Niger - Economy
Economic growth is estimated to have increased to 4.6 percent in 2016 from 3.5 percent in 2015, helped by a strong 2016-17 crop year and despite continued weakness in the oil and mining sectors, adverse spillovers from the economic downturn in Nigeria and continued elevated security threats. Inflation remains subdued.
Notwithstanding recent macroeconomic gains, Niger still ranks last on the UN’s Human Development Index with growth barely above the estimated rate of population growth (4.1 percent a year). President Issoufou secured a second term in the presidential and legislative elections held in February-March 2016, with the new administration reaffirming a focus on reinvigorating growth to create more employment opportunities, including by addressing infrastructure gaps, while strengthening food security.
Growth was projected by the IMF in early 2017 to rise to 5.2 percent in 2017, and to average 5.4 percent during 2017-19, driven by the expansion of irrigated agriculture under the national food security program (3N Initiative). The main natural resource projects—an oil pipeline through Chad and the Imouraren uranium mine—are now expected to be completed in 2020 and 2021, respectively, providing for a boost to growth beginning in 2020. The current account deficit is projected to rise to about an average of 18.6 percent of GDP in 2017-19 driven by capital and intermediate goods imports associated with FDI and the government’s investment program. Exports are expected to improve from higher gold production and agricultural products boosted by investments under the recently signed compact between Niger and the Millennium Challenge Corporation (MCC). Inflation is expected to remain subdued at about 2 percent. Gross official reserves are projected to remain stable at 4 months of import of goods and services.
Niger is one of the world’s top uranium exporters, but 80% of the population is employed in subsistence agriculture. The country has consistently ranked at the bottom of the UN Human Development Index, rising from the bottom of the index in 2009 to number 167 of 169 countries in 2010. Traditional subsistence farming, herding, small trading, seasonal migration, and informal markets dominate an economy that generates few formal sector jobs. Fourteen percent of Niger's GDP is generated by livestock production--camels, goats, sheep, and cattle. Fifteen percent of Niger's land is arable, found mainly along its southern border with Nigeria. Rainfall varies, and when insufficient, Niger has difficulty feeding its population and must rely on grain purchases and food aid to meet food requirements. Niger’s economic growth rates are closely linked to rainfall and fluctuate widely in connection with agricultural output. In 2010, the economy showed strong growth (8% growth rate in real GDP, up from -1.2% in the drought year of 2009).
In 2009, 64% of export earnings were from uranium, 20.5% were from livestock, and about 6% from other agriculture, most notably onions. Actual livestock exports far exceed official statistics, which often do not include large herds of animals that are simply walked across the border to markets in Nigeria. Some hides and skins are exported, and some are used for handicrafts.
Niger has exploitable deposits of gold in the region between the Niger River and the border with Burkina Faso. Niger’s sole commercial gold mine, Samira Hill, opened in 2004 under a joint venture known as SML between a Canadian company--Societe SEMAFO Inc. (80%) and the Government of Niger (20%). Gold prices have been very strong in recent years, but income from the Samira mine was limited until April 2009, because a percentage of the mine’s production had been committed to forward sales at a lower price when the mine was initially financed. Now that this commitment has been fulfilled, Samira’s production is sold at market price, and SML was awarded an additional concession that will extend the life of the mine.
Niger also has oil potential. China National Petroleum Company is exploiting the Agadem block and a refinery north of Zinder, which was expected to be operational by late July 2011. The parastatal SONICHAR (Societe Nigerienne de Charbon) in Tchirozerine (north of Agadez) extracts coal from an open pit and fuels an electricity-generating plant that supplies energy to the uranium mines. There are additional low-quality coal deposits southwest of the current mines. Substantial deposits of phosphates, iron, limestone, and gypsum also have been found in Niger.
The new government actively seeks foreign private investment and considers it key to restoring economic growth and development. With the assistance of the United Nations Development Program (UNDP) and international financial institutions, it plans a concerted effort to revitalize the private sector. Niger has attracted significant investment over the years, in uranium, the petroleum sector, cellular communications, and, most recently, in a dam and a cement factory, but poor legal and physical infrastructure still hamper investment. To date, there are seven major active Internet service providers operating in Niger--Sonitel, Afripa, Moov Niger, Orange Niger, ConnecteO, X.com, and Liptinfor. They are fairly independent and they are not required to use the state-owned infrastructure. Sonitel no longer has a monopoly in the telecommunications sector.
Niger shares a common currency, the CFA franc, and a common central bank, the Central Bank of West African States (BCEAO), with seven other members of the West African Monetary Union. The Treasury of the Government of France supplements the BCEAO's international reserves in order to maintain a fixed rate of 656 CFA to the Euro. The CFA is freely convertible to Euro or dollars, but there are restrictions on the amount of CFA that can be converted. Amounts greater than CFA 800,000 (approximately U.S. $1,800 or Euro 1,200) require approval from the Ministry of Finance. (Travelers need only show a passport and a plane ticket to receive approval.)
In December 2000, Niger qualified for enhanced debt relief under the International Monetary Fund (IMF) program for Heavily Indebted Poor Countries (HIPC) and concluded an agreement with the Fund on a Poverty Reduction and Growth Facility (PRGF). Niger reached decision point in January 2001 and completion point in 2004. Debt service as a percentage of government revenue was slashed from nearly 44% in 1999 to 10.9% in 2003 and will average 4.3% during 2010-2019. The debt relief cut debt service as a percentage of export revenue from more than 23% to 8.4% in 2003, and decreases it to about 5% in later years. In 2005, the IMF canceled all Niger's debt to it (approximately $111 million) incurred before January 2005. In 2006, the African Development Fund canceled $193 million in debt for Niger. The World Bank announced that approximately $745 million in debt relief for Niger would be phased in over the next 37 years.
The most important donors in Niger are France, the European Union, the World Bank, the IMF, and UN agencies--UNDP, UNICEF, FAO, WFP, and UNFPA. Other donors include the United States, Belgium, Germany, Switzerland, Japan, China, Italy, Libya, Egypt, Morocco, Iran, Denmark, Canada, and Saudi Arabia. The U.S. Agency for International Development (USAID) has a field office that operates within the U.S. Embassy in Niamey. The United States has provided approximately $65 million to Niger's development during FY 2011 (including $15 million in non-emergency P.L. 480 food assistance; $18 million in emergency food programs; and $32 million in agriculture, nutrition, community health, peace and security, election support, and democracy and governance). These development and emergency programs are carried out by more than 20 U.S. implementing partners (private voluntary organizations and contractors); a limited amount of this support is made available to UN agencies such as WFP and UNICEF. Since inauguration of the elected government in April 2011, the United States, with the majority of the donor community, started to reengage in several key sectors. Foreign aid represents 8.3% of Niger's GDP and over 40% of government revenues.
Despite continued expansion of the area cultivated, per capita land use is declining. Farms are small (average 4.1 hectares) and getting smaller because Niger’s high population growth rate (nearly 3.5 percent per annum) exceeds the rate of area expansion. The consequent pressure on agricultural land resources has risen in the last decades and is now very high.
Crop production thus takes place in a context of low and variable rainfall, and high and increasing pressure on cultivable land. The potential for irrigation is limited, and its use is relatively low. Production is further constrained by the predominance of traditional management systems, with limited use of improved seeds, fertilizer, and mechanization. High land pressure also limits the scope for fallowing land as a means to preserve and restore soil fertility, with only 5 percent of land in fallow in 2005.
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