Mali turns to free-market economics

President Moussa Traore doesn't like to describe himself as a convert to free-market economies, but he will concede that his country has embarked on ``a change.'' ``We came to a moment where our economy was blocked, and we had to restart it,'' he says. ``It is a system that existed in our country for a millenium.''

Like many other African nations, Mali is beginning to shed its practices of centralized economic control and look for ways to encourage private enterprise. It could be a long time before the change produces any results -- if it produces any at all. But Western development officials say it may be the only chance for such nations to lift themselves out of poverty.

``The moment of truth has come. There is no longer enough money to pay for the deficits that the economy has incurred,'' says Michael Furst, the World Bank representative to Mali.

Senegal, Tanzania, Malawi, Togo, Ghana, and Niger are all going through similar changes, according to Mr. Furst.

More than most of these nations, however, Mali's economy has basic structural problems. Landlocked in central West Africa, it has the population of Chicago spread throughout an area twice the size of Texas. With a per capita annual income estimated at $187, Mali is the world's fourth-poorest nation. Its national budget of some $200 million is smaller than that of the United States Library of Congress.

On top of everything else, Mali has suffered through a decade of bad harvests, topped last year by a serious famine. With a population that is doubling every 25 years, the country is losing the ability to feed itself.

Limited as the state budget is, however, the influence of the government is broad. Partly from traditions remaining from French colonial days and partly from genuinely Socialist models it tried to adopt since independence in 1960, the government has kept a tight rein on much of the economy.

In an effort to encourage students to extend their education, the government guaranteed all university graduates a job in the civil service. Now, government agencies and nationalized firms employ more than 60 percent of the nation's salaried workers.

Such an overwhelming bureaucracy also generates a steady stream of stories of corruption, inefficiency, and mismanagement. And the state controls imposed on the private sector have proved stifling.

Western diplomats and analysts give President Traore and his team credit for changing Mali's course on their own. Still, the International Monetary Fund, the World Bank, and other donors have offered plenty of encouragement and pressure for Mali to trim its government and promote private enterprise. The US is providing $18 million in aid linked to the privatization of several state firms, reforms to the commercial code, and restructuring of the national budget.

The Economic Policy Reform Program, as it is called, also supports a Malian government plan to provide retirement benefits and some initial credit guarantees to any civil servants who retire early and start their own businesses. Program officials say Malians have already shown a strong interest in the plan.

Finally, during the past few years, the government has loosened its control of grain prices, which had been kept artificially low for the benefit of urban residents. This has given farmers more incentive to produce, although it has presented a political risk for a government that largely depends on the cities for its political support. To some, the trend may sound very much like an African version of Reaganomics, but many Western officials insist it is simply the best -- and perhaps the only -- solution to Mali's intractable economic troubles.

Still, there are questions about whether free enterprise can work for a people whose standard of living is so low. Traore acknowledges the difficulties of the new strategy, but he still considers it Mali's best chance. And he doesn't like the implication that it represents some sort of ideological change. ``Our own problems taught us this,'' he says. Mali has tried other systems, he adds, and they simply ``didn't work.''