,019 for men, further limiting their eligibility for financial services. Nevertheless, 55 percent of Malian women reported having saved in 2021. These women can benefit from better-suited DFS targeted at savings products.142 Figure - Developing Economies Have Varied Widely in How Effectively They Tackle the Gender Gap Adults with an account (percent), 2017–21, source: Global Findex Database 2021. 1392018 ITU report “Measuring the Information Society Report.� 1402015 GSMA report “Accelerating Digital Literacy: Empowering women to use the mobile internet.� 141 UNESCO, 2018. http://uis.unesco.org/en/country/ml. (Accessed May 12, 2022). 142 World Economic Forum http://reports.weforum.org/global-gender-gap-report-2014/economies/#economy=MLI. 73 Mali Digital Economy Diagnostic Measures to boost the usage of digital financial services by women include (i) building awareness of the benefits of DFS through digital skills and financial literacy programs (e.g., for social payments recipients); (ii) maximizing convenience by locating points of DFS (especially cash-in cash-out networks) close to where women live and work, (e.g., through the post office service networks); (iii) building government and service providers’ capacity to apply risk-based customer due diligence/simplified know your customer requirements to provide more flexibility for women without ID to open mobile money or bank accounts; (iv) ensuring that a large proportion of digital social payments are directly made to women and girls; and (v) implementing agent codes of conduct for mobile money providers to enhance women’s safety and security. Several constraints limit women’s access to digital financial services, including sociodemographic and cultural factors contributing to women’s lower per capita income, more limited eligibility for bank financing, and lower participation in training and financial education initiatives. Providers tend to fail to target women, as there is limited adaptation of DFS to the needs of female customers, lack of disaggregation of f = gender data on DFS, and limited efforts to strengthen women’s capacities in financial education and digital skills. This insufficiency leads to higher levels of inequality and exclusion. Gap in participation in the ICT sector/digital businesses: Mali is characterized by low enrollment of women in science, technology, engineering, and mathematics (STEM) courses and limited participation of women in the ICT sector. Only 10 percent of digital businesses are female led. While women are less educated in general, the lack of professional training and tailored support compounds uneducated women’s ability to acquire the necessary skills to move to higher value generating activities, including in digital businesses. Measures to boost participation of women in the ICT sector include (i) providing tailored counselling services and peer-to- peer learning events to women who wish to develop a professional development in the ICT and STEM fields and to acquire more intermediate and advanced digital skills; (ii) developing digital courses specifically designed for women-led MSMEs and female entrepreneurs; (iii) sourcing female mentors and advisers to help female entrepreneurs; (iv) targeting specific digital reskilling and upskilling programs and activities toward women and girls; and (v) providing women with digital skills certificates to increase their employment prospects. In addition, there are growing risks of online gender-based violence (GBV) that need to be mitigated. These risks include cyberbullying and harassment, cyberstalking, non-consensual dissemination of intimate images, and so forth. Early evidence suggests that this form of violence can reinforce digital inequalities between men and women because, in addition to psychological harm, it can prevent women from logging on or cause them to disconnect after bad experiences, limiting their participation online. Similarly, it can undermine the positive employment effects of digital transformation by increasing the likelihood that young women will forgo or leave digital jobs.143 To mitigate this risk, Mali should (i) raise awareness of the risks, specifically highlighting the risk of online GBV and providing guidance on how to identify, report, cope with, and recover from online violence, engaging both men and women; and (ii) facilitate legislative reform to criminalize harmful digital communications and integrate a gender lens and aspects related to technology-facilitated gender-based violence into the broader cybercrime and data protection policies and related legal frameworks. 143Solutions for Youth Employment (S4YE) Knowledge Brief. Online Violence Against Young Female Workers, 2022. World Wide Web Foundation (2015). 74 Mali Digital Economy Diagnostic CHAPTER 3 DIGITAL FINANCIAL SERVICES Key messages: � Digital financial services (DFS) have the advantage of accelerating financial inclusion and access. However, usage of DFS is limited in Mali as revealed by the activity rate (45.0 percent) as well as the proportion of adults receiving government payments through an account (5.3 percent). The fragility context of Mali heightens the need to leverage digital technologies in private and public financial transactions to improve traceability of payments and reduce the risk of illicit transactions, including terrorism financing. The high reliance on cash payments can be attributed to: a limited network of financial access points, cultural habits, outdated regulations, weak financial infrastructure, lack of digital skills, cost of services, and limited innovation. These are key impediments to DFS uptake and usage. The newly adopted financial inclusion strategy aims to address several of the above challenges but will require strong support and coordination for optimal implementation. A mix of policy, regulation, infrastructure, and market-level solutions will be key to increase the use of DFS in Mali. � Addressing fintech challenges and leveraging on opportunities to scale DFS. The assessment revealed a nascent ecosystem for fintech start-ups. Mali is home to 18 fintech firms specializing in credit, insurance, payments, transfers, and micro investments through partnerships with banks. However, fintech firms struggle to find an enabling environment, funding, and business skills. The effect of the creation of the Central Bank of West African States (BCEAO) Fintech Committee in 2020 will trickle down to address Mali’s fintech challenges. � Overarching regulations on credit information and digitization set by the BCEAO have not yet been transposed by the Mali government. As other WAEMU peers, it will be important that Mali adopts the decree on credit information bureau, requiring utility billers to share consumer data with the credit information bureau. Such reform will increase chances that financial institutions will develop digital credit services, building on alternative data that can be used for credit scoring. Further regulations will also be needed to implement regional regulations on digitization of government payments as in peer countries. � In the case of public entities, dedicated support and guidance at institutional and technological levels is lacking and contributes to low digitization of financial services. This is the case of the National Treasury and the CAISFF and the CNSMO hosting the NFIS. The Treasury lacks a national centralized platform although it has recently officially made a step towards connecting to the GIM-UEMOA to digitize its retail payments. 75 Mali Digital Economy Diagnostic 3.1 IMPORTANCE OF DIGITAL FINANCIAL SERVICES Studies have found that financial inclusion has been a key driver of global poverty reduction and economic growth primarily through access to affordable digital financial services (DFS). DFS include products and services made available to consumers via digital technologies such as mobile phones. Consumers can use DFS to process payments, remittances, savings, credit, insurance, and investments. The benefits of DFS for consumers include lower transaction costs, greater speed of transactions, security, transparency, and ability to meet financial consumers’ needs. Technological advances in the fintech space have further increased access to digital financial services and products worldwide, with benefits for consumers in terms of greater income, financial resilience, and well-being, especially for the most vulnerable populations, including women and youth. 144 DFS has thus contributed to the growth of financial inclusion, which reached 68.5 percent globally and 43.0 percent in Sub-Saharan Africa (SSA) as of 2017.145 Mobile money in the form of digital remittances and government-to-person (G2P) payments have provided critical financial support to individuals during the COVID-19 pandemic. Globally, cross-border remittances fell from US$719 billion in 2019 to US$702 billion in 2020 due to COVID-19.146 Since the onset of the crisis, remittances have been falling sharply as major remittance sending countries experience lockdowns, hitting key service industries where migrants are employed. Facing instability and food insecurity, large swaths of the Malian population are vulnerable and struggling to make ends meet. In Mali, money transfer corridors provided through DFS providers helped the most vulnerable people receive money from friends and family abroad. While the average cost to send money in the form of cash is 6.8 percent, a fully digital transaction drops the cost to 3.3 percent. One of the most active digital remittance corridors is between Mali and Burkina Faso. Digital payments have also served as a key tool for distributing financial assistance to the most vulnerable populations during the COVID-19 pandemic. In terms of G2P, DFS have proven to be a viable alternative to informal financial services in fragile countries such as Mali, where the advancement of financial inclusion is difficult. Conflict in Mali has displaced more than 300,000 people from their homes, according to the United Nations High Commissioner for Refugees (UNHCR), and has slowed financial inclusion147. However, as DFS continue to grow and become increasingly accessible, digital transfers can serve to better reach vulnerable populations in conflict-affected regions. DFS can also strengthen transparency and accountability. For governments issuing emergency funds to citizens and businesses, digital financial services can improve the ability to track where and how government funds are spent and evaluate the impact of interventions. Leakages due to corruption and theft can be reduced through digital payments so that intended beneficiaries receive the full amount of funding they are due. 144 Digital Financial Services, World Bank, 2020 at https://pubdocs.worldbank.org/en/230281588169110691/Digital-Financial-Services.pdf (accessed March 17, 2022). 145 More recent data from the 2021 Findex are expected. 146 Migration Policy Institute at https://www.migrationpolicy.org/programs/data-hub/global-remittances- guide#:~:text=The%20numbers%20fell%20in%202020,%2D%20and%20middle%2Dincome%20countries. 147 Microsave at https://www.microsave.net/wp-content/uploads/2020/07/Inclusive-FinTechs-in-Francophone-Africa-Mali-country-report.pdf. (accessed May 12, 2022). 76 Mali Digital Economy Diagnostic To mitigate the impact of the COVID-19 pandemic, the authorities Box 3.1. BCEAO COVID-19–Related Measures on of the Central Bank of Western African States (BCEAO) reacted by Digital Financial services adopting measures on DFS to help mitigate the pandemic’s social Free person-to-person (P2P) transfers in the country for amounts less than or equal to five and economic impact. The BCEAO adopted several COVID-19– thousand (5,000) CFA francs, including bank related DFS measures intended to decrease financial transaction accounts to e-wallets, and vice-versa. costs and further enable the use of mobile money, including by Free payment of water and electricity bills, by getting rid of or reducing fees/commissions and relaxing mobile phone, for amounts less than or equal to conditions on the opening of accounts (see Box 3.1). In addition fifty thousand (50,000) FCFA. to the BCEAO taking swift action to preserve financial stability and The abolition by e-money issuers of commissions provide additional liquidity to the banking system, Malian paid by merchants on merchant payments, authorities have also responded quickly to the COVID-19 shock supported by electronic money. with emergency measures to support households and businesses The 50percent reduction by banks of merchant affected by the outbreak. fees paid on card-backed merchant payments in the GIM-UEMOA network. The increase in the size limit of electronic wallets 3.2 DIAGNOSTIC FINDINGS: CURRENT STATE OF DIGITAL from two (2) to three (3) million CFA francs and the FINANCIAL SERVICES total monthly cash from ten (10) to twelve (12) million XOF. Relaxation of the conditions for opening electronic money accounts. As such, e-money issuers are 3.2.1 Financial Inclusion allowed to systematically activate e-wallets on the mobile phone database, subject to obtaining by any means the customer's consent and e-KYC The Malian financial sector reflects the structure of the private remote identification, within the limits of the sector market in terms of size, concentration, diversification, and regulatory ceilings. outreach. The financial system is dominated by the banking sector. There are 14 licensed commercial banks, which together account for more than 90 percent of total financial sector assets. Although the microfinance sector is much smaller in size, accounting for about 3 percent of financial sector assets, it is critical to financial inclusion. The microfinance sector has more than 1.2 million deposit accounts and provides financing to market segments that are excluded or underserved by the banking sector and are predominantly informal (microenterprises, subsistence enterprises, women-led enterprises, farmers, etc.). The remainder of the Malian financial system is comprised of six non-bank financial institutions (NBFIs), five mobile money providers, two guarantee funds and one leasing company, and eleven insurance companies that together account for less than two percent of total financial sector assets. Access to and use of financial services are limited among adults in Mali. While the percentage of adults holding accounts in formal financial institutions in Mali has increased over the past decade from 19.2 percent in 2010 to 48.6 percent in 2020, this remains lower than the regional average of 63.8 percent (Figure ), and the second lowest in the region after Niger. Mobile money continues to drive inclusion, with 22.0 percent of financial consumers having access to e-money accounts in 2020, while banks and microfinance together account for 28.8 percent. Out of all financial consumers, only 15.5 percent had access to bank accounts (figure 3.2). The BCEAO Financial Inclusion Index estimates that in the range of 0 to 1, Mali had a 0.445 level of financial inclusion, against a regional average of 0.550 in 2020. Women’s participation in the financial sector has improved significantly in Mali. According to the 2021 Findex Global survey, Mali, has a 1 percentage point gender gap in access to formal financial services. This is a massive improvement from where it was four years prior, where along with Benin, it had one of the highest gender gaps in the WAEMU region in terms of access to financial services at 20 percentage points. Error! Reference source not found. However, in terms of access to national identification, Mali has a gender gap of 15 percentage points. Further information on the gender gap in access to financial services is presented in Focus 2: Gender & Digital. 77 Mali Digital Economy Diagnostic Figure 3.1 and Figure 3.2. Left: Financial Inclusion in Mali and WAEMU. Source: BCEAO 2020, %. Right: Financial Inclusion in Mali. Source: BCEAO 2020,% 70 Access to Bank, 48.6 microfinance and 60 Emoney accounts 50 Access to Bank and 28.8 40 Microfinance 30 accounts 20 Access to Bank 15.5 10 accounts 0 0 20 40 60 MALI WAEMU 2020 2019 3.2.1.1 DFS Offerings, Uptake and Usage The bulk of DFS is offered through mobile money but the market is limited to a few providers. Mobile money is offered by just four providers with a customer base of 8.6 million individuals. These include one e-money issuer, Orange Money Mobile finance, and a joint venture between a bank (BDM) and a Telco (Malitel). Together with Niger, Mali has the fewest mobile money providers in the region. The number of mobile money providers in Mali represents 10 percent of the WAEMU total. Despite the limited number of providers, mobile money adoption in Mali has been constantly growing. The share of mobile money transactions as a percentage of gross domestic product (GDP) in Mali increased from 21 percent in 2015 to 37 percent in 2019. In terms of regional adoption, recent data from the BCEAO show strong and steady growth since 2014 ( Figure 6). However, Mali continues to represent a smaller share of mobile money account ownership behind Burkina Faso and Senegal, and only ahead of Niger and Guinea Bissau (figure 3.4). The mobile money sector has become a vehicle for the provision of accessible and affordable alternative financial services and has already surpassed banking and microfinance services in terms of account ownership and use. 78 Mali Digital Economy Diagnostic Figure 6 and Figure 7. Left: Growth of Mobile Money Accounts in the WAEMU Region 2014–2020, in Millions, BCEAO. Right: Share of Mobile Money Account Ownership Per Country, 2020, BCEAO. 100 94.2 Togo 90 6% Benin 76.9 Senegal 16% 80 14% 70 59.4 62.9 Niger 60 Burkina 7% 16% 50 40 36.4 25.5 Mali 30 9% 18.2 Guinea 20 2% 10 Cote 0 d'Ivoire 2014 2015 2016 2017 2018 2019 2020 30% Access to mobile money accounts continues to grow but is still constrained. According to the International Monetary Fund (IMF) financial access survey, there were 678 mobile money accounts for every 1,000 adults in 2020.147, standing between Burkina (1,050) and Niger (294). This number is remarkably higher than the average mobile money account ownership in Sub-Saharan Africa, Latin America, and Europe, where the average per 1,000 adults is 250, 150, and 50, respectively. The total number of accounts has registered steady growth in the past three years, mainly due to the pandemic. Today, the country accounts for 8.6 million148 accounts with more than 1.6 million accounts added in one year. In terms of transactions, it is responsible for 12 percent of the total volume of transactions in the WAEMU region and 13 percent of its value. Although on the rise, the value of mobile money transactions as a percentage of GDP is significantly lower in Mali (37.0 percent in 2019), compared to Burkina Faso (59.2 percent), and similar to Benin (33.4 percent) (Figure ). The mobile money distribution and acceptance network is limited compared to country size and population. Registered mobile money agents have increased tremendously in one year (Figure ). The number of access points, including merchants and agents, reached 202,764, up from 148,000 a year ago, with an activity rate of 34 percent, while in Burkina activity rates for access points reached 78 percent in the same year. Additionally, Burkina and Senegal account respectively for 8,687 and 9,593 merchants accepting mobile money as means of payment, while this number reaches barely 4,000 in Mali. Malians also tend to abandon ATM networks in favor of mobile money agents, with only five ATMs per 100,000 adults as of 2019 (Figure ). Figure 3.5. Number of Registered Mobile Money Agent Outlets Per 1,000 km2. IMF FAS, 2020 148 BCEAO mobile money report, 2020. 79 Mali Digital Economy Diagnostic 140.00 120.00 121.69 100.00 80.00 60.00 40.00 46.72 35.93 37.93 27.98 20.00 8.85 0.00 2014 2015 2016 2017 2018 2019 Figure 3.6. Number of ATMs Per 100,000 Adults IMF FAS, 2020 6.00 5.23 5.00 4.88 4.70 4.72 4.30 4.46 4.00 3.00 2.00 1.00 0.00 2014 2015 2016 2017 2018 2019 Figure 3.7. Value of Mobile Money Transactions as Percent of GDP IMF FAS, 2020 Mali Burkina 70.00 60.00 60 50.00 52 47 40.00 36.79 33.90 30.00 31 30.38 26.39 20.00 21.18 17 10.00 0.00 2015 2016 2017 2018 2019 The use of digital payments remains low due to a lack of diversification in use cases. According to World Bank data, only 31.0 percent of Malian adults reported making or receiving a digital payment in a year, compared to 34.4 percent in Sub-Saharan Africa.149 A small share of mobile money transactions are payments (4.8 percent) and person-to-person transfers (9.0 percent), while more than 35.0 percent of the volume of mobile money transactions is devoted to the purchase of Airtime (figure 3.8). A similar trend can be observed in 80 Mali Digital Economy Diagnostic Burkina Faso (figure 3.9). The shares of adults who have made bill payments (4.2 percent) and online payments (5.7 percent) are also low. Many still prefer alternative payment methods such as cash payments for people with lower purchasing power or bank cards for people with higher purchasing power. Mali has 593,176 cardholders, a total value of bank card transactions at US$787 billion. and an average transaction value of US$500 per transaction. The high value per transaction reveals that cards are luxury payment instruments for selected individuals. ATM withdrawals are the most widespread use of bank cards in Mali as opposed to payments. Figure 8 and Figure 9. Left: Type and volume of mobile money transactions in Mali (in millions), 2019. Right: Type and volume of mobile money transactions in Mali and Burkina Faso, Source BCEAO (in millions), 2020. Figure 3.8. Type and Volume of Mobile Money Transactions in Figure 3.9. Type and Volume of Mobile Money Transactions in Mali (in millions)- 2020 Mali and Burkina Faso, Source BCEAO (in millions)- 2020 Mali Burkina 734 128 116 114 86 83 68 7.5 5.2 36 25 23 Use of informal credit and savings remains prevalent. The 2021 Findex survey found a higher use of informal financial services compared to formally delivered services, with a tendency to borrow from friends or family and to save in the form of tontines.149 Fewer people obtain formal credit in Mali than in Burkina (7 percent versus 3 percent, respectively).150 In terms of savings, the share of adults who have formally saved in Mali was 11 percent, 5 percentage points higher than the former estimate, but lower than the Sub-Saharan and WAEMU average of 16 percent and 10 percent, respectively. It is also higher than formal savings in Burkina Faso and on par with savings in Côte d’Ivoire at 8 percent and 6 percent, respectively (Table). Table 3.1. Formal and Informal Financial Services. Findex, 2021. Indicator Sub-Saharan WAEMU Burkina Mali Africa Faso Savings Adults who have formally saved 16 10.4 8 11 Adults who have saved informally 22.1 19 30 Credit Adults having borrowed formally 10 5.6 7 3 Adults who borrowed informally 41 33.7 35 35 Transfers Received local remittances using money 21.1 21 24 transfer 149 Informal savings group usually organized by women. Article. 150 Adults over the age of 15 who have obtained credit from an institution. 