Study on the traceability of mining revenues at the level of local authorities in Mali
The study was conducted by Groupement Pyramis Audit & Conseil SARL / CHT Conseil Fiscal. English Deepl translation below.
Mali, like other African countries, has adopted several texts on the management and governance of mineral resources in order to enable local communities to benefit from the exploitation of mining resources. These include Law No. 2011-036 of 15 July 2011 on the fiscal resources of communes, circles and regions and Law No. 93-008 of 11 February 1993 as amended, which gives communities responsibility for their own development.
This ambition is taken into account by Requirement 5.2 of the EITI-2019 Standard which states that "where transfers between national and sub-national state entities are linked to revenues generated by extractive companies and are mandated by a national constitution, law, or other revenue sharing mechanisms, the Multi-stakeholder Group is required to ensure that significant transfers are disclosed".
The main objective of this study is to produce a detailed report on sub-national transfers and local revenue flows, including discrepancies and the use made of these transfers by recipient communities in terms of their perception of local development.
The methodology used involves the collection and analysis of documents, field visits to certain infrastructure projects and the acquisition of equipment in accordance with the requirements of the contract, on the basis of sampling in the local authorities benefiting from sub-national transfers in the Kayes and Sikasso regions.
The results obtained raised the following points:
The sub-national transfers benefiting the communities bordering the mines mainly concern the patent and road tax. The collection of these levies is the responsibility of the tax administration. Their collection circuit and transfer mechanism to beneficiaries, via the treasury services, are cumbersome and have a negative impact on the pace of spending by local authorities.
The reconciliation work carried out supports the existence of discrepancies between the tax assessments declared by the regional treasuries and those collected from local authorities. This situation can be explained, on the one hand, by the lack of information for local authority authorising officers on the payments made by mining companies and subcontractors and, on the other hand, by the lack of collaboration between the public treasury services and tax centres with local authority authorising officers in relation to the payment of mining companies and their subcontractors.
The patent paid by mining companies and subcontractors represents the bulk of the own resources of local authorities and especially of municipalities. These own resources have been used, generally depending on the locality, to pay operating expenses, financial support for local and regional administrative authorities, maintenance of social and health facilities, construction of classrooms, acquisition of equipment and furniture, etc....
The report specifies in detail and by authority, the amount invested in each type of expenditure.
Taking into account the above-mentioned shortcomings, the study recommends the following measures:
1. Concerning authorising officers of local and regional authorities
Involve the technical services of the State (Taxation, Regional Payment, Tax Collector...) in budget planning in order to better estimate the expected sub-national revenues;
Establish close collaboration and a direct relationship between tax agents, local authority tax collectors, collectors and elected officials by drawing up and monitoring a monthly, quarterly, half-yearly or annual cash flow plan (dashboard). This system ensures a constant collection of taxes and duties and a permanent and abundant cash flow for the local authorities;
Arranging financial support to the State's technical services and local and regional administrative authorities. At this level, the aim is to limit support exclusively to the supply of materials and consumables necessary for the operation of the structures concerned;
Investigate with mining companies and tax departments at local and national level on any unexplained variations in the transfer of patents and road taxes;
Institutionalize accounting and financial audits on the use of transfers.
The Commission is also working with the Member States on the implementation of the recommendations of these missions;
Encourage the development of a communication and information plan by the community council that is consistent with available resources and time and include it in the community development plan and budget;
To encourage local authorities to provide regular information to other elected representatives and the population on income and expenditure and on the state of implementation of local authority projects;
Establish a culture of self-monitoring and reporting on the functioning of local authorities.
2. Concerning the services of the public treasury
Provide an extract from the list of taxpayers in support of the certificates of revenue issued to authorising officers of local and regional authorities;
Diligent transfers of payments received from the tax authorities to local authorities;
Ensure compliance with the requirements for payment of public expenditure at the local government level;
Establish in relation to the tax services a text defining the roles, responsibilities and deadlines in the processing and transfer of the patent and road tax to the local authorities.
3. Concerning tax administration
Require the payment of property tax at a rate of 3% to all mining companies and sub-contractors that fall within the scope of this tax;
Permit decadal decrees at the level of the patent collection centres to speed up the transfer of sub-national revenues to communities.
4. Concerning the EITI Steering Committee
Financing Mining Sector Governance Project
Capitalise on the results of this study on the traceability of mining revenues in local authorities and make the report public;
Initiate a study on the analysis of the basis for assessing the patent rights of contributing mining companies.
5. Concerning the Prime Minister's Office
- Establish periodic audits of local authorities receiving sub-national transfers.