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Resilience and adaptation in times of insecurity: Mali’s renewal will come from the private sector (2/2)

Recent crises and the resulting structural vulnerabilities have considerably diminished the capacity of Sahelian countries, already historically very weak, to attract investment. For instance, after an all-time high of 860 million USD in 2019 (5% of GDP), foreign direct investment to Mali (net inflows) has fallen drastically to just 252 million in 2022 (1.3% of GDP).

Despite the low priority given to private sector development in fragile security contexts, it plays a central role during and after conflict situations. Experience has shown that the private sector remains active even in times of conflict, and can adapt to overcome systemic shocks.

In this interview, Malian entrepreneur Mohamed Keita, Director and Co-Founder of Zira Capital, a company created in 2022 and dedicated to financing and supporting start-ups and SMEs in Mali, shares his fund-raising experience and argues for the need to continue supporting the private sector despite a difficult security and socio-political context.

Entreprenante Afrique: What is the current state of entrepreneurship in Mali?

Mohamed Keita: Over the past ten years or so, the Malian economy has been affected by the combined effects of the security crisis and political and institutional crises. We are keeping a close eye on how the situation evolves, and our wish as entrepreneurs is of course to quickly return to a stable business environment.

But despite this difficult context, despite the challenges, we observe that entrepreneurs are still succeeding at creating opportunities locally. They develop projects and goods that satisfy local needs. They create and maintain jobs that support thousands of households, and stimulate other aspects of economic activity in the process.

Malian companies are exceptionally resilient, but they need strategic partners to support them, both financially and extra-financially. This is why, together with other players (BNDA, Investisseurs & Partenaires and a number of private individuals), we have launched Zira Capital to support these small local businesses through financing mechanisms and tools tailored to their development projects.

Raising funds to support entrepreneurship in such a high-risk country is no easy task, how did you address the financial backers?

M. K.: The model of Zira Capital, a fund co-created by or with local players to provide equity financing for local businesses, is a model that has already been set up and is beginning to prove its efficiency in other African countries, in other countries in the Sahel zone, such as Burkina Faso or Niger. However, it’s a completely new concept in the Malian entrepreneurial ecosystem.

The initiative was well received, and generated enthusiasm among Malian entrepreneurs. Even before the official creation of the management company, we had built up a pipeline of quality projects. We had built up a database of high-potential companies in a variety of sectors, all of which are linked to the fundamental needs of the Malian economy: agri-food, which accounts for 45% of GDP and employs 80% of the population, but also energy, essential services, health and education.

Our main argument for convincing people of the need to create our financing facility was this pipeline of quality entrepreneurs, rooted in the country and whose needs had been clearly identified.

Investing in a country like Mali obviously involves taking on a certain degree of risk. But mechanisms can be put in place to mitigate them. During the fundraising process, which lasted several years, we faced several challenges. We had identified a number of potential partners, including subsidiaries of multinationals with whom discussions had reached a more or less advanced stage, but whose enthusiasm gradually subsided in view of the changing political situation. This is understandable when a certain degree of investment security can no longer be guaranteed.

But fortunately for us, the vast majority of investors identified at the outset of the project maintained their confidence in our project, and supported us through our first closing in 2022.

“Investing in a country like Mali obviously involves taking on a certain degree of risk. But mechanisms can be put in place to mitigate them”

The Sahel countries have received significant public aid from the international community in recent years, with mixed results. Should we rethink the mechanisms of public aid? Does SME investment represent a more impactful alternative?

M. K.: In 2021, Mali received USD 1.42 billion in official development assistance. This represents an important resource for the country in general. I wouldn’t say that aid is inappropriate, but that it needs to be channeled more towards local actors, in particular private companies. Some historical approaches to public aid have shown their limits. And we need to deploy innovative mechanisms and more substantial resources to enable public private finance institutions (DFIs) to be more present, faster, and more effective.

I am among those who firmly believe that the development of our countries, particularly fragile states like Mali, relies on the growth of a network of small and medium-sized enterprises.”. An effective way of doing so would be to bet on making more resources available to these companies, especially resources they have difficulty mobilizing locally.

“I firmly believe that the development of our countries, particularly fragile states like Mali, relies on the growth of a network of small and medium-sized enterprises.”

What’s important to note is that Mali’s entrepreneurial fabric is vibrant. There’s a tremendous amount of effervescence, and more and more people are starting up. Rather young people, who bring new solutions, who despite the context, develop services with quality, manage to launch projects. And I think this adds a note of hope to the country’s overall picture, which is rather complicated, with a security crisis that has lasted for ten years or so, and political instability. For my part, I’m among those who are betting that Mali’s renewal will come largely from the private sector.

Further reading: in our “Resilience and Adaptation” series, discover Maïmouna Baillet’s article, “the battle of Niger’s women entrepreneurs”

By : Mohamed Keita

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Perspectives Testimonials

Resilience and adaptation in times of insecurity: the battle of Niger’s women entrepreneurs (1/2)

Nigerian women have always stood out for their resilience and survival instinct in an arid, hostile environment. Although written records of Africa’s traditionally oral history are relatively recent, as…

Nigerian women have always stood out for their resilience and survival instinct in an arid, hostile environment.

