The World Bank in Niger

COUNTRY OVERVIEW

Located in the heart of the Sahel, Niger has a poorly diversified economy, dependent largely on agriculture. The extreme poverty remained stagnant at 48.4% in 2023. However, with inflation, it is projected to increase to 49.9% by 2026.

In 2023, UNOCHA reported 4.5 million people, or 17% of the population, requiring humanitarian assistance in Niger, compared to 3.7 million in 2022. In July 2024, according to UNHCR, Niger hosted almost 968,000 refugees, asylum-seekers and internally displaced people (IDPs), a majority of which are hosted in Tillaberi, Diffa and Tahoua regions.

Political background

Following the unconstitutional change of government on July 26, 2023, Niger has been governed by a military regime under the National Council for the Safeguard of the Homeland (CNSP), led by General Abdourahmane Tchiani, who serves as the President of the transition. Since then, political activities have been suspended. The national dialogue announced by the President of the transition has not taken place, and the constitution has not been reinstated. The security situation remains precarious, particularly in the Liptako-Gourma region (bordering Burkina Faso and Mali). Additionally, two other groups, the Front Patriotique de Libération (FPL) and the Front Patriotique pour la Justice (FPJ), responsible for several attacks against military forces and infrastructure, are demanding the release of the deposed president.

On the regional front, Niger, Burkina Faso, and Mali decided to withdraw from the Economic Community of West African States (ECOWAS) in January 2024 and formed the Confederation of States of the Sahel (AES). Despite announced mediation efforts by Senegal and Togo, the three countries have repeatedly stated that their withdrawal is definitive.

Economic situation

The political crisis in 2023 is estimated to have reduced GDP growth to 2.0 % in 2023 (-1.7 % per capita). Growth in 2024 is expected to recover with the sanctions lifted in February 2024 and resumption of financing. However, the expected boost from large-scale oil exports has been dampened. Growth in 2024 is projected at 5.7 % (1.8 % per capita), based on an expected total oil production of 11.2 million barrels, compared to 9.1 % growth if oil production had reached 16.6 million barrels. On the supply side, in addition to industry (oil), agriculture is expected to contribute 2.6 percentage points (pps) to growth. Exports, driven by oil, are expected to be the main driver on the demand side (+4.5 pps), followed by private consumption (+2.6 pps).

Trade disruptions due to the border closure with Benin have fueled an increase in food prices, causing the year-on-year inflation rate to rise from 1.7 % in June 2023 to 15.5 % in June 2024. The annual average inflation rate is expected to reach 8.5 %.

Despite higher inflation, the extreme poverty rate is projected to decrease to 47.5 % in 2024 due to positive agriculture growth. However, 13.1 % of the population is facing severe food insecurity, around 300,000 people are internally displaced due to insecurity. In addition, floods in August destroyed thousands of homes and led to hundreds of deaths.

The Central Bank of West African States (BCEAO) has kept its policy interest rates unchanged since December 2023 at 3.5 % for liquidity calls and 5.5 % for the marginal lending facility. The WAEMU inflation rate has been on a downward trend since peaking in 2022 but remains above the 1 to 3 % WAEMU target, at 4.4 % y/y in July 2024, and regional foreign exchange reserves remain low, covering only 3.5 months of imports in 2024Q1.

Given lower than expected oil revenues, the fiscal deficit in 2024 is expected to remain above the WAEMU target at 4.4 % of GDP. At the end of April 2024, the government had accumulated CFAF 701.8 billion in external and domestic/regional debt arrears. However, by the end of June, Niger had cleared CFAF 533.8 billion and resumed bond issuances on the regional market, albeit at higher rates, exceeding 9 % for 12-month bills. The clearance was assisted by a US$400 million loan from China secured by oil exports; the pause in oil exports complicates the repayment.

Outlook

GDP growth is expected to average 6.5 % over 2025-2026, supported by oil production and exports (scaling up in 2025) and improvements in agricultural output due to an expansion in irrigated land. This assumes the security situation does not deteriorate and an orderly ECOWAS withdrawal that limits negative impacts to lower trade with non-WAEMU ECOWAS states. As domestic financing is expected to remain costly, the fiscal deficit is expected to narrow and average 3.6 % over 2025-2026, with public debt declining to 50.6 % by 2026. The current account deficit is projected to narrow and average 4.1 % over 2025-2026 on the back of oil exports.

Inflation is projected to remain high at an average of 5.4 % over 2025-2026, partly due to higher import costs. The regional inflation rate is expected to align with WAEMU target by 2025, while regional reserves are expected to rise gradually, supported by the resumption of international bond issuances, recovering exports and monetary policy easing in the Euro Area.

Despite projected higher inflation in 2025-2026, the extreme poverty rate is projected to decrease significantly to 42.5 % by 2026, driven by the strong GDP and agriculture output growth projections. The outlook remains subject to significant downside risks, including a deterioration of the security situation, commodity price volatility and climatic shocks. An ECOWAS withdrawal that has gaps in agreements could lead to larger disruptions in the free movement of goods, services, capital, and labor and could have spillover effects onto trade in the WAEMU zone. However, if new trade opportunities are realized, these negative impacts could be mitigated. Sustained or escalated tensions between Benin and Niger could lead to higher trade costs and delay oil exports.

