major macro economic indicators
|2018||2019||2020 (e)||2021 (f)|
|GDP growth (%)||7.2||5.9||1.2||6.0|
|Inflation (yearly average, %)||3.0||-2.5||2.8||1.5|
|Budget balance (% GDP)*||-3.0||-3.6||-6.0||-4.5|
|Current account balance (% GDP)*||-12.7||-12.3||-13.0||-16.0|
|Public debt (% GDP)||36.9||39.8||41.7||42.1|
(e): Estimate (f): Forecast *Including grants
- Sixth largest uranium producer in the world in 2019
- Net exporter of petroleum products and gold
- Investment effort 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
- Economy vulnerable to climate shocks and fluctuations in commodity prices
- Economy still largely dependent on subsistence agriculture
- Rapid population growth, high poverty (world's lowest HDI), chronic food crisis situation
- Deficient tax and duty collection system
- Endemic corruption and the size of the informal sector; very poor business environment (132nd in the Doing Business 2020 report)
- Porous borders favouring illegal immigration and trafficking (gold, oil etc.)
- Deteriorating security situation and terrorist attacks
Domestic demand as a driver of recovery
Penalised by the closure of their shared border by Nigeria since August 2019, and the measures implemented to combat COVID-19, Niger experienced low growth in 2020. However, a dynamic recovery is anticipated for 2021. Although it has been significantly slowed by rising poverty and social distancing measures, consumption, which accounts for 70% of GDP, continued to grow in 2020 (+2.3%) thanks to government support for the most vulnerable households (monetary assistance and the suspension of electricity bills). In 2021, it is expected return to its usual growth rate of around 7% as the effects of the crisis dissipate. Investment (30% of GDP) will also drive growth in 2021 (+11%), following the suspension of certain projects during the health crisis. The Kandadji hydroelectric dam (financed to the tune of USD 150 million by the World Bank) will be revived and will help secure the drinking water supply of the Niamey agglomeration by 2025. In addition, the construction of a 2,000-km oil pipeline will be resumed and completed by 2023. This project, led by the China National Petroleum Company, will link the country's oil fields to the Beninese maritime coast and will increase the country's oil production from 20,000 barrels per day to 97,000 once construction is completed. The mining sector is a key sector of the country, representing 8% of GDP. Contrary to gold production, which is doing well, uranium production will fall in 2021 with the expected closure of the Akouta mine, one of the country's two mines.
The construction, mining, and services sectors are therefore expected to be the main beneficiaries of the intensification of projects. Furthermore, agriculture (80% of employment and 40% of GDP), which was only slightly affected by the crisis, will also experience sustained growth in 2021 (+5%), although it is mainly subsistence farming. It will therefore not contribute to exports, while massive imports of capital goods will be necessary to carry out investment projects, leading to a negative contribution of trade to growth.
Twin deficits financed by international aid (13% of GDP)
In April 2020, the government announced an ambitious stimulus plan of 597 billion CFA francs, or 7.4% of GDP, to help households and businesses most affected by the crisis. Despite revenue maintenance aided by the sale of a telecommunications licence, the increase in spending led to a widening of the public deficit and, as a result, a rise in the debt (71% external). Thanks to increased support from international institutions (notably the IMF), a Deutsche Bank loan taken in January (1.9% of GDP) and the Debt Service Suspension Initiative (0.2% of GDP), the country has had the funds to finance its deficit in 2020. In 2021, the resumption of activity and rising revenues will help to reduce the deficit and prevent the country from going deeper into debt.
In 2020, the massive current account deficit had not changed much. Indeed, the trade deficit remained stable, as the decline in imports of capital goods caused by the halt in construction offset the drop in exports. The slight deterioration is explained by the erosion of remittances from expatriates, representing 2.5% of GDP. It was financed largely by international aid, including USD 250 million from the World Bank, USD 114 million and USD 20 million from the IMF under its two credit facilities: the first, rapid to respond to the COVID-19 emergency, and the second, expanded and multi-year, renewable in 2021. In 2021, the deficit will widen because of increased imports of capital goods. In addition, although mining exports (45% of exports) will benefit from favourable prices, they will be limited by the ageing of the uranium mines and the country's refining capacity (only 20,000 barrels per day). The deficit will be financed by the return of FDI, as well as by international aid. Moreover, in 2020, reserves with the WAEMU amounted to 4.5 months’ worth of imports.
Degraded security and social situation
The political situation in Niger has long been characterised by the control of President Mahamadou Issoufou (Niger Party for Democracy and Socialism (PNDS)) over the various institutions since the victory of his party in the presidential and legislative elections of 2016. However, he confirmed that he would withdraw peacefully in the upcoming elections, while carefully planning for the future election of his designated successor, former Prime Minister Mohamed Bazoum who came first with 38% of the votes in the first round of the presidential election of December 2020. In addition, the opposition is highly critical of the President's actions and the bias of the new 2019 electoral code, which is accused of favouring the current government.
These political tensions, coupled with increased poverty and a heightened risk of famine, have worsened the social situation in the country. Moreover, the country has been hit hard by the deterioration of the security situation following the actions of terrorist groups in the region (Boko Haram, AQIM, Al-Murabitoun). Despite the difficulties in financing the G5 Sahel force, international cooperation will come to the aid of Niger, a country affected by several attacks and kidnappings of foreign nationals in 2020.
Last updated: March 2021