Although written records of Africa’s traditionally oral history are relatively recent, as early as the end of the 19th century they began to extol the courage of a warrior queen, a figure of resistance to the colonists – Sarraounia Mangou.

From 1960 to 1974, Niger was back in the limelight thanks to its first “First Lady”, Mme Aïssa DIORI, who charmed not only with her great beauty, but above all with her unrivalled charisma and rare intelligence. Her prestige radiates around the world. “Rubbing shoulders with the greats of the world (Elizabeth II, Haile Selassie, Nasser, De Gaulle, Johnson…), Madame Diori commanded respect and admiration. At her husband’s side, she began the process of female emancipation through hard work and rigor in this Afro-Muslim region.” She embodied resilience so well. So disturbed, in fact, that she was personally targeted and mortally wounded in the 1974 coup d’état.

In 1992, in addition to the world-famous March 8, Niger established a Nigerien Women’s Day to honor this resilience. Indeed, following the historic 1991 march by women to demand greater representation on the preparatory commission for the Sovereign National Conference, May 13 came to symbolize Nigerien Women’s Day, instituted by presidential decree.

As a reminder, here are a few aspects of this hostile environment. Although they represent 50.60% of the population, women have the highest illiteracy rate, at 78% (compared with 60% for men), and are also the poorest. Indeed, four out of five poor people are women, sinking under the weight of socio-cultural and economic barriers such as material dependence, characterized by low decision-making power, arduous work, and difficult access to basic services. Financial dependence, reflected in low monetization, laborious access to knowledge, jobs, and productive resources.

Niger holds two sad records, both impacting women: the highest fertility rate in the world (6.2 children per woman in 2021 vs. 7.6 in 2012) and the highest rate of early marriage: 77% of our girls are married before the age of 18 and 28% before the age of 15. And these are just the official figures… many believe that the reality is even more alarming.

In this context, women have been quick to realize that solidarity – in line with the now fashionable concept of sisterhood – is their only option, and female entrepreneurs are no exception to this trend.

Culturally, they are confined to a type of profession that is “acceptable” for women: sewing, beauty care, food processing or fruit and vegetable marketing and cooking, which are also low-margin, low-income sectors. And with low barriers to entry, competition is high and activities are often informal.

In cities, they run or invest in very small businesses and SMEs. They accumulate initiatives and jobs. When they have had access to training, they keep their salaried jobs and develop their VSEs at the same time. Insecurity doesn’t affect them much; they simply adjust their working hours and take precautions to avoid dangerous areas on the outskirts.

In rural areas, they engage in IGAs – income-generating activities. In villages, women are traditionally involved in market gardening, raising poultry and small ruminants. This income enables them to help support their families. With insecurity, looting and attacks have deprived many of them of income, leading to higher market prices and the impoverishment of entire communes. Forced migration, rural exodus and the loss of fathers and sons at the front have increased the vulnerability of rural women as well as gender-based violence.

However, since 1992, they have been organizing themselves into a Union. This is an association or structure of women who have voluntarily decided to band together to defend common interests, but above all to build their financial autonomy through tontines – most often 100% female. Insecurity has further strengthened this solidarity.

The financial system has also adapted, and is increasingly offering products to these groups, giving them access to savings and then credit, and freeing them from the guarantee or surety previously provided by a man. The dematerialization of traditional tontines also makes it possible to combat looting and secure the assets of these women’s unions.

Whether rural or urban, women entrepreneurs in Niger are organizing, building and maintaining their resilience. Groups dedicated to women entrepreneurs are springing up on social networks, as are professional associations and incubators dedicated exclusively to women. For over 20 years, one microfinance institution, MECREF, has taken up the challenge of catering to a clientele made up of 100% women. Indeed, in Niger as in the rest of the world, studies show that women entrepreneurs are better paid than men.

“Whether rural or urban, women entrepreneurs in Niger are organizing, building and maintaining their resilience”

However, the situation remains critical in many regions. Since the beginning of 2023, according to official figures, some 670,000 forcibly displaced persons have been registered in Niger, 52% of whom are women.

Nigerien women will have an increasingly important role to play in rebuilding peace in Niger. Military families are often left to fend for themselves. And just as we saw during the great world wars in Europe, women are now perfectly capable of heading these families and generating income to support the family.

Their resilience is still being tested by the coup d’état of July 26, 2023. Sanctions are taking their toll on households and women in particular, including rising food prices. Nigerien women are calling for peace and a diplomatic way out of the crisis, but they are also passionate about this historic page that the whole country is now writing.

“Their resilience is still being tested by the coup d’état of July 26, 2023”

So, more than ever, empowering women is part of economic development and must be a priority. This has a greater impact on health, education and economic development in general. And the fact that they are more involved and that we can provide them with more support will have an impact on safety across the board and at local level.

Further reading: in our “Resilience and Adaptation” series, discover Mohamed Keita’s article, “Mali’s renewal will come through the private sector“.

By : Maïmouna Baillet

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