Niger is a vast landlocked country with an estimated population of 15 million, the majority of whom live along a narrow band of arable land on the country’s southern border. The economy is dominated by agricultural activity, including rearing livestock, mining (uranium), and informal trading activities. The primary sector, which accounted for about 40.8 percent of GDP in 2007, is dominated by rain-fed agriculture, while livestock production accounts for about a third of the value added in the sector.

In 2009, Niger was ranked 182 out of 182 countries on the UNDP's Human Development Index. Sixty-one percent of Niger’s population lives in extreme poverty on less than a dollar a day and the average per capita income was estimated at US$330 in 2008. Social indicators are low, with an infant mortality rate of 81 per 1,000 live births, life expectancy of 50.8 years, a literacy rate of 28.7 percent in 2007, and gross primary school enrollment preliminary estimates of 67.8 percent in 2008/09. GDP growth has been highly volatile but low on average, outpaced by the population growth rate which was estimated at 3.4 percent in 2008.

GDP was estimated at 9.5 in 2008 (against 3.3 percent in 2007 and 5.2 percent in 2006, after reaching 7.4 percent in 2005), reflecting the strong performance of the agriculture sector (about 26 percent growth in real terms) following its recovery from the 2004 drought (GDP growth of -0.8 percent this year).

The government took measures to ensure the replenishment of the grain reserve in 2006 and is working to find a sustainable solution to this structural problem with the support of the donor community. Real GDP is estimated to have grown only by about one percent in 2009, although non-agricultural GDP growth increased from 4.1 percent in 2008 to 5.4 percent in 2009, reflecting continued growth in mining, transport, construction, telecommunications.

Political Context

The conflict in the Northern region of the country which started in early 2007 has now almost dissipated with no reports of armed attacks since June 2008, although the government considered the northern region a military zone as recently as November 2008. Under the auspices of Libya, the Government and rebels have recently signed an agreement whose implementation would help resolve the crisis. On the political front, Niger, President Mamadou Tandja proposed an extension of three years, through a referendum, of his second presidential term, expected to end in December 2009. The President dissolved the National Assembly and the Constitutional Court, actions which were unfavorable to his plan to change the Constitution.

Then-President Mamadou Tandja gained a high percentage at local and parliamentary elections held in October 2009. It is in that context that a military coup took place on February 18, 2010. The junta announced the creation of the Supreme Council for the Restoration of Democracy (CSRD), which is presided over by Major Djibo Salou. The advent of CSRD has been saluted by Nigeriens, many of whom expressed their support through rallies in Niamey and across the country. Salou Djibo has initiated a series of consultations with political parties, social and professional groupings, as well as with Niger’s development partners. He maintains that the junta will only run the country for a transition period and has no desire to retain power. He has proclaimed three pillars for the transition: sound management, reconciliation, and the restoration of democracy. The junta has also stated that it will tackle the looming threat of a food crisis.

Economic Overview

Niger’s reliance on rainfed agriculture, mining, and official development assistance, make it highly vulnerable to climatic fluctuations, locust invasions, changes in global demand and prices for its mineral exports, well as well as fluctuations in donor financing. In addition to these specific vulnerabilities, Niger also has been hard hit by the series of global crisis, including the food, fuel and financial crises.

These vulnerabilities are reflected in large year to year fluctuations in economic growth, exports, and government revenue and expenditures. With a large share of households living near or below the poverty line, negative shocks translate directly into households not being able to cover basic needs and exposing them to hunger and malnutrition and inability to build human capital though education and adequate health care and nutrition.

Following the severe drought experienced in 2004, better rainfalls in recent years allowed a return to normal agricultural activity with a particular good harvest in 2009. However, the International Red Cross predicts a food crisis for 2010 as a consequence of insufficient rains in early 2010 and insufficient cereal stocks by about half the population.

While a food crisis seems to be looming, the prolonged political crisis also threatens the continued flow of much needed donor assistance. With official development assistance financing about 45 percent of Niger’s budget, a sustained decline in development assistance would threaten whatever progress has been made in recent years to increase access to health and education.

In the mining sector, Niger is only partially benefitting from the upward trend in uranium prices, as a large share of its uranium export are sold at fixed prices. A resolution of the political crisis will also be important to ensure that FDI in the mining sector proceeds at the expected pace and is able to sustain employment in construction and other related sectors.

The Government’s Second Poverty Reduction Strategy Paper (PRSP), which was approved by Decree on October 10, 2007, includes seven pillars: (i) strong, diversified, sustainable and job-creating growth; (ii) equitable access to quality social services; (iii) addressing the demographic challenge; (iv) reduction of inequalities and strengthening of social protection for the vulnerable groups; (v) infrastructure development; (vi) promotion of good governance; and (vii) effective implementation of the strategy.