81 Mali Digital Economy Diagnostic 3.2.1.2 Saving, Borrowing, and Insurance The Malian private sector has engaged in innovative financial services and product delivery. The most active players on the scene are an insurance company (NSIA), a mobile network operator (MNO) (Orange), and a financial intermediary (PlaNet Guarantee). For instance, Sini Tonon is a savings product offered through a mobile platform by Orange Mali. Any Orange Money subscriber can open a savings account with an initial deposit of XOF 3,000 (US$5). Similarly, Tin Nogoya is digital insurance offered when the savings balance in a Sini Tonon account reaches XOF 40,000 (US$66). It provides health/disability insurance and maternal health insurance to its clients151 (Box ). Box 3.2. Digital Savings and Insurance Products Sini Tonon is a savings product provided on the mobile platform of Orange Mali and NSIA via Orange Money, to provide a remunerated savings service. The savings account can be opened by any Orange Money subscriber with a minimum initial deposit of XOF 3,000 (about US$5), by selecting an option from the Unstructured Supplementary Service Data (USSD) mobile money menu to move the money from the main wallet to the savings account. Once the savings account is opened, the user can save money at any time with a minimum deposit of 100 XOF (about US$0.16), by moving money from the main orange money wallet to the savings account. Digital credit also appeared with Tin Nogoya, an insurance product that activates automatically when a savings balance reaches XOF 40,000 (about US$66) on the Sini Tonon account, and gives the user 12 months of life/disability insurance and maternal health insurance. The payment to the beneficiary for death or permanent disability is XOF 150,000 (approximately US$260). Expenses are also reimbursed for four major complications during childbirth: hemorrhage, eclampsia, dystocia, and caesarean section, with up to XOF 100,000 (US$165) for the first three complications and XOF 50,000 (US$82) for caesarean section. If the patient has not attended antenatal consultations, the maximum reimbursement is 75 percent of these limits, which is a way of indirectly encouraging women to seek antenatal care. Another automated credit and savings product, Singa Ni Mara, was launched in partnership between Orange Money and AKDN but was closed in 2020. DFS holds significant potential for expanding access to agricultural insurance for smallholder farmers in Mali, who are vulnerable to climate risks. Smallholder farmers’ livelihoods are dependent on the proceeds from their farms and are highly vulnerable to extreme weather events such as droughts and floods. Given that agriculture accounts for 58.0 percent of total employed labor, 37.3 percent of total GDP, and 20.0 percent of total exports in Mali, risks in this sector have widespread implications for the country in terms of economic growth and poverty reduction as well as food security. Crop insurance is provided by “OKO Finance� has an affordable cost and has helped ensure farmers’ incomes against loss due to extreme weather.152 International remittances fell slightly to $987 million in 2020 down from $1 billion a year before. Fees for mobile remittances are relatively lower, ranging between 3 to 5 percent per transaction instead of 10 to 12 percent when using over-the-counter (OTC) services. In the wake of the pandemic and regional political sanctions resulting from the coup, OTC options were unavailable to customers. As a result, consumers sought alternative ways, through DFS, to receive money from family and friends overseas. Remittances in Mali accounted for 5.7 percent of its total GDP, valued at USD 969000000.027 w. These rank Mali 3 after 153 in the WAEMU region in terms of inbound remittance.154 3.2.1.3 Public Services and DFS 151 EMOP: Malian Institute of Statistics. 152 https://agfundernews.com/oko-finance-is-delivering-crop-insurance-to-cushion-malis-farmers-from-intensifying-weather-patterns. 153 https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?locations=ML. 82 Mali Digital Economy Diagnostic The Government of Mali (GoM) opted to digitize selected G2P payments, in particular for social safety nets and small pensions, though the majority of G2P payments remain cash based. The World Bank–financed PAFEEM project157 is supporting the GoM to modernize social payment systems (social safety nets and retirement pensions) through the Malian Social Security Fund (CMSS) as well as the National Social Prevention Institute (INPS). Although the beginning of digitization is underway for social payments, the low number of retail outlets that accept mobile money as a means of payment means that cash withdrawals are likely to remain popular. Tax payments person-to-government (P2G) are pushed back by small businesses. The GoM introduced the synthetic tax in 2014 to replace local taxes, such as taxes on livestock and mills, with the view to collect taxes on micro and small businesses. The latter tend to underreport their revenues. However, simplifying the tax base by specifying single tax rates or thresholds for micro, small, and medium enterprises (MSMEs) may encourage them to register formally hence pay taxes digitally. Digitizing P2G payments is likely to increase transparency, formality, and revenue mobilization in Mali. As indicated in Table , Mali still holds one of the lowest levels of digitization, according to a 2019 World Bank study. Table 3.2. Level of Digitalization of Payments (expressed as a percentage of values) G2P B2G P2G Benin (Year 2016) 84.62 percent 0 percent 0 percent Burkina (Year 2017) 95.78 percent 72.91 percent 3.79 percent Cote d’Ivoire (Year 2017) 97.57 percent 13.02 percent Not available Mali (Year 2017) 43.56 percent 38.98 percent Not available Senegal (Year 2016) 24.70 percent Not available 8,40 percent Source: World Bank, 2019. 3.2.1.4 Financial Technology (fintech) Landscape: Opportunities and Challenges Financial institutions are digitizing transactions to meet the urgent needs of the population, especially during the pandemic: paying for health services, utility bills or receiving wages, social benefits, at low cost. Following the same trend as the rest of the world, digital technology in Mali has allowed a new market dynamic of fintech start-ups that help bridge the exclusion gaps and accelerate growth. Fintech companies appear slowly, and their growth is delayed by the absence of an adequate operating environment. The Malian government is putting in place policies to leverage digital solutions and understands the need to strengthen the entrepreneurship ecosystem. This will require investment in skills, education, and support for the start-up sector, with the support of strong mentors. At the end of 2020, there were 18 fintech companies, including 11 specialized in digital payments, 4 in banking back office, 1 in digital insurance, 1 in digital credit, and 1 in investment. The main business model is P2P and most fintech firms have developed and launched without the support of an incubation program or a public financial institution. The main obstacles to the development of fintech firms can be summarized in 4 points: access to capital, access to talent, collaboration, and policy and regulatory framework. Fintechs mainly 83 Mali Digital Economy Diagnostic focus on payment and transfer solutions; the main target segment is the Malian diaspora, which represents one-third of the population. To expand their customer base, Fintechs are focusing on youth, MSMEs and farmers, women and the diaspora. Recently established in West Africa, WAVE launched a payment service in partnership with UBA and ORABANK. The service is considered a breakthrough because of its low-cost policy, flattening the cash out fee of transactions to 1%. WAVE reported 185,000 customers and 4,000 agents at end 2021. The service is available for small businesses as well as individuals for payment, transfers, and bill payments. Despite efforts to provide quality internet technology (4G/5G, broadband), there remains a generalized degradation of transport infrastructure, delay in electrification of rural areas, and low purchasing power among individuals. Infrastructure (electricity and internet mainly) and its related costs remain a major hurdle to the development of Malian fintech start-ups. Box 3.3. Mapping of Inclusive Malian Fintech Firms According to Target Segments and Main Products (prior to WAVE arrival) Women MSMEs Farmers Youth Payments Credit Savings & investments It will be important to extend the scope of sectors where digitization can have a strong impact. In priority sectors like education, agriculture, social protection, and energy can strengthen the digital economy; as seen in box 3.3, Malian fintech firms are active in these sectors. Further market incentives will be needed to induce innovation in financial services and address the demand for credit and savings and insurance. The provisions of the legal and regulatory framework for financial services no longer fully adhere to recent developments in financial technology in view of the emergence of new players and services, and the associated risks. Digital finance has evolved toward themes related to agency banking, crypto-assets, infrastructure sharing, aggregation and alternating financing platforms, acceptance technologies (QR codes, mobile print of sale [MPOS]), Central Bank issued digital currency (CBDC), cybersecurity, and so forth. Fintech companies operating in Mali and WAEMU are not categorized among the service providers approved by the Central Bank of West African States (BCEAO). As a result, on the demand side, there is a rise in legal, operational (security), and financial (money laundering) risks, requiring an update of the main regulatory texts relating to payment, including the Banking Act, the Microfinance Act, the Regulation on Payment Systems, the Uniform Law on Money Laundering and the Financing of Terrorism, and the Instruction on Electronic Money. 3.2.2 Enabling Environment for DFS Financial inclusion is now recognized as one of the main levers for socioeconomic development and the reduction of poverty and inequality. Thus, access to financial services has become a priority for policy makers and regulators, as evidenced by the growing number of countries adopting strategies to improve the use of 84 Mali Digital Economy Diagnostic appropriate financial services. It is also increasingly recognized as an alternative way of promoting the economic activity of households, small and medium-sized enterprises (SMEs) and all populations excluded from the traditional financial system. 3.2.2.1 Policy Frameworks The government of Mali adopted the National Financial Inclusion Strategy (NFIS), in June 2022, with an objective to reach 75 percent financial inclusion by 2025. One of its pillars focuses on promoting the use and adoption of digital financial services, including by MSMEs and by government, for example through digitizing government payments and enhancing digital public platforms, as discussed in the Digital Public Platforms chapter. The GoM set up the National Committee for Monitoring the Implementation of the National Strategy for Financial Inclusion (CNSMO) 155 to effectively implement the strategy. In addition, the Professional Association of Banks and Financial Institutions (PABFI) and the Professional Association of Decentralized Financial Systems (PADFS) work to harmonize efforts to increase DFS access in Mali. All providers whose services fall under these categories are legally mandated to join these associations. 3.2.2.2 Financial infrastructure Banks in Mali are members of the below regional payment systems: The Interbank Automated Clearing System in WAEMU (SICA-UEMOA); The WAEMU Automated Transfer and Settlement System (STAR-UEMOA); and the platform of the Groupement Interbancaire Monétique (GIM-UEMOA). Currently, Mali’s financial infrastructure has failed to exploit the BCEAO payment systems to strengthen credit infrastructure, digitalization of government payments, and interoperability between digital payment instruments. The Malian banking sector operates the regional payment system, set up and managed by the BCEAO, following a reform of the regional payment system that led to the establishment of a regional infrastructure between 2004 and 2006. The GoM has made some progress in digitizing payments, but these are limited mainly to the payment of civil servants’ salaries. In order to strengthen the mechanisms, reduce settlement times, guarantee the speed and collection of revenues and, more generally, modernize means of payment, the Treasury signed a convention to join the GIM-UEMOA. 3.2.3 Constraints to the Development of Digital Financial Services 3.2.3.1 Legal, Policy, and Regulatory Constraints Mali lags other countries in the WAEMU zone in terms of credit information. The credit infrastructure, although open to non-banks, captures only partial information that limits prospective innovation. A credit information bureau (BIC-UEMOA) has been operational since February 2016 for the WAEMU region with a national branch in each WAEMU member country. Financial institutions are required to declare loan applications and check the creditworthiness of borrowers. A 2019 reform of the legal framework of Mali’s BIC allowed the collection of customer data without their consent. This legal change has led to a substantial increase in the number of accounts declared to the credit bureau, to 847,000 accounts, with the potential159 to reach 9 million adults. It turns out that the amendment to extend the scope of the BIC to post-paid public service bills has not yet been adopted in Mali. Such a reform would have the benefit of allowing a wider database and preparing for an improvement in the possibilities of access to credit. However, fintech firms do not presently take part in the BIC, although these entities are the ones that carry out the scoring of customers for micro credit or automatic renewal of credit. Not involving fintech firms could be risky for financial inclusion due to a lack of 155 The National Committee for Monitoring the Implementation of the National Strategy for Financial Inclusion (CNSMO-SNIF) attached to the Ministry of Finance is a permanent consultation framework, one of the objectives of which is to implement the national strategy for financial inclusion. 85 Mali Digital Economy Diagnostic real and exhaustive information on clients’ financial situations. Similarly, smaller credits are not listed within the BIC, which could also prove risky for financial inclusion for the reasons mentioned above. Indeed, without alternative data on consumers, it is impossible to create credit algorithms and rating tools for the financial sector to further support digital credit. The country lacks a decree on the digitization of government payments in Mali. The level of digitalization of public payments is still low and stands at 5.8 percent, compared to 7.0 percent in the SSA. Only the Directive No. 08 of September 19, 2002 stipulates that government payments exceeding 100,000 XOF (or US$163) must be made by a non-cash or electronic means in accordance with Instruction (2003) of the BCEAO governor. Civil servants’ salaries remain the most digitized flow when they exceed this threshold; however, other benefits such as allowances are largely paid in installments, showing that this directive is poorly enforced. A stronger commitment at the government level, such as a decree, would allow a better application of this Directive. Regional constraints and recommendations are addressed in the ongoing Financial Sector Assessment Program (FSAP). Selected recommendations are presented in the appendix section 3.2.3.2 Institutional Constraints The absence of a collaborative approach to the supervision of DFS exposes the consumer to greater risk. The rise of digital financial services has given rise to the need to control the risks inherent in technology (fraud, financial risk, and reputational risk) and to protect the financial consumer. The scope of intervention of the authority in charge of the regulation of electronic transactions, the Malian Telecommunications Regulatory Authority (AMRTP), naturally concerns mobile money operations, which are an integral part of digital financial services. The BCEAO is also in charge of regulating digital financial services and supervises this sector. However, there is a lack of coordination between the two regulators regarding cross-cutting aspects: supervision, authorization, pricing, and so forth. Supervision is also a challenge due to a lack of technological means such as “Suptech.�This is particularly the case for digital financial services, microfinance, and insurance, although significant efforts have been made in this area since 2015. Modern supervisory methods make it possible to strengthen existing control and supervision systems and to adapt supervisory practices to financial innovations. The rise of digital financial services has increased the need for enhanced surveillance, while the current surveillance system in Mali still manually processes data collection, analysis, and reporting, despite inefficiency (high staff assignment) and risks of inaccuracy (human error). In the specific case of e-money transactions, the regulator does not have the capacity to accurately assess the value of the electronic money in circulation, which should be secured by funds protected in the escrow account. The adoption of DFS is not without risks, and consumer protection is at stake. Mali has not yet put in place a system to control the technological risks related to financial technology. Personal data used to inform product offerings may be used fraudulently by suppliers or other entities often without the consent or understanding of consumers. It is important to have clear guidelines on the e-security of DFS and to implement a consumer redress mechanism. Several incidents of fraud have been reported in the region regarding DFS transactions. Other risks in DFS can be found in table 3.3. Risks of using DFS could be addressed in Mali’s national financial inclusion strategy. Table 2. Risks of Using DFS Nature Impact High-speed transactions Transparency, product sustainability Remote product adoption and use Transparency, over-indebtedness, product suitability, recourse Automated decision-making Product adequacy, data privacy, discrimination 86 Mali Digital Economy Diagnostic Participation of non-regulated or non-financial Security of consumer funds fair treatment, data confidentiality entities Use of alternative data Data privacy, discrimination Reaching consumers who were not previously Product durability banked 3.2.3.3 Product and Market-Level Constraints Compared to the rest of the region, mobile money in Mali is expensive. The “national transfer� service is a transfer of electronic money from one electronic money account to another electronic money account within the same network (sometimes called P2P). In the region, most providers do not charge for this service, whereas in Mali, a transfer costs XOF 50 (or US$0.081), regardless of the amount transferred. The fees for withdrawing cash can reach XOF 2,150 (or US$3.54), the highest in the WAEMU, compared to XOF 1,000 (or US$1.63) in Burkina Faso. The national cash transfer fee is also the highest in the WAEMU, reaching a maximum of XOF 3,650 (or US$6.02). Studies have shown that mobile money can help reduce gender inequalities, but challenges stand in the way of the optimal adoption of digital financial services by women. As noted in the Gender & Digital focus area, there are several constraints limiting women’s access to digital financial services ; the lack of disaggregated data collected by AMRTP (Mali’s ICT and Postal Regulatory Authority) reduces the possibility for private and public actors to define strategies and policies oriented toward women. Finally, efforts to strengthen women's capacities in financial education and digital skills are lacking, particularly within the National Agency for Entrepreneurship (ANPE). 3.2.3.4 Infrastructure Constraints To date, the WAEMU regional payment system has not achieved its interoperability objective and does not process instant payments. The BCEAO has taken the strategic decision to set up an instant payment infrastructure allowing “account-to-account� exchanges, regardless of the type of account (bank, non-bank), instrument, service and channels used and the integration of all financial service providers. The deployment of the new services, based on instantaneous and irrevocable transactions, should contribute to the reduction of transaction costs and delays, the control of risks related to the clearing and settlement of transactions, and the promotion of the financial inclusion of populations. While Mali benefits from the regional payment infrastructure, lack of interoperability affects DFS expansion. While the world is moving toward open payment systems and shared interfaces, this system is not accessible to microfinance institutions (MFIs) and electronic money institutions (EMIs). Despite efforts by the central bank to create an interoperable payment ecosystem at the regional level, payment infrastructures of key market players are yet to be interconnected, thereby reducing its effectiveness. Some inefficiencies are noted in the interoperability of digital payments. This is especially evident when customers of financial institutions try to send payments to customers of mobile money operators and vice versa. In addition, several challenges arise for regional interoperability, such as increased costs of a unifying payment system and the predominance of a dominant operator. Furthermore, Mali lags other countries in the WAEMU zone regarding credit information and infrastructure (See section on Legal, policy, and regulatory constraints.) The capacity of the Public Treasury to effectively digitize government payments is limited. A project is currently underway to connect Mali’s Public Treasury to the regional switch by December 2022. However, the Malian Treasury currently lacks the technological resources needed to digitize several procedures and processes, 87 Mali Digital Economy Diagnostic including those of financial operations. The Treasury presently does not have a central platform or interface to process payments. Connections to broadband networks are insufficient to back the effective usage of DFS. For context, broadband networks are essential to connect to DFS, such as mobile money. As discussed in the Digital Infrastructure chapter, limited access to broadband connections further exacerbates challenges to increasing financial inclusion through DFS, particularly in rural areas. 