Niger

• In 2012, GDP grew by an estimated 13.1% in real terms, one of the highest levels recorded in Africa. Growth was boosted by a good harvest and an exceptionally dynamic secondary sector, which grew by almost 38%, driven by the extractive industries. Although there are some risks, the outlook for 2013 and for the medium term is good, with growth expected to average 5.5%. Reducing the national debt remains a challenge.

• In the political sphere, state institutions were consolidated in 2012. In social affairs, progress was made in human development, but remains slow. Niger is unlikely to achieve all the Millennium Development Goals (MDGs) by 2015.

• Huge investment in the oil and mining sectors are encouraging signs for the country’s development. Nevertheless, better policies on the management of natural resources are needed, taking into account environmental externalities. To achieve sustainable mitigation of the economy’s and the population’s recurrent vulnerability to climatic impacts, Niger would benefit from making good use of its mining and oil resources to finance structural investments. Economic diversification is also necessary to generate inclusive growth.

The political situation in Niger is still improving. However, the regional crisis in Mali fuelled by jihadist groups (AQIM, Ansar Dine and MOJWA), and taken up by Boko Haram in Nigeria could threaten social cohesion in Niger. Because of the risks, Niger could change its budgetary decisions, increasing spending on security and defence at the expense of certain areas of social spending.

The economic recovery continued in 2012, with growth in gross domestic product (GDP) of more than 13% according to provisional estimates. The primary, secondary and tertiary sectors all grew, contributing 6.9, 4.0 and 2.5 percentage points respectively to overall GDP growth.

An expansionary fiscal policy was made possible by a number of factors: high revenue generated by the extractive industries, revision of various tax rates¹ and continuing reforms of tax and customs administration. Support came from technical and financial partners including the African Development Bank (AfDB), the World Bank, the European Union (EU) and French co-operation. Debt rose again in 2011 and 2012. Analysis of debt sustainability reveals that the risk of over-indebtedness² could be upgraded from moderate to high. The budget deficit was estimated at less than 3% of GDP in 2012, well below the 6.8% deficit recorded in 2011, and is forecast to remain low until 2015.

The Central Bank’s monetary policy was slightly expansionary, with the money supply growing by 16.6% and credit to the economy – especially to the extractive industries – by 18.2% in 2012. Inflation increased from 2.9% to 3.9%. The effects of controls on staple food prices in response to the July 2012 floods will take place in 2013, with inflation forecast to fall to 1.8%, well below the West African Economic and Monetary Union (WAEMU) target rate of 3%.

Public policies have improved human development in the areas of health, education and social protection. The greatest achievement of the last decade has been investment in human capital, which has vastly improved education and health services. However, income poverty has declined very slowly. About 60% of Niger’s population still live below the poverty line of USD 1 a day. If the poverty line is raised to USD 2 a day, that figure rises to 85%. In 2013, two years before the expiry of the MDGs, the poverty index is forecast to fall only to 55.0%, well short of the 2015 target of 31.5%.

GDP growth in 2012 was estimated at more than 13.0%, fuelled by the start of oil production and a good harvest. The contribution made by the primary, secondary and tertiary sectors to that growth was 6.9%, 4.0% and 2.5% respectively. Tax on goods, meanwhile, impacted negatively on growth (‑2.1%). The balance of payments benefited from major flows of foreign direct investment (FDI) linked to projects to exploit natural resources and to the start of petroleum exports. Net foreign assets grew by an estimated 3.0% of GDP, but as in 2011, they represented only three months of imports.

The primary-sector grew strongly in 2012, up 16.5% by volume from a fall of 3.7% in 2011. This strong growth was due to a good 2012/13 harvest, thanks to abundant rainfall. Agriculture contributed 24.8% to primary-sector growth, driven by winter crops and irrigated farming resulting from added investment and the provision of better seeds. Slower growth in livestock farming (2.8% against 4.5% in 2011 due to a fodder deficit the previous year), forestry (1.7% against 2.5% in 2011) and fisheries (3.0% against 3.5% in 2011) prevented higher growth in the sector.

In 2012, the primary sector’s contribution to the economy stood at 46.2% of GDP, compared with 45.4% in 2011 and 48.0% in 2010.

