Niger is a vast country located in the heart of the Sahel region. Its economy is not well diversified and depends primarily on agriculture, which accounts for 40% of its gross domestic product (GDP). Despite significant strides made by Niger over the past decade to reduce the country’s poverty rate, the extreme poverty rate remained very high at 41.4% in 2019, affecting more than 9.5 million people.
Niger has, in recent years, also been grappling with a significant influx of refugees fleeing conflicts in the region, particularly in Nigeria and Mali. In April 2019, the United Nations High Commissioner for Refugees (UNHCR) registered 221,671 refugees and 196,717 displaced persons, mainly in Diffa and Maradi.
The current president, Mahamadou Issoufou, was reelected to a second term in 2016. The next presidential and legislative elections are scheduled to take place in 2020-2021, preceded by municipal and regional elections. Security conditions have deteriorated in recent years, particularly in the areas bordering Nigeria, Burkina Faso, and Mali, where armed groups have established bases and carry out repeated attacks against the security forces and civilians. To date, the government has declared a state of emergency in the Diffa, Tahoua, and Tillabéri regions.
In July 2017, the African Development Bank, the European Union, France, Germany, the United Nations Development Program and the World Bank launched the Sahel Alliance to provide an appropriate and coordinated response to the challenges faced by the G5 Sahel member countries (Burkina Faso, Chad, Mali, Mauritania, and Niger). Since then, Denmark, Italy, Luxembourg, the Netherlands, Spain and the United Kingdom have joined the Alliance.
- Niger’s economic growth remained robust at 6.3% in 2019, driven by agriculture, which benefited from favorable weather conditions and investments aimed at boosting agricultural productivity. Economic activity was also driven by the construction of infrastructure for the hosting of the African Union Summit in July 2019 and by major donor-supported projects. These achievements were realized despite a host of obstacles such as low commodity prices, a slowdown in trade triggered by the closure of the border with Nigeria since mid-August 2019, and escalating security challenges. The government prevented the spread of conflicts in Niger's border regions, thereby protecting the main economic activities.
- Between 2018 and 2019, the fiscal deficit fell from 4.1% to 3.9% of GDP. Higher government spending and lower domestic revenue were offset by an increase in grants. Tax revenues did not increase substantially, owing primarily to the closure of the border with Nigeria, which resulted in a loss in import duties. In addition, the sharp decline in domestically financed investment spending and tighter control of current expenditure helped contain public expenditure in 2019. Niger nevertheless remains one of three WAEMU countries that fail to meet WAEMU’s fiscal convergence criterion of 3% of GDP.
- The current external account deficit (grants included) widened to 19.5% in 2019, driven by high import volumes associated with infrastructure projects. Substantial external capital inflows, concessional loans, and foreign direct investment financed a large share of the current external account deficit.
Three factors are likely to undermine Niger’s economic performance:
- In 2020, the global coronavirus pandemic (COVID-19) will strain Niger's economy, owing mainly to increased spending on health and social assistance services for vulnerable households aimed at mitigating the impact of COVID-19. The pandemic will also have an adverse impact on international trade and foreign direct investment channels.
- Deteriorating security conditions pose another major risk to economic growth and public finances.
- Lower oil prices could adversely affect the real sector, public finances, and the balance of payments.
- Niger also remains vulnerable to climate shocks and fluctuations in global non-oil commodity prices.
Last Updated: Apr 17, 2020