3.3 RECOMMENDATIONS This section provides recommendations on priority actions to accelerate DFS adoption and usage in Mali. R1 [Quick win]. Support the National Treasury in its vision to connect to regional payment systems and to acquire a national payment gateway to oversee and manage all public financial flows in order to accelerate digitization of government payments. A deep dive diagnostic of internal processes and a description of specific functional and technical requirements will be needed prior to acquiring such system. R2 [Quick win]. Adopt a decree allowing the expansion of the BIC-UEMOA database in order to allow the incorporation of data from major billers (SOTELMA, EDM, MALITEL). Additional consumers’ data will help improve the assessment of the creditworthiness of individuals and help accelerate scoring systems needed for digital credit services. R3 [High priority]. Adopt a decree to mandate the digitization of specific government payment flows in line with the 2002 regional directive on banking. The new decree will set a deadline by which specific transactions over a threshold will need to be processed digitally. The span of digitized flows could cover pensions, grants, and salaries in line with regional guidelines. P2G payments could also be included (taxes, custom fees). R4 [High priority]. Further extend DFS to sectors other than the financial sector to expand the range and adoption of DFS. This includes adoption of DFS in the agricultural industry, which accounts for 37.32 percent of GDP. Modernization of agricultural value chains now includes efforts to digitize financial income for small producers. These small-scale producers are primarily in need of credit, savings, and digital insurance in the face of climate change crises. R5 [High priority]. Establish a dedicated and autonomous agency for financial inclusion. This agency will also be responsible for designing, monitoring, and implementing financial inclusion–related projects in Mali. The agency will be responsible for coordinating all activities between stakeholders to promote access to financial services for the vulnerable. The new agency will be supported by the CNSMO. A dedicated agency has been created in Côte d’Ivoire and Nigeria. The latter is considered as an aspiration peer. R6 [High priority]. Establish a consumer protection agency to mitigate financial risks to consumers. This entity would monitor the quality of financial services available to consumers, mass dissemination of financial education, and consumer protection through a financial mediation system. Furthermore, it would help protect consumers against financial risks such as operational errors and fraud. A consumer protection agency is operational in Senegal and Cote d’Ivoire. R7 [High priority]. Ensure the creation, disaggregation, and use of gender data to inform DFS product and policy designs. Research shows that DFS can help reduce gender inequalities; therefore it is essential to collect gender data that provides insights on how to refine financial policies and products that favor women and young people. Data can be leveraged to target women’s financial literacy, increase their participation in fintech 88 Mali Digital Economy Diagnostic entrepreneurship, and modernize prominent traditional saving mechanisms common to Malian women such as tontines. R8 [High priority]. Address fintech challenges and leverage opportunities to scale DFS. The passing of the Startup Act in Mali should be accelerated. This law will create an enabling environment for fintech start-ups. 89 Mali Digital Economy Diagnostic FOCUS 3: REGIONAL INTEGRATION Mali has much to gain from expanding digital regional integration. The poor performance of Mali’s telecommunications sector is undoubtedly linked in part to the country’s geographical isolation and economic geography. Mali’s landlocked situation has an impact on the price of data, which remains very high, due in particular to the additional costs of crossing the networks of neighboring countries to reach the undersea landing stations. Moreover, Mali’s neighbors are also poor performers in the telecoms sector, so the country does not benefit from any knock-on effect for the development of its sector. Overall, Mali’s geographical location and small domestic market highlight the need for regional and international integration to support external growth, benefit from the network effects of a regional market, access regional private investment, connect to regional infrastructure, and integrate into regional value chains. A regional approach supporting the long-term goal of a Single Digital Market (SDM) can be a win-win solution for all G5 Sahel countries. Burkina Faso, Chad, Mali, Mauritania, and Niger represent a total population of about 80 million people, 47 percent of whom are under 15 years of age, in a territory of 5 million square kilometers (one-half the size of the United States). The Sahel is characterized by a “regional fragility trap� fueled by land pressures due to rapid urbanization and population growth, environmental degradation, climate volatility in countries already prone to desertification, drought and flash floods, poor basic electricity and water infrastructure, hunger and malnutrition, insecurity and recurrent conflicts, and lack of economic opportunities. In such a context, digital connectivity at national and regional levels and digital technologies, anchored on digital skills needed for digital uses, can serve as catalysts to reducing poverty and promoting inclusive growth. Furthermore, financial market integration will play a key role in helping Africa attain its financial inclusion goal and provide financial support to vulnerable people affected by COVID-19. The BCEAO, through its regional payment system (the GIM-UEMOA), aims to implement a regional interbank electronic system for electronic withdrawals and payments to help extend financial services past traditional offers. Three ways it tries to ensure regional financial integration include: the creation of a payment scheme through the provision of payment applications and the specification of use for financial instruments; switching, to ensure interoperability for all market players; and processes that bring the financial sector mechanism together (such as dematerialization, user security, and flow centralization). However, as discussed in the Digital Financial Services chapter, market players in many countries, including Mali, are yet to connect to this regional payment system. This limitation means that financial service providers are yet to take full advantage of this system to scale financial solutions, and consumers face restrictions in product use. Through policy and regulatory harmonization, countries can reap the full benefits of an interconnected payment system.156 Regional integration will require Mali and its neighboring countries to take proactive steps and work together, as they have begun to do with the creation of the G5 Sahel ICT Committee, based on an SDM framework. For Mali, this would begin to ensure full harmonization of its electronic communications framework with that of WAEMU and ECOWAS. Mali’s adoption of the ECOWAS roaming regulation is a step in the right direction. Strengthening regional integration would also require accompanying businesses to increase their production capacity, ensure seamless digital payment services, develop their human capital, and increase revenues through cross-border trade. Many challenges would also remain, such as extending the availability of broadband networks beyond regional capitals in a difficult security environment, and updating regulations to improve the enabling environment, from financial services and digital payments to cybersecurity and data protection and privacy, regional expansion of digital businesses, and tax policies. Supporting Africa’s Recovery and Transformation: Regional Integration and Cooperation Assistance Strategy Update for the Period FY21–FY23. 156 World Bank Group, 2020. 90 Mali Digital Economy Diagnostic SDM Framework Achieving an SDM will require simultaneously supporting domestic development and cross-border integration of the following submarket structures, which form distinct yet interconnected layers of the overall SDM. These include the following: • A single connectivity market, which will remove barriers to regional telecom infrastructure and services deployment to encourage investment, improve performance, and eliminate pricing and quality differentials between coastal and landlocked countries while simultaneously expanding access to connectivity to all. • A single data market, which will enable secure exchange, storage, and processing of data across borders; support regional deployment of data infrastructure; and drive supply and demand for data- driven services and innovation across the region. • A single online market, which will allow firms, governments, and citizens to access and deliver both public and private services online; undertake e-commerce transactions; and access digital content and information seamlessly from anywhere in the region. Advancement in each distinct market layer is expected to create a virtuous cycle. Each layer builds on the other, which will reinforce the development, expansion, and integration of the SDM and further drive access to the internet, innovation, job creation, and growth. Note: Digital market typology developed by the World Bank157 157 See A Single Digital Market For East Africa, World Bank & SDM East Africa, 2018. 91 Mali Digital Economy Diagnostic CHAPTER 4 DIGITAL BUSINESSES Key messages: � Mali’s digital ecosystem is fairly young, with over 90 percent of digital businesses emerging in the last decade. Malian digital businesses can unlock employment opportunities for Mali’s fast-growing youth population and can contribute to improving the country’s competitiveness in key economic sectors, as highlighted in Mali’s Private Sector Diagnostic. Malian digital businesses also have the potential to support further social, financial, and digital inclusion, especially among women, since these businesses tend to be less capital intensive than traditional ones and can offer flexible and remote operations opportunities provided adequate connectivity is available. � Despite ongoing efforts to boost entrepreneurship in Mali, the implementation of policies has often fallen short, with no policy formalizing the digital entrepreneurship agenda. Malian entrepreneurs, including in the digital domain, continue to face a weak business regulatory environment, particularly in terms of the high costs of starting and operating a business and burdensome taxation. In addition, access to finance remains a key constraint for Malian micro, small, and medium enterprises (MSMEs) compounded by the global COVID-19 outbreak and the ongoing political crisis. Strengthening the enabling environment is crucial as Malian digital businesses serve as a critical foundation to enable traditional offline businesses in value chains to adopt digital technologies, expand the customer reach, create positive spillover effects in the rest of the economy, and improve trade of goods and services across borders. � In the context of a small domestic market, sustaining growth outside of Mali can be an important avenue to access regional private investment and regional value chains for accompanying businesses to scale their productive capacity, to develop their human capital, and to increase revenues by trading across borders. This trend is already taking place with nearly one-half (46 percent) of digital businesses operating in Mali headquartered outside of Mali according to the World Bank’s Finance Competitiveness and Innovation database. � Mali trails behind in fintech and e-commerce compared to the Sub-Saharan Africa (SSA) region, indicating that far-reaching reforms are needed to unlock fintech and e-commerce potential in Mali. These range from regulatory reforms to connectivity investments to public and private cooperation to digital readiness in the transportation and logistics sector. � Weak digital literacy and limited digital skills are intertwined with demand- and supply-side obstacles for digital businesses. As access to devices and broadband connectivity expands, most policy makers, business leaders, and digital entrepreneurs agree that digital skills must be strengthened in a targeted fashion to alleviate the current scarcity of local information and communication technology (ICT) professionals, to address the digital entrepreneurship skills gaps, and to promote digital literacy for all to accelerate the adoption of digital solutions aimed at the general population. 92 Mali Digital Economy Diagnostic 4.1 IMPORTANCE OF DIGITAL BUSINESSES Digital businesses158 can play a strategic role in unlocking opportunities for economic growth, job creation, and social inclusion in Mali. Prior to COVID-19, formal and informal firms in SSA that adopted digital technologies were likely to have higher levels of productivity, output, profits, employment, and wages. More specifically, employment and labor productivity have been higher in firms that use smartphones, digital transaction technologies (such as mobile money to pay suppliers and receive customer payments), and digital management solutions (accounting and inventory control/point-of-sale [POS] software) as highlighted in the 2021 Africa Pulse Report.159 Overall, digital businesses offer employment opportunities for Mali’s fast-growing youth population and can contribute to improving the competitiveness of key economic sectors such as education (for example, rapid skilling trainings, digital learning marketplaces, and online education programs), agriculture (for example, monitoring crops and soil quality) and logistics (for example business-to-consumer [B2C] rideshare and business-to-business [B2B] delivery services from production areas to consumer centers), as highlighted in Mali’s Private Sector Diagnostic. Digitization offers unique opportunities for Mali’s MSMEs. Throughout the Sub-Saharan economies, (MSMEs) make up 90 percent of the private sector and 50 percent of jobs.160 As part of Mali’s economic development strategy, expanded broadband access, affordability, and reliability, along with digitization can help transform Mali’s MSMEs161 by leveraging technologies to revamp their core operations, improve productivity, adopt new business models, expand the customer reach, and trade and fulfill goods and services delivery more efficiently.162 4.2 DIAGNOSTIC FINDINGS: CURRENT STATE OF DIGITAL BUSINESSES Although still at a nascent stage, Mali’s digital business ecosystem is demonstrating an encouraging growth potential. Given its size and fragility, Mali’s digital business ecosystem is relatively small compared to aspirational peers, such as Côte d'Ivoire, Ghana, Senegal, Rwanda, and Kenya. However, it has been developing in recent years, with several innovative digital firms emerging boosted by the pandemic and the need to rapidly shift to virtual interactions and to online delivery of primary goods and services ranging from food to education. Created in 1996, the Association des Sociétés Informatiques du Mali (ASIM) gathers 92 companies of different sizes ranging from the large to the micro enterprises. Based on the World Bank Group Finance Competitiveness and Innovation database, there exist 58 digital businesses in Mali, including data and platform firms. Digital businesses are digital solution providers that develop digital technology products or provide digital services. Digital businesses can be largely divided into two distinct categories in their business lifecycle: (i) digital start-ups, and (ii) established digital businesses. They serve as a critical foundation to enable traditional offline businesses in value chains to adopt digital technologies and new digital business models, creating positive spillover effects in the rest of the economy. Mali’s digital ecosystem is fairly young, with over 90 percent of digital businesses emerging in the last decade. Overall, Mali’s digital businesses have a similar founding year distribution as Chad’s, Guinea’s, and Niger’s 158 For the purpose of this report and in accordance with DE4A 2.0 guidelines, digital businesses are comprised of two main categories—digital start- ups (early-stage ventures that create new/innovative digital solutions or business models as part of their core products or services) and established digital firms (platform-based and data-driven firms that have passed the initial start-up stage, having acquired suppliers, contractors, and consumers). 159 World Bank, 2021, Africa Pulse. COVID-19 and the Future of Work in Africa: Emerging Trends in Digital Technology Adoption. https://www.worldbank.org/en/region/afr/publication/africas-pulse, 160 Supporting Small and Medium Enterprises in Sub-Saharan Africa through Blended Finance. Available at https://www.csis.org/analysis/supporting- small-and-medium-enterprises-sub-saharan-africa-through-blended-finance 161 UNCSTAD Formulating National Entrepreneurship Policy. Available at https://unctad.org/topic/enterprise-development/entrepreneurship-policy- hub. 162 Deloitte, 2019. Reimagining the Role of Technology. https://www2.deloitte.com/content/dam/Deloitte/ec/Documents/technology-media- telecommunications/DI_CIO-Insider-Reimagining-the-role-of-technology.pdf. 93 Mali Digital Economy Diagnostic but Mali’s digital businesses on average are younger than Burkina Faso’s, Sierra Leone’s , and low-income averages (Figure- ). Overall, Mali’s digital business ecosystem is trailing and ranks 19 among 35 countries in the Sub-Saharan region (Figure ) when it comes to the number of digital businesses per dollar of GDP per capita (2019). Most of the digital start-ups are relatively young (some of the oldest established in 2011), and only a handful are generating revenue, with over one-half considered to be at the ideation or validation stage. Figure- 4.1. Mali and Global Frontier: Digital Business by Founding Years Figure 4.2. Number of Digital Businesses Per Dollar of GDP Per Capita (US current, 2019) SSA countries by number of digital businesses 0.000 0.050 0.100 0.150 0.200 0.250 Nigeria 0.191 0.175 South Africa 0.139 0.093 Ghana 0.049 0.040 Tanzania 0.039 0.025 Senegal 0.022 0.020 Mozambique 0.020 0.017 Malawi 0.012 0.011 Côte d'Ivoire 0.007 0.007 Mali 0.006 0.003 Namibia 0.002 0.001 Note: *Number of digital businesses only includes CB Insights data (as of June –September 2020), which covers all the regions. Thirty-five SSA countries with digital businesses captured in the database that have GDP per capita information are used in this analysis. Digital businesses operating in Mali = 5, SSA region = 2,050, the rest of the region = 184K 94 Mali Digital Economy Diagnostic Malian start-ups are focused on delivering business-to-customer (B2C) digital products and services and are predominantly clustered in retail and commerce, media and advertising, and fintech, with these three sectors accounting for more than 57 percent of analyzed tech start-ups and thus representing promising emerging areas of growth for digital businesses. As seen figure 4.3in the top digital subsectors in Mali are similar to the regional SSA average but AgTech163 and MobilityTech stand out. Mali trails behind in fintech and e-commerce compared to the region although more recently founded firms are consistently entering the fintech and e- commerce sectors. The entrepreneurs behind these digital ventures are typically young men (below the age of 40), as women lead an estimated 10 percent based on interview surveys. Some of these start-ups have benefited from the local support ecosystem that now counts 24 tech hubs and co-working spaces and market linkage initiatives, such as Seedstart and Afrique Excelle. Figure 4.3. Top 10 Digital Business Subsectors in Mali and in the SSA Region In line with urbanization trends, digital businesses in Mali are highly concentrated in urban centers. Overall, the ecosystem had grown prior to the pandemic. However, most of that growth had been mostly concentrated around Bamako and to a limited extent around Sikasso and Segou (including some programs that have regional representations). This is hardly surprising in the context where 44 percent of the Malian population164 lives in urban areas (above the SSA average of 41 percent) and are driven by food insecurity, limited economic opportunities, political crises, and underdeveloped or unreliable infrastructure in rural zones (especially in terms of access to electrical power and digital connectivity). Affordability, speed, and reliability of internet services remain key usage barriers. Such low adoption and penetration rates amid persistent broadband connectivity and electrification infrastructure constraints, more pronounced in rural areas, hinder opportunities for digital businesses to expand their customer base and to increase adoption rates. Several hurdles, beyond the underlying broadband connectivity constraints and broader enabling environment, are limiting the growth and the expansion opportunities of digital companies in the country. First, access to finance, especially for young firms with a services-based model, may be less trusted in Mali considering all the risks factors. Second, weak digital skills (including programming and technical management skills) and digital literacy and awareness among the broader population are critical constraining 163 Sustainable agricultural technology or, more simply, “AgTech,� is an emerging economic sector that has the potential to completely reshape global agriculture, dramatically increasing the productivity of the agriculture system while reducing the environmental and social costs of current ag production practices. https://www.daf.qld.gov.au/__data/assets/pdf_file/0009/1556469/what-is-agtech.pdf. 164 United Nations Population Division. World Urbanization Prospects: 2018. Mali vs. SSA. https://data.worldbank.org/indicator/SP.URB.TOTL.IN.ZS?locations=ZG. 95 Mali Digital Economy Diagnostic factors both on the supply and the demand side of digital products and services. Finally, low adoption of digital financial services (DFS) and the absence of payment gateways stifle opportunities for online transactions. As illustrated in the Digital Financial Services chapter and underscored by several digital businesses interviewed during the elaboration of this report, the payments infrastructure in Mali is underdeveloped, and the economy remains largely cash based. Despite the challenges to start and operate digital businesses in Mali, some promising digital start-ups have managed to carve out innovative solutions to address local needs. Several young and innovative companies such as WAVE, Teliman, Famib and Lenali (see Box ) have recently emerged and were slightly boosted by the COVID-19 pandemic to offer solutions respectively for business transactions, goods deliveries, online education, and audio-based social media interactions. Box 4.1. Lenali— An Innovative Local Social Application Innovative digital applications like Lenali165 have endeavored to overcome some of the barriers outlined above, in addition to the challenge of illiteracy that affects one-half of the young population and two-thirds of adult women. Through its voice-only social media platform in local languages, Lenali’s timeline of posts, likes, and voice messages in local languages has connected uneducated people with limited access to the internet. In agriculture, the Lenali platform was used in two World Bank projects (Agroindustrial Competitiveness Project and Rural Land Management) to manage rural citizens’ complaints and to conduct surveys among rural citizens with no internet access. In health care, Lenali was used to connect pregnant women in Sabalibougou, Bamako, with doctors. Lenali is able to integrate its technology with TV boxes for rural households without an internet connection. However, in aggregate terms the pandemic has had a negative effect on the demand market with food insecurity on the rise and remittances on a sharp decline. Remittances play a major role in the fight against food insecurity in Mali. A significant number of Malian households, often unbanked and living in rural areas, depend on them to meet their food needs. With the decrease in economic activities in the migrants’ host countries, the World Bank (2020) anticipates a 23 percent reduction in remittance flows to Sub-Saharan Africa regions. This in turn had a negative impact on digital businesses, which saw a drop in local demand and a decrease in remittances, another source to finance the growth of local businesses through networks of expatriate family and friends. Far-reaching reforms are needed to unlock e-commerce potential in Mali. At the onset of the COVID-19 crisis, the United Nations Conference on Trade and Development (UNCTAD) conducted rapid eTrade readiness assessments in Benin, Mali, and Niger. The assessments found that the three west African countries, just like other least developed countries (LDCs), need far-reaching reforms to seize the benefits of online commerce that have been boosted all over the world with more people having to shop online. Mali, in particular, would need to accelerate the implementation of reforms in the country’s digital strategy through a steering and coordination framework with clear implementation commitments. Moreover, it would need to determine the feasibility, the prioritization and the public and private partnerships necessary to expand broadband connectivity and to ensure the competitiveness and digital readiness of the transportation and logistics sector. Lastly, fast-growing mobile money adoption would need to overcome inadequate financial services, low financial inclusion, limited competition, and slow uptake of e-payment methods for digital government services. The following section considers some of the critical constraints to digital businesses in Mali, including the policy, regulatory, and institutional environment, access to finance, support structures and human capital. 