The secondary sector (Niger’s Achilles heel) recorded strong growth of 37.7% in 2012, up from 3.0% in 2011. This improvement was driven by the extractive industries, which grew by 152.5% thanks to oil production. After declines in 2011, production forecasts for uranium and gold are on the rise; 13.2% and 11.9% respectively in 2012. With the country’s refining capacity exceeding domestic demand and the electricity supply to Niamey having improved, the energy sector’s value added grew by 5.7% in 2012, after contracting by 12.1% in 2011. The government’s ongoing infrastructure work has helped consolidate the construction sector, which grew by 7.4% in 2012, compared to a 3.3% contraction in 2011.

Tertiary-sector growth remained steady at 6.6% in 2012, against 7.7% in 2011. This trend is linked to increased activity in freight transport,³ which grew by 8.5%, and the continued dynamism of public administration, which grew by 12.4%. The communications sector saw growth slow from 6.5% to 2.9%, with the market for mobile telephones becoming saturated.

The short- and medium-term macroeconomic outlooks are positive, despite some risks. Huge investment in mining and oil and a consolidated macroeconomic situation should restore strong growth, which is predicted to hover at around 5.5% from 2013. The start of production at the Zinder oil refinery at the end of 2011 will make Niger a net exporter of petroleum products. Current investments and plans for a new uranium mine funded by the French group Areva should double production between 2012 and 2016, making the country the world’s second-biggest uranium producer. Mining and oil production and exports should also double between 2012 and 2016. With the decline in food prices, inflation is expected to remain low in 2013. The region’s fragile security and Niger’s vulnerability to natural disasters, as the July 2012 floods showed, affect the country’s outlook.

On the demand side, real GDP growth is driven mainly by investment and exports. Consumption contributed 11.6% to growth, investment 6.1%, exports 3.0% and imports ‑7.5%.

Final household consumption, which amounted to 70.6% of GDP in 2012, should continue to grow at a rate of 14.4%, up from 5.8% in 2011, with food imports having more than offset the deficit in agriculture in the 2011/12 season. Meanwhile, a rise in public expenditure means that final government consumption is likely to grow at a slower pace, having already slowed from 13.0% in 2011 to 5.5% in 2012. Final consumption grew by an estimated 12.4% of GDP in 2012 (up from 7.0% growth in 2011), representing 85.5% of GDP.

After shrinking by 5.9% in 2011, investment grew by an estimated 16.0% in 2012. This growth was driven by a 15.0% increase in private gross fixed capital formation (GFCF) following Areva’s purchase of capital goods and a 20.0% increase in public GFCF following infrastructure work carried out by the government in rural areas, on roads and for the social sectors. Total investment reached an estimated 29.9% of GDP in 2012, down from 32.1% in 2011.

Estimates for foreign trade, meanwhile, indicate that exports grew by 15.0%, thanks to the sale of oil and gas, to reach 22.1% of GDP, while imports grew by 14.8% to reach 35.8% of GDP. Deterioration in the both the trade and service balances caused the external deficit to widen from 22.7% of GDP to 25.0%.

Unlike in 2011, fiscal policy was expansionary in 2012. The initial budget was XOF 1.26 trillion (CFA franc BCEAO), but was then revised upwards to XOF 1.44 trillion and then downwards to XOF 1.35 trillion. The first increase in spending was financed by the significant revenue generated by the extractive industries, revenue from various changes to tax rates, the expiry of certain tax exemptions and ongoing measures to strengthen tax and customs administration. However, the XOF 68.8 billion capital loss in customs revenue from imports and exports, the XOF 8.6 billion reduction in resources drawn from the International Monetary Fund (IMF), the reduction in EU budget aid and lower oil revenue forced the government to revise the budget a third time, this time downwards to XOF 345 billion. The final budget was 6.5% higher than the initial budget approved in December 2011.

Despite these changes, fiscal policy remained prudent, providing fiscal space of XOF 20 billion (0.5% of GDP) for unexpected events, including spending on security and defence. Niger is suffering the consequences of the regional security crisis, particularly in Mali, and experiences recurring climatic hazards, including devastating floods. In accordance with the terms of the new Extended Credit Facility (ECF) agreed with the IMF, the basic budget deficit was less than 3% of GDP in 2012, well below the 6.8% deficit of 2011. The deficit is expected to stay below 3% until 2015. From 2016, a budget surplus is expected when Africa’s largest uranium mine opens in Imouraren, with annual production expected to reach around 5 000 tonnes of uranate.

