Project Finance 2024 Comparisons

In Mali, as in most countries, banks are the primary financiers of projects and are responsible for guaranteeing the execution of public contracts.

However, given the country’s significant poverty and the often high interest rates charged by banks, private organisations have emerged to finance small-scale economic activities. These organisations are referred to as microfinance institutions, with the most prominent being Nyessigiso, Baobab, Kafo Jiginew and Caece Jigiseme. They offer low-amount, low-interest loans to small-scale entrepreneurs such as artisans, farmers and small traders.

Public-private partnership transactions are governed by Law No 2016-061 of 30 December 2016, and its implementing Decree No 2017-0057/P-RM of 9 February 2017. Additionally, Decree No 2017-0050/PM-RM of 9 February 2017 established the Public-Private Partnership Unit.

These administrative contracts (concessions, service concessions, works concessions, leasing, management contracts, etc) are signed based on the opinion of the Public-Private Partnership Unit.

The private partner is subject to various obligations: social responsibility, performance targets concerning the quality of services provided (Article 24.4), the requirement to submit an annual report to the contracting authority (Article 33.II), and notably, the obligation to allocate a minimum portion of the contract execution to small to medium-sized enterprises or artisans (Article 37.IV).

However, the private partner also has rights: real rights over the works and equipment they produce, unless otherwise specified (Article 26.I), and the right to fair compensation, indemnity or compensation in the event of contract termination, force majeure events or an increase in obligations by the contracting authority (Article 34). The private partner may also subcontract part of the work or transfer the entire contract, subject to the contracting authority’s approval (Articles 36 and 37).

The deal can be structured in various ways, provided that the type of company is determined (eg, a public limited company (société anonyme in Malian law), limited liability company (société à responsabilité limitée in Malian law) or sole proprietorship (entrepreneur individuel in Malian law)). The internal organisation of the company must also be established (including procedural manuals, the distribution of responsibilities, management practices and human resources), as well as legal and fiscal compliance (adherence to labour standards, payment of taxes and duties).

Regarding financing, options include bank loans, supplier credit, refinancing, private equity and joint ventures. Additionally, it is noteworthy that there is an interesting organisation in the country, namely the Private Sector Guarantee Fund (FGSP), which guarantees loans made by banks to businesses.

Given Mali’s rich mineral resources (gold, bauxite, lithium, etc), the mining industry is a highly promising field. Activities related to solar energy and the food sector are also developing rapidly. Moreover, due to the government’s regular initiation of large-scale social housing construction programmes, the cement industry is experiencing significant growth. Lastly, the aviation, rail and road transportation sectors are particularly promising and are expected to continue to develop; these sectors are currently almost non-existent.

Loans granted to entrepreneurs are generally secured by mortgages. Lenders also use guarantees or pledges, as well as other securities, to protect themselves against the risk of insolvency of their borrowers.

Various guarantees are regulated by the Organization for the Harmonization of Business Law in Africa (OHADA) Uniform Act of 15 December 2010, which regulates the organisation of securities. This Act stipulates that some guarantees must be renewed annually to remain valid.

The Uniform Act was revised to introduce new articles, notably articles establishing a securities agent, who must be a legal entity – whether national or foreign – responsible for the establishment, registration and execution of securities at the request of a creditor (Article 5 of the Uniform Act). The agent’s prerogatives and obligations are outlined in Article 6 and subsequent Articles of the Act.

Floating charges do not exist in Mali, as this is a practice specific to Anglo-Saxon law. However, a comparison can be made with personal guarantees under OHADA law. A person, at the time of the loan, personally commits to guaranteeing the debtor’s default, covering both their present and future assets. Similarly, in business transfer situations, it is possible for the seller to guarantee liabilities that are not yet incurred or payable.

Mortgage registration is conducted at the land registry office with a fee of 1.2% of the guarantee amount. Other securities are registered with Registre du Commerce et du Credit Mobilier (RCCM; the Trade and Personal Property Credit Register), maintained by the commercial court. Pledges are registered at a maximum rate of 3%.

Each collateral element must be specified in the document; otherwise, the security will not be valid, except for personal guarantees where the guarantee covers all the guarantor’s assets.

Restrictions are generally related to the incapacity of the person wishing to commit, the requirement for prior approval from the board of directors in public limited companies to encumber company assets, and the inability of the guarantor to encumber their spouse’s personal assets or the couple’s joint property without the spouse’s consent.

It is generally the notary’s responsibility, when drafting the deed, to ensure that the given guarantees are free from other privileges. To this end, the notary consults the land registry office or conducts searches in the RCCM, a centralised file available at the commercial court.

Guarantees are typically released after the proper execution of the contract, such as full repayment of the loan.