4.2.1 Policy underpinnings 165Global Development: Illiterate Population in Mali had its own Social Media App. 2019. Los Angeles Times. https://www.latimes.com/world/africa/la-fg-mali-social-network-for-illiterates-20190617-story.html. 96 Mali Digital Economy Diagnostic Multilateral development institutions’ commitments and private sector efforts to boost entrepreneurship in Mali resulted in an increase of entrepreneurship support organizations (ESOs), such as incubators, accelerators, fab labs, and co-working spaces, from an estimated166 four ESOs in 2015 to 24 ESOs in 2019. However, as summarized in table 4.1, the implementation of public policies has often fallen short, with limited actions and fragmented strategies to formalize a clear roadmap for digital entrepreneurship policies in Mali. Since 2008, Mali’s Agency for Investment Promotion (API) has endeavored to improve the business environment with the implementation of a one-stop shop to improve the enterprise creation process both onsite and online. In 2019, API’s repositioning to report directly to the Prime Minister’s office highlighted governance challenges, such as the necessary coordination between ministries and agencies, and the importance of private investments. The Mali Digital 2020 strategy had aimed to develop a local industry and to promote local start-up creation. The institutional capacity challenges and the lack of coordination between public stakeholders resulted in a limited implementation of key priorities, including the Startup Act and support mechanisms to reduce the risk of entrepreneurial activity and to promote cost-effective financing opportunities. Moreover, public sector stakeholders need to better understand these businesses they are trying to help and to consider synergistic partnerships with the private sector. Table 4.1. Main Entrepreneurship Policies in Mali Policy Year Cadre Stratégique pour la Relance Economique et le Développement Durable 2019–2023 2018 Mali Start Up Act 2018 Mali Digital 2020 2016 Cadre Stratégique pour la Relance Economique et le Développement Durable 2016–2018 2015 Plan pour la Relance Durable du Mali (2013–2014) 2012 Guichet Unique pour la Création d'Entreprise 2008 Stratégie Nationale pour la Microfinance 2008 Création l’Agence pour la Promotion des Investissements au Mali (API-Mali) 2005 Under the support of the Ministry of Digital Economy, a highly participatory dialogue was launched in 2018 to identify key bottlenecks faced by entrepreneurs and put forward recommendations to further strengthen the entrepreneurial ecosystem. This resulted in the Mali Startup Act which was adopted by the Council of Ministers in September 2019. An accompanying decree, which further detailed the operationalization of these measures, was drafted but has not yet been adopted due to the recent government changes. The implementation of the Startup Act will be crucial to support and sustain the capacity building of the entrepreneurship ecosystem in Mali. Similar to other national Startup Acts, such as the Senegalese, the Togolese, and the Tunisian ones, the Malian one includes a series of measures and fiscal incentives to encourage new start-ups in the digital sector to register their businesses (hence exiting from the informal sector where most operate). It also foresees the establishment of dedicated funding mechanisms (such as an investment fund for start-ups) aimed at providing the early capital start-ups requiring to formalize their business structures. Malian entrepreneurs, including in the digital domain, continue to face a weak business regulatory environment, including persistent broadband connectivity challenges (in terms of access, affordability, and reliability as highlighted in Appendix A) and the high costs of starting a business and burdensome taxation. The World Economic Forum (WEF) Global Competitiveness Index consistently ranks Mali among the lowest performing countries (at 129 out 141 countries in 2019, 125 out of 140 countries in 2018, and 123 out of 137 countries in 2017). Although the Malian Agency for Investment Promotion has created a one-stop shop process to register a business, the process remains onerous and lengthy. According to the 2020 Doing 166 Diagnostic Mali SAEI 2019. 97 Mali Digital Economy Diagnostic Business Report, it costs 55.1 percent of income per capita (US$889.79) to register a business, compared to an average 36.3 percent of income per capita for the Sub-Saharan region. In terms of taxation, firms have to comply with many different taxes and spend on average 276 hours processing accounts. The total tax and contribution rate (percent of profit) is 54.5 percent, which is above the already high regional average of 47.3 percent. When comparing Mali to structural peers and aspirational peers, figure 1.4 reveals that Mali is lagging several countries across most categories ranging from the cost of starting a business to paying taxes. Figure 1.4. Doing Business in Mali and Selected Peers: Starting a Business and Paying Taxes Starting a Paying taxes: Paying taxes: business: Starting a business: Payments Payments per year Paying taxes: Country Time - Men Cost - Men (% of (number per (number per year) – Time (hours Name (days) income per capita) year) Score per year) Mali 11 55.1 35 46.7 276 STRUCTURAL PEERS NIGER 10 7.9 41 36.7 270 CHAD 58 169.3 54 15 834 GUINEA 15 33.8 33 50 400 BENIN 8 3.4 54 15 270 MEDIAN 12.5 20.8 47.5 25.8 335 ASPIRATIONAL PEERS SENEGAL 6 22.6 53 16.7 416 GHANA 13 12.3 36 45 226 COTE 6 2.7 25 63.3 187 D'IVOIRE KENYA 23 22.4 24 65 179.5 MEDIAN 9.5 17.4 30.5 54.2 206.5 Source: Doing Business database. Last updated: August 18, 2021, 4.2.2 Access to Finance In Mali, access to finance remains a key constraint for Malian MSMEs compounded by the global COVID-19 outbreak, the persistent political crisis, and the deteriorating economic environment. The ratio of domestic credit to the private sector as a percentage of gross domestic product (GDP) was about 26 percent in 2020 compared to the SSA average of 38 percent of GDP. Thereby, private credit for MSME financing is very limited, and credit constraints are particularly acute for micro firms and women entrepreneurs. As a result, MSMEs tend to rely heavily on their own resources, including those provided by friends and families, which accounts for 75 percent of financing for purchasing fixed assets, followed by bank loans (19 percent of financing). Several founders of digital firms and IT service providers that were interviewed have shared that credit constraints are a serious challenge as small businesses are neither able to have adequate working capital nor to make investments needed for growth, resulting in stagnation. Self-financing or small loans from a professional network of peers and family tend to result in slower growth. In this landscape, equity finance plays a minimal role, representing only 2 percent of financing, while alternative financial instruments such as seed funds for start-ups and crowdfunding platforms remain at an embryonic stage. With the COVID-19 health crisis taking a toll on the Malian economy in 2020, particularly on smaller firms that typically have minimal cash 98 Mali Digital Economy Diagnostic reserves, the financial sector is poised to be hard hit because of liquidity shortages, asset quality deterioration, and potential solvency problems. Uncertainties and heightened risk profiles are likely to lead lenders to pull back from riskier segments such as MSMEs. The primary financing vehicles are credit guarantees, direct lending, equity participation, and grants and subsidies. For early-stage entrepreneurs, collateral requirements and high interest rates of local banks hinder the possibility of direct lending. This is even more pronounced among women since they traditionally have been limited to no access to collateral such as land titles. As to the government, it remains absent when it comes to support mechanisms including grants and credit guarantees for young firms and start-ups. Concessional debt and equity would give young enterprises the ability to flourish beyond the pilot stage and to prepare them for private financing. In the current ecosystem, access financing constraints are alleviated thanks to donor-supported funds and programs, including among others the African Development Bank, the Agence Francaise de Développement (AFD), the European Union, the German GIZ, USAID, and the World Bank Group. For the period 2017 to 2022, one of the most impactful programs to support Youth Entrepreneurship Funding (Fonds d’Appui à la création d'entreprise par les Jeunes 167— FACEJ) has been developed by the Royal Danish Embassy in Mali and partly financed in 2020 by the Netherlands. As of November 1, 2021, FACEJ resulted in 1,166 business plans validated and financed thanks to four banking partners in urban and suburban areas of the regions of Bamako, Koulikoro, Sikasso, Segou, Timbuktu, Mopti, and Kita. On the private sector side, new early-stage financing actors have entered, such as Zira Capital and Mali Angels. Zira Capital has ambitious objectives in Mali with the engagement of the Malian diaspora and the support of the International Fund of Agricultural Development, the European Union and IPDEV II (a fund managed by Investisseurs & Partenaires), which has already sponsored and participated in the launch of funds in five African countries (Senegal, Côte d'Ivoire, Madagascar, Burkina Faso, and Niger). Mali Angels maintains a West Africa private investors network (REAO), committed to investing in young firms ranging from start-up to high Sgrowth enterprises. Composed of strong entrepreneurs and former bankers with years of experience in the Malian market, this network is looking to invest in both digital and traditional businesses, including in the agricultural value chain. One of the main challenges remaining is to navigate the current political and economic environment and to identify a few entrepreneurs who demonstrate sound business models and adequate leadership potential. The funding channels available are very limited, especially those tailored to the needs of digital entrepreneurs. Since the 2016 World Bank Enterprise Survey, access to funding for MSMEs, including digital start-ups, has been constrained by a combination of intertwined demand and supply factors often triggered by political instability, the COVID-19 pandemic, and persistent economic shocks (Error! Reference source not found.). In addition, Malian businesses, like their counterparts across SSA and other developing economies, suffer from the practices of the informal sector and infrastructure constraints, which negatively affect their maturity and formalization. Very few are formalized businesses with audited accounts and proper governance structures to be able to comply with the requirements of financing institutions. These challenges and constraints are also prevalent among digital businesses. In an already very small market, this leads to a very small number of business firms resulting in an absent deal flow as shared during interviews with investors. The Government of Mali (GoM) could provide a guarantee of investment loans and co-finance investment projects with banks within the framework of the next digital economy strategy similar to other sectoral strategies (for example, agriculture and real estate). The guarantee makes it possible to break the financing lock by sharing the risk with the World Bank and compensating for the lack of collateral, in particular, for MSMEs. The guarantee is not a subsidy. The credits guaranteed (like any other credit) commit their beneficiaries. Figure 4.5. Top Ten Business Environment Constraints in Mali 167 https://www.swisscontact.org/en/news/facej-sugu-mali-young-entrepreneurs-trade. 99 Mali Digital Economy Diagnostic According to the World Bank’s Finance Competitiveness and Innovation database, nearly one-half (46 percent) of digital businesses operating in Mali are headquartered outside of Mali, potentially due to diaspora entrepreneurial activities and better access to capital markets. Based on the number of firms, France, the United States, the United Kingdom, Côte d'Ivoire, and Israel are the leading sources of digital business foreign direct investment (FDI). Almost one-half of platform or data-driven business models in Mali are headquartered outside of Mali, and many of them are digital businesses with a pan-African focus (see Figure ). Based on the mapping (figure 4.7) foreign platform-based businesses seem to be offering services in similar sectors as domestic businesses but are building momentum in digital media/entertainment technology, mobility and logistics technology, and e-commerce subsectors. Figure 4.6. Proportion of Platform-based vs. Data-driven Businesses in Mali and in Selected Peers Countries 100 Mali Digital Economy Diagnostic Figure 4.7. Mapping of Platform-based vs. Data-driven Businesses in Mali and in Selected Peers Countries The gamut of financial instruments needs to be more available and more suitable for early-stage investment sizes, ranging from $25,000 to $250,000, and more for growth stages. Provided there is increased political stability, the GoM and International Finance Institutions (IFIs) should consider a technical assistance program to consider the lessons learned and the success cases in other sectors or peer and aspirational countries to determine the most adequate instruments and action plan to bridge the financing gap of digital entrepreneurs and build the pipeline of start-ups that investors could need to qualify further and accompany from the early stage to the growth stage. The GoM and IFIs should also engage with the growing angel investor community in the region, improving their capacity and ability to invest, and recognizing their key role in sharing knowledge, experience, and networks with entrepreneurs. Moreover, the GoM should encourage IFIs and fund managers to work together on innovative and flexible fund structures to allow for longer-time horizons, profitability, scale, and exit opportunities. 4.2.3 Support System and Culture In Mali, the digital entrepreneurship ecosystem is comprised of two types of businesses—traditional ICT service providers, and start-ups and young firms. Traditional ICT service providers aim to offer standard ICT services ranging from hardware, software, information technology, and telecommunications services in the local and regional markets. Start-ups and young firms tend to develop and offer a product, service, or a combination of the two. Among the few ICT service providers, there tends to be a highly educated team of professionals as founding partners that often developed their experience abroad and financed their growth through personal 101 Mali Digital Economy Diagnostic savings or the award of a service contract with a large corporation, a government client, or an international development organization. In the past decade, several local ICT services providers have emerged including among others, General Computech, Lenali, Famib, Loga Engineering, Voolinks, and DSN Mali. Prior to the COVID-19 pandemic, the growing importance of digital entrepreneurship for the country’s economic growth was reflected in the increased government attention to this topic. In 2019, the GoM “Tech Fridays� initiative contributed to spotlighting the topic of entrepreneurship and to highlighting the need for strengthening the entrepreneurial ecosystem. From this initiative, about 15 promising entrepreneurs 168 (mainly operating in the digital space) successfully pitched their business concept and received some seed funding in the form of prizes or grants to test or refine their business ideas or products. While these initiatives have had the merit of drawing attention to entrepreneurship, their impact has remained quite limited and has not addressed the persistent issues which affect entrepreneurs, from the lack of a legal status for start-ups, to dedicated funding instruments, to adequate capacity building support, and to access to local demand vertical markets including the public sector and regional markets. Vibrant ecosystems in conjunction with donor-funded initiatives have been a catalyst to allow a new class of young and promising local talents to rapidly test the entrepreneurial path. According to a World Bank study,169 this movement is evidenced by the growth of ESOs, such as incubators, accelerators, fab labs and co-working spaces, estimated to have increased from only 4 ESOs in 2015 to 24 ESOs in 2019. The Malian market is still small, with little purchasing power and an unfavorable business environment. As highlighted in Figure , most ESOs have focused on ideation, incubation of young project holders, and even the formalization/launching of a start-up business. Unlike public agencies or industry associations, very few of them are able to go beyond an early-stage support offering, mainly due to a lack of funding, demand market access, and business growth skillsets. The capacity and the quality of services at ESOs still vary as they depend on donor-funded initiatives or private enterprise sponsorship to sustain themselves and offer structured and tailored programs. Figure 4.8. Incubators, Co-working Spaces and Other Capacity Development Providers in Mali 168 https://mytechfridays.com/a-propos/. 169 Diagnostic Mali SAEI 2019. 102 Mali Digital Economy Diagnostic While the number of incubators and co-working spaces experienced a rapid development by 2019, overall the number of start-ups that has reached the growth stage remains very limited, and many could not sustain operations following the pandemic. The incubator services mainly include consulting, networking, access to premises, and support in finding financing. The intensity and quality of services, however, varies greatly. The level of professionalization of incubators depends on many factors: experience, the profile of the founder(s), the networks and the public and private partnerships established, but also and above all the financial capacity to work in a favorable environment with a competent and available salaried team. Only one-half of the actors have already succeeded in establishing partnerships/contracts with donors and/or sponsors to finance their activities, while many have invested their own funds and time on a voluntary basis. Overall, the needs are mainly focused on access to networks and opportunities, financial support (for cash flow and investment), access to equipment, premises, and laboratories, and mentoring and training on both digital and management skills. The 2019 Global Entrepreneurship Index (GEI), a global perception-based ranking of entrepreneurship ecosystems, ranks Mali 123 out of 137 economies, behind aspirational peers such as Senegal, Rwanda, Kenya, and the Côte d'Ivoire (see Figure ). Of the 14 GEI sub-scores, start-up skills, risk acceptance, internationalization, human capital and product innovation are not as favorable in Mali as in other countries. It’s important also to note that risk capital is not even on this list as it’s very limited and at its infancy with the Zira Capital’s market entry in 2021. The government can play a proactive role in this area in close collaboration with the private sector and international finance institutions. As part of the next national ICT strategy, it’s important for the government to identify the key subsectors that have the highest growth potential, to accelerate market development partnerships and the national competency building in those strategic niches, and to support a vibrant start-up ecosystem. Figure 4.9. Global Entrepreneurship Index, Mali and Selected Peers, 2019 103 Mali Digital Economy Diagnostic Mali's GEI Sub-Scores (1= best) Informal Investment 0.35 Competition 0.35 Process Innovation 0.33 Technology Absorption 0.33 High Growth 0.29 Networking 0.27 Opportunities Perception 0.26 Cultural Support 0.25 Opportunity Startup 0.13 Product Innovation 0.11 Human Capital 0.11 Internationalization 0.08 Startup Skills 0.07 Risk Acceptance 0.02 0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 As highlighted in the Gender Focus section, although female entrepreneurship is growing and becoming more organized throughout the ecosystem from professional associations to mentoring programs, female entrepreneurs still face more hurdles than their male counterparts. From rural farmers to the urban “elite,� women entrepreneurs face discrimination at almost every step of the way. In the agriculture sector, they do not have access to quality raw materials. In the banking sector, they are required to provide guarantees that are out of their reach. Patriarchal traditions have also been replicated in regulatory frameworks, barring women from accessing land, equity, and inheritance equally. According to the World Bank’s Women, Business and the Law 2020 Report, there have been improvements within the workplace and in pay indicators as Mali is listed as one of the economies that has seen policy reforms. However, due to societal norms, it is still harder for female entrepreneurs to have an equal access to credit from banks and other financial providers. The lack of professional training and tailored support compounds uneducated women’s ability to acquire the necessary skills to move to higher value generating activities. Overall, Malians are still on their way to becoming digital citizens. Despite the abovementioned challenges to the overall infrastructure (broadband access, electrical power, payment gateway systems), enabling business environment, and vibrant innovation ecosystem, Mali faces another challenge related to the level of digital adoption by local customers and users. Supporting digital literacy and shifting consumer behavior will take time before Malians can overcome their preference to use cash, attend physical markets, and have personal interactions. For now, most digital start-ups and young firms are adapting to these realities. For instance, Teliman B2C customers still prefer cash as a method of payment while its B2B clients prefer checks or bank wires. Teliman also pays its 500+ drivers using mobile money. For now, urban citizens in Bamako are becoming digitally savvy when it comes to using Teliman to order deliveries or researching medical doctors on Doctix to make appointments. 