In the medium term, Niger’s fiscal policy aims to maintain debt sustainability. It also aims to provide resources to increase social spending and public investment without choking private investment in sectors not controlled by the state. In addition, as part of the programme drawn up with the IMF, the government will work to set up a legal framework with transparent controls for the mining and oil sectors. The government will also support the development of the private and financial sectors.

Niger is a member of WAEMU. As such, since 1 April 2010, the country’s monetary policy is the sole remit of the Monetary Policy Committee (Comité de politique monétaire, CPM) of the Central Bank of West African States (CBWAS). According to Article 8 of the CBWAS statutes, the bank’s primary objective is to ensure price stability. To help achieve this objective, the bank provides support to WAEMU’s economic policies for healthy, sustainable growth.

In 2012, the CBWAS implemented a slightly expansionary monetary policy, increasing the money supply by 16.6%. As a result, credit to the economy increased by 18.2%, mainly benefiting the extractive industries. To implement this policy, the CPM cut interest rates by 25 basis points following its meeting on 11 June 2012. The minimum open-market and marginal-lending rates were set at 3.0% and 4.0% respectively, coming into effect on 16 June 2012. In the money market, the CPM has noted that the tensions that justified lowering the reserve requirements in March 2012 have faded. The weighted average rate of one-week loans on the interbank market stood at 4.67% in March 2012, but fell to 4.25% by May of the same year. The CPM responded by freezing reserve requirements for banks at 5.0%, the rate that had been in place since 16 March 2012.

Inflation rose by a single percentage point in 2012 to 3.9%. Measures to control staple food prices following the July 2012 floods should bring inflation back down to 1.8% in 2013, below the ECOWAS target rate of 3.0%.

As part of an expansionary fiscal policy to finance social and capital spending and respond to the recovery of the extractive industries, the CBWAS’s monetary policy in 2013 will aim to stabilise prices and the real effective exchange rate and prevent public spending from crowding out private investment.

Niger’s trade deficit widened again in 2012, increasing by XOF 25 billion to XOF 473 billion, despite the buoyancy of exports, boosted by sales of uranium and the country’s first refined petroleum products. Exports were up 15.0%, representing 22.1% of GDP. Imports, meanwhile, grew by 14.8%, representing 35.8% of GDP.

The current account has a structural deficit and deteriorated in 2012. The deficit grew to XOF 795 billion, or 22.7% of GDP, from XOF 684 billion in 2011. One of the main causes of this deterioration was the import of capital goods for major extraction investment projects. Furthermore, food imports almost doubled and imports of other consumer goods also increased. Foreign direct investment (FDI) – mainly Chinese and French investment in the mining and oil sectors – has remained high over the past three years, making the deficits sustainable. Total FDI was XOF 499 billion in 2011 and XOF 402 billion in 2012.

The current account balance should improve drastically in 2013. Imports of the main refined petroleum products will fall dramatically, while exports should get into their stride after a slow start to 2012. Meanwhile, in early 2012 the IMF approved a new three-year economic programme under the Extended Credit Facility that will further strengthen medium-term macroeconomic stability.

Regarding regional integration, Niger has signed and ratified all protocols and agreements drawn up by the main regional integration and co‑operation bodies, including WAEMU and ECOWAS. Niger participates actively in discussions on Economic Partnership Agreements (EPAs) and on introducing a five-band common external tariff (CET) for ECOWAS. The challenge for the customs authorities is to combat fraudulent imports of goods, especially from Benin and across the porous 1 500 km border between Niger and Nigeria.

According to the conclusions of the IMF’s Article IV Consultation with Niger, the country’s debt levels fell considerably after it received debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI). In 2010-11, total public debt (domestic and external) was equal to 24% of GDP. The authorities have made considerable efforts to develop a comprehensive inventory of domestic debt. An agreement signed between Niger and the CBWAS in July 2010 on bank-loan repayments considerably improved Niger’s financial position vis-à-vis the CBWAS. However, in 2012 public debt grew due to the state guarantee on the loan granted to the Soraz oil refinery and a loan to finance the government’s holding in the new uranium mine. Debt sustainability analysis therefore reveals a higher debt ratio, with Niger’s debt distress rating having increased from low to moderate.