Based on its PRSP, the government has embarked on a range of critical reforms in recent years which will need to be sustained and deepened, if tangible progress in poverty reduction is to be achieved. These reforms include a focus on macro-economic and debt sustainability, strengthening of public expenditure and debt management, the transparent management of mining revenue, restructuring and privatization of state owned enterprises, increasing access to social services, measures to manage the rate of population growth, and enhancing the environment for private sector activities, especially in the agriculture sector.

In April 2004, Niger reached the HIPC Completion Point and received debt relief from IDA, including topping-up, equivalent to US$142 million. The country also qualified for US$300 million in debt relief from the Multilateral Debt Relief Initiative (MDRI).A three-year PRGF arrangement with the IMF was approved by the Fund’s Board in May 2008 for a total amount of SDR23 million. The third review was completed by the IMF’s Board in February 2010, allowing a disbursement of about US$5 million.

 

As of end September 2009, the commitment value of thirteen ongoing IDA-financed operations is about US$349 million equivalent, with an undisbursed balance of about US$215.58 million. The portfolio supports: (i) investments in water infrastructure; (ii) rural development, promotion of agricultural exports, and irrigation; (iii) HIV/AIDS; a nation-wide community action program to support development programs at the community level; (iv) education for improving access to and quality of basic education; (v) reforming and restructuring the financial sector; (vi) health sector and institutional strengthening; (vii) natural disaster management; (vii) and an Emergency Food Security Support Project to mitigate the impact of food price hikes. Policy reforms to support improved public expenditure management and remove bottlenecks are being undertaken under a series of development policy lending operations, the first of which was approved in FY06 (Rural and Social Sector Policy Reform), the second one approved by the Board on June 19, 2007, and the third was approved on March 24, 2009 (Growth Policy Reform Grant). Disbursement of the Growth Policy Reform Grant has been held up in the absence of parliament to ratify fiscal reforms and pending an IMF assessment of the macro environment.

A new Country Assistance Strategy (CAS) covering Fiscal Years F08-FY11 was approved by the Board on May 29, 2008.The government and the Bank are working closely together to address implementation issues including strengthening capacity building, simplification, harmonization and modernization of procurement and financial management processes and resolution of low project disbursement rates.

IFC’s Strategy in Niger is to develop projects in Health and Education, Agribusiness, Infrastructure, GMS, and Infrastructure sectors. IFC is also considering a potential Private Enterprise Partnership Africa involvement in the implementation of investment climate reforms.

Niger signed the MIGA Convention on April 11, 1994, but has yet to complete all the requirements for membership. Under these circumstances, the Agency cannot underwrite any investments in support of the country.

In FY10, WBI is implementing its Strategic Renewal with a focus on seven cross-cutting themes that are responsive both to corporate priorities and to strong country demand, including: Fragile and Conflict-affected States, the Global Economic Crisis, Governance, Climate Change, Health Systems, Urban Development, and Public-Private Partnerships (Service Delivery). Opportunities will be sought to engage Niger in these activities. A program on higher education was delivered for Niger in FY09. However, activities being offered in the sub-region across many sectors are available.

 

Public sector reforms implemented over recent years allowed budget allocations to respond to medium-term government priorities.

The reforms also improved budget execution, reduced disparities between voted and executed budgets, secured priority expenditures, and strengthened internal and external controls. In addition, a strengthened national statistical information system improved the monitoring of social and economic indicators and allowed for an increase in the transparency and efficiency of the procurement process through the creation of a clear and accountable institutional framework.

The statistical bureau is now one of the most efficient in the sub-region after lagging behind for decades.

Niger has managed to make gains in health by reducing the infant mortality rate by nearly 20 percent over the past decade: 123 per 1,000 in 1998 compared to 81.4 per 1,000 in 2006. The under-five mortality rate fell from 274 per 1,000 in 1998 to 198 per 1,000 in 2006.

The pilot Second Private Irrigation Promotion Projects (PIP2) helped expand small-scale irrigation systems and technologies across the country. It demonstrated that such investments can be profitable and can measurably improve farmers’ welfare.

France, Germany, Belgium, Canada, Japan, China, the European Union, the African Development Bank, the World Bank and the IMF are key development partners in Niger.

International and local nongovernmental organizations (NGOs) have an active presence in the country. Several UN agencies provide relief through famine and refugee programs.

The UNDP and the World Bank play an active role in donor coordination in Niger. The government revised the PRSP with strong donor support. It was adopted in October 2007 by the government and endorsed by donors at a PRSP II financing Round Table in Brussels (October 25 to 26, 2007).

A Joint Bank/Fund Staff Assessment Note (JSAN) on the PRSP II was discussed on April 29, 2008 at the Bank Board and on May 16, 2008 at the IMF Board.