4.2.4 Human Capital Weak digital literacy and limited digital skills are intertwined with demand- and supply-side obstacles for digital businesses. As access to devices and broadband connectivity is expanded, most policy makers, business leaders, and digital entrepreneurs agree that digital skills must be strengthened in a targeted fashion to alleviate the current scarcity of local ICT professionals, to address the digital entrepreneurship skills gaps, and 104 Mali Digital Economy Diagnostic to promote digital literacy for all to accelerate the adoption of digital solutions aimed at the general population. For further discussion, see the Digital Skills chapter. The young generation of citizens must be prepared to contribute to the labor force and the development of an entrepreneurial Mali to accelerate economic growth and to improve prosperity for all.. Evidence from the Global Entrepreneurship Index highlights the need to strengthen the entrepreneurial culture in the education systems emphasizing traits such as risk-taking, constant learning, innovative thinking, and action-taking. The GoM and the private sector need to also work in partnership to strengthen the demand for and supply of digital skills in the overall economy. The private sector (particularly multinationals, prominent national companies, and ESOs) is best suited to identify growing demand for specific skills and inform government and other private sector counterparts responsible for supplying skills. Thus, ecosystem support programs should strive to have active private sector participation at the core of their offerings. This should include an emergency plan that involves reskilling and upskilling of the active population in both the public and the private sector. Also, data production and analysis are key to making precision targeting possible, especially when considering the economic recovery context and the opportunity for digital transformation of entire sectors from agriculture to education. As highlighted by some professional associations and businesses during the interviews, internship opportunities as part of the university curriculum should be generalized. Business training and mentoring programs are crucial for entrepreneurs to improve both their technical and their managerial skills. Governments, IFIs, and the ESOs should encourage and incentivize successful entrepreneurs to share their knowledge and resources when mentoring up-and-coming entrepreneurs. Whereas the government may take many years to launch a virtual university, it took merely three years for a private partner like Famib to launch one that has educated 10,000 young Africans, including 1,200 Malians, to the level of an Associate’s degree in entrepreneurship. The rapid growth can also be attributed to the reasonable pricing where the equivalent of an Associate’s degree is free, a Bachelor’s degree is US$150, and a Master’s degree is US$300. To fully realize the potential of female entrepreneurs, these ecosystem support programs should take into account women’s specific needs and challenges as highlighted in the focus section on gender. Women face challenges related to restricted mobility, lower levels of financial inclusion, and constraining social norms in the country. Several women-led organizations have been established, including Women Tech Mali and the Organization des Jeunes Patrons du Mali (OJEP) women-only chapter. Led by successful women business leaders and entrepreneurs, these organizations are endeavoring to support and accompany women entrepreneurs while addressing persistent challenges ranging from financing to mentoring to parenting. To expand their reach, further support for these ESOs, professional associations, and other intermediaries would be needed. While women-only networks are crucial, mixed-gender networks would be just as important to support business building and competency building skills. The mixed-gender networks tend to be male dominated but remain important gateways in both the public and the private sector contexts to strive toward increased female representation and continued progress toward gender parity. 4.2.5 Markets Adoption of digital technologies among businesses remains comparatively low, and there is a need for more detailed and updated data in this domain. The latest WEF’s firm-level technology absorption values (2016) demonstrate that the average growth rate of adopting new technologies by businesses in Mali decreased by 0.41 percent between 2013 and 2016. Compared to aspirational peers such as Côte d'Ivoire and Rwanda, it is noticeable that Malian firms lag in adopting new technologies as part of their business processes (see Figure ). With respect to revenues generated by digital businesses, no official sources exist. During interviews, growth fluctuation seems to be taking place considering the pandemic’s effects and the ongoing political situation. However, follow-up data collection is necessary to have an accurate overview of firm-level adoption of 105 Mali Digital Economy Diagnostic technology similar to the one recently conducted in Senegal.170 This analytical exercise could explain the main sources of variation in technology adoption across sectors, regions and within firms and show the productivity impacts of those variations. These indicators could be gathered in several countries to compare and to provide evidence for policy design to help stimulate the adoption of technologies by enterprises, including those operating in the informal sector. Figure 4.10. Firm Level Technology Absorption Index 2016, Mali and Selected Peers Source: WEF, 2012-2016, Global Information Technology Reports; Firm-Level Technology Absorption Index 1–7 (7 = best). In the context of a small domestic market, Malian digital businesses need to prepare themselves with competitive offerings that could be integrated into regional markets and, in some cases, international markets. Sustaining growth outside of Mali can be an important avenue to access regional private investment and regional value chains for accompanying businesses to scale their productive capacity, to develop their human capital, and to increase revenues by trading across borders. This trend is already taking place with one-half the digital businesses headquartered outside of Mali, as mentioned in section 4.2.2. A holistic approach to supporting digital entrepreneurship is needed, one that links funding to pipeline development. In fact, the first few business angels and venture capital firms are already concerned by a limited pipeline. Thus, fostering the supply side of the business angel or venture capital ecosystem needs to be matched by growing the demand side of the digital entrepreneurship pipeline, especially those that are ready to graduate from an ESO. The investment readiness or the quality of the pipeline is also critical. Investment readiness programs with ESOs and other intermediaries are crucial to provide tailored training and mentoring, and other services to overcome these constraints. Improving the effectiveness of these programs means increased cooperation between all public and private stakeholders to build a consistent pipeline of entrepreneurs that would meet the basic requirements of early-stage investors. As to catalyzing private market development, the public sector has a strategic role to play in the demand market as it is in direct need of digital transformation. As the nation’s top ICT purchaser, the government should seize this opportunity to establish medium- to long-term capacity development programs to increase the participation of MSMEs, including those emerging from the digital entrepreneurship ecosystem. This can be done in three ways. First, sector-specific technical assessments need to consider the feasibility of progressive inclusion requirements of small- to medium-sized businesses while ensuring competitiveness and encouraging private investments. These types of requirements have become prevalent in strategic industries. The largest global economies such as China and India, as well as the neighboring African economies such as Morocco and Tunisia, have employed these support mechanisms to encourage international partnerships and 170 https://openknowledge.worldbank.org/handle/10986/36860. 106 Mali Digital Economy Diagnostic to support the skills transfer and the capacity building of very small and small and medium-sized businesses. Second, procurement procedures need to consider inclusion so that digital MSMEs, particularly those led by female entrepreneurs and young leaders, can emerge on merit beyond the entrepreneurial ecosystem. Third, procurement procedures need to encourage specialization when required to promote not only competitive procurement, but also to improve the quality of products and service delivery and the inclusion of local MSMEs. Rise of E-commerce and Fintech The adoption of private digital platforms has increased in Mali, partly driven by the COVID-19 lockdown measures. While several innovative firms, established and start-ups, including Orange Money, Wave, Teliman, and Fikasso, adapted quickly to deliver essential services in the wake of the pandemic, from digital payments to food delivery to online education, most private companies across sectoral value chains had not yet embraced digitalization. It is difficult to quantify e-commerce activity due to limited data on digital financial transactions, and the fact that fintech usage and adoption is still at a nascent stage (see the Digital Financial Services chapter for additional details). Opportunities for brick-and-mortar stores (mainly consumer goods) and services (education and health) to digitize include leveraging payments technology by providing a self- service online option. While limited examples exist in the SSA region, transitioning to these types of solutions are currently not a high priority in Mali where essential purchases rely mostly on personal transactions. Mali has yet to formalize its e-commerce strategy.171 Based on UNCTAD’s e-commerce index 2020, Mali can improve its internet shoppers as a share of internet users and as a share of the overall population, which stand at 14.0 percent and 2.6 percent, respectively (see Table 3). Most of the top 10 developing and transition economies ( Table ) tend to have internet shoppers as a share of internet users and a share of the population that are respectively above 20 percent and 4 percent. Emerging e-commerce services in Mali include Whatsapp, Sodishop.com, dealsamax.com, and cityfoodmali.com. Though Whataspp does not provide e-commerce services, it’s an important platform along with Meta (formerly known as Facebook) to connect people in the formal and informal markets that are looking to complete transactions of products and services without online payment. Another dominant player, DHL Africa eShop,172 along with its regional partner MallforAfrica,173 both exited the Sub-Saharan market altogether in November 2021. E-commerce friendly regulations coupled with better digital foundations (connectivity, consumer protection and cybersecurity, digital payments, trade regulation) at the local and the regional levels would contribute to increased user adoption and decreased cost of delivery to make it competitive for e-commerce platforms to sustain their presence and their development in the region and in the country. Table 4.2. Top 10 Developing and Transition Economies, SSA Mauritius Tanzania South Africa Ghana Nigeria Senegal Kenya Botswana Namibia Uganda Source: UNCTAD B2C E-Commerce Index 2020. Table 3. Internet Shoppers as a share of Internet Users and of Population, 2019 Economy As a share of Internet users (%) As a share of population (%) 171 UNCTAD e-commerce assessment, 2020. https://unctad.org/webflyer/mali-rapid-assessment-e-commerce-readiness. 172 https://techcabal.com/2021/10/26/dhl-africa-eshop-shutdown/. 173 https://businessday.ng/retail/article/mallforafrica-closure-mirrors-hurdle-facing-ecommerce-in-nigeria/. 107 Mali Digital Economy Diagnostic Mali 14 2.6 Ghana 15 4.2 Rwanda 9 1.0 Côte d'Ivoire 12 3.2 Senegal 10 2.6 Burkina Faso 9 1.6 Malawi 13 2.3 Chad 23 1.7 Source: UNCTAD B2C E-Commerce Index 2020. 4.3 RECOMMENDATIONS The World Bank Report174 High-Growth Firms has identified cutting edge thinking on policies that foster the business growth dynamic and its virtuous cycle on the overall economy. The study highlighted that start-ups are the base of the pyramid from which high growth firms can emerge. This study also concluded that high growth firms are not necessarily technology based although they tend to represent 20 percent of the private sector and yet produce 80 percent of the output. These are not only powerful engines of job and productivity growth, but also create positive spillovers for other businesses across the value chain. In addition, the International Finance Corporation (IFC) paper175 on the Emergence of the Next Generation Entrepreneurs in Africa recommends that governments in the continent focus on four strategic areas of policy making to foster these ecosystems that would be favorable to the emergence of transformational entrepreneurs and high growth and innovative firms: 1. Improving the enabling environment for digital businesses, particularly start-ups. 2. Enacting policies that foster skills development and support the overall ecosystem. 3. Introducing early-stage financing and supporting start-up capital development. 4. Creating digital market opportunities. The following recommendations for the GoM all fall into these four strategic areas and are based on consultations with Malian government agencies and their private sector counterparts, investors, entrepreneurs, and other ecosystem actors. Improving the enabling environment for digital businesses, particularly startups R1 [Quick win]. Launch a start-up registration program to better qualify both new and existing startups. Reinforcing a holistic view of the start-up ecosystem through real-time data-centric dashboards would help to keep track of the evolution of the ecosystem and better assess the bottlenecks experienced by businesses looking to tackle local and regional market opportunities. Moreover, it would offer more granular real-time data to permit more targeted measures, and support mechanisms and mentoring. Finally, it would educate the entire entrepreneurship ecosystem and raise awareness of the importance of market data information and financial data relative to these young firms. R.2 [High priority]. Adopt the MALI Startup Act operationalization decree. The GoM’s implementation of the StartUp Act, adopted by the Council of Ministers in September 2019, would send a strong signal to the https://openknowledge.worldbank.org/handle/10986/30800. 174 https://www.ifc.org/wps/wcm/connect/2a4058eb-d835-4e71-af3d-2d791b194880/Next-Startups-Africa-WhitePaper- 175 2018.pdf?MOD=AJPERES&CVID=mud22wX&. 108 Mali Digital Economy Diagnostic investment community that Mali and its government remain committed to sustaining the development of an entrepreneurial ecosystem. An accompanying decree further detailing the operationalization of these measures has been drafted but has not yet been adopted due to the recent government changes. Similar to other national StartUp Acts, such as the Senegalese and the Togolese ones, the Mali Startup Act includes a series of measures and fiscal incentives for new start-ups in the digital sector to register their businesses (hence exiting from the informal sector where most operate). It also foresees the establishment of dedicated funding mechanisms (such as an investment fund for start-ups) aimed at providing the early capital start-ups require to formalize their business structures. This package can be operationalized at once or in a series of measures starting with a registration program. Enacting policies that foster skills development and support the overall ecosystem R.3 [Quick-Win]. Launch a digital skills development plan in partnership with the private sector to reskill and upskill the workforce to prepare for Mali’s digital transformation. The 2021 digital skills study for Sub-Saharan Africa highlighted that the demand for digital skills exceeds current supply and the expected growth in demand will further widen the gap within the current decade. Moreover, the analysis determined that the majority of training opportunities are through business-to-business, business-to-government, and public private collaboration. The study concluded that the private sector must play a pivotal role in addressing gaps in digital skills. This challenge can hence be met by fostering private and public partnerships, vibrant digital ecosystem development, and proven models with potential to scale and to offer best practices and lessons to other providers willing to make inroads in the space. Lastly, it’s important to also consider the inclusive dimension to develop the competency of female business leaders and smaller/younger local firms as part of investment program implementation. R.4 [High Priority]. Provide female entrepreneurs increased assistance through entrepreneurship support programs that consider women’s specific needs and challenges. Women face challenges related to restricted mobility, lower levels of financial inclusion, and constraining social norms in the country. To expand the reach of ESOs, professional associations, and other intermediaries to address challenges faced by women, it’s important to define an enabling environment and targeted opportunities exclusively for women when it comes to networking, training, and mentoring. Both women-only and mixed-gender networks would help to support business building and competency building skills. The mixed-gender networks tend to be male-dominated but remain important gateways to achieve progress toward gender parity in both the public and the private sector contexts. Introducing early-stage financing and support for start-up capital development R.5 [High Priority]. Establish dedicated funding instruments, credit guarantees, and capacity development programs adapted to digital start-ups and small firms. In the short-term, given the nascent stage of the ecosystem, the focus could be on creating programs in partnership with financial institutions for the provision of pre-seed financing in the form of concessional loans. In sharing the risk with lenders, this would allow entrepreneurs to progress beyond ideation to the rapid-prototyping and operational start-up stages. In addition, the GoM could also consider regulations that allow for alternative collateral options to expand lending opportunities to entrepreneurs (among other group lending schemes, credit guarantees, and repayment performance). In addition, it is important to sustain not only financial capacity but also technical capacity throughout the entrepreneurship ecosystem. This includes strengthening the capacity of existing ESOs to provide services tailored to entrepreneurs and incentivizing the creation of partnerships between large companies, the diaspora and small local firms to accelerate digital technologies adoption among businesses, workers, and citizens. The implementation of such a support mechanism can consider the experience of the Innovation and Entrepreneurship Lab platform established by the AfDB in several African countries. Creating digital markets 109 Mali Digital Economy Diagnostic R.6 [Quick win]. Target specific use cases as part of a phased approach to the deployment of fintech solutions. Over the course of the ongoing economic emergency response, the GoM can introduce social protection and specific digital payments to remote workers, families, and businesses. As part of the next National Digital Strategy, the GoM can introduce policies to define specific niches where the country would benefit from a comparative advantage both in terms of digital businesses clusters, private partnerships and digital skills development. With fintech and e-commerce being the most important market opportunities in the region, it’s important to identify the key drivers and inhibitors to catalyze the uptake of B2B, G2G, G2B, B2C and G2P solutions in those markets starting with fintech and eventually e-commerce solutions. As highlighted in the Digital Platforms and Digital Financial Services chapters, a phased approach in the deployment of these solutions would target specific use cases to improve financial inclusion, reduce administrative costs, and enable government social protection systems to respond more rapidly to shocks. These use cases would boost overall digital adoption as more users would begin to trust the process of making and receiving payments online. 110 Mali Digital Economy Diagnostic FOCUS 4: CLIMATE CHANGE & DIGITAL Mali is highly vulnerable to climate change. Mali ranks 170 out of 182 on the 2019’s Notre Dame Global Adaptation Index, indicating high vulnerability and low readiness to combat the effects of climate change.176 The country faces a range of natural hazards, the most important of which are droughts, floods, and crop pests. Climate change is expected to become an increasingly important threat to the country's development. Projected temperature increases in Mali, coupled with reduced or erratic rainfall, are likely to make natural hazards more frequent and severe. In particular, more frequent El Niño events could increase the frequency and intensity of droughts in Mali, especially in the northern regions. The impacts of climate change will affect the poorest and most vulnerable the most and will also hamper Mali’s development agenda and its efforts toward economic sustainability and political stability. In such a context, digital transformation can play an important role in climate change adaptation and mitigation in Mali, as a key cross-cutting enabler across all sectors: ▪ How can digital technologies be leveraged for climate change adaptation? Related policies and measures could include modelling and adaptation scenarios for future climate change, disaster risk management, and early warning systems. The lack of digital connectivity in large parts of Mali means that the government cannot quickly and effectively provide the necessary social assistance in the event of drought, flooding, or other natural disasters. Furthermore, Mali currently lacks the capacity to generate improved climate-smart agricultural technologies and practices, and poorly developed broadband connectivity is one of the main barriers to the adoption of smart agricultural applications. Universal access to the internet has the potential to stimulate digital transformation in all sectors, including in response to climate shocks. Overall, the transition to economy-wide digital transformation will also be a key factor in improving resilience and adaptation through improved and uninterrupted access to basic services and public assistance in emergencies. In addition, improved data hosting practices will decrease the risk of data loss in the context of extreme events such as floods and landslides. ▪ How can digital technologies be leveraged for climate change mitigation? This can be achieved in all sectors and verticals of government, such as smart agriculture (e.g., through precision farming), smart transport, and improving energy efficiency across all sectors. In addition, digital technologies can help reduce carbon emissions. Currently, service users in Mali often have to travel physically to access or use public services. Most services are not digitized, which means that they require physical presence and transport to service access points at some point in the process. Many government records and systems are still in paper form, resulting in the significant use of associated resources. Digitized processes can thus help reduce greenhouse gas (GHG) emissions, including by reducing the need to travel to deliver or access services, hold meetings, and so forth. Policies and measures should also specifically take into account the resilience and greening of digital infrastructure, including through the adoption of best available technologies. With regard to infrastructure resilience, safeguarding digital infrastructure is crucial, as rain and flood risks could have a significant impact on the quality and availability of internet services, leading to network and service outages that leave communities disconnected, and result in the loss of valuable government data if infrastructure is not built and managed properly. In the event of extreme rainfall and flooding, telecommunications infrastructure such as underground fiber-optic cables could be affected. Other risks include flooding of buildings that house server 176 Notre Dame Environmental Change Initiative (ND-GAIN) .2021.) Country Index, Vulnerability and Readiness. 111 Mali Digital Economy Diagnostic rooms; duct and silt damage; scoured cables and damaged foundations; cable heave from uprooted trees stemming from flooding; and so forth. Appropriate measures to mitigate these risks would include: (i) enforcing redundancy by design for digital infrastructure; (ii) building capacity for emergency response planning and preparedness, notably by integrating climate data and risk analysis with respect to digital infrastructure planning and deployment; and (iii) developing new climate smart and resilient digital infrastructure policy and regulatory guidelines to ensure the robustness of the infrastructure (e.g., investments in flood barriers, cooling systems, and more resilient infrastructure need for connectivity to be re-routed in the event of damage caused by extreme weather conditions). Where possible, telecommunications networks with energy efficiency levels in line with best practice should also be promoted, for example by encouraging the move away from energy- intensive coaxial cables and instead favoring more energy-efficient technologies when extending network infrastructure, as well as energy-efficient data management and hosting systems. 