Public debt monitoring has improved, but further steps are needed to strengthen debt management. The government therefore needs to shift more towards grants and concessional loans to finance public investment. Government guarantees for new investments in the extractive industries should be limited as much as possible. To strengthen debt management, the government aims to create an office within the Ministry of Finance in charge of managing all domestic and external debt. Proposals for new loans and guarantees, including those for the exploitation of natural resources, should be presented to the national debt-management committee for proper analysis. Given the risk of debt distress, the authorities have reached an agreement with the IMF that funding for the new uranium mine, due to open in 2014, will not benefit from government guarantees.

Official development assistance (ODA) is on the rise. ODA increased again after it had contracted in 2010 during the military transition following the coup and co‑operation from technical and financial partners (TFPs) was suspended. In 2011 it almost doubled to XOF 206.8 billion, and in 2012 it continued rising, reaching an estimated XOF 365 billion.

According to the World Bank report Doing Business 2013, Niger introduced no major environmental reforms in 2012 and slipped one place down the rankings, from 175^th to 176^th out of 183 countries. While other countries like Rwanda and Zambia have made progress, having introduced major reforms over the past three years, almost all of Niger’s indicators have shown no improvement. The indicator for starting a business has made no significant progress, unlike among other economies in the African Business Law Harmonisation Organisation (OHADA). Starting a business in Niger requires nine procedures and takes seventeen days, making it much more complex than in similar economies, like Mali, where it requires four procedures and takes eight days.

Practical steps by the government to improve the business climate must focus on:

• further reducing the time needed to obtain a construction permit by eliminating problems in cadastral matters and registering property;
• reviewing the cost of energy, which is too dependent on imports and therefore vulnerable to external impacts;
• greatly improving protection for investors;
• improving the procedures, delays and costs of enforcing contracts;
• adopting an effective collection policy in response to the many cases of insolvency.

The financial system remains relatively healthy. It has not been affected by the recent world financial crises because it has few links with the world economy and is closely supervised by WAEMU’s banking commission. With around ten banks and one financial institution the system remains highly concentrated compared with those of other WAEMU countries. As of 2011, nine-tenths of total balance-sheet assets – worth XOF 712.6 billion – were owned by four major commercial banks. The depth of the financial sector, measured as the ratio of money supply to GDP (M2/GDP), has increased substantially, but remains low. The ratio increased from 8.8% in 2000 to 20.5% in 2010 before falling slightly to 20.3% in 2011, well below the average of 41.0% for the whole of sub-Saharan Africa. Financial products and capital markets are very limited in their capacity to respond to the specific needs of an economy driven by the primary sector (agriculture) and the extractive industries (such as mining and oil).

Credit to the formal private sector remains low due to a shortfall in funds available on the market given the sector’s requirements. Financial intermediation and the banking rate are both low. Access to finance is limited; less than 5% of the population use financial products of any kind. The distribution of credit does not reflect the relative size of the different economic sectors. The growth-driving agricultural sector, for instance, contributes more than 40% to GDP, but receives less than 1% of bank loans and struggles to obtain finance. This lack of structure in demand for credit is one of the bottlenecks preventing entrepreneurs from obtaining agricultural loans. Indeed, because demand for credit isn't formally structured, (documented, based on reliable data, etc.) and lacks guarantees, lending is far too risky for banking institutions. Bringing structure to the demand for credit requires support for developers in preparing bankable proposals and providing adequate guarantees. Improving access to credit also requires substantial progress in the country’s business environment, particularly in legal and judicial matters.

Following the return to democracy and constitutional order in 2011, 2012 saw a consolidation of the Republic’s institutions. On the economic front, the government of Niger organised the round table of Niger TFPs on financing the PDES development plan (Plan de développement économique et social) for 2012-15, in conjunction with the United Nations Development Programme (UNDP) and with the support of bilateral and multilateral TFPs.

The plan is based on an annual-growth forecast of 8% between now and 2015. The aim of the plan is to build infrastructure to support the economy and reduce the cost of transport and energy. Costing USD 12.4 billion, the 2012-15 PDES particularly aims to diversify an economy that depends heavily on mining revenue, especially uranium. The PDES envisages a 20% rise in tax revenue, most of which still comes from the oil sector.