If the guarantee is a mortgage, it ceases to be effective immediately if not renewed before the contractually specified deadline (Article 196 of the Uniform Act Organising Securities (UAOS)). After proper fulfilment of the obligation, it is removed from the land registry and seized by the notarial officer, at the request of the creditor or debtor (Article 202 of the UAOS). If the creditor or registrar refuses to remove the mortgage, the debtor may ask the competent court to obtain the release of the mortgage.

The guarantor is engaged to the same extent as the principal debtor. Therefore, partial or total extinguishment of the principal obligation has the same effects on the guarantor's commitment. Finally, discharge or novation completely releases the guarantor (Article 36 and subsequent Articles of the UAOS).

Movable securities regulated by the AUS include the right of retention, ownership retained or transferred as collateral, pledge of tangible assets, pledge of intangible assets and privileges (Article 50). Securities subject to registration, such as pledges, must be recorded in the RCCM by the creditor, securities agent or pledgor. Registered movable securities must be renewed before their expiry to remain valid. They can also be removed by agreement, or judicially at the request of the pledgor, provided there are serious reasons.

For securities requiring a notarised deed, the notary applies the enforceable formula, making it equivalent to a court judgment. For other types of securities, execution must be pursued through the court to obtain an enforceable title.

Once in possession of the enforceable title, the lender typically transfers it to their lawyer, who then appoints a bailiff to carry out the execution under their supervision. For sales, a court-appointed bailiff is designated, as only they are authorised to conduct the sales.

If a securities agent exists, they may consult with a lawyer or act as the lawyer themselves if the procedure is straightforward. The recovered asset or its proceeds are transferred to the securities agent’s estate, which is distinct from their personal estate, thus protecting it from other claims by creditors, including in cases where the debtor undergoes restructuring or liquidation procedures.

Parties to a contract may choose to apply foreign law in the event of a dispute, which is common when one of the companies involved is foreign. This is permissible as long as it is specified in the contract from the outset. Additionally, when an arbitration clause is included in the contract, the parties may designate a foreign arbitration jurisdiction, such as Paris, London or the Court of Justice and Arbitration of OHADA (CCJA), provided that the applicable rules are those of the chosen arbitration jurisdiction.

Judgments or arbitration awards rendered by a foreign jurisdiction are not directly enforceable in Mali. However, this does not necessitate rejudging the case. Such decisions must undergo an exequatur procedure to gain enforceability in Mali. This procedure is not very complex; it involves submitting the judgment to the court of the place of execution, where the court will verify the authenticity and judicial nature of the foreign decision and, if regular, apply the enforceable formula. The decision can then be executed in Mali.

A foreign lender can assert their rights provided they possess an enforceable decision. They have the same rights and obligations as local creditors and can utilise all necessary procedures to obtain satisfaction.

Foreign lenders are not subject to restrictions when granting credit. However, there are rules in Mali that allow authorities to verify the origin of funds if there are doubts or suspicions of money laundering.

There are no restrictions on granting guarantees or securities to foreign lenders, provided that the guarantees are recognised and enforceable in Mali.

Foreign investments in Mali are governed by Law No 2012-016 of 27 February 2012, relating to the Investment Code (the “Code”), and its implementing Decree No 2012-475/P-RM of 20 August 2012.

The law ensures that individuals or legal entities, regardless of nationality, regularly established in Mali and engaged or wishing to engage in activities defined in Article 3 of the law, are assured of the general guarantees and benefits outlined in the Code (Article 4 of the Law).

Specifically for foreign investors, the law states that they receive the same treatment as Malian investors (subject to contrary provisions of laws or treaties concluded by the Republic of Mali with their home countries) and may freely hold up to 100% of the shares or equity of the company they intend to establish (subject to specific regulations applicable to certain sectors) (Article 6 of the Law).

The rights, obligations and freedoms of foreign investors are further organised by the Code, which classifies them into four categories (A, B, C, D) based on the amount of investment. The Investment Promotion Agency of Mali (API-Mali), established in 2005, aims to encourage and secure foreign investments. It operates a “one-stop shop” for company formation, which helps to avoid administrative hassles.

Payments abroad or repatriation of capital are carried out smoothly under the framework of Law No 2016-008 of 17 March 2016, which is the Uniform Law on the Fight Against Money Laundering and the Financing of Terrorism, and in compliance with the provisions of the tax code.

Foreign companies may hold offshore foreign currency accounts to facilitate investments in Mali. However, if they wish to conduct business in the country, they are also required to maintain a local account to finance their activities.

Foreign companies may hold offshore foreign currency accounts to facilitate investments in Mali. However, if they wish to conduct business in the country, they are also required to maintain a local account to finance their activities.

A licence is required to hold or operate certain properties or natural resources (land title, administrative authorisation, exploration permit, operating permit, etc). Foreign investors can obtain such documents from the Malian administration, provided they comply with legal requirements and possess all necessary documentation.