112 Mali Digital Economy Diagnostic CHAPTER 5 DIGITAL SKILLS Key messages: � Mali’s education system does not provide sufficient digital skills training to ready its youth for the digital economy. Due to resource constraints, low education expenditure, and a burgeoning population, there are too few schools to meet educational demands, facilities are inadequate, teachers lack proper training, and auxiliary costs prevent much of Mali’s poor from attaining education. There is also significant inequity in education access and quality, particularly for students in rural areas and for girls. These factors coupled with digital infrastructure deficits mean that Malian students are being left behind. Although there are several efforts to improve learning outcomes and basic skills training, including through the use of digital applications, digital skills are still not a part of national education standards. � Private, non-profit, and continuing education and technical, vocational education and training (TVET) institutions are filling the void left by the formal education system in terms of digital skills training. Overall, there is significant engagement from the private sector in digital skills development, while public sector engagement remains limited. Private sector engagement ranges from curriculum development to delivery of programs, identifying qualification frameworks, accreditations, and partnerships for tertiary institutions. Expanding partnerships with the private sector will be crucial to develop a national digital skills training ecosystem that can boost youth employability through apprenticeships or work-integrated learning initiatives, rapid skilling programs, digital skills marketplaces, integrated digital skills, and placement services with key sectors � Conversely, demand for digital services, and consequently for digitally skilled labor, is expected to grow rapidly with the adoption of Agtech, rapid urbanization, and expanding mobile usage. The Government of Mali (GoM) aims to develop and improve agro-processing and products, including through the use of viable Agtech along the supply chain. This would offer an opportunity to build a regional competitive advantage in the digital economy and would increase demand for digitally skilled workers. There is also growing demand for digitally skilled public servants (as outlined in the Digital Public Platforms chapter), where training is needed for technical competency to leverage the use of digital platforms and tools, as well as for overall strategic thinking on growing the digital economy. � However, the ability of Mali’s workforce to meet future demand for digitally skilled labor remains uncertain. Mali currently has a limited number of highly skilled professionals (4.5 percent of employment) and heavily relies on medium-skilled workers (93.0 percent of employment). Digital skills training also tends to be concentrated in urban centers, particularly Bamako, with the risk of certain skillsets becoming saturated in one place while severely lacking in others. 5.1 IMPORTANCE OF DIGITAL SKILLS As highlighted throughout this report, the digital economy relies on a digitally competent workforce to drive productivity, innovation, and growth, as well as digitally literate citizens who can safely interact and fully engage in a society that is becoming increasingly digital . Prior to the COVID-19 pandemic, the digital economy 113 Mali Digital Economy Diagnostic represented an estimated 22.5 percent of the global economy,177 and approximately 65.0 percent of positions formally recruited by African companies required basic digital skills.178 The COVID-19 pandemic precipitated an “acute digital disruption� and accelerated global digitization by seven years. 179 Post-COVID-19, these percentages are expected to rise due to the growth of remote working and digitized services.180 In West Africa, the pandemic response increased use of mobile money and online transactions; leveraged online apps and platforms, mobile phones, and broadcast media for public health and education; and mainstreamed drone technologies for cost-effective public service delivery.181 Governments now contend with enacting policies and initiatives that generate digitally skilled workers and incentivize digital technologies that inclusively solve local problems for local customers.182 Governments need to also empower citizens to become more digitally literate and promote fuller participation in a more digital society from information consumption to mobile-based services utilization to knowledge acquisition. The demand for digital skills in Sub-Saharan Africa (SSA) currently outstrips supply, 183 a gap that will further widen over the coming decade as digital acceleration initiatives in the government, and the agricultural, manufacturing and services sectors become prevalent. Shortages in digital skills are likely to be pronounced across sectors, creating a sense of urgency to strengthen the human capital base in countries like Mali by improving the digital literacy of children, youth, and adults in order to reap the benefits of digitization across society, increase local businesses participating in the digital economy, and foster international trade and regional economic integration. A holistic notion of digital skills represents the capacity to access, manage, understand, integrate, communicate, evaluate, and create information safely and appropriately.184, 185 Digital skills are not limited to an individual’s capacity to use information and communication technology (ICT) devices and gain access to electronic information. Based on frameworks from the World Bank, the United Nations Educational, Scientific and Cultural Organization (UNESCO), and the European Commission, the digital skills spectrum can be presented as skill levels increasing from basic (i.e., mobile phone, and smartphone use) to highly specialized (i.e., idea, product, or service generation), and competencies gained from formal and informal learning environments. Figure presents a comprehensive digital skills framework covering seven core domains. Digital proficiency levels (i.e., basic, intermediate, advanced, and highly specialized) depend on the type of problems one can solve, the degree of independence in dealing with specific tasks and the strategic approach to solving problems (see Box ). Overall, digital skills have become ubiquitous for learning, livelihoods, and well-being. They can help bridge the digital divide, bringing more people online and empowering individuals to become self-directed, community-focused, and resilient lifelong learners. A digitally skilled individual is likewise critical to creating the consumer base for new digital products and services created by local entrepreneurs. Figure 5.1. Digital Skills Spectrum 177 Accenture. https://www.accenture.com/_acnmedia/pdf-14/accenture-strategy-digital-disruption-growth-multiplier-brazil.pdf. Accessed May 2020. 178 IFC— Digital Skills Sub-Saharan Africa. https://www.ifc.org/wps/wcm/connect/ed6362b3-aa34-42ac-ae9f- c739904951b1/Digital+Skills_Final_WEB_5-7-19.pdf?MOD=AJPERES. Accessed May 2020. 179 https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the- technology-tipping-point-and-transformed-business-forever. Accessed February 2021. 180 The Future of Jobs. World Economic Forum. http://www3.weforum.org/docs/WEF_Future_of_Jobs_2020.pdf. Accessed May 2021. 181 https://www.gsma.com/mobilefordevelopment/blog/covid-19-and-west-africa-six-key-technology-trends-driving-change/. Accessed February 2021. 182 James, Jeffrey. 2019. Confronting the Scarcity of Digital Skills in Developing Countries. Development Policy Review. 39. 10.1111/dpr.12479. 183 Digital Skills in Sub- Saharan Africa. https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/education/publications/digital+skills+in+s ub-saharan+africa. 184 Law, N., D. Woo, J. de la Torre, and G. Wong. 2018.�A Global Framework of Reference on Digital Literacy Skills for Indicator 4.4. 2, Information Paper No. 51.� Montreal: UNESCO Institute for Statistics. 185 Carretero, Stephanie, Riina Vuorikari, and Yves Punie. 2017.�The Digital Competence Framework for Citizens.� Publications Office of the European Union. 114 Mali Digital Economy Diagnostic Source: Bashir and Miyamoto, 2020. Box 5.1. Digital Skills Pyramid Digital skills exist on a spectrum and can be presented as skill levels increasing from basic (i.e., mobile phone, and smartphone use) to highly specialized (i.e., idea, product, or service generation), and competencies gained from formal and informal learning environments (based on frameworks from the World Bank, UNESCO, and the European Commission). Within the digital skills spectrum, there are user, specialist and practitioner, and e-business skills. 1. User skills refer to basic skills that enable safe use of digital devices and online applications. They may include simple software applications such as email, search engines, word processing, and spreadsheets. Here, basic skills are core skills and part of a broader framework of twenty first century skills (which include reading comprehension, writing and numeracy skills, and the ability to solve problems and adapt). In a digitally focused economy, all adult age populations should have basic user skills for access to services and as a digital consumer. 2. Specialist and practitioner skills are intermediate, and advanced ICT users who can complete tasks with guidance and well-defined routine and nonroutine tasks independently. They also refer to intrinsically driven professionals who design, develop (program), and maintain digital tools and manage ICT systems. These skill sets are essential for acquiring, maintaining, and distributing digital offerings. 3. E-business skills are advanced and highly specialized skills that encompass more multifaceted digital and entrepreneurial skills, including abilities to ingeniously apply and contribute to the creation of new business models, processes, products, and services, and resolve complex problems. These skills are essential for innovation and expanding the digital economy. Thus, digital skills represent an individual’s ability to use his or her knowledge, skills, and attitudes to use new or existing information and communication technologies. With digital skills, soft skills ’ and competencies, a digitally skilled individual can: - Analyze, select, and critically evaluate digital information; - Solve problems; and - Develop a collaborative knowledge base while engaging in organizational practices. 115 Mali Digital Economy Diagnostic 5.2 DIAGNOSTIC FINDINGS: CURRENT STATE OF DIGITAL SKILLS 5.2.1 Policy Underpinnings In Digital Mali 2020, there are three main initiatives to address Mali’s digital economy’s human capital needs: • Establish governance dedicated to human capital, aligning digital workforce supply and demand; • Develop and implement an initial training plan meeting the needs of the digital sector; and • Develop and implement a training plan for the use of digital technology. These initiatives remain relevant as education access, spatial equity, and quality challenges persist and, for digital skills in particular, the education system lacks ICT specific policies, mandates, and curricula. It is also imperative that digital skills policy and initiatives customize and maximize the latest technologies and processes for service delivery, prepare an agile workforce, and minimize disruptions. For Mali it must also address the full human development spectrum— from meeting basic needs; gaining fundamental, technical, and agile skills within the formal education system; to workplace and social digitalization. However, it is most important to remember that “planning is good; doing is better� and begin immediate implementation incorporating monitoring, evaluation, and learning and requisite adjustments. Despite significant expenditure on education, Mali’s education system struggles to meet its man dates. Mali has free public education for children up to 15 years of age. Education expenditure reflects regional norms at 16.5 percent of total government expenditure and 3.8 percent of gross domestic product (GDP). However, with one of the highest fertility rates in the world, education spending per child is 73 percent below the Sub-Saharan average.186 With an extreme poverty rate at 42.3 percent, a sizable portion of the population cannot afford the required auxiliary costs of schooling. This results in incomplete enrollment and attrition from primary to secondary education. Additionally, Mali’s learning poverty indicator— the skills required for foundational learning calculated as the percentage of students who can read a simple sentence by age 10 weighted by out of school population— is 4.3 percentage points worse than the Sub-Saharan average.187 The literacy rate for 15–24-year olds is 50.1 percent and for adults (15+ years), 35.5 percent, as only 10 percent of the adult population has completed lower secondary and 7.1 percent completed upper secondary education.188 Gender disparities in enrollment and completion exist, although they are generally less than 10 percentage points. To meet these challenges, the GoM approved the Second-Generation Ten-year Education Sector Development Program for 2019–2028 (Programme décennal de développement de l’éducation deuxième génération, PRODEC II) and the Multi-Year Action Plan (2019–2022) in 2019. PRODEC II’s objectives are to improve learning quality and relevance, access, delivery, teacher training and management, governance, and resilience. However, implementation of GoM and partner programs was hampered by the COVID-19 pandemic and internal unrest. 186 Mali Learning Poverty. EduAnalytics. http://pubdocs.worldbank.org/en/806921571223364739/SSA-AFCW3-MLI-LPBRIEF.pdf. Accessed February 2021. 187 Mali Learning Poverty. EduAnalytics. http://pubdocs.worldbank.org/en/806921571223364739/SSA-AFCW3-MLI-LPBRIEF.pdf. Accessed February 2021. 188 The World Bank. https://data.worldbank.org/country/mali. Accessed February 2021. 116 Mali Digital Economy Diagnostic Box 5.2. Education System Structure General, higher, and technical education are managed by the Ministries for National Education and Literacy (MEN), Higher Education and Scientific Research (MESRS), and Technical and Professional Education (MEFP). With a 3-6-3-3 school system, pre-primary, primary, lower secondary, and upper secondary education is mandated from ages 7 to 15. In 2018, there were 2,278 pre-primary, 14,513 primary, 4,709 lower secondary and 914 upper secondary schools. Primary school enrollment is 75.6 percent (58.9 percent net), representing 2.5 million pupils, and the completion rate is 49.6 percent. Secondary school enrolment is 41 percent (29.9 percent net, 34 percent for lower and 17 percent for upper secondary), with a lower-secondary completion rate of 29.7 percent. Approximately 51% of primary school teachers have recognized training and certifications and in secondary school, the student-teacher ratio is 17:1. There are four main types of schools—public, private, non-governmental community schools, and madrasas—at51, 18, 12, and 19 percent, respectively. School age population LEVEL AGE RANGE POPULATION PERCENTAGE Pre-primary 4–6 1,952,904 20% Primary 7–12 3,474,420 35% Secondary 13–18 2,771,005 28% Tertiary 19–23 1,607,365 18% Total 9,805,694 100% Sources: Aline Meysonnat and Ignacio Torrano. Prospective evaluation of GPE’s country-level support to education. Universalia. https://www.globalpartnership.org/sites/default/files/document/file/2020-05-country-level- prospective-evaluation-mali-Year-2.pdf. Accessed February 2021. UNESCO. http://uis.unesco.org/en/country/ml?theme=education-and-literacy. Accessed February 2021. Mali’s tertiary enrollment rate of 5.5 percent is well below the Sub-Saharan average, yet many higher education institutions offer training in science, technology, engineering, and mathematics (STEM), fields that are crucial for building intermediate, advanced, and highly specialized digital skills. These institutions include the University of Science and Technology, the Abderhamane Baba Touré National School of Engineers, the Rural Polytechnic Institute of Training and Applied Research of Katibougou, and University of Segou, which all offer four-year degrees in mathematics, computer science, and/or engineering. 189 Currently, most STEM researchers work within the government or private/non-profit sectors and conduct research in the agricultural sector.190 Given the expenditure on tertiary education, which is 17.3 percent of the education budget, the GoM should work on increasing enrollment rates, especially in STEM fields, and support applications and entrepreneurship beyond agriculture that are responsive to national and regional market demand. Increasing enrollment rates in STEM fields will require improving the overall numbers of students completing school and conducting better orientation from younger ages toward STEM fields. Several e-learning platforms and programs have been proposed for TVET and higher education as virtual learning increases the accessibility of quality training and reduces the need for large capital investments in equipment, especially in the early stages of training. Ongoing programs by Azalai Group and FAMIB Group provide both custom and mobile TVET training, adapting to program need with travel to various regions for short hands-on courses, especially in hospitality and construction services domains where it is difficult to learn required skills virtually. For higher education, private initiatives have led the way. The FAMIB Group, through its corporate social responsibility program, launched the Virtual University of Mali in 2018 to increase Malian’s access to certified courses and professional certification programs. In 2020, approximately 10,000 scholarships for an equivalent to an associate (Brevet Technicien Supérieur) in entrepreneurship study were offered to Malians and citizens of neighboring countries. The Virtual University is now managed by the Digital Africa Cluster, a collective intelligence platform. For general skills training, the National Employment Agency has a national workforce development policy and training center. The policy targets agriculture, entrepreneurship, and key public services (e.g., WASH). In practice, implemented activities include a center for improving the business climate, 189 https://www.4icu.org/ml/. Accessed February 2021. 190 http://uis.unesco.org/en/country/ml?theme=science-technology-and-innovation. Accessed February 2021. 117 Mali Digital Economy Diagnostic competitive loans and grants for micro, small, and medium enterprises (MSMEs), and an ICT training program. However, these programs are insufficient for meeting skill needs. Education service delivery gaps continue to exist, which could be filled by the private sector and public-private partnerships in STEM vocational and continuing education and general and digital skills building. 5.2.2 Digital Skills Supply A sizable percentage of Malians have some form of digital skills through regular digital technology use. 12.5 million Malians (nearly 60 percent) have accessed the internet. 4.85 million have used the internet in the last 3 months (23 percent), and currently 2 million (nearly 10 percent) are Facebook users.191 Most people access the internet with mobile devices (see Digital Infrastructure chapter). Mali is also a place where adults are more likely to have a mobile money account than a financial institution account (see Digital Financial Services chapter). Much of the education sector’s attention is on increasing access to secure, quality p rimary and secondary education through projects with development partners. For example, with the World Bank and UNICEF, the GoM is implementing the Mali Improving Education Quality and Results for All (MIQRA) which aims to improve learning outcomes and basic skills training to increase girls’ access to lower and upper secondary education in underserved areas and to enhance institutional capacity and governance.192 MIQRA will support a series of innovative digital applications using targeted and cost-effective smart solutions to improve the quality of teaching and learning. Evidence-based technological tools will be used across the education system, and more specifically at student, teacher, and system levels as described in Figure . MIQRA is an important initiative for progress toward the PRODEC II. In a context of high levels of poverty, insecurity, and demographic growth, this project aims to directly benefit over 4 million Malians, including students and teachers, by targeting pre- primary, primary, lower secondary, and upper secondary schools nationwide. Other important programs such as the Education Development Center’s PACETEM project will enroll 600,000 out-of-school children through alternative educational strategies and complementary system support. 193 In addition, exposure within preservice institutions for teachers to digital skills and enhanced supervision measures are helpful since they lay the groundwork for digitally enabled teaching practices. https://www.internetworldstats.com/stats1.htm. Accessed February 2021. 191 192World Bank. Mali Education Quality For Learning Project. https://projects.worldbank.org/en/projects-operations/project-detail/P164032 193 https://www.edc.org/pacetem. 118 Mali Digital Economy Diagnostic Figure 5.2. Harnessing Technology for More and Better Learning Source: MIQRA Project Appraisal Document (P164032). Currently, the GoM has little information on or policy for digital skills training in secondary education, and digital skills are not part of national educational standards. Moreover, connectivity, especially access to appropriate Wi-Fi services, remains an important priority to urgently address. Since 2011, Mali has a National Research and Education Network (NREN), MaliREN, which aims to bring affordable noncommercial broadband to educational institutions, 194 but has only formally committed to proceed and is not operational. 195 Thus, universities and research institutions are still waiting to be interconnected and connected to high-speed broadband internet through MaliRen. The GoM needs to make formal commitments to the recommended Progressive Bandwidth Targets for African Universities and TVETs (see Table ). Table 5.1: MaliREN Progressive Broadband Target Commitments Year Minimum Bandwidth 2021 (targeted minimum) 0.2 Gbps @1,000 2021–2025 2 Gbps @1,000 2025–2030 20 Gbps @1,000 Source: Feasibility Study to Connect All African Universities to Broadband, 194 http://documents1.worldbank.org/curated/en/233231488314835003/pdf/113114-NRENSinAfrica-SABER-ICTno05.pdf. Accessed February 2021., https://mastercardfdn.org/wp-content/uploads/2019/11/ICT-in-Secondary-Education.pdf. Accessed February 2021. 195 https://openknowledge.worldbank.org/bitstream/handle/10986/34955/Connecting-Africa-s-Universities-to-Affordable-High-Speed-Broadband- Internet-What-Will-it-Take.pdf?sequence=1&isAllowed=y. Accessed February 2021. 