The Kandadji dam should contribute to this programme by enabling the irrigation of 10 000 hectares by 2018. Costing EUR 500 million, the dam will also power a 130-megawatt power station, thus raising the country’s total power capacity by 55%. Another major project is the pipeline from the Agadem oil fields in eastern Niger to Chad, from where an existing pipeline will carry Niger’s oil to the coast of Cameroon. This project will allow the new oil-producing country to become an exporter of crude oil. Negotiations are well under way.

Management of natural resources and environmental externalities is a priority for Niger. On the strategic and operational front, environmental policies and regulations focus on protecting natural resources, ensuring their sustainable use and managing pollution.

In the extractive industries, the country created a national charter on good governance and management of mineral resources and oil and gas. To fully comply with the Extractive Industries Transparency Initiative (EITI) in 2012, all investors had to conduct an environmental and social impact study and to have an environmental and social management plan for all mining and oil and gas projects. As part of their revised mining and investment codes, the government plans to bolster environmental standards by aligning them with international standards.

In the agricultural sector, the government adopted a new rural development strategy on 18 April 2012: the 3N⁴ initiative for food safety and sustainable agricultural development. This strategy tackles environmental management through the following programmes: i) managing natural resources sustainably; ii) strengthening the capacity of stakeholders; iii) supporting land tenure security; and iv) establishing a participatory system of governance. More than USD 2 billion will be invested in the 3N initiative.

In the context of climate change, Niger has been admitted to the Pilot Program for Climate Resilience (PPCR). The PPCR is the first programme of the Strategic Climate Fund and is designed to redirect development towards low-density forms of carbon that can withstand the effects of climate change. To accompany these resources the government created a separate fund with the CBWAS that will receive revenue from the extractive industries to be used to manage crises related to climate change, such as recurring droughts and floods.

The political situation in Niger is still improving, but the regional situation threatens to disrupt the internal balance. Within Niger, the country is becoming more politically stable, with all the national institutions envisaged in the Constitution being gradually put in place. This has been helped by government stability, which was not seen in previous decades. The ruling MNR coalition (Mouvance pour la renaissance du Niger) has a comfortable majority in the National Assembly. However, in view of the continued criticism aimed at the government by the second strongest party in the coalition, some might question how long the coalition government is likely to last.

In the wider region the situation remains volatile. To the north, the Libya crisis has subsided, but the country remains volatile. To the south, the Nigeria-based Boko Haram sect still poses a threat, with a real, albeit contained, danger of negative impacts in Niger. Finally, to the west the deteriorating situation in northern Mali has led to an influx of refugees, which has had repercussions on security and humanitarian aid.

Given the regional situation, before the military operations to retake northern Mali, Niger launched a national security operation to limit the security repercussions of the crises in Mali, Nigeria and Libya. This operation had a huge effect on the national budget. The rise in defence spending in 2012 is set to continue in 2013, possibly at the expense of certain capital investments. Military operations in Mali by French and Malian forces with the deployment of the African-led International Support Mission to Mali (AFISMA) have certainly helped remove jihadists from major cities in northern Mali, but they have not permanently removed the threat to Niger.

The government has made efforts to improve the health system. To combat malaria – the leading cause of death in Mali – healthcare centres, information campaigns and the use of mosquito nets, especially among children under five, have contributed to lowering the mortality rate from 0.18% in 2006 to 0.16% in 2010.

The infant mortality rate is drastically improving. Efforts have centred around assisted births supported by qualified healthcare staff, the rate of which increased from 14.9% in 1992 to 17.7% in 2006, then to 37.1% in 2010. Water-borne diseases linked to the lack of safe water, hygiene and sanitation – the main cause of deaths among infants under five – are also expected to become less prevalent in the medium term. Indeed, access to drinking water rose from 43.0% in 2000 to 50.1% in 2008, and should climb further thanks to major government investment supported by donors such as the AfDB.

The government’s strategy to tackle HIV/AIDS, which affects workforce productivity, especially in rural areas, has focused on improving access to treatment for HIV by local, devolved, decentralised services. The number of people with advanced HIV infection receiving combination antiretroviral therapy greatly increased between 2008 and 2010, from 2 846 to 7 663 people.