The concepts of agent and trust are recognised in Mali. The agent’s activity is regulated by the OHADA Uniform Act on Securities (Article 5 and subsequent Articles).

As for trusts, they are also practiced but are specifically regulated, notably by Law No 2016-008 of 17 March 2016, which is the Uniform Law on the Fight Against Money Laundering and the Financing of Terrorism. This Law defines a trust as a legal construct, and more concretely as “an operation by which one or more settlors transfer assets, rights, or securities, or a set of assets, rights, or securities, present or future, to one or more trustees, who, keeping them separate from their own assets, act for a specific purpose for the benefit of one or more beneficiaries”.

To prevent trusts from being used for money laundering (since identifying beneficiaries can be challenging), the Law imposes significant responsibilities on trust managers, such as lawyers or notaries, to oversee operations and identify the parties involved in the trust, especially if they are foreign (Article 1.27 of the Law).

There is no formal ranking of securities under Malian law. In practice, the date of registration of the security determines the priority among creditors with competing securities.

However, in certain scenarios, such as restructuring or judicial liquidation procedures, employees of the distressed company and the state are prioritised above all others, including holders of duly registered securities.

In practice, when a creditor wishes to secure a claim on a debtor’s asset, they first ensure, through their notary or lawyer, that no other security interest is registered on the asset. It is not possible to contractually arrange a ranking among securities, except where multiple guarantees are provided to the same creditor, who can then rank them in the contract.

Finally, if a creditor with multiple securities pursues collection, the law requires them to first enforce securities on movable assets before proceeding to seize immovable assets.

The different forms of companies are regulated by the revised OHADA Uniform Act on Commercial Companies and Economic Interest Groups of 20 January 2014.

The project company is free to choose the form that best suits its business needs, but it most commonly adopts the form of a société anonyme or a public limited company for management and intermediation (société anonyme de gestion et d’intermédiation in Malian law).

OHADA law organises the bankruptcy procedure through the Uniform Act on the Organization of Collective Procedures for Debt Settlement, adopted on 10 September 2015.

The procedure covers all stages, from temporary difficulties and preventive conciliation to judicial reorganisation and liquidation of companies facing insurmountable difficulties.

The procedure is conducted before the commercial court, which may be seized by the company itself, a creditor or the public prosecutor.

As in many countries, the initiation of a collective procedure in Mali suspends actions against the company while it is assessed for possible recovery. During this period, creditors cannot pursue the company or enforce their securities. They must register their claims and securities with the attorney or liquidator and wait for the conclusion of the proceedings to potentially assert their rights.

The payment of liquidation proceeds is done according to a specific ranking established by the attorney or liquidator: first, the super-prioritised creditors, such as employees and the state (Treasury, taxes, customs, social security, etc); second, the prioritised creditors with securities; and finally, unsecured creditors.

If the borrower, security provider, or guarantor becomes insolvent, the lender will likely face significant difficulties in asserting their rights. The recovery of their investment will depend on the effectiveness of the enforcement agents they appoint and the quality of the securities they hold. Therefore, it is crucial to carefully draft the contract from the outset, ensuring secure and easily enforceable guarantees.

The bankruptcy procedure as organised by OHADA law applies to all economic actors. Article 1.1 of the Uniform Act specifies that it applies “to any individual engaged in an independent professional, civil, commercial, artisanal, or agricultural activity, to any private legal entity, and to any public enterprise in the form of a private legal entity”. This includes companies, sole traders, merchants, farmers, and professionals such as lawyers and notaries.

However, entities governed by specific legislation, including other Uniform Acts, are excluded from its scope. This includes co-operatives regulated by a Uniform Act of 15 December 2010, insurance and reinsurance companies subject to CIMA Code (Inter-African Conference on Insurance Markets) Article 321 and subsequent Articles, and credit institutions regulated by either the West African Economic and Monetary Union (UEMOA) or the Economic and Monetary Community of Central Africa (CEMAC).

Additionally, some small entities or associations may establish their own bankruptcy procedures in their statutes, thereby avoiding the provisions of the Uniform Act.

There are no restrictions on insurance policies. Naturally, the policy will depend on the amount of the investment. The premium amount varies according to the type of insurance and the coverage sought.

The insurance policy can be paid directly to the beneficiary, whether local or foreign, provided this is explicitly stated in the insurance contract.

Payments made to lenders are subject to withholding tax.

Additional costs to anticipate include registration fees, stamp duties and other associated expenses.

There is a maximum interest rate (usury rate), set at 24%.

Project agreements are governed by various regulations, including the Public Procurement Code, the OHADA Uniform Act on Commercial Companies and Economic Interest Groups and the OHADA Uniform Act on General Commercial Law.

Financing agreements are governed by the various OHADA Uniform Acts.

Public procurement matters are governed by national law.