VZCZCXRO2016
RR RUEHMA RUEHPA
DE RUEHBP #0589 1761404
ZNR UUUUU ZZH
R 241404Z JUN 08
FM AMEMBASSY BAMAKO
TO RUEHC/SECSTATE WASHDC 9352
INFO RUEHZK/ECOWAS COLLECTIVE

UNCLAS BAMAKO 000589 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ECON ETRD ML
SUBJECT: PRIVATIZATION OF MALI'S STATE-OWNED COTTON COMPANY 
MOVES AHEAD 
 
¶1.  Summary:  On May 28 Mali's Council of Ministers' passed a 
draft law authorizing the sale of government stock in the 
cotton parastatal, Malian Textile Development Company (CMDT), 
marking a major step in the World Bank-sponsored 
reconstruction of the Malian cotton sector.  The text now 
goes to the National Assembly for ratification.  CMDT workers 
and farmers' unions, however, still pose a significant 
obstacle to privatization efforts and are likely to place 
increased pressure on National Assembly Deputies when the law 
authorizing the sale of CMDT reaches the Assembly floor.  End 
Summary. 
 
¶2.  On May 28 the Council of Ministers approved a draft law 
authorizing the sale of the government of Mali's shares in 
CMDT.  The government currently owns 92.38 percent of CMDT's 
shares.  The remaining shares have been bought by French 
Geocoton, formerly Dagris.  This draft law marks a major step 
in the World Bank-sponsored privatization process of Mali's 
cotton parastatal.  The National Assembly is slated to vote 
on the draft law on July 5 although there are already 
indications that some Deputies will vote against passage. 
 
¶3.  Provided the law passes, the Malian government then will 
create four independent subsidiaries of CMDT divided by 
geographical region -- Southern Sikasso, Eastern Koutiala, 
Central Fana, and Western Kita.  All relevant assets and 
liabilities currently under assessment will then be allocated 
to the four subsidiaries.  When the sale of government shares 
is complete (the call for bids is currently scheduled for 
November 2008), the CMDT will have been transformed into four 
privately owned companies each with the autonomy to gin and 
sell cotton in their respective regions. 
 
¶4.  Although the Council of Ministers' decision has been 
expected for months, it triggered negative reactions from 
cotton farmer and CMDT worker's unions.  Cotton farmers and 
CMDT unions were regularly consulted during restructuring 
discussions.  Their participation, however, has not reduced 
criticism of Mali's privatization efforts as the unions 
continue to argue that CMDT privatization will plunge Mali's 
cotton sector into turmoil similar to that experienced by 
Burkina Faso, Benin and Cote d'Ivoire.  A high-ranking member 
of Mali's Cotton Restructuring Commission told the Embassy he 
believed the CMDT workers' union was positioning itself to 
bargain for better severance payments in advance of 
"inevitable hundreds of lay-offs to come in the future." 
Farmers' unions are also warning of layoffs, disincentives to 
cotton cultivation, and an end to seed and fertilizer 
subsidies. 
 
¶5.  COMMENT:  Many Malians believe the CMDT's main problem is 
not its parastatal status but decades of rampant 
mismanagement.  Declines in the world price of cotton have 
aggravated the situation.  Although the privatization of the 
CMDT has been underway for years, cotton farmers and CMDT 
workers remain unconvinced of the need to privatize and wary 
of negative impacts that may harm cotton growers and reduce 
the power of CMDT labor unions.  More serious concerns focus 
on the viability of four private cotton companies and their 
understandable need to reduce costs, cut corruption, and 
increase operational efficiency while maintaining a work 
force and supply network that has never had to focus on 
turning a profit. 
MCCULLEY