Niger has also made good progress in education, but unless it changes its policy it will not achieve the MDG goal on primary education. In education and literacy, efforts are still needed to reduce disparities, despite the progress made, particularly those between men and women. The net enrolment rate⁵ increased from 25.4% for the period 1997‑98 to 62.8% for the period 2009‑10, then to 67.2% for 2010‑11. The completion rate, meanwhile, reached 51.2% in 2011, up from 15.0% in 1990. Niger has also made significant progress in reducing inequalities between girls and boys, with the ratio of girls to boys in primary schools having increased from 62.5% in 1997 to 82.0% in 2011. But despite these efforts, there are still problems with maintaining quality.

The various surveys on household living conditions conducted by the national statistics agency (Institut national de la statistique, INS) in 2005 and 2008, based on a monetary approach, concluded that poverty had declined. The incidence of poverty stood at 63% in 1990, 62.1% in 2005 and 59.5% in 2008. Progress has therefore been slow, with 60.0% of the population still living below the poverty line of USD 1 a day in 2008. If the poverty line is raised to USD 2 a day, that figure rises to 85.0%. Poverty most affects people in rural areas (especially women), since the structures and production systems in those areas are based mainly on rain-fed agriculture and livestock farming, which are heavily dependent on climatic conditions. Spatial analysis also shows that poverty is endemic in the Maradi, Dosso and Tillabéry regions.

This poverty has many causes. According to the INS report on gender and poverty, they include high fertility,⁶ successive droughts resulting in poor harvests and often endemic food shortages, the deterioration of productive potential, migration of young people from rural to urban and mining areas, or their migration to neighbouring countries, and poor access to credit and jobs for women. According to the 2012‑15 PDES, unemployment⁷ and underemployment, particularly among young graduates, are ongoing concerns with a strong impact on poverty.

Encouraging preliminary estimates by the authorities suggest that by 2013 the incidence of poverty will have fallen to 55.0%, thanks to public policies in the social sectors over a number of years. However, the target of 31.5% for the incidence of poverty (MDG 1, eradicating extreme poverty and hunger) will not be achieved by 2015.

The government has therefore adopted a proactive policy on social protection. It has ratified several legal instruments, adopted a national policy document on social protection in 2011, improved services during food crises and created a full range of aid to the most vulnerable groups in the form of safety nets.

Gender disparities persist in education and in the labour market. In education, policies by successive governments have doubled the percentage of girls in primary education since 2000. However, the gap between girls and boys in absolute terms is widening, since the enrolment rate of boys is growing even quicker. The disparities between boys and girls grow as they get older: in primary schools almost half the students are girls, while in the second cycle of secondary schools they constitute only a fifth of students.

There is also an unequal contribution made by men and women to the country’s development. While 50.1% of the population are women, only 26.0% of civil servants and only 21.7% of private-sector and parapublic workers are women. More than half (53.0%) of potentially active women do not work; by contrast, only 14.0% of men are inactive.

In government, however, women have increased their presence. For the period 1999‑2002 only 8.7% of government workers were women; for 2002‑04, 14.3% were women; since 2004 the figure has been over 20.0%. The proportion of female MPs increased from 1.2% for 1999‑2004 to 12.4% for 2004‑2009, then increased again. Thanks to a law requiring at least 25.0% of senior public positions to be filled by women, the number of women in such roles will improve further.

Niger has an abundance of natural resources, particularly minerals, oil and gas. The main resources are uranium, gold, coal, iron, limestone and phosphates. Present in Niger for over half a century, the French group Areva is developing the country’s uranium potential through the Niger-based companies Somair, Cominak and Imouranen SA. The opening of the new uranium mine in Imouraren, scheduled for 2014 or 2015, will represent a major turning point. By 2016 the mine’s maximum annual capacity is expected to reach 5 000 tonnes of uranates. Niger is expected to become the second largest producer of uranium, behind Kazakhstan and ahead of Canada. Gold mining is expected to go through another phase of expansion in the coming years. Thanks to proven reserves of more than 80 million tonnes, Niger is also expected to benefit from high global demand for coal.⁸ It has more than a billion tonnes of iron ore, too. The Termit Massif is of great interest and is currently being explored. The country also has large limestone and phosphate reserves.

