Tax Revenue Loss and Malaria in Mali

February 18th, 2010

This blog post is the third of a four part series, which highlights cases of tax revenue loss from trade mispricing, the topic of a recent paper by Global Financial Integrity, “The Implied Tax Revenue Loss of Trade Mispricing.”  To read the previous post, please visit Tax Revenue Loss and Education in Thailand.

Mali, a landlocked state in West Africa, is a flawed democracy, which established multiparty politics in 1992, but has suffered under military and one-party rule for decades.  On the Economists Intelligence Unit’s Democracy Index, Mali ranks 83rd with a score of 5.87, above the region’s average of 4.28.  Recently, however, Mali has been given many reasons to hope for political and economic progress.  The current president, Amadou Toumani Touré, nicknamed “The Soldier of Democracy,” has ruled the country since 2002.  In 2007 Touré won an easy reelection with 71% of the vote; the election was called free and fair by foreign observers.  Touré increasingly bases his political legitimacy on a consensual domestic political system.

Yet Mali is still one of the poorest countries in the world.  Approximately 64% of Malians live in poverty and the national income per capita is just $500.  The country faces many significant obstacles to development, including an extremely high illiteracy and fertility rates, a poor infrastructure, expensive electricity, and a predominantly rural population.

Perhaps the most significant obstacle to development in Mali, however, is the devastation of widespread diseases which ravage the population, despite the fact that many of these diseases have vaccines available or would be easily treatable in Western countries.   According to the World Health Organization (WHO), the top seven causes of death in Mali are: lower respiratory infections (16%), diarrheal disease (9%), malaria (9%), prenatal conditions (8%), HIV/AIDS (5%), Tuberculosis (4%), and malnutrition (3%).  Indeed, Malaria, a mosquito-borne infectious disease, is responsible for over 37% of outpatient visits in Mali.  Of the 810,000 deaths due to Malaria in 2004, about a third were children under 5 years old.  In fact, one in five Malian children dies before his or her fifth birthday.

According to the new GFI report, Mali loses an average of $200.4 million per year in government revenue to trade mispricing, which represents about 25.1% of the government’s yearly revenue.  According to the World Health Organization, this number is about 22 times the amount of money that the Government of Mali (GOM) spent battling malaria last year (roughly US$9 million).

President Touré has introduced an ambitious plan for combating malaria in Mali for 2010.  The graph below breaks down, by sector, the spending which the President hopes to expend on malaria prevention and control in Mali.  As is obvious from this graph, the tax revenue loss due to trade mispricing in Mali overwhelms even the most optimistic government funding levels to combat a disease that is wrecking havoc on the country.

You can read the entire GFI report, “The Implied Tax Revenue Loss from Trade Mispricing,” here.  To read the next post in this series, Tax Revenue Loss and Rails and Roads in Moldova, please click here.

Written by Ann Hollingshead

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