As one of the world’s Top 5 uranium-producing countries, Niger is giving itself the means to become one of the most business-friendly countries in the West African sub-region. The World Bank’s Doing Business 2020 report notes that the country has jumped eleven (11) places compared to 2019 through the reforms adopted since 2010 to improve the business environment. The Nigerien economy remains resilient, despite the security challenge and the adverse effects of COVID-19, the country posted growth of 3.6% in 2020 while the WAEMU countries grew by an average of 1.8% in the same year. In 2021, Niger’s economic growth came out at 1.3%, due to the poor 2021/2022 agricultural season and the unfavorable context for economic activity marked by the accentuation of the security crisis and the COVID-19 pandemic.
The outlook remains favorable for Niger’s economy, particularly in line with the good outlook for the hydrocarbon sector. The country plans to increase its domestic oil production to 200,000 barrels per day by 2025, from a production of 20,000 barrels per day currently. Oil is estimated to account for at least 25% of Niger’s GDP in 2025 and nearly 50% of the country’s budget revenues. It would constitute nearly 80% of Niger’s total export earnings. In this perspective, the growth of Niger’s economy is expected to accelerate in the medium term to 6.7% in 2022 before reaching 8.6% a year later. According to projections made last April by the International Monetary Fund (IMF), Niger would be the most dynamic economy in sub-Saharan Africa in 2022.
The tertiary sector: driving force of the Nigerien economy in 2021
The Nigerien economy grew by 1.3% in 2021 after 3.6% a year earlier. This slowdown in activity growth is attributable to the decline in production in the primary sector (-8.3%) following the bad rainy season in 2021. The satisfactory performance of activities in the secondary (+5.4%) and tertiary (+7.7%) sectors helped to mitigate the decline in production in the primary sector. In relation to the decline in its production, the contribution of the primary sector to the real GDP growth rate was negative in 2021 (-1.6 points) after +2.7 points a year earlier. As for the tertiary and secondary sectors, they contributed +2.0 and +0.9 points respectively to Niger’s growth in 2021. These sectors have benefited from the revival of activity following the easing of restrictions imposed as part of the fight against COVID-19.
The tertiary sector, composed mainly of service activities, held up well in 2021 after suffering the consequences of the health crisis, including the closure of land and air borders, entertainment venues, and restrictions on shops and transport. Thus, its value-added increased by 7.7% in 2021 against 2.3% in 2020.
Concerning the secondary sector, it is dominated by extractive activities including mining production with gold and uranium and foreign whose exploitation began in 2011. The secondary sector grew by +5.4% in 2021 after +2.3% in 2020. This strengthening of the sector’s growth is attributable to the good direction of the extractive industries and of manufacturing and construction activities. The sector’s contribution to wealth creation in Niger is expected to increase sharply from 2023 because of the start of crude oil production activity for export, via the pipeline under construction between Niger and Benin.
Despite the decline in primary sector output in 2021, this sector was the engine of growth in the Nigerien economy in 2020 with a contribution to the real GDP growth rate of 2.7 points compared to 0.4 and 0.5 points respectively for the secondary and tertiary sectors. Predominantly rain-fed, the primary sector is mainly composed of the branches of agriculture, livestock, forestry, hunting, and fishing. This sector shows an unstable evolution characterized by a production deficit every other year. However, the investments made under the I3N Program (Nigeriens Feed Nigeriens Initiative) since 2011, are gradually reducing agriculture’s dependence on rainfall by strengthening the structure of irrigated production.
Niger’s Economic Outlook and Development Plan
The prospects for the Nigerien economy are encouraging in line with the achievements of the implementation of the country’s National Development Plan. To accelerate economic and social progress and consolidate its achievements, the Government of Niger approved, in September 2017, an ambitious five-year economic and social development plan (PDES 2017-2021). The plan aims to overcome long-standing obstacles to the country’s development by transforming its economic structure to ensure strong, sustainable, resilient, and inclusive growth that will raise people’s living standards. Thanks to the PDES 2017-2021, Niger has strengthened its socio-economic infrastructure, notably with the inauguration in 2017 of the Goroubanda power plant, with a capacity of one hundred megawatts, the completion of projects for the renovation of Niamey International Airport and certain hotel complexes. One of the major achievements of the PDES 2017-2021 remains the establishment of the “Nigeriens Feed Nigeriens” (I3N) Initiative, which aims to protect Nigerien populations from famine immediately and sustainably. To achieve this goal, this initiative focuses on building national capacity for food production, supply, and resilience to food crises and disasters. To this end, important water mobilization infrastructures, such as the Kandadji dam, are being built to develop agricultural activity through irrigation, as well as to develop electricity production.
The PDES 2017-2021 allowed the launch of the construction of a 2,000 km pipeline to transport crude oil to the port of Seme Terminal in Benin, the Salkadamna energy project, and the continuation of construction work on the Kandadji hydro-agricultural dam at a total cost of 155 CFAF billion. By 2023, oil would be a driver of investment and would allow Niger to go from 20,000 to 110,000 barrels per day, which will represent 24% of GDP.
On 10 June 2022, the Nigerien authorities adopted the Economic and Social Development Plan (2022-2026). This second five-year phase of the Niger 2035 Sustainable Development and Inclusive Growth Strategy should consolidate the achievements of the 2017-2021 PDES. It is articulated around the following three (03) strategic axes:
- human capital development, inclusion, and solidarity
- the consolidation of governance, peace, and solidarity
- the structural transformation of the economy.
Niger has also embarked on various reforms to improve the business environment, which led to it being ranked in 2018 among the top ten reform countries in the World Bank’s Doing Business report. In this desire to promote the development of companies since 2016, Niger has taken measures related to the development of an action plan for the reform of import and export procedures and the adoption of an action plan for the improvement of the indicators of the Doing Business ranking.
For more information on the macroeconomic situation in Niger, download the 2022 Information Note, prepared by UMOA-Titres here.
Source: Niger Information Note – UMOA-Titres – September 2022
