Located in the heart of the Sahel, Niger has a poorly diversified economy, dependent on agriculture for 40% of its GDP. The level of extreme poverty is expected to reach 44.1% in 2023 due to negative per capita growth and rising inflation, which will increase the extremely poor population by 700,000 bringing the total to 12 million in 2023.
By September 2023, Niger was hosting more than 700,000 displaced people, including refugees, asylum seekers and internally displaced persons. Between August and early September 2023, the United Nations Refugee Agency (UNHCR) recorded the arrival of over 6,900 asylum seekers in Niger, mainly from Chad, Nigeria and Burkina Faso.
A candidate of the ruling party, Mohamed Bazoum was elected president in the December 2020 and February 2021 elections. He was the first to democratically succeed his predecessor. But on July 26, 2023, members of his presidential guard dismissed him, justifying their decision by saying they wanted to avoid further economic and security problems.
Following this move, at an emergency summit held in Nigeria on July 30, 2023, ECOWAS demanded that Bazoum be reinstated. And indicated that if he was not, "all measures" would be taken to restore constitutional order. "These measures may include the use of force to this end". ECOWAS has imposed financial sanctions on the putschists and the country, freezing "all commercial and financial transactions" between member states and Niger, one of the world's poorest countries.
Real GDP growth in 2023 had been projected at 6.9%, based on an average performance in agriculture and large-scale oil production coming on stream at the end of the year. The coup d'état and its aftermath have considerably affected growth prospects. If sanctions and the pause in international development funding continue until the end of 2023, and agricultural performance is slightly below average, growth could fall to 2.3% (-1.5% in per capita terms).
ECOWAS trade sanctions (without exemptions) and border closures will significantly reduce exports (including crude oil exports via the new pipeline - now expected to be postponed until 2024 - and uranium) and imports (foodstuffs, electricity), including with non-ECOWAS countries.
Financial sanctions implemented by the Central Bank of West African States (BCEAO), including the freezing of government and SOE accounts, loss of access to long-term liquidity windows and the regional debt market, combined with a significant reduction in external budget support and project financing by development partners, will reduce government consumption and investment. Private investment growth will be slowed by political uncertainty and reduced liquidity in the banking sector.
These sanctions are expected to dampen growth in manufacturing due to power shortages caused by the halt in electricity exports from Nigeria to Niger, and reduced investment will weigh on the construction sector. The trade, transport and financial services sectors are likely to contract. Agriculture could be a source of economic resilience, but there are signs that the harvest could be below average.
Growth could rebound to 12.8% (8.7% per capita) in 2024 and remain high, at 7.4% in 2025, if the following occur in 2024: (i) lifting of sanctions early in the year; (ii) start-up of large-scale oil production and exports; (iii) resumption of international development financing; and (iv) decent agricultural performance.
Inflation could fall to 4% in 2024 and 3% in 2025 following the lifting of sanctions and the moderation of food inflation. With robust growth in GDP per capita and lower inflation, the extreme poverty rate should gradually fall by 5.4 percentage points, to 38.7% in 2025, and the number of absolute poor could decrease to 11.3 million people, these projections depending essentially on policies that pass on oil and gas rents to the population, and to disadvantaged populations in particular.
With the start of oil exports, the current account deficit should narrow significantly in the medium term. Increased oil revenues and measures to improve non-oil revenues would support medium-term fiscal consolidation, which would see the debt-to-GDP ratio decline from 2024 onwards.
In the absence of a political resolution, the outlook is highly uncertain. In addition to the risks of climatic shocks and falling world oil prices, which Niger would normally have to contend with, the risks of environmental degradation are also significant. Growth and poverty prospects are subject to a prolonged political crisis, sanctions that last beyond 2023, a continued pause in major international infrastructure projects and their financing, and the deteriorating security situation.
Last Updated: Oct 10, 2023