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Niger

Niger

Population 22.4 million
GDP 414 US$
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Synthesis

major macro economic indicators

 

  2017 2018 2019 (e) 2020 (f)
GDP growth (%) 4.9 6.5 6.3 6.0
Inflation (yearly average, %) 2.4 2.7 -1.4 2.2
Budget balance * (% GDP) -5.7 -4.1 -4.3 -3.0
Current account balance * (% GDP) -15.7 -18.1 -20.0 -22.8
Public debt (% GDP) 54.4 53.8 55.8 54.3

(e): Estimate. (f): Forecast. *Grants included.

STRENGTHS

  • World's fifth largest uranium producer (2018)
  • Net exporter of petroleum products and gold
  • Drive to invest in agriculture and infrastructure
  • Member of the West African Economic and Monetary Union (WAEMU) and the Economic Community of West African States (ECOWAS)
  • Financial support from multilateral lenders

WEAKNESSES

  • Economy vulnerable to climate shocks and commodity price fluctuations
  • Economy still largely dependent on subsistence agriculture
  • Rapid population growth, extreme poverty (lowest HDI in the world), chronic food crisis situation
  • Inadequate system for collecting taxes and customs duties
  • Endemic corruption and large informal sector
  • Porous borders, favouring illegal immigration and trafficking
  • Deteriorating security situation and terrorist attacks

RISK ASSESSMENT

Investment to be the mainstay of growth

The economy is expected to grow rapidly in 2020 thanks to investment. International financial support should enable public investment to make a significant contribution to growth by financing numerous projects. However, private investment should be the main driver, with projects being financed mainly through this means. Private investment is also set to increase thanks to the expansion of bank credit and compliance with the IMF programme, which is reassuring investors. The construction and services sectors (telecommunications in particular) are expected to be the main beneficiaries as projects are stepped up, including construction of the Kandadji hydro-agricultural dam, rehabilitation of Niamey airport and construction of the Garadawa cement plant. Private investment and grants relating to infrastructure for the extractive industry will also increase. In particular, the construction of a 2,000 km pipeline by the China National Petroleum Corporation to transport crude oil to the port of Seme Terminal in Benin may act as an investment catalyst and enable Niger to become an exporter by 2022. Crude oil production is currently limited by the national refinery's capacity to 20,000 barrels per day and by the lack of a pipeline.

Household consumption is expected to grow robustly, thanks to the increase in agricultural incomes. This sector (80% of employment and 40% of national production) will benefit from public investments under the Nigeriens Feed Nigeriens (3N) plan, which aims to boost agro-sylvo-pastoral productivity and added value, and improve water management. In particular, the irrigation project in the Agadez, Tahoua, Dosso and Tillabéry regions, which has the financial backing of the International Development Association, is expected to increase agricultural yields and revenues.

 

Twin deficits financed by international aid

The public deficit is expected to continue to shrink. The country is engaged in consolidating its public accounts, which was a prerequisite for the IMF to grant a three-year Extended Credit Facility worth SDR 120 million (2% of Niger's GDP) in 2017 (which expires in January 2020). Tax reforms, including measures to modernise the administration and the introduction of VAT for banking services, should increase revenues, despite rampant corruption in the tax and customs administrations. Meanwhile, the reinstatement of the tax on international phone calls will also add some more fiscal flexibility. Expenditure, which is primarily directed towards public investment, will remain high. The deterioration in the social and security climate will make it harder to curb current expenditure. Grants (40% of public expenditure), concessional loans and WAEMU market issues will finance the budget deficit and public debt payments.

Given the country's development needs, the current account deficit is expected to continue to widen in 2020, with massive capital goods imports pressuring the trade deficit. The gradual downturn in the extractive sectors will constrain the increase in exports, with uranium production (15% of exports) suffering from low prices and rising costs due to the depletion of reserves (as illustrated by the upcoming closure of one of the country's two mines). The income balance, which is structurally in deficit, is set to widen further owing to the growth of foreign investment in recent years. Transfers, including expatriate remittances and budget support, will continue, but will be too low to stop the current account deficit from worsening. The deficit will be financed by grants and project loans (two-thirds) and by FDI.

 

A worsening security and social situation

The Nigerien political situation is characterised by the control wielded by President Mahamadou Issoufou (Niger Party for Democracy and Socialism (PNDS)) over the country’s institutions since his party won the 2016 presidential and legislative elections. The opposition is highly critical of the President's actions, and although marginalised, is likely to act as a catalyst for the widespread discontent that emerged in 2018 during opposition to the finance law providing for increased tax burden to meet IMF expectations. The timing of elections (municipal, legislative and presidential elections will be held in November 2020) is perceived as being intended to skew the results. However, the main threat lies in the precarious security situation, with terrorist groups in the region (Boko Haram, AQIM, Al-Mourabitoun) finding that Niger offers fertile ground for recruitment (high poverty rates and few prospects) and porous borders favourable to their actions. International cooperation should continue to be strengthened, although the difficulties in financing the G5 Sahel force (of the USD 414 million pledged, only a quarter has actually been disbursed) have prevented the force from containing the unrest in neighbouring countries (notably Nigeria). The UNHCR estimates that there are more than 350,000 refugees and displaced persons in Niger. This uncertain security situation weighs on the business climate (132nd in the Doing Business 2020 ranking), with foreign nationals still at a high risk of being kidnapped.

 

Last update: February 2020

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