119 Mali Digital Economy Diagnostic Despite the above realities, digital skills training is underway in both formal and informal environments. According to international digital skills frameworks, digital skills should be cultivated starting from lower secondary school. This means that at the lower secondary level (grades 7–9), students should gain basic user skills along with a diploma of fundamental studies; and at upper secondary level (grades 10–12) and technical vocational school, students should gain computer literacy along with a baccalaureate for upper secondary and a certificate for technical vocational education and training (TVET) (see Figure ). Figure 5.3. Harnessing Technology for More and Better Learning Formal training Room for Growth • Basic Skills: TVET is available to students after Recent studies show that Sub-Saharan Africa provides completion of lower secondary school or through private raw data but pays for digital intelligence and products (out-of-school programs). Although longstanding, TVET generated from and by companies holding the data. As programs have insufficient specialization and do not digital transformation progresses at an exponential align with labor force needs. Furthermore, TVET training pace, entry-level technologies are the bare minimum for operations and no longer demonstrate returns. Thus, is largely private as public institutions absorb only 5 countries like Mali must continue to build a digitized percent of the eligible age group. 196 Mali’s 500 plus workforce and entrepreneurship pool to monetize private TVET institutions primarily focus on tertiary sector technologies within and beyond the digital economy. skills and outmoded rudimentary digital skills due to low There is regional progress; African digital enterprises up-front investment and lack of quality assurance and produce software for business customers and a digital component for international clients. They have also public oversight. 197 Mali increased its secondary achieved success leveraging experiential know-how and technical and vocational technical offerings, but these creating digital solutions for local customers and local courses do not deliver proper digital skills training.198 problems. 196 http://planipolis.iiep.unesco.org/sites/planipolis/files/ressources/mali_prodefpe_2015_2017.pdf. Accessed February 2021. 197 https://www.ilo.org/wcmsp5/groups/public/---ed_emp/---ifp_skills/documents/publication/wcms_706949.pdf. Accessed February 2021. 198 http://documents1.worldbank.org/curated/en/159371551363122855/pdf/Concept-Project-Information-Document-PID-Mali-Education-Quality- for-Improved-Learning-Project-P168786.pdf. Accessed February 2021. 120 Mali Digital Economy Diagnostic • Specialist Skills: Per the digital skills framework, formal education and specialist training can occur in upper secondary and secondary TVET settings, but this is not the case in Mali. Continuing education and undergraduate institutions offering degrees in computer science and certificates in ICT concentrations provide most specialist skills training. • e-Business Skills: The possession of e-business skills— a mix of digital and entrepreneurial skills— means one can identify and use ICT for business. It also means the ability to create new services and products. Conversely, with user-friendly e-business platforms and apps, specialist skills are no longer prerequisites for utilizing ICT for business. In Mali, the development of e-business skills in the formal education system is lacking. This is primarily due to the nascent status of the e-commerce sector and lack of integration into broader growth strategies. At present, students may acquire e-business skills through graduate business programs that, along with other subjects, investigate e-commerce. Informal/Private/Non-Profit Training • Basic Skills: Due to the education sector’s current state, informal environments are even more important to digital skills attainment. Whether through mobile phones or smartphones, cyber cafes or at work interactions with digital technologies, Malians can prove competency and glean basic digital skills that form the building blocks for future attainment. Projects in agriculture, industry, and education utilize digital technologies for information dissemination, data collection, and learning. Thus, usage- and skills-focused self-learning is vital for building Malians’ digital skills. • Private and Non-profit Providers of Specialist Skills: Private, non-profit, continuing education, and TVET institutions are filling the void left by the formal education system. One program doing so is the Mali Vocational Education Training and Enterprise Center, a private provider offering courses in digital literacy, IT support, and computer science; technology and innovation; and web and graphic design. Courses undergo quality assurance from various public and private entities and are aligned with workforce forecasts and demonstrated need. Most important, the course provides graduates with certificates of completion recognized by education ministries and agencies.199 • E-Business Skills: Entrepreneurship support organizations (ESOs) such as innovation hubs are a means of providing a networked environment to increase entrepreneurship and accelerate business success. ESOs usually have access to training, mentors, investors, staff, government, and international corporations. Their infrastructure and networks attract e-business entrepreneurs. Mali has numerous innovation hubs, including Impact Hub Bamaka and the Business Innovation and Incubation Centre—which are part of the AfriLabs network—and Orange Digital Center (see Box ). There are also efforts to map the digital sector, connect regional startups, and form associations for improved advocacy and support. Innovation hubs remain unproven in the African context as they lack a clear framework and specialty.200 However, with the right components and direction, hubs can be a catalyst for transformation by facilitating technical and policy cooperation between the public and private sectors.201 Overall, there is significant engagement from the private sector in digital skills development, while public sector engagement remains limited. Private sector engagement ranges from curriculum development to delivery of programs, to identifying qualification frameworks, accreditations, and partnerships for tertiary institutions. In terms of public sector engagement, although the transitional government announced the creation of the National Digital Council to leverage public, private, and academic knowledge and accelerate digital development,202 there are very few partnership initiatives to strengthen digital skills across sectors. Existing programs include training platforms from Azalay Hotel,203 Centre des Investisseurs Europeens au Mali 36 Young Business Hub. https://youngbusinesshub.org/mali-entreprenur/168786.pdf. Accessed February 2021. 200 Digital Economy Report 2019. UNCTAD. https://unctad.org/en/PublicationsLibrary/der2019_en.pdf?user=46. Accessed May 2020. 201 https://www.gsma.com/mobilefordevelopment/blog/618-active-tech-hubs-the-backbone-of-africas-tech-ecosystem/. Accessed May 2020. 202 https://www.ecofinagency.com/telecom/0911-42034-mali-hamadoun-toure-announces-the-creation-of-the-national-digital-council. Accessed February 2021. 203 Uses a digital platform and virtual reality to train future staff 121 Mali Digital Economy Diagnostic (CIEM), Institut des Administrateurs du Mali, 204 Orange Digital Center, 205 and Famib’s, 206 which could be scaled up for more impact. There are a few rapid ICT reskilling and upskilling programs in Mali. Most multinational corporations support digital competency building through regional and local initiatives to prepare their own workforce and in some cases the value chain in which they operate. While Google sponsors hackathons locally, Orange has invested in a Digital Center in Bamako in partnership with GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH) as highlighted in box 5.3. During the COVID-19 crisis, the United Nations Institute for Training and Research (UNITAR) launched a six-week training initiative to enhance productive sources of livelihoods and an employment training program targeting youth and women in the Sahel region. In addition, public and private schools offer basic ICT/digital courses on a commercial basis. Box 5.3. Orange Digital Center Formed as a public-private partnership with support from GIZ and Orange, the Orange Digital Center supports young professionals and entrepreneurs with advanced digital skills development with some business mentoring and some networking to facilitate access to the regional seed and venture funding ecosystem. Its space incorporates digital skills training, fabrication laboratories, managerial services, and coaching services, with 30 percent women clients. All programs are free but with limited placements. There are plans to scale up recruitment and placement. To date, there have been 2,300 applications from which 50 were chosen. seven completed training requirements and were placed on projects. However, the demand was for 150 developers. The Orange Digital Center is looking to collaborate with the Virtual University to expand training. 5.2.2.1 Challenges to Developing Digitally Skilled Labor Human capital development and, to a lesser extent, security, are binding constraints to the timely development of Mali’s digitally skilled labor. While access to education has improved in Mali in recent years, the Malian education system faces a high level of learning poverty, with only one in ten Malian children able to read an age-appropriate text by the age of 10.207 Mali’s poor live predominantly in rural areas and are mainly farmers who depend on low-productivity agricultural production systems. The great majority of the urban poor are workers in the informal sector who are engaged in low-productivity activities. Mali has a young population, growing at 3.1 percent a year, and youth unemployment is a major challenge, as the number of young people entering the job market is estimated at 300,000 per year, while the economy can only create a maximum of 50,000 jobs in the formal sector per year. These issues are exacerbated by current fragility, with the 2020 health, security, social, and political crises having led to a 5 percentage points increase in poverty, and socioeconomic vulnerabilities are expected to further rise, exacerbating the country’s fragility and social challenges, particularly in rural areas.208 The GoM’s current educational offerings do not provide proper digital skills training nor ready its youth for the digital economy. Due to limited funding and a burgeoning population, there are too few schools to meet educational demands, facilities are inadequate, teachers lack proper training, and auxiliary costs prevent much of Mali’s poor from accessing and attaining their education. Education inequity also has geospa tial components as students in rural areas (where 90 percent of the poor reside) are more likely to be poor and therefore disadvantaged in comparison to urban students. The GoM’s expenditure per child is also 73 percent below the SSA average. This, coupled with digital infrastructure deficits, means Malian students are being left behind. Mali scores low on the World Bank’s Human Capital Index (HCI) at 0.32, that is, the future earnings 204 Preparing leaders to become senior managers could benefit from a virtual or hybrid model of learning. 205 Trains coders. 206 Famib is training a wide range of skillsets ranging from undergraduate students to employed manual laborers, 207 This is due in part to the accumulation of constraints on instructional time. A study conducted by the Ministry of Education and USAID concluded that Malian students had only 122 days of learning time in 2009/2010 out of a total of 172 days scheduled in the official calendar. 208 World Bank, 2021, https://www.worldbank.org/en/country/mali/overview. 122 Mali Digital Economy Diagnostic potential of children born today is estimated to be 32 percent of what they could have been with complete education and full health.209 As shown in Table , Mali trails behind most of its peers across the Human Capital Index (HCI) subcomponents, including expected years of school by age 18, harmonized test scores, and learning adjusted years. Table 5.2. Human Capital Index and Sub-components Comparison: Mali and selected Peer Countries, and Sub-Saharan Africa210 Restoring quality education services is urgent when one considers Mali is a young country, with 47 percent under 15 years of age and growing at 3.1 percent a year. The TVET system faces challenges with infrastructure (equipment), coordination, harmonization, content quality, higher-level training, course orientation toward the tertiary sector (at 80 percent), modest coordination of ITC in any sector training, and lack of personalized learning. Additionally, quality improvement is required within university education.211 These statistics mean that, along with addressing matters of reproductive justice, the GoM is tasked to work within unique contextual and resource constraints while improving education accessibility, quality, productivity, and cost-effectiveness. Thus, the GoM, in coordination with the World Bank, is implementing the Mali Improving Education Quality and Results for All Project to increase learning outcomes in early primary education, help promote girls’ access to lower and upper secondary education in underserved areas, and enhance the governance of the education system, supporting goals of PRODEC II.212 Mali’s political fragility has led to missed school days; interrupted and inconsistent policies, programs, and projects; and missed economic and investment opportunities. Although beyond the scope of this paper, addressing fragility is an obvious requirement for policy implementation, poverty reduction, and inclusive, sustained growth. Investors do not reward sustained, high political risk, and uncertainty. Along with transparency and accountability, political certainty attracts and cultivates regional and international coordination, partnerships, and financing required for capital investments in businesses’ long-term success as well as for capital projects (such as broadband infrastructure). The GoM must actively manage its business climate to reach a level of stability for acceptable forecasting and analysis for investment decision-making. 209 World Bank. Human Capital Index. https://data.worldbank.org/indicator/HD.HCI.OVRL?locations=ML. 210 The Human Capital Index 2020 Update: Human Capital in the Time of COVID-19. https://openknowledge.worldbank.org/handle/10986/34432. Accessed February 2022. 211 National Employment Agency - Head of the Employment Promotion Training Department. Interview April 27, 2021. 212 World Bank Provides $80 Million to Improve Quality of Education in Mali. The World Bank. March 23, 2021. https://www.worldbank.org/en/news/press-release/2021/03/23/world-bank-provides-80-million-to-improve-quality-of-education-in-mali. Accessed February 2022. 123 Mali Digital Economy Diagnostic The COVID-19 crisis exacerbated already difficult challenges with the closure of national education systems that already faced considerable challenges as a result of ongoing conflict and displacement, critical lack of funding, and very limited digital connectivity and public services. Like many African countries, Mali endeavored to overcome the education To accelerate digital readiness, interruption by supporting students’ learning through radio and governments must marry policies and actions that generate digitally television content. For a limited proportion of the population, especially skilled workers and incentivize those in urban environments, broadband connectivity supported digital technologies that inclusively access to more content on the internet. In higher education, solve local problems. entrepreneurs in the diaspora, such as the founder of Famib, sought to build international partnerships to support access to educational content and to develop online learning platforms that could fill some of the digital skills gaps. 5.2.3 Digital Skills Demand The conjunction of recent economic, political, and security events has weakened workforce demand. Despite efforts by the GoM to contain the economic fallout of the COVID-19 pandemic and address the deteriorating security situation and political turbulence, these shocks are taking a heavy toll on Mali’s private sector and economic outlook, with GDP expected to contract by 2.3 percent in 2020 (from 5.1 percent real GDP growth in 2019) as a result of declining global demand and the impact of restrictive measures adopted to contain the spread of COVID-19. To employers, the recent coups d’état are “politics� and out of the purview of the private sector. However, instability (especially the lack of contract enforcement) affects the business environment, investments, partnerships, labor, and growth. Moreover, electrical power and broadband connectivity challenges are an important inhibitor for sector-wide and business-wide digital transformation. To consumers, uptake remains limited as there is greater trust in cash transactions and limited spending mainly on essential goods and services. Notwithstanding the economic contraction and its impact on the job market, the adoption of Agtech, population growth, urbanization, and expanding mobile usage together signal future increases in digital services and, consequently, demand for employees with digital skills. The Malian government aims to develop and improve agro-processing and products as two of its top ten companies are in agriculture. 213 A key component will be viable Agtech along the supply chain and related ICT infrastructure. Coupled with Mali’s comparative advantage in ICT—with US$600 million (BoP) of services exported in 2018, and ICT encompassing over 37 percent of those services, 214 this provides a powerful foundation on which to build a regional comparative advantage in the digital economy. However, the lack of diversification in the Malian economy, which remains resource intensive with weak digital transformation and innovation, 215 could dampen forecasted digital skills demand and development. The ability of Mali’s workforce to fill the future surge in demand is uncertain as it has a limited number of highly skilled professionals (4.5 percent of employment) and heavily relies on medium-skilled workers (at 93.0 percent of employment). This reflects the low tertiary education attainment rate (3.4 percent of 25- to 54- year olds).216 Additionally, training in ICT is geographically concentrated around Bamako and certain skill sets can become saturated in one place whilst lacking in another. The GoM supported the construction of a platform to match skilled workers to employment with a job search engine. It has over 10,000 registrants but is no longer operational. There is also demand for workers with digital skills within the GoM, where training is needed to build both technical competency and strategic thinking for the digital economy. 213 EMIS. https://www.emis.com/countries/Mali. Accessed February 2021. 214 Data.worldbank.org. Accessed February 2022. 2020 will bring about a contraction with –2.0 GDP growth (AfDB) as the COVID-19 pandemic saw 30 percent of men and 40 percent of women cease working (ILO) and the coup d’état heightened economic uncertainties. 215 Mali ranks 112 of 129 in the Global Innovation Index. https://www.globalinnovationindex.org/analysis-indicator. Accessed February 2021 216 WEF human capital report, http://www3.weforum.org/docs/WEF_Global_Human_Capital_Report_2017.pdf. Accessed February 2021. 124 Mali Digital Economy Diagnostic 5.3 RECOMMENDATIONS The following recommendations for the GoM all fall into these three strategic areas based on consultations with Malian government agencies and their private sector counterparts, and other education ecosystem actors: 1. Improving the enabling environment for digital skills development; 2. Enacting policies that foster skills development and sustain the country’s digital transformation; and 3. Supporting the growth of digital markets and digital inclusion. Improving the enabling environment for digital skills development R.1 [Quick win]. Improve understanding of the nature of demand for and supply of digital skills and the roles of formal, informal, and self-learning in skills attainment in key sectors of the economy. An assessment of the qualifications and the competencies needed by different sectors and segments of the labor market in the short- to medium-term would be crucial. The findings of such an assessment would allow the government to make the best use of its existing resources. The findings would also prioritize the sectors most affected by digital transformation such as financial services, agriculture and agro-processing, ICT, transportation and logistics, and the public sector. R.2 [High priority]. Expand partnerships with the private sector in the design and delivery of an emergency digital skills development plan in key sectors of the economy, including the public sector. The private sector is generally well-positioned to provide affordable, accessible, market-relevant, and inclusive options at international standards for individuals of all ages to gain digital skills that will enable them to function and become more employable in an increasingly digital world. A shared and coordinated vision with private sector partners of key sectors would enable the implementation of training opportunities, such as apprenticeships or work-integrated learning (WIL) initiatives, rapid reskilling programs to support sector-specific digital transformation (including of the public sector whether intra- and inter-organizations), rapid upskilling programs for those already employed, and targeted incentives for results-based contracting for employment placement among vulnerable groups, including youth, women, and persons with disabilities. Such an emergency plan would aim to accelerate economic recovery and improve service quality, delivery, accountability, and geo- spatial equity. Additional actions may include financial incentives for domestic companies creating customized ICT technologies and platforms that inclusively solve local problems for local people and easing infrastructure, financial, and market (doing business) barriers. The GoM should work with incubation hubs to highlight digital entrepreneurship avenues—specifically development, distribution, and management of technologies—and provide access to data for local market analysis, insight, and planning on digital products and services. Lastly, the diaspora represents a potential pool of resources that could be further leveraged in Mali to support digital skills development, not only through investment but also through technical expertise and know-how. Enacting policies that foster skills development and sustain the country’s digital transformation R.3 [High priority]. Tackle critical connectivity challenges in education institutions. While national policy documents and stakeholders are candid and persistent about the need to address infrastructure challenges, political and financial momentum is needed from the GoM and other relevant stakeholders to ensure that all primary and secondary schools, TVET, and higher education institutions (HEI) have adequate electricity and reliable internet with appropriate maintenance support, as defined by minimum broadband standards. At the primary and secondary levels, this will require significant investments and cross-sectoral collaboration to ensure adequate security, electricity, and internet access. For HEIs and TVET institutions, minimum connectivity standards to set norms for connection speeds by size of institution constitute an important milestone. 