In the oil and gas sector, the first explorations were carried out in 1970 by major oil companies such as Esso, Texaco, Sun Oil, Global Energy and Elf Aquitaine. A major turning point was the introduction of a major programme to interpret geological and geophysical data in 1990. Niger’s oil and gas potential comes from two large sedimentary basins covering 90% of its territory: the west basin (Iullemeden basin and Tamesna sub-basin) and east basin (Chad basin). Oil maps show 34 separate blocks, and exploration or operating licences have only been granted for four of them: three by the China National Petroleum Corporation (CNPC) and one by the Algerian firm Sonatrach. The remaining 30 blocks are open to investors. The total potential remains to be established by prospecting, but partial knowledge of Niger’s geology reveals an assemblage of promising features.⁹ Currently, proven reserves amount to 744 million barrels of oil and more than 16 billion m³ of gas. Since 2012, operations at the Zinder (Soraz) refinery by the CNPC and the government have made Niger a net exporter of oil.

The impact of the extractive industries on the economy as a whole has been mixed, even negligible. Their contribution to GDP is increasing, but remains very low (2.8% of GDP in 2010 and 6.0% in 2012); agriculture alone provides 40.0% of GDP. This partly reflects the unbalanced partnership that has lasted decades.¹⁰ Apart from staff wages and royalties paid to the local and regional authorities of the areas mined, the capital-intensive mining sector seems disconnected from the rest of the economy. Production is exported without any local processing. The extractive industries provide only 10% of tax revenue. In the medium term, mining and oil should raise their contribution to GDP and to tax revenue. Given this scenario, compliance with the EITI¹¹ and its extension to include oil and gas is good news for the future, as are the articles in Niger’s new Constitution that strengthen the framework of governance, exploitation and management of natural and subsoil resources, (articles 148 and 153). The extractive industries have had the most significant effect on growth, through FDI, and on the balance of payments through foreign exchange reserves.

The PDES 2012‑15 in Niger highlighted the possibilities and prospects of rational and sustainable exploitation of mineral and oil and gas resources changing the structure of the country’s economy. In accordance with Article 153 of the Constitution, the government has decided that the priority for income from mining and oil is reinvestment in economic diversification. It will thus finance structural investment in agriculture and livestock farming to support the 3 N initiative for food security. Agribusiness will be a major source of diversification thanks to its still underexploited potential and will become a lever for growth and job creation in the medium term. FDI and the future-generations fund envisaged in the Constitution will help transform the economy, growing the value chains of agriculture, forestry and livestock farming. In addition, the exploitation of natural resources could create the potential for the development of industrial mining and a regional oil and gas market.

The main challenges are macroeconomic and environmental. At the macroeconomic level, government involvement in the extractive industries has led to a deterioration of debt ratios. Inappropriate exploitation of natural resources could also be speeding up environmental degradation. In response to these risks, the government intends to bolster the environmental code by ensuring that an appropriate PDES is prepared for any activity affecting the environment. The government will limit its equity participation, and possibly end the guarantees it offers for certain investments in mining and oil. In addition, by reinvesting mining and oil income in diversifying the economy, the government will be able to mitigate the risk of Dutch disease.

1. Certain exemptions granted under the investment code have expired.

2. In 2012 public debt grew thanks to a state guarantee on the loan granted to the Soraz oil refinery and a loan taken out by the government to finance its stake in the new uranium mine in Imourarem.

3. Especially oil and gas, along with oil refining and petroleum exports to certain neighbouring countries.

4. Les Nigériens nourrissent les Nigériens (Nigerians feed Nigerians).

5. Indicator measuring the education system’s capacity to enrol the school-age population.

6. According to the EDS-MICS III demographic and health survey, women in Niger have an average of seven children. Almost half the female population marry before the age of 15 and have their first child before the age of 18.

7. According to the employment section of the 1-2-3 survey conducted by the INS in 2003, the overall unemployment rate was estimated at 15.9% (19.4% in urban areas and 15.1% in rural areas).

8. This is due to the energy needs of China and India and is seen as an indirect result of the moratorium on nuclear energy declared by several Western countries following the Fukushima disaster.

9. Niger is surrounded by countries whose large reserves have already been updated and exploited: Algeria and Libya to the north and Chad to the east, as well as Nigeria and Cameroon along the coast to the south, where offshore operations have been in place for many years.

10. The increase in the contribution to GDP since 2010 is the result of contract renegotiations with the French group Areva in 2009‑10, resulting in higher purchase prices for uranate and allowing Niger to sell part of its quota on the international market. The nascent oil industry also contributed.

11. Extractive Industries Transparency Initiative.