Module 9 - Mali: Institutional Reform to Focus Public Role on Essential Public Goods

Market activity of ON was progressively divested to market agents, and the credit function to the National Agricultural Credit Bank. Relations between ON and the government were streamlined to ensure the autonomy of ON and to establish a contractual agreement between the two. ON was internally reorganized, its financing restructured, and investment made in capacity building. Village Associations (active in other parts of Mali) were promoted to partner with ON and take on some of its agricultural support functions over the longer term.

Benefits and Impacts

Significant gains made in the productivity and output of Mali’s agricultural sector included:

• Increases in agricultural output, including nearly tripling total rice production and substantially improving vegetable production, resulting in an annual increase in real per capita income of US$70.
  
  
• Liberalization of the rice trade and reduction in government expenditures on subsidies to the rice sector.
  
  
• Successful restructuring of ON, including a shift of some of its functions to other agencies and restoration of its financial health.
  
  
• Rehabilitation and modernization of 57 kilometers of canals and main drains.
  
  
• Improved water fee collection rates from 60 to 97 percent, with fees now being retained in the areas where they are collected.
  
  
• Improved land tenure and thus an increased incentive for farmers to invest in productivity improvements.

Lessons Learned and Issues for Wider Applicability

• Sectoral reforms should be accompanied by adequate complementary sectoral investments to have a major impact.
  
  
• Difficult institutional reforms, particularly those that go beyond a single ministry, should be headed by an independent agency outside the concerned ministries/agencies.
  
  
• Greater farmer empowerment and involvement is one good way to ensure sustainability of irrigation investments.
  
  
• Greater transparency in land management increases farmers’ land security even in the absence of official land titles. Land tenure security is one of the necessary conditions for private sector investment in irrigated farming.
  
  
• The mechanism for setting water fees should be an independent and transparent negotiated process based on clear needs, and free from government interference.

Under some conditions, reorienting institutional objectives for a specific administrative agency may be key to broad success. This is particularly true where the agency has a portfolio of responsibilities that are not closely related, and for which adequate staff expertise is not available and where public sector institutions undertake commercial activities.

Divesting authority within a state structure is never a simple or easy process. Sometimes, however, this is necessary to enable an agency to better serve its clients. As shown in Mali, the institutional realignment must also be accompanied by changes in attitude and behavior of employees.