Last Updated: Oct 03, 2024

The Government developed a provisional 2024-2026 Program of Resilience for Safeguarding the Homeland (Programme de résilience pour la sauvegarde de la patrie - PRSP), which is expected to be officially approved in 2024. The PRSP seeks to ensure the well-being of all Nigeriens as reflected in decreased national poverty and multidimensional poverty. The PRSP supports four strategic axes: 1) Strengthen governance, peace, and security; 2) Inclusive human capital development; 3) Improve economic growth and employment; and 4) Improve citizen participation and social inclusion. The PRSP axes are similar to those of the 2022-2026 Economic and Social Development Plan (PDES), though the PRSP added the fourth axis on citizen engagement and social inclusion.

The World Bank’s strategy in Niger will be outlined in its new Country Engagement Note (CEN), currently being developed and due to be presented at the Board in late 2024 or early 2025. The CEN will be aligned with the PRSP priorities.

On September 1, 2024, the World Bank was financing 27 operations in Niger: 15 national projects and 12 regional projects valued at $4.24 billion (grants and loans included). These projects support the development of thirteen different sectors:

• water and sanitation: 19%
• energy and extractive industries: 19%
• agriculture: 12%
• education: 9%
• transport: 7%
• social protection and employment: 6%
• urban development, disaster management, and resilience: 6%
• health and population: 5%
• governance: 5%
• sustainable social development: 4%
• environment and natural resources: 4%
• digital development: 2%
• poverty: 2%

International Finance Corporation (IFC)

IFC’s approach in Niger, anchored in the Sahel strategy, focuses on: (i) providing support to Micro, Small and Medium Enterprises (MSMEs) through Risk Sharing Facilities (RSF) and partnerships with domestic financial institutions; (ii) bolstering the agribusiness sector by developing agri-finance solutions (including linking smallholder farmers to off-takers and buyers while leveraging WB projects); (iii) promoting private participation in infrastructure projects, especially solar power generation; and (iv) improving the enabling business environment with an emphasis on investment climate reforms. 

On the infrastructure front, the IFC has advised the Government on two (02) strategic projects in the energy (Scaling Solar) and digital (restructuring of the Niger Telecom) sectors.  Other key engagements in the sector involve a loan to one of the leading Mobile Money Operator in the country, to improve connectivity and expand access to digital services across the country.

In terms of access to finance and MSMEs financing IFC continues to work with local commercial private banks to provide RSFs and long-term funding to increase access to finance, especially to MSMEs. Also 5 Nigeriens firms will be receiving technical assistance as part of the local champions Initiative, which is a regional advisory program initiated by IFC to support domestic private sector in FCS. 

Last Updated: Oct 03, 2024

The following are examples of progress made possible by World Bank financing:

Health

The World Bank is contributing to help Niger accelerate the demographic transition, improve health and nutrition, and empower women and girls. The World Bank has made reducing gender inequalities a central focus of its support in Niger, including promoting girls’ access to education, reproductive health services, and economic opportunities as a keyway to reduce child marriage and high fertility rates.

Key results include the following:

1. Nearly six million women of reproductive age and children under five use a range of basic reproductive health and nutrition services. Additionally, 4.2 million children are vaccinated, nearly 1.6 million births are attended by skilled personnel, and 94% of facilities report their monthly results on time.
2. Improvement in girls’ access to and retention in education through (i) the “All Girls in School” subproject; and (ii) the financing of the subproject “Safe Spaces and Clubs for Future Husbands.”
3. Improved supply chain of reproductive, maternal, newborn, child, and adolescent health products.

Energy

The World Bank’s efforts in Niger’s energy sector address four related challenges: (i) significantly increase access to electricity for all, improve the quality of access to electricity for current and future consumers by strengthening and developing the energy infrastructure; (ii) increase the availability of electricity to the population through the development of new and renewable energy sources; (iii) increase and diversify low-cost, low-emission electricity supply sources through domestic renewable energy sources and regional electricity interconnections; and (iv) ensure the financial viability of the energy sector for a sustainable, high-quality and affordable electricity supply for the population.

Considering these challenges, Niger and the World Bank have developed a partnership rich in commitments throughout the energy sector value chain, mobilizing significant financial resources. The World Bank’s current commitment to Niger stands at $1,207.5 million for the financing of three national projects and four regional projects in the power sector, including the Kandadji dam program. These projects are expected to provide access to electricity for more than 4.5 million persons.

In addition, the Bank is financing and assisting the government of Niger in the preparation of a low-cost renewable energy production plan that will be a key tool for future generation capacity.

Agriculture

The World Bank has been a key partner in advancing Niger's agricultural sector, with a focus on enhancing food security, boosting productivity, and promoting climate resilience. Through flagship initiatives like the Regional Sahel Pastoralism Support Project (PRAPS-Niger) and the West Africa Food System and Resilience Program (FSRP-Niger), the Bank is driving sustainable agricultural practices and fostering livestock productivity and market access. These programs offer smallholder farmers technical assistance, access to improved seeds, and the promotion of climate-resilient techniques, enabling them to adapt more effectively to erratic weather patterns and droughts. The Bank also supports critical infrastructure development, such as irrigation systems, to reduce the nation's dependence on rain-fed agriculture.

Moreover, the recently approved Livestock and Agriculture Modernization Project (LAMP) focuses on increasing productivity, commercialization, and climate resilience—key pillars of Niger's agricultural economy. The World Bank continues to strengthen the institutional capacity of the government in agricultural policy management and value chain development, with an emphasis on inclusive growth that integrates women and youth. Through these targeted interventions, the World Bank is contributing to the modernization of Niger's agriculture, tackling food insecurity, and improving livelihoods across rural communities.

Last Updated: Oct 03, 2024

The World Bank collaborates with various multilateral agencies and donors, such as the United Nations, International Monetary Fund, the African Development Bank and the European Union, as well as bilateral to coordinate its support for Niger’s development.

Last Updated: Oct 03, 2024