Economy of Niger

Economy - overview: Niger is a poor, landlocked Sub-Saharan nation, whose economy centers on subsistence agriculture, animal husbandry, re-export trade, and increasingly less on uranium, its major export since the 1970s. The 50% devaluation of the West African franc in January 1994 boosted exports of livestock, cowpeas, onions, and the products of Niger's small cotton industry. The government relies on bilateral and multilateral aid - which was suspended following the April 1999 coup d'état - for operating expenses and public investment. Short-term prospects depend on upcoming negotiations with the World Bank and the IMF on debt relief and extended aid.

Economy - in greater depth: One of the poorest countries in the world, Niger's economy is based largely on subsistence crops, livestock, and some of the world's largest uranium deposits. Drought cycles, desertification, a 3.4% population growth rate and the drop in world demand for uranium have undercut an already marginal economy. Traditional subsistence farming, herding, small trading, and informal markets dominate an economy that generates few formal sector jobs.

Niger's agricultural and livestock sectors are the mainstay of all but 18% of the population. Fourteen percent of Niger's GDP is generated by livestock production (camels, goats, sheep and cattle), said to support 29% of the population. The 15% of Niger's land that is arable is 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. Although the rains in 2000 were not good, those in 2001 were plentiful and well distributed. Millet, sorghum, and cassava are Niger's principal rain-fed subsistence crops. Irrigated rice for internal consumption, while expensive, has, since the devaluation of the CFA franc, sold for below the price of imported rice, encouraging additional production. Cowpeas and onions are grown for commercial export, as are small quantities of garlic, peppers, potatoes, and wheat.

Of Niger's exports, foreign exchange earnings from livestock, although impossible to quantify, are second only to those from uranium. Actual exports far exceed official statistics, which often fail to detect large herds of animals informally crossing into Nigeria. Some hides and skins are exported and some are transformed into handicrafts.

The persistent uranium price slump has brought lower revenues for Niger's uranium sector, although uranium still provides 72% of national export proceeds. The nation enjoyed substantial export earnings and rapid economic growth during the 1960s and 1970s after the opening of two large uranium mines near the northern town of Arlit. When the uranium-led boom ended in the early 1980s, however, the economy stagnated and new investment since then has been limited. Niger's two uranium mines (SOMAIR's open pit mine and COMINAK's underground mine) are owned by a French-led consortium and operated by French interests.

Exploitable deposits of gold are known to exist in Niger in the region between the Niger River and the border with Burkina Faso. Substantial deposits of phosphates, coal, iron, limestone, and gypsum also have been found. Numerous foreign companies, including American firms, have taken out exploration licenses for concessions in the gold seam in western Niger, which also contains deposits of other minerals. Several oil companies have explored for petroleum since 1992 in the Djado plateau in north-eastern Niger and the Agadem basin, north of Lake Chad but have made no discoveries worth developing. Niger's known coal reserves, with low energy and high ash content, cannot compete against higher quality coal on the world market. However, the parastatal SONICHAR (Société nigérienne 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.

After the economic competitiveness created by the January 1994 CFA franc devaluation contributed to an annual average economic growth of 3.5% throughout the mid-1990s, the economy stagnated due the sharp reduction in foreign aid in 1999, which gradually resumed in 2000, and poor rains in 2000. Reflecting the importance of the agricultural sector, the return of good rains was the primary factor underlying a projected growth of 4.5% for 2001.

In recent years, the Government of Niger promulgated revisions to the investment code (1997 and 2000), petroleum code (1992), and mining code (1993), all with attractive terms for investors. The present 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), it has undertaken a concerted effort to revitalize the private sector.

Niger shares a common currency, the CFA franc, and a common central bank, the Central Bank of West African States (BCEAO), with six 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 100 CFA (Communauté financière africaine) to the French franc (to the Euro as of January 1, 2002).

Economic Reform
In January 2000, Niger's newly elected government inherited serious financial and economic problems including a virtually empty treasury, past-due salaries (11 months of arrears) and scholarship payments, increased debt, reduced revenue performance, and lower public investment. In December 2000, Niger qualified for enhanced debt relief under the International Monetary Fund program for Highly Indebted Poor Countries and concluded an agreement with the Fund on a Poverty Reduction and Growth Facility (PRGF).

In addition to strengthening the budgetary process and public finances, the new government has pursued economic reform with the privatization of water distribution and telecommunications and the implementation of flexible a petroleum product pricing structure tied to world market prices. Further privatizations of public enterprises are in the works. In its effort to consolidate macroeconomic stability under the PRGF, the government also is taking actions to reduce corruption and, as the result of a participatory process encompassing civil society, has devised a Poverty Reduction Strategy Plan that focuses on improving health, primary education, rural infrastructure, and judicial reform.

Foreign Aid
The most important donors in Niger are France, the European Union, the World Bank, the IMF and other United Nations agencies (UNDP, UNICEF, FAO, WFP, and UNFPA). Other principal donors include the United States, Belgium, Germany, Switzerland, Canada, and Saudi Arabia. While USAID does not have an office in Niger, the United States is a major donor, contributing nearly $10 million each year to Niger’s development. The U.S. also is a major partner in policy coordination in such areas as food security and HIV/AIDS. The importance of external support for Niger's development is demonstrated by the fact that about 45% of the government's FY 2002 budget, including 80% of its capital budget, derives from donor resources.

GDP: purchasing power parity - $9.6 billion (9.6 G$) (1999 est.)

GDP - real growth rate: 2% (1999 est.)

GDP - per capita: purchasing power parity - $1,000 (1999 est.)

GDP - composition by sector:
agriculture: 40%
industry: 18%
services: 42% (1998)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 3%
highest 10%: 29.3% (1992)

Inflation rate (consumer prices): 4.8% (1999)

Labour force: 70,000 receive regular wages or salaries

Labour force - by occupation: agriculture 90%, industry and commerce 6%, government 4%

Unemployment rate: NA%

Budget:
revenues: $377 million, including $146 million from foreign sources
expenditures: $377 million, including capital expenditures of $105 million (1999 est.)

Industries: uranium mining, cement, brick, textiles, food processing, chemicals, slaughterhouses

Industrial production growth rate: NA%

Electricity - production: 180 GWh (1998)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 363 GWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 196 GWh (1998)

Agriculture - products: cowpeas, cotton, peanuts, millet, sorghum, cassava (tapioca), rice; cattle, sheep, goats, camels, donkeys, horses, poultry

Exports: $269 million (f.o.b., 1997)

Exports - commodities: uranium ore 65%, livestock products, cowpeas, onions (1998 est.)

Exports - partners: US, Greece, Japan, France, Nigeria, Benin

Imports: $295 million (c.i.f., 1997)

Imports - commodities: consumer goods, primary materials, machinery, vehicles and parts, petroleum, cereals

Imports - partners: France, Côte d'Ivoire, US, Benelux, Nigeria

Debt - external: $1.3 billion (1999 est.)

Economic aid - recipient: $222 million (1995)

Currency: 1 Communauté financière africaine franc (CFAF) = 100 centimes

Exchange rates: Communauté financière africaine francs (CFAF) per US$1 - 670 (January 2000), 560.01 (January 1999), 589.95 (1998), 583.67 (1997), 511.55 (1996), 499.15 (1995)
note: since 1 January 1999, the CFAF is pegged to the euro at a rate of 655.957 CFA francs per euro

Fiscal year: calendar year

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