125 Mali Digital Economy Diagnostic R.4 [High priority]. Define and implement use cases to integrate the use of new digital technologies in education and to prepare a comprehensive digital skills curriculum and teachers training programs for primary, secondary education, and TVET institutions. Political will and financial commitments will be crucial to reinvent education in the era of digital applications, mobile broadband, and virtual learning. A comprehensive review of education policies and programs and the need to integrate digital skills components at different education levels should be undertaken. Existing curriculum on computer studies and guidelines on computing skills should be updated to reflect the holistic notion of digital skills. The curriculum content, especially in primary and lower secondary levels, should include not only ways to develop the use of computers and the internet, but also how to better communicate in the digital realm, how to solve problems, and how to research and navigate safely in cyberspace. Teacher training programs should also reflect this broader notion of digital skills at different levels. In addition, digital interaction with teachers should be reinforced from curriculum planning to classroom management to payroll. As use cases are implemented nationally and internationally, it is crucial to keep strengthening and refining the national policy framework for digital skills development and ICT in education and continued education. This is crucial given an increasingly young population that will enter the job market in the coming decade while digital usage evolves rapidly to accelerate the transformation of key sectors of the economy. Supporting the growth of digital markets and digital inclusion R.5 [Quick win]. Collaborate with public and private stakeholders on the provision of data and advisory services to gain market intelligence on the alignment of workforce supply and demand. Due to accelerated digitalization and the ongoing recession, the world of work has changed. Therefore, the GoM should proactively prepare Malians to thrive in the twenty-first century labor market. This means understanding and accurately forecasting workforce supply, demand, and skill requirements. Building on an assessment of the supply and demand for digital skills as recommended above, and through partnerships with ICT, telecom, and other industries employing and servicing digital technologies, the GoM should begin collecting workforce data and seeking advice on skills alignment and assistance with citizen digital skills attainment (i.e., community and in- house training). A public institution like the Institut National de la Statistique (INS) could be empowered to support data collection and analysis on current and future digital workforce needs. Overall, private and public cooperation will be essential in the design of reskilling and upskilling programs for specific sectors, to boost employability of those youth out of the schooling system, and to prepare the next generation of digital citizens, workers, and entrepreneurs. R.6 [High priority]. Leverage digital technologies and support community programs to improve education access, quality, equity, and general literacy rates with effective coordination, responsive curricula, equipped facilities, and quality assurance. As Mali faces unique fragility, resource, and infrastructure challenges, it is imperative that solutions are customized to meet those challenges. This means not only optimizing its current resources with improved coordination—focused and aligned objectives and resources, reduced fragmentation, and mitigated risk—but also reflecting and accounting for teacher and student contexts and covering both formal (public) and private systems. The use of emerging data and digital technologies (such as drones, digital mini grids, learning platforms, etc.) to offset resource and infrastructure deficits will be paramount. The COVID- 19 pandemic spurred innovative actions for delivering educational opportunities 217 and can serve as an inspiration for structuring e-learning systems that meet educational quality and equity objectives. It is important that actions engage learners “where they are� and employ pedagogy that reflects tangible, useful, and usable links between learning and digital literacy. In parallel, teacher training, standards, performance metrics, evaluations, and digital pay should be strengthened and incorporate competency in and teaching of digital skills. 217 https://www.globalpartnership.org/sites/default/files/document/file/2020-07-requete-financement-accelere-covid-19-document-programme-mali.pdf. Accessed February 2021. 126 Mali Digital Economy Diagnostic CONCLUSION The development of the digital economy represents an opportunity for Mali to address its fragility and build resilience, while driving inclusive growth. Digital technologies and tools can improve public service delivery, connect citizens, accelerate private sector development, and restore trust in the state. Increased digital adoption can also contribute to Mali’s resilience to future pandemics or shocks, as it would allow economic exchanges to continue in a context of restricted circulation—through e-commerce and digital payments, business continuity, and the continued provision of essential basic services— for example, through distance learning, e-health, and digital safety net payments. The Government of Mali (GoM) recognizes the importance of digital technologies and aspires to accelerate the digital transformation of its public sector and the wider economy. The results of the diagnostic show that the potential of the digital economy is unfulfilled in Mali. The GoM has taken the first steps to advance digital transformation, including the development of digital infrastructure and the digitalization of public service delivery and core government functions. However, much remains to be done to enable Mali to fully exploit the full potential of digital technologies and innovation to accelerate inclusive socioeconomic growth and reduce poverty. The nascent state of Mali’s digital economy is reflected in low rates of digital adoption, significant digital divides, and the absence of a comprehensive and coherent digital strategy, with digital technology yet to have a transformational impact on Mali’'s economy. And while the digital economy holds great promise, it is not a panacea. Given the problems of poverty and unemployment that Mali faces, the focus must be on inclusion and participation in the digital development process. Moving forward, in order to harness the power of digital technologies and build an inclusive digital economy in Mali, it will be necessary to invest in the basic foundations of �digital,� combining supply- and demand-side interventions, based on a coordinated holistic approach. Overall, to harness digital sources of growth and unlock digital dividends, Mali needs a combination of supply-side policies and investments to support affordable and reliable broadband and digital public services, but also demand-side interventions, incentives, and skills-building programs to stimulate digital adoption and productive use by individuals and businesses. Similarly, isolated investments in individual pillars of the digital economy may not have the desired impact. For example, improved digital connectivity can only have a transformational impact on economic opportunities and inclusive growth if it is combined with improvements in digital skills and literacy, access to digital payments and other financial services, and support for digital entrepreneurs. The ability of governments to develop platforms such as digital identity systems and to leverage technology to improve efficiency and service delivery is critical in many of these areas. The combined effect of these improvements is greater than their sum. Several cross-cutting challenges have been identified throughout the analysis. Addressing these would strengthen Mali’s ability to navigate and address the challenges identified under the five pillars. Improving the enabling environment. Anchoring reforms and investments to develop the main elements and pillars of the digital economy on a solid “analogue� (legal, regulatory, and institutional) foundation will be crucial for success and sustainability. Developing a common vision for digital transformation and improving strategic institutional oversight and coordination will be essential, as will the need to close existing regulatory gaps and update key legal and regulatory frameworks, in order to create and implement a legal environment that preserves citizens' fundamental rights and secures digital transactions and safeguards against all illegal acts of information and communication technology (ICT) use. Closing the usage gap and supporting wider digital adoption and inclusion. The GoM should pursue its efforts to catalyze the development of digital literacy and skills among the general population, as they are necessary for any Malian citizens or residents to interact safely and benefit from digital social media services, e- commerce, and digital public services, while helping the digitally advanced workforce to drive productivity, 127 Mali Digital Economy Diagnostic innovation, and growth. Attractive use cases such as digital public services and the communication around them are essential to generate interest in digitalization and encourage widespread adoption by the general population. In the long run, a key priority for the GoM is to ensure that no Malian is left behind in the digital economy. This will require a multipronged approach that addresses affordability and quality of services, and skills barriers, as well as the perceived value of digital technologies, with specific interventions targeted at the most vulnerable groups, including women (see below Bridging the gender gap), poorest households, the elderly, people with disabilities, and so forth. Bridging the gender gap. Women lag behind in terms of digital skills, economic opportunities, and access to and consumption of digital services. This digital divide exacerbates inequalities and the ability to contribute to the economy through digital means. It is recommended that a strategic gender lens be applied to all digital efforts, and that projects are monitored for their gender performance to enhance learning and impact. Important areas include addressing starker barriers to access connectivity, for example, through community access points or device affordability schemes tailored for women, strengthening the capacity of business support organizations to support women along the entrepreneurial value chain, and investing in tailored programs to develop the digital skills of women and improve their access to digital devices. Stimulating private sector participation and partnerships. The GoM should seek to engage the private sector when it comes to increasing investment in broadband network expansion, building local business capacity through public sector projects, and deploying user-centric platforms and small business friendly ecosystems across the digital economy. Private partnerships will also be essential for skills development as the digital transformation of the Malian economy takes hold and accelerates. To achieve this, the GoM needs to provide an enabling framework that offers visibility and confidence to potential private investors, as well as the predictability and sustainability of long-term partnerships with the private sector to make the required investments. There should also be more coordination between the public and private sectors to determine how they can work together to achieve the objectives of the strategy. Strengthening regional integration. Mali’s geographical location and small domestic market highlight the need for regional integration to benefit from the network effects of a regional market, access regional private investment, connect to regional infrastructure, and integrate into regional value chains. Achieving a Single Digital Market (SDM) in the region will require simultaneously supporting domestic development and cross- border integration of a single connectivity market, a single data market, and a single online market, which form distinct yet interconnected layers. Many challenges remain, such as extending the availability of broadband networks beyond regional capitals and across borders in a context of enhanced security, updating regulations to implement the WAEMU and ECOWAS electronic communications framework and improving the enabling environment, from financial services and digital payments to cybersecurity and personal data protection, and leveraging other neighboring entrepreneurial ecosystems to promote access to additional incubation/acceleration support as well as access to finance and markets. The development of reforms and investments to advance Mali’s digital economy must be based on a set of principles: ▪ Data-driven interventions: Strengthening data collection, with data disaggregated by gender and vulnerable groups, will be essential to inform policy and decision-making on the type of interventions that are most likely to boost Mali's digital transformation potential. ▪ Due consideration for fragility factors and risks: The promotion of digital technologies in Mali must navigate the complex dynamics of fragility, conflict, and violence and be tailored to the specific context of Mali to ensure that the many opportunities emerging from digitalization can be seized and the associated risks appropriately mitigated. ▪ User-centricity, citizen engagement, and consumer protection: The design and delivery of digital services and devices should be guided by user-centricity principles to ensure accessibility, security, availability, and ease of use. Digital means should be used to involve citizens more in the creation of 128 Mali Digital Economy Diagnostic public services and to provide better digital public services, and emphasis should be placed on the protection of customers, personal data, and privacy. ▪ Interoperability and a whole-of-government approach: To avoid a patchwork of ICT solutions that are not always compatible with each other and an e-government program that does not achieve its objectives, it will be very important for the GoM to design and implement its digital government program with interoperability at its core. The most critical reforms to unlock digital transformation in Mali are presented in table C.1. Table C.1. Prioritized Recommendations POLICY AND INSTITUTIONS Quick ▪ Reinforce the newly established strategic inter-ministerial coordination mechanism for digital win transformation DIGITAL INFRASTRUCTURE ▪ Strengthen AMRTP's implementation of the legal and regulatory framework to increase competition, Quick encourage private investment and lower barriers to entry win ▪ Operationalize the ICT market observatory ▪ Strengthen the transparency and governance of the universal service fund (AGEFAU) ▪ Design and implement targeted interventions to increase service and device affordability High ▪ Increase awareness of digital dividends and expand public access and digital literacy priority ▪ Establish a Virtual Landing Point, accompanied by adequate governance and a mechanism to control tariffs, in order to develop international connectivity and improve affordability of services ▪ Extend digital connectivity in ‘uncovered unprofitable areas’ , such as through the use of the universal access fund based on public subsidies and PPPs or demand aggregation/bulk purchase agreements for user groups (e.g., government/public institutions) to incentivize private sector deployment of networks, with due consideration for ensuring infrastructure security in fragile areas and off-grid power needs DIGITAL PUBLIC PLATFORMS Quick ▪ Design and implement digital government services considered as quick wins and which would be of win high impact to citizens to create interest in digitalization ▪ Elaborate a prioritized and sequenced action plan for the development of digital government and digital public platforms, based on a coordinated and inclusive approach ▪ Develop a national data governance framework and policy to lay down protocols and standards for how government institutions process, store and share public and citizen data within the larger government ecosystem High ▪ Hire or develop skills for more digital/IT specialists to strengthen public sector capabilities for the priority development and management of digital public platforms and services ▪ Accelerate the implementation of interoperability between Malian public information systems to digitize sustainable government processes and facilitate public service integration ▪ Build foundations for the use of digital signature and digital authentication services to improve accessibility and quality of future digital public platforms $ DIGITAL FINANCIAL SERVICES ▪ Support the National Treasury in its vision to connect to regional payment systems and to acquire a national payment gateway to oversee and manage all public financial flows in order to accelerate Quick digitization of government payments win ▪ Adopt a decree allowing the expansion of the BIC-UEMOA database in order to allow the incorporation of data from major billers (SOTELMA, EDM, MALITEL) ▪ Adopt a decree to mandate the digitization of specific Government payment flows in line with the 2002 regional Directive on banking High ▪ Further extend DFS to sectors other than the financial sector to expand the range and adoption of DFS priority ▪ Establish a dedicated and autonomous agency for financial inclusion ▪ Establish a consumer protection agency to mitigate financial risks to consumers ▪ Ensure the creation, disaggregation and use of gender data to inform DFS product and policy designs 129 Mali Digital Economy Diagnostic ▪ Address fintech challenges and leverage opportunities to scale DFS DIGITAL BUSINESS ▪ Launch a startup registration program to better qualify both new and existing startups Quick ▪ Launch a digital skills development plan in partnership with the private sector to reskill and upskill the win workforce to prepare for Mali’s digital transformation ▪ Target specific use cases as part of a phased approach to the deployment of Fintech solutions ▪ Adopt the Start Up Act operationalization decree ▪ Provide female entrepreneurs increased assistance through entrepreneurship support programs that High consider women’s specific needs and challenges priority ▪ Establish dedicated funding instruments, credit lines and capacity development programs adapted to digital startups and small firms DIGITAL SKILLS ▪ Improve understanding of the nature of demand for and supply of digital skills and the roles of formal, informal, and self-learning in skills attainment in key sectors of the economy Quick ▪ Define and implement use cases to integrate the use of new digital technologies in education and to win prepare a comprehensive digital skills curriculum and teachers training programs for primary, secondary education and TVET institutions ▪ Collaborate with public and private stakeholders on the provision of data and advisory services to gain market intelligence on the alignment of workforce supply and demand ▪ Expand partnerships with the private sector in the design and delivery of an emergency digital skills development plan in key sectors of the economy including the public sector High ▪ Tackle critical 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First Evidence on Economic Benefits of High� speed Broadband Technologies in Europe," Journal of Common Market Studies, Wiley Blackwell, vol. 57(5), pages 1071–1090, September. 134 Mali Digital Economy Diagnostic APPENDIXES Appendix A: DE4A High-Level Scorecard Indicators DE4A DE4A Interim FINAL Findings GOAL INDICATOR target Target for Mali (2021) (2030) DIGITAL INFRASTRUCTURE Increase access to broadband “Unique� mobile-broadband subscriptions per 100 30 32 67 Internet inhabitants (by IDA, FCV) (2021) Increase quality of broadband Average Mobile Broadband download speed (Mbit/s) 4.72Mbs 3Mbps 10Mbps Internet (by IDA, FCV) (2021) Mobile broadband basket (prepaid, 500MB) price per Increase affordability of 5.96 month (% of a country’s average monthly GNI per 6 2 broadband Internet (2020) capita) (by IDA, FCV) DIGITAL PUBLIC PLATFORMS Increase availability and Digital Adoption Index (DAI) (Government cluster) (by adoption of secured and IDA, FCV) 0.47 0.45 0.80 interoperable digital public (2020) platforms for public services Increase ID coverage for adults Percent of the 15+ population with an officially 71 70 100 recognized identity credential (a “foundational� ID) (2017) DIGITAL FINANCIAL SERVICES Increase access to digital Percent of adults with access to a transaction account 28 financial services (by gender, income group, education level, urban/rural; 50 90 (2021) and by IDA, FCV)* Increase usage of digital Percent of adults who made a digital retail payment in 34 financial services the past year (by gender, income group, education 50 90 (2021) level, urban/rural; and by IDA, FCV)** DIGITAL BUSINESS Number of investment ready digital solution providing firms operating in the country including those receiving Number of investment-ready funds from pre-seed/seed (grants, angel etc), VC, PE, 72 digital solution firms operating 240 600 Mezzanine financing, debt financing and other (2020) in the country capitalization (non-equity assistance, corporate round) and have not reached exit stage (M&A, IPO) Number of platform-based or Number of domestic or international firms, start-ups or 10 data-driven firms operating in mature firms as long as they are platform-based or N.A N.A (2020_ the country using data as a key input to create value DIGITAL SKILLS Percent of lower-secondary schools with access to Increase Internet connectivity No data internet for pedagogical purposes 55 100 in education institutions available (by urban/rural; and by IDA, FCV) Proportion of youth and adults with advanced digital Increase availability of digitally No data skills*** 3% 6% competent workforce available (by gender, urban/rural; and by IDA, FCV) * Note: Number of depositors with commercial banks per 1000 adults, IMF financial access survey, 2019 **Made or received digital payments in the past year (% age 15+), Global Findex, 2021 ***Note: Data comes from UIS’s SDG Indicator 3.3.1. ( http://data.uis.unesco.org/). “Proportion of youth and adults with advanced digital skills� is proxied using the� proportion of youth and adults who have written a computer program using a specialized programming language�. This measure was used in ITN’s Measuring the Information Society Report (2018). 135 Mali Digital Economy Diagnostic Appendix B: Regional Level Recommendations to Boost DFS Uptake Establish a regulatory framework that takes into BCEAO High Medium/long-term account technological innovations The revision of the provisions for the issuance and BCEAO High Medium/long-term distribution of electronic money: for a greater adaptation of the regulatory framework of digital finance and fintechs, it would be necessary to proceed to the revision of Instruction No. 008-05- 2015, in particular on the aspects of the conditions for opening remote accounts, the capital required, the ceiling amounts and the types of services authorized The revision of Directive No. 8/2002/CM/UEMOA of BCEAO High Medium/long-term September 19, 2002 on measures to promote banking and the use of non-cash means of payment, and the 2003 Instruction by setting the reference amount of XOF 100,000 at XOF 50,000 The forecast of new categories of actors in the banking BCEAO High Medium/long-term law Make the regulatory framework for intermediary BCEAO High Medium/long-term agents in banking operations enabling to promote the expansion of the network of access to financial services and financial inclusion while creating opportunities for fintechs, the BCEAO could adopt one or more regulations on “agents�by clarifying or easing the conditions of access (IOB/IOM) The update of Regulation 15/SP of September 19, BCEAO High Medium/long-term 2002 on payment systems, in particular on aspects of mobile money, electronic banking, acceptance technologies, interfaces, conditions of access to payment systems To promote the level of interoperability, non-bank BCEAO High Medium/long-term institutions should be allowed to participate in the BCEAO's payment systems Improve the AML/FT in order to allow the BCEAO High Medium/long-term simplification of account opening procedures as recommended by the FATF Revision of the regulatory framework for microfinance BCEAO High Medium/long term institutions, allowing them to become more involved in the distribution of digital financial services, reducing the ceiling on income from electronic